OMB APPROVAL | ||
OMB Number: 3235-0570 | ||
Expires: January 31, 2014 | ||
Estimated average burden hours per response: 20.6 | ||
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANIES
Investment Company Act file number 811-02699
AIM Growth Series (Invesco Growth Series)
11 Greenway Plaza, Suite 2500 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Philip A. Taylor 11 Greenway Plaza, Suite 2500 Houston, Texas 77046
(Name and address of agent for service)
Registrant’s telephone number, including area code: (713) 626-1919
Date of fiscal year end: 12/31
Date of reporting period: 12/31/10
Item 1. Reports to Stockholders.
![]() |
Annual Report to Shareholders | December 31, 2010 | ||
Invesco Balanced-Risk Retirement Funds | |||
Invesco Balanced-Risk Retirement Now Fund | |||
Invesco Balanced-Risk Retirement 2010 Fund | |||
Invesco Balanced-Risk Retirement 2020 Fund | |||
Invesco Balanced-Risk Retirement 2030 Fund | |||
Invesco Balanced-Risk Retirement 2040 Fund | |||
Invesco Balanced-Risk Retirement 2050 Fund |
2 | Letters to Shareholders | |||
4 | Performance Summary | |||
4 | Management Discussion | |||
16 | Long-Term Fund Performance | |||
28 | Supplemental Information | |||
31 | Schedule of Investments | |||
33 | Financial Statements | |||
38 | Notes to Financial Statements | |||
52 | Financial Highlights | |||
58 | Auditor’s Report | |||
59 | Fund Expenses | |||
62 | Tax Information | |||
T-1 | Trustees and Officers |
![(PICUTRE OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886202.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886203.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
2 Invesco Balanced-Risk Retirement Funds
![(PICUTRE OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886204.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![(SIGNATURE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886205.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 Invesco Balanced-Risk Retirement Funds
Performance Summary – Invesco Balanced-Risk Retirement Now Fund
For the 12 months ended December 31, 2010, Class A shares of Invesco Balanced-Risk Retirement Now Fund, at net asset value (NAV), returned 7.74% and slightly outperformed the Fund’s custom style-specific benchmark, which returned 6.25% over the same period. A tactical overweight in fixed income paired with a concurrent underweight in equities during the second quarter contributed largely to the outperformance for the reporting period. The Fund’s diversified commodity exposure was also favorable for performance.
Your Fund’s long-term performance appears later in this report.
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 7.74 | % | ||
Class A5 Shares | 7.74 | |||
Class B Shares | 6.83 | |||
Class C Shares | 7.08 | |||
Class C5 Shares | 6.95 | |||
Class R Shares | 7.47 | |||
Class R5 Shares | 7.43 | |||
Class Y Shares | 8.13 | |||
Institutional Class Shares | 8.00 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 12.14 | |||
Custom Balanced-Risk Retirement Now Index■ (Style-Specific Index) | 6.25 | |||
Lipper Mixed-Asset Target Allocation Conservative Funds Index▼ ( Peer Group Index) | 9.99 | |||
▼Lipper Inc.; ■Invesco, Lipper Inc.
Invesco Balanced-Risk Retirement Now Fund uses a combination of Invesco Balanced-Risk Allocation Fund and affiliated money market funds to provide broad market diversification and execute the Fund’s glide path strategy.
Invesco Balanced-Risk Allocation Fund, which is held by Invesco Balanced-Risk Retirement Now Fund, employs a total return asset allocation strategy that invests in equity, bond and commodity markets. Invesco Balanced-Risk Allocation Fund uses a long-only, proprietary risk-balanced investment process that seeks to provide greater capital loss protection than traditional balanced portfolios. It is comprised of asset classes
Risk Allocation
By asset class
Risk | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10* | ||||||
Equity | 40.39 | % | 28.44 | % | ||||
Fixed Income | 23.45 | 97.61 | ||||||
Commodities | 36.16 | 23.65 |
* Due to the use of leverage, the percentages may not equal 100%.
The Fund uses commodity-linked derivative investments and enhanced investment techniques such as leverage.
that are expected to perform differently during a variety of economic environments, and uses active positioning – a tactical asset allocation strategy – in striving to enhance returns. The fund gains access to the underlying markets in which it invests through the use of derivatives and other financially linked instruments, specifically exchange-traded futures and swap agreements, that provide leveraged exposure, liquidity and transparency.
Prior to the implementation of the glide path, the Fund is allocated 100% to Invesco Balanced-Risk Allocation Fund. Upon implementation, the glide path allocation process takes place on a quarterly basis. Each quarter a percent-
Total Net Assets | $20.4 million | |||
Fund Nasdaq Symbols | ||||
Class A Shares | IANAX | |||
Class A5 Shares | VIRAX | |||
Class B Shares | IANBX | |||
Class C Shares | IANCX | |||
Class C5 Shares | VIRCX | |||
Class R Shares | IANRX | |||
Class R5 Shares | VIRRX | |||
Class Y Shares | IANYX | |||
Institutional Class Shares | IANIX |
age of the Fund is moved from invesco Balanced-Risk Allocation Fund and allocated to the affiliated money market funds. Having completed the glide path, Invesco Balanced-Risk Retirement Now Fund is comprised of a blend of 60% Invesco Balanced-Risk Allocation Fund and 40% affiliated money market funds.
In the asset accumulation stage, investors’ concerns include not achieving enough growth to outpace inflation and the possibility that market losses may lead to abandoning their investment program. To address these concerns, Invesco Balanced-Risk Retirement Now Fund seeks to provide asset growth while attempting to provide greater capital loss protection and more consistent returns across all market environments relative to traditional balanced portfolios.
For investors in retirement, the primary concerns include preserving purchasing power, combating the effects of inflation and little-to-no ability to offset losses with additional contributions. To address these concerns, Invesco Balanced-Risk Retirement Now Fund maintains the real return strategy of 60% Invesco Balanced Risk Allocation Fund and 40% affiliated money markets once the target date is achieved.
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during that period driven by anticipation that improving economic conditions would boost earnings growth. A tactical shift to an overweight position in equities was implemented to participate in the strength of this rally.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a double dip recession in the U.S.
4 Invesco Balanced-Risk Retirement Funds
and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward. The Fund’s tactical strategy shifted in favor of government bonds and away from equities during April, resulting in a positive contribution to performance from our active positioning process. Commodity exposure remained slightly underweight from a risk contribution standpoint.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the U.S. Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary conditions and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. Within commodities, all complexes enjoyed price advances during the fourth quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Within the Fund, a tactical shift in favor of equities and commodities helped capture positive returns toward the end of the reporting period. Throughout the year, the ability of our strategy to adapt to a dynamically changing market environment proved to be an important element in the success of the Fund’s process.
Finally, we thank you for your continued commitment to Invesco Balanced-Risk Retirement Now Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PICTURE OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886209.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
![(PICTURE OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886210.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PICTURE OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886206.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886207.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PICTURE OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886208.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement Now Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Assisted by the Global Asset Allocation Team
5 Invesco Balanced-Risk Retirement Funds
Performance Summary – Invesco Balanced-Risk Retirement 2010 Fund
For the 12 months ended December 31, 2010, Class A shares of Invesco Balanced-Risk Retirement 2010 Fund, at net asset value (NAV), returned 7.79% and outperformed the Fund’s custom style-specific index, which returned 6.60% over the same period. A tactical overweight in fixed income paired with a concurrent underweight in equities during the second quarter contributed largely to the outperformance for the reporting period. The Fund’s diversified commodity exposure was also favorable for performance.
Your Fund’s long-term performance appears later in this report.
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 7.79 | % | ||
Class A5 Shares | 7.79 | |||
Class B Shares | 6.90 | |||
Class C Shares | 7.02 | |||
Class C5 Shares | 6.93 | |||
Class R Shares | 7.49 | |||
Class R5 Shares | 7.50 | |||
Class Y Shares | 8.10 | |||
Institutional Class Shares | 7.96 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 12.14 | |||
Custom Balanced-Risk Retirement 2010 Index♦ (Style-Specific Index) | 6.60 | |||
Lipper Mixed-Asset Target 2010 Funds Index▼ (Peer Group Index) | 11.19 | |||
▼Lipper Inc.; ■Invesco, Lipper Inc.; ♦Invesco, IDC via FactSet Research
Invesco Balanced-Risk Retirement 2010 Fund uses a combination of Invesco Balanced-Risk Allocation Fund and affiliated money market funds to provide broad market diversification and execute the Fund’s glide path strategy.
Invesco Balanced-Risk Allocation Fund, which is held by Invesco Balanced-Risk Retirement 2010 Fund, employs a total return asset allocation strategy that invests in equity, bond and commodity markets. Invesco Balanced-Risk Allocation Fund uses a long-only, proprietary risk-balanced investment process that seeks to provide greater capital loss protection than traditional balanced portfolios. It is comprised of asset classes that are expected to perform differently
Risk Allocation
By asset class
Risk | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10* | ||||||
Equity | 40.39 | % | 28.44 | % | ||||
Fixed Income | 23.45 | 97.61 | ||||||
Commodities | 36.16 | 23.65 | ||||||
* Due to the use of leverage, the percentages may not equal 100%.
The Fund uses commodity-linked derivative investments and enhanced investment techniques such as leverage.
during a variety of economic environments, and uses active positioning – a tactical asset allocation strategy – in striving to enhance returns. The fund gains access to the underlying markets in which it invests through the use of derivatives and other financially linked instruments, specifically exchange-traded futures and swap agreements, that provide leveraged exposure, liquidity and transparency.
Beginning 10 years from Invesco Balanced-Risk Retirement 2010 Fund’s target date, the glide path strategy begins. Prior to the implementation of the glide path, the Fund is allocated 100% to Invesco Balanced-Risk Allocation Fund. Upon implementation, the glide path allocation process takes place
Total Net Assets | $31.1 million | |||
Fund Nasdaq Symbols | ||||
Class A Shares | INJAX | |||
Class A5 Shares | VRAAX | |||
Class B Shares | INJBX | |||
Class C Shares | INJCX | |||
Class C5 Shares | VRACX | |||
Class R Shares | INJRX | |||
Class R5 Shares | VRARX | |||
Class Y Shares | INJYX | |||
Institutional Class Shares | INJIX |
on a quarterly basis. Each quarter a percentage of the Fund is moved from Invesco Balanced-Risk Allocation Fund and allocated to the affiliated money market funds. At the target date, this results in a blend of 60% Invesco Balanced-Risk Allocation Fund and 40% affiliated money market funds.
In the asset accumulation stage, investors’ concerns include not achieving enough growth to outpace inflation and the possibility that market losses may lead to abandoning their investment program. To address these concerns, Invesco Balanced-Risk Retirement 2010 Fund seeks to provide asset growth while attempting to provide greater capital loss protection and more consistent returns across all market environments relative to traditional balanced portfolios.
For investors in the pre-retirement stage, defined as 10 years away from their target date, the primary concerns include holding a significant pool of assets that may be subject to loss should difficult market conditions arise, but without the luxury of time to make up those losses prior to their target date. To address these concerns, Invesco Balanced-Risk Retirement 2010 Fund seeks to reduce risk and protect accumulated wealth by transitioning from the accumulation strategy to a real return strategy. This is executed through the glide path migration which transitions the portfolio from a 100% allocation to Invesco Balanced-Risk Allocation Fund to a portfolio consisting of 60% Invesco Balanced Risk-Allocation Fund and 40% affiliated money market funds over a 10-year period.
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during that period driven by anticipation that improving economic conditions would boost earnings growth. A tactical shift to an overweight position in equities was implemented to participate in the strength of this rally.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about
6 Invesco Balanced-Risk Retirement Funds
the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a double dip recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward. The Fund’s tactical strategy shifted in favor of government bonds and away from equities during April, resulting in a positive contribution to performance from our active positioning process. Commodity exposure remained slightly underweight from a risk contribution standpoint.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the U.S. Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary conditions and the belief that the seven largest developed (G7) economies had recovered since the summer months. For the emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. Within commodities, all complexes enjoyed price advances during the fourth quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Within the Fund, a tactical shift in favor of equities and commodities helped capture positive returns toward the end of the reporting period. Throughout the year, the ability of our strategy to adapt to a dynamically changing market environment proved to be an important element in the success of the Fund’s process.
Finally, we thank you for your continued commitment to Invesco Balanced-Risk Retirement 2010 Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PICTURE OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886209.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
![(PICTURE OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886210.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PICTURE OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886206.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886207.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886208.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2010 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Assisted by the Global Asset Allocation Team
7 Invesco Balanced-Risk Retirement Funds
Performance Summary – Invesco Balanced-Risk Retirement 2020 Fund
For the 12 months ended December 31, 2010, Class A shares of Invesco Balanced-Risk Retirement 2020 Fund, at net asset value (NAV), returned 13.11% and outperformed the Fund’s custom style-specific benchmark, which returned 10.23% over the same period. A tactical overweight in fixed income paired with a concurrent underweight in equities during the second quarter contributed largely to the outperformance for the reporting period. The Fund’s diversified commodity exposure was also favorable for performance.
Your Fund’s long-term performance appears later in this report.
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 13.11 | % | ||
Class A5 Shares | 13.11 | |||
Class B Shares | 12.30 | |||
Class C Shares | 12.19 | |||
Class C5 Shares | 12.37 | |||
Class R Shares | 12.90 | |||
Class R5 Shares | 12.92 | |||
Class Y Shares | 13.52 | |||
Institutional Class Shares | 13.47 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 12.14 | |||
Custom Balanced-Risk Retirement 2020 Index■ (Style-Specific Index) | 10.23 | |||
Lipper Mixed-Asset Target 2020 Funds Index▼ (Peer Group Index) | 12.83 | |||
▼Lipper Inc.; ■Invesco, Lipper Inc.
Invesco Balanced-Risk Retirement 2020 Fund uses a combination of Invesco Balanced-Risk Allocation Fund and affiliated money market funds to provide broad market diversification and execute the Fund’s glide path strategy.
Invesco Balanced-Risk Allocation Fund, which is held by Invesco Balanced-Risk Retirement 2020 Fund, employs a total return asset allocation strategy that invests in equity, bond and commodity markets. Invesco Balanced-Risk Allocation Fund uses a long-only, proprietary risk-balanced investment process that seeks to provide greater capital loss protection than traditional balanced portfolios. It is comprised of asset classes that are expected to perform differently
Risk Allocation
By asset class
Risk | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10* | ||||||
Equity | 40.39 | % | 28.44 | % | ||||
Fixed Income | 23.45 | 97.61 | ||||||
Commodities | 36.16 | 23.65 | ||||||
* Due to the use of leverage, the percentages may not equal 100%.
The Fund uses commodity-linked derivative investments and enhanced investment techniques such as leverage.
during a variety of economic environments, and uses active positioning – a tactical asset allocation strategy – in striving to enhance returns. The fund gains access to the underlying markets in which it invests through the use of derivatives and other financially linked instruments, specifically exchange-traded futures and swap agreements, that provide leveraged exposure, liquidity and transparency.
Beginning 10 years from Invesco Balanced-Risk Retirement 2020 Fund’s target date, the glide path strategy begins. Prior to the implementation of the glide path, the Fund is allocated 100% to Invesco Balanced-Risk Allocation Fund. Upon implementation, the glide path allocation process takes place
Total Net Assets | $57.2 million | |||
Fund Nasdaq Symbols | ||||
Class A Shares | AFTAX | |||
Class A5 Shares | VRCAX | |||
Class B Shares | AFTBX | |||
Class C Shares | AFTCX | |||
Class C5 Shares | VRCCX | |||
Class R Shares | ATFRX | |||
Class R5 Shares | VRCRX | |||
Class Y Shares | AFTYX | |||
Institutional Class Shares | AFTSX |
on a quarterly basis. Each quarter a percentage of the Fund is moved from Invesco Balanced-Risk Allocation Fund and allocated to the affiliated money market funds. At the target date, this results in a blend of 60% Invesco Balanced-Risk Allocation Fund and 40% affiliated money market funds.
In the asset accumulation stage, investors’ concerns include not achieving enough growth to outpace inflation and the possibility that market losses may lead to abandoning their investment program. To address these concerns, Invesco Balanced-Risk Retirement 2020 Fund seeks to provide asset growth while attempting to provide greater capital loss protection and more consistent returns across all market environments relative to traditional balanced portfolios.
For investors in the pre-retirement stage, defined as 10 years away from their target date, the primary concerns include holding a significant pool of assets that may be subject to loss should difficult market conditions arise, but without the luxury of time to make up those losses prior to their target date. To address these concerns, Invesco Balanced-Risk Retirement 2020 Fund seeks to reduce risk and protect accumulated wealth by transitioning from the accumulation strategy to a real return strategy. This is executed through the glide path migration which transitions the portfolio from a 100% allocation to Invesco Balanced-Risk Allocation Fund to a portfolio consisting of 60% Invesco Balanced Risk-Allocation Fund and 40% affiliated money market funds over a 10-year period.
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during that period driven by anticipation that improving economic conditions would boost earnings growth. A tactical shift to an overweight position in equities was implemented to participate in the strength of this rally.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears
8 Invesco Balanced-Risk Retirement Funds
about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a double dip recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward. The Fund’s tactical strategy shifted in favor of government bonds and away from equities during April, resulting in a positive contribution to performance from our active positioning process. Commodity exposure remained slightly underweight from a risk contribution standpoint.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the U.S. Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary conditions and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. Within commodities, all complexes enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Within the Fund, a tactical shift in favor of equities and commodities helped capture positive returns toward the end of the reporting period. Throughout the year, the ability of our strategy to adapt to a dynamically changing market environment proved to be an important element in the success of the Fund’s process.
Finally, we thank you for your continued commitment to Invesco Balanced-Risk Retirement 2020 Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PICTURE OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886209.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
![(PICTURE OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886210.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PICTURE OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886206.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886207.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PICTURE OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886208.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2020 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Assisted by the Global Asset Allocation Team
9 Invesco Balanced-Risk Retirement Funds
Performance Summary – Invesco Balanced-Risk Retirement 2030 Fund
For the 12 months ended December 31, 2010, Class A shares of Invesco Balanced-Risk Retirement 2030 Fund, at net asset value (NAV), returned 13.06% and outperformed the Fund’s custom style-specific index, which returned 10.23% over the same period. A tactical overweight in fixed income paired with a concurrent underweight in equities during the second quarter contributed largely to the outperformance for the reporting period. The Fund’s diversified commodity exposure was also favorable for performance.
Your Fund’s long-term performance appears later in this report.
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 13.06 | % | ||
Class A5 Shares | 13.06 | |||
Class B Shares | 12.08 | |||
Class C Shares | 11.95 | |||
Class C5 Shares | 12.17 | |||
Class R Shares | 12.71 | |||
Class R5 Shares | 12.75 | |||
Class Y Shares | 13.30 | |||
Institutional Class Shares | 13.43 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 12.14 | |||
Custom Balanced-Risk Retirement 2030 Index■ (Style-Specific Index) | 10.23 | |||
Lipper Mixed-Asset Target 2030 Funds Index▼ (Peer Group Index) | 13.83 | |||
▼Lipper Inc.; ■Invesco, Lipper Inc.
Invesco Balanced-Risk Retirement 2030 Fund uses a combination of Invesco Balanced-Risk Allocation Fund and affiliated money market funds to provide broad market diversification and execute the Fund’s glide path strategy.
Invesco Balanced-Risk Allocation Fund, which is held by Invesco Balanced-Risk Retirement 2030 Fund, employs a total return asset allocation strategy that invests in equity, bond and commodity markets. Invesco Balanced-Risk Allocation Fund uses a long-only, proprietary risk-balanced investment process that seeks to provide greater capital loss protection than traditional balanced portfolios. It is comprised of asset classes that are expected to perform differently
Risk Allocation
By asset class
Risk | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10* | ||||||
Equity | 40.39 | % | 28.44 | % | ||||
Fixed Income | 23.45 | 97.61 | ||||||
Commodities | 36.16 | 23.65 | ||||||
* Due to the use of leverage, the percentages may not equal 100%.
The Fund uses commodity-linked derivative investments and enhanced investment techniques such as leverage.
during a variety of economic environments, and uses active positioning – a tactical asset allocation strategy – in striving to enhance returns. The fund gains access to the underlying markets in which it invests through the use of derivatives and other financially linked instruments, specifically exchange-traded futures and swap agreements, that provide leveraged exposure, liquidity and transparency.
Beginning 10 years from Invesco Balanced-Risk Retirement 2030 Fund’s target date, the glide path strategy begins. Prior to the implementation of the glide path, the Fund is allocated 100% to Invesco Balanced-Risk Allocation Fund. Upon implementation, the glide path allocation process takes place
Total Net Assets | $45.7 million | |||
Fund Nasdaq Symbols | ||||
Class A Shares | TNAAX | |||
Class A5 Shares | VREAX | |||
Class B Shares | TNABX | |||
Class C Shares | TNACX | |||
Class C5 Shares | VRECX | |||
Class R Shares | TNARX | |||
Class R5 Shares | VRERX | |||
Class Y Shares | TNAYX | |||
Institutional Class Shares | TNAIX |
on a quarterly basis. Each quarter a percentage of the Fund is moved from Invesco Balanced-Risk Allocation Fund and allocated to the affiliated money market funds. At the target date, this results in a blend of 60% Invesco Balanced-Risk Allocation Fund and 40% affiliated money market funds.
In the asset accumulation stage, investors’ concerns include not achieving enough growth to outpace inflation and the possibility that market losses may lead to abandoning their investment program. To address these concerns, Invesco Balanced-Risk Retirement 2030 Fund seeks to provide asset growth while attempting to provide greater capital loss protection and more consistent returns across all market environments relative to traditional balanced portfolios.
For investors in the pre-retirement stage, defined as 10 years away from their target date, the primary concerns include holding a significant pool of assets that may be subject to loss should difficult market conditions arise, but without the luxury of time to make up those losses prior to their target date. To address these concerns, Invesco Balanced-Risk Retirement 2030 Fund seeks to reduce risk and protect accumulated wealth by transitioning from the accumulation strategy to a real return strategy. This is executed through the glide path migration which transitions the portfolio from a 100% allocation to Invesco Balanced-Risk Allocation Fund to a portfolio consisting of 60% Invesco Balanced Risk-Allocation Fund and 40% affiliated money market funds over a 10-year period.
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during that period driven by anticipation that improving economic conditions would boost earnings growth. A tactical shift to an overweight position in equities was implemented to participate in the strength of this rally.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears
10 Invesco Balanced-Risk Retirement Funds
about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a double dip recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward. The Fund’s tactical strategy shifted in favor of government bonds and away from equities during April, resulting in a positive contribution to performance from our active positioning process. Commodity exposure remained slightly underweight from a risk contribution standpoint.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the U.S. Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary conditions and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. Within commodities, all complexes enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among the commodity-intensive emerging markets.
Within the Fund, a tactical shift in favor of equities and commodities helped capture positive returns toward the end of the reporting period. Throughout the year, the ability of our strategy to adapt to a dynamically changing market environment proved to be an important element in the success of the Fund’s process.
Finally, we thank you for your continued commitment to Invesco Balanced-Risk Retirement 2030 Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PICTURE OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886209.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
![(PICTURE OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886210.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PICTURE OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886206.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886207.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PICTURE OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886208.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2030 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Assisted by the Global Asset Allocation Team
11 Invesco Balanced-Risk Retirement Funds
Performance Summary – Invesco Balanced-Risk Retirement 2040 Fund
For the 12 months ended December 31, 2010, Class A shares of Invesco Balanced-Risk Retirement 2040 Fund, at net asset value (NAV), returned 13.03% and outperformed the Fund’s custom style-specific benchmark, which returned 10.23% over the same period. A tactical overweight in fixed income paired with a concurrent underweight in equities during the second quarter contributed largely to the outperformance for the reporting period. The Fund’s diversified commodity exposure was also favorable for performance.
Your Fund’s long-term performance appears later in this report.
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 13.03 | % | ||
Class A5 Shares | 13.03 | |||
Class B Shares | 12.08 | |||
Class C Shares | 12.09 | |||
Class C5 Shares | 12.19 | |||
Class R Shares | 12.69 | |||
Class R5 Shares | 12.71 | |||
Class Y Shares | 13.42 | |||
Institutional Class Shares | 13.25 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 12.14 | |||
Custom Balanced-Risk Retirement 2040 Index■ (Style-Specific Index) | 10.23 | |||
Lipper Mixed-Asset Target 2040 Funds Index▼ (Peer Group Index) | 14.62 | |||
▼Lipper Inc.; ■Invesco, Lipper Inc.
Invesco Balanced-Risk Retirement 2040 Fund uses a combination of Invesco Balanced-Risk Allocation Fund and affiliated money market funds to provide broad market diversification and execute the Fund’s glide path strategy.
Invesco Balanced-Risk Allocation Fund, which is held by Invesco Balanced-Risk Retirement 2040 Fund, employs a total return asset allocation strategy that invests in equity, bond and commodity markets. Invesco Balanced-Risk Allocation Fund uses a long-only, proprietary risk-balanced investment process that seeks to provide greater capital loss protection than traditional balanced portfolios. It is comprised of asset classes
Risk Allocation
By asset class
Risk | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10* | ||||||
Equity | 40.39 | % | 28.44 | % | ||||
Fixed Income | 23.45 | 97.61 | ||||||
Commodities | 36.16 | 23.65 | ||||||
* Due to the use of leverage, the percentages may not equal 100%.
The Fund uses commodity-linked derivative investments and enhanced investment techniques such as leverage.
that are expected to perform differently during a variety of economic environments, and uses active positioning – a tactical asset allocation strategy – in striving to enhance returns. The fund gains access to the underlying markets in which it invests through the use of derivatives and other financially linked instruments, specifically exchange-traded futures and swap agreements, that provide leveraged exposure, liquidity and transparency.
Beginning 10 years from Invesco Balanced-Risk Retirement 2040 Fund’s target date, the glide path strategy begins. Prior to the implementation of the glide path, the Fund is allocated 100% to Invesco Balanced-Risk
Total Net Assets | $23.5 million | |||
Fund Nasdaq Symbols | ||||
Class A Shares | TNDAX | |||
Class A5 Shares | VRGAX | |||
Class B Shares | TNDBX | |||
Class C Shares | TNDCX | |||
Class C5 Shares | VRGCX | |||
Class R Shares | TNDRX | |||
Class R5 Shares | VRGRX | |||
Class Y Shares | TNDYX | |||
Institutional Class Shares | TNDIX |
Allocation Fund. Upon implementation, the glide path allocation process takes place on a quarterly basis. Each quarter a percentage of the Fund is moved from Invesco Balanced-Risk Allocation Fund and allocated to the affiliated money market funds. At the target date, this results in a blend of 60% Invesco Balanced-Risk Allocation Fund and 40% affiliated money market funds.
In the asset accumulation stage, investors’ concerns include not achieving enough growth to outpace inflation and the possibility that market losses may lead to abandoning their investment program. To address these concerns, Invesco Balanced-Risk Retirement 2040 Fund seeks to provide asset growth while attempting to provide greater capital loss protection and more consistent returns across all market environments relative to traditional balanced portfolios.
For investors in the pre-retirement stage, defined as 10 years away from their target date, the primary concerns include holding a significant pool of assets that may be subject to loss should difficult market conditions arise, but without the luxury of time to make up those losses prior to their target date. To address these concerns, Invesco Balanced-Risk Retirement 2040 Fund seeks to reduce risk and protect accumulated wealth by transitioning from the accumulation strategy to a real return strategy. This is executed through the glide path migration which transitions the portfolio from a 100% allocation to Invesco Balanced-Risk Allocation Fund to a portfolio consisting of 60% Invesco Balanced Risk-Allocation Fund and 40% affiliated money market funds over a 10-year period.
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during that period driven by anticipation that improving economic conditions would boost earnings growth. A tactical shift to an overweight position in equities was implemented to participate in the strength of this rally.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears
12 Invesco Balanced-Risk Retirement Funds
about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a double dip recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward. The Fund’s tactical strategy shifted in favor of government bonds and away from equities during April, resulting in a positive contribution to performance from our active positioning process. Commodity exposure remained slightly underweight from a risk contribution standpoint.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the U.S. Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary conditions and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. Within commodities, all complexes enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Within the Fund, a tactical shift in favor of equities and commodities helped capture positive returns toward the end of the reporting period. Throughout the year, the ability of our strategy to adapt to a dynamically changing market environment proved to be an important element in the success of the Fund’s process.
Finally, we thank you for your continued commitment to Invesco Balanced-Risk Retirement 2040 Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PICTURE OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886209.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
![(PICTURE OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886210.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PICTURE OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886206.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886207.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PICTURE OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886208.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2040 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Assisted by the Global Asset Allocation Team
13 Invesco Balanced-Risk Retirement Funds
Performance Summary – Invesco Balanced-Risk Retirement 2050 Fund
For the 12 months ended December 31, 2010, Class A shares of Invesco Balanced-Risk Retirement 2050 Fund, at net asset value (NAV), returned 13.08% and outperformed the Fund’s custom style-specific benchmark, which returned 10.23% over the same period. A tactical overweight in fixed income paired with a concurrent underweight in equities during the second quarter contributed largely to the outperformance for the reporting period. The Fund’s diversified commodity exposure was also favorable for performance.
Your Fund’s long-term performance appears later in this report.
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 13.08 | % | ||
Class A5 Shares | 12.93 | |||
Class B Shares | 12.13 | |||
Class C Shares | 12.26 | |||
Class C5 Shares | 12.06 | |||
Class R Shares | 12.74 | |||
Class R5 Shares | 12.75 | |||
Class Y Shares | 13.33 | |||
Institutional Class Shares | 13.18 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 12.14 | |||
Custom Balanced-Risk Retirement 2050 Index■ (Style-Specific Index) | 10.23 | |||
Lipper Mixed-Asset Target 2050+ Funds Category Average▼ (Peer Group) | 14.50 | |||
▼Lipper Inc.; ■Invesco, Lipper Inc.
Invesco Balanced-Risk Retirement 2050 Fund uses a combination of Invesco Balanced-Risk Allocation Fund and affiliated money market funds to provide broad market diversification and execute the Fund’s glide path strategy.
Invesco Balanced-Risk Allocation Fund, which is held by Invesco Balanced-Risk Retirement 2050 Fund, employs a total return asset allocation strategy that invests in equity, bond and commodity markets. Invesco Balanced-Risk Allocation Fund uses a long-only, proprietary risk-balanced investment process that seeks to provide greater capital loss protection than traditional balanced portfolios. It is comprised of asset classes
Risk Allocation
By asset class
Risk | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10* | ||||||
Equity | 40.39 | % | 28.44 | % | ||||
Fixed Income | 23.45 | 97.61 | ||||||
Commodities | 36.16 | 23.65 | ||||||
* Due to the use of leverage, the percentages may not equal 100%.
The Fund uses commodity-linked derivative investments and enhanced investment techniques such as leverage.
that are expected to perform differently during a variety of economic environments, and uses active positioning – a tactical asset allocation strategy – in striving to enhance returns. The fund gains access to the underlying markets in which it invests through the use of derivatives and other financially linked instruments, specifically exchange-traded futures and swap agreements, that provide leveraged exposure, liquidity and transparency.
Beginning 10 years from Invesco Balanced-Risk Retirement 2050 Fund’s target date, the glide path strategy begins. Prior to the implementation of the glide path, the Fund is allocated 100% to Invesco Balanced-Risk
Total Net Assets | $9.1 million | |||
Fund Nasdaq Symbols | ||||
Class A Shares | TNEAX | |||
Class A5 Shares | VRIAX | |||
Class B Shares | TNEBX | |||
Class C Shares | TNECX | |||
Class C5 Shares | VRICX | |||
Class R Shares | TNERX | |||
Class R5 Shares | VRIRX | |||
Class Y Shares | TNEYX | |||
Institutional Class Shares | TNEIX |
Allocation Fund. Upon implementation, the glide path allocation process takes place on a quarterly basis. Each quarter a percentage of the Fund is moved from Invesco Balanced-Risk Allocation Fund and allocated to the affiliated money market funds. At the target date, this results in a blend of 60% Invesco Balanced-Risk Allocation Fund and 40% affiliated money market funds.
In the asset accumulation stage, investors’ concerns include not achieving enough growth to outpace inflation and the possibility that market losses may lead to abandoning their investment program. To address these concerns, Invesco Balanced-Risk Retirement 2050 Fund seeks to provide asset growth while attempting to provide greater capital loss protection and more consistent returns across all market environments relative to traditional balanced portfolios.
For investors in the pre-retirement stage, defined as 10 years away from their target date, the primary concerns include holding a significant pool of assets that may be subject to loss should difficult market conditions arise, but without the luxury of time to make up those losses prior to their target date. To address these concerns, Invesco Balanced-Risk Retirement 2050 Fund seeks to reduce risk and protect accumulated wealth by transitioning from the accumulation strategy to a real return strategy. This is executed through the glide path migration which transitions the portfolio from a 100% allocation to Invesco Balanced-Risk Allocation Fund to a portfolio consisting of 60% Invesco Balanced Risk-Allocation Fund and 40% affiliated money market funds over a 10-year period.
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during that period driven by anticipation that improving economic conditions would boost earnings growth. A tactical shift to an overweight position in equities was implemented to participate in the strength of this rally.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears
14 Invesco Balanced-Risk Retirement Funds
about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a double dip recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward. The Fund’s tactical strategy shifted in favor of government bonds and away from equities during April, resulting in a positive contribution to performance from our active positioning process. Commodity exposure remained slightly underweight from a risk contribution standpoint.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the U.S. Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary conditions and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter recent in government bond yields took their valuations much closer to our estimate of fair value. Within commodities, all complexes enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among the commodity-intensive emerging markets.
Within the Fund, a tactical shift in favor of equities and commodities helped capture positive returns toward the end of the reporting period. Throughout the year, the ability of our strategy to adapt to a dynamically changing market environment proved to be an important element in the success of the Fund’s process.
Finally, we thank you for your continued commitment to Invesco Balanced-Risk Retirement 2050 Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PICTURE OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886209.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
![(PICTURE OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886210.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PICTURE OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886206.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PICTURE OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886207.jpg)
Scott Hixon Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PICTURE OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886208.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Balanced-Risk Retirement 2050 Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Assisted by the Global Asset Allocation Team
15 Invesco Balanced-Risk Retirement Funds
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 1/31/07
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886211.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
16 | Invesco Balanced-Risk Retirement Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (1/31/07) | –0.09 | % | ||
1 Year | 1.81 | |||
Class A5 Shares | ||||
Inception | –0.09 | % | ||
1 Year | 1.80 | |||
Class B Shares | ||||
Inception (1/31/07) | –0.07 | % | ||
1 Year | 1.83 | |||
Class C Shares | ||||
Inception (1/31/07) | 0.61 | % | ||
1 Year | 6.08 | |||
Class C5 Shares | ||||
Inception | 0.60 | % | ||
1 Year | 5.95 | |||
Class R Shares | ||||
Inception (1/31/07) | 1.12 | % | ||
1 Year | 7.47 | |||
Class R5 Shares | ||||
Inception | 1.09 | % | ||
1 Year | 7.43 | |||
Class Y Shares | ||||
Inception | 1.53 | % | ||
1 Year | 8.13 | |||
Institutional Class Shares | ||||
Inception (1/31/07) | 1.61 | % | ||
1 Year | 8.00 |
Class A5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class C5 and Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class C5 and Class R5 shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 0.88%, 0.88%, 1.63%, 1.63%, 1.63%, 1.13%, 1.13%, 0.63% and 0.63%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 11.10%, 11.10%, 11.85%, 11.85%, 11.85%, 11.35%, 11.35%, 10.85% and 10.55%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A and Class A5 share performance reflects the maximum 5.50% sales charge, and Class B, Class C and Class C5 share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C and Class C5 shares is 1% for the first year after purchase. Class R, Class R5, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012 and June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.55% for Invesco Balanced-Risk Retirement Now Fund. |
17 | Invesco Balanced-Risk Retirement Funds |
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 1/31/07
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886212.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
18 | Invesco Balanced-Risk Retirement Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (1/31/07) | –0.35 | % | ||
1 Year | 1.90 | |||
Class A5 Shares | ||||
Inception | –0.35 | % | ||
1 Year | 1.90 | |||
Class B Shares | ||||
Inception (1/31/07) | –0.34 | % | ||
1 Year | 1.90 | |||
Class C Shares | ||||
Inception (1/31/07) | 0.37 | % | ||
1 Year | 6.02 | |||
Class C5 Shares | ||||
Inception | 0.32 | % | ||
1 Year | 5.93 | |||
Class R Shares | ||||
Inception (1/31/07) | 0.85 | % | ||
1 Year | 7.49 | |||
Class R5 Shares | ||||
Inception | 0.83 | % | ||
1 Year | 7.50 | |||
Class Y Shares | ||||
Inception | 1.26 | % | ||
1 Year | 8.10 | |||
Institutional Class Shares | ||||
Inception (1/31/07) | 1.35 | % | ||
1 Year | 7.96 |
Class A5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class C5 and Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class C5 and Class R5 shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 0.91%, 0.91%, 1.66%, 1.66%, 1.66%, 1.16%, 1.16%, 0.66% and 0.67%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 4.58%, 4.58%, 5.33%, 5.33%, 5.33%, 4.83%, 4.83%, 4.33% and 4.11%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A and Class A5 share performance reflects the maximum 5.50% sales charge, and Class B, Class C and Class C5 share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C and Class C5 shares is 1% for the first year after purchase. Class R, Class R5, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012 and June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.55% for Invesco Balanced-Risk Retirement 2010 Fund. |
19 | Invesco Balanced-Risk Retirement Funds |
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 1/31/07
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886213.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
20 | Invesco Balanced-Risk Retirement Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (1/31/07) | –0.73 | % | ||
1 Year | 6.94 | |||
Class A5 Shares | ||||
Inception | –0.73 | % | ||
1 Year | 6.94 | |||
Class B Shares | ||||
Inception (1/31/07) | –0.70 | % | ||
1 Year | 7.30 | |||
Class C Shares | ||||
Inception (1/31/07) | –0.10 | % | ||
1 Year | 11.19 | |||
Class C5 Shares | ||||
Inception | –0.02 | % | ||
1 Year | 11.37 | |||
Class R Shares | ||||
Inception (1/31/07) | 0.47 | % | ||
1 Year | 12.90 | |||
Class R5 Shares | ||||
Inception | 0.48 | % | ||
1 Year | 12.92 | |||
Class Y Shares | ||||
Inception | 0.86 | % | ||
1 Year | 13.52 | |||
Institutional Class Shares | ||||
Inception (1/31/07) | 1.00 | % | ||
1 Year | 13.47 |
Class A5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class C5 and Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class C5 and Class R5 shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 0.99%, 0.99%, 1.74%, 1.74%, 1.74%, 1.24%, 1.24%, 0.74% and 0.75%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 2.82%, 2.82%, 3.57%, 3.57%, 3.57%, 3.07%, 3.07%, 2.57% and 2.42%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A and Class A5 share performance reflects the maximum 5.50% sales charge, and Class B, Class C and Class C5 share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C and Class C5 shares is 1% for the first year after purchase. Class R, Class R5, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012 and June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.79% for Invesco Balanced-Risk Retirement 2020 Fund. |
21 | Invesco Balanced-Risk Retirement Funds |
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 1/31/07
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886214.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
22 | Invesco Balanced-Risk Retirement Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (1/31/07) | –2.19 | % | ||
1 Year | 6.86 | |||
Class A5 Shares | ||||
Inception | –2.19 | % | ||
1 Year | 6.86 | |||
Class B Shares | ||||
Inception (1/31/07) | –2.17 | % | ||
1 Year | 7.08 | |||
Class C Shares | ||||
Inception (1/31/07) | –1.55 | % | ||
1 Year | 10.95 | |||
Class C5 Shares | ||||
Inception | –1.52 | % | ||
1 Year | 11.17 | |||
Class R Shares | ||||
Inception (1/31/07) | –1.04 | % | ||
1 Year | 12.71 | |||
Class R5 Shares | ||||
Inception | –1.03 | % | ||
1 Year | 12.75 | |||
Class Y Shares | ||||
Inception | –0.63 | % | ||
1 Year | 13.30 | |||
Institutional Class Shares | ||||
Inception (1/31/07) | –0.50 | % | ||
1 Year | 13.43 |
Class A5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class C5 and Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class C5 and Class R5 shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 1.03%, 1.03%, 1.78%, 1.78%, 1.78%, 1.28%, 1.28%, 0.78% and 0.79%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 3.18%, 3.18%, 3.93%, 3.93%, 3.93%, 3.43%, 3.43%, 2.93% and 2.68%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A and Class A5 share performance reflects the maximum 5.50% sales charge, and Class B, Class C and Class C5 share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C and Class C5 shares is 1% for the first year after purchase. Class R, Class R5, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012 and June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.79% for Invesco Balanced-Risk Retirement 2030 Fund. |
23 | Invesco Balanced-Risk Retirement Funds |
Invesco Balanced-Risk Retirement 2040 Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 1/31/07
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886215.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
24 | Invesco Balanced-Risk Retirement Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (1/31/07) | –2.98 | % | ||
1 Year | 6.79 | |||
Class A5 Shares | ||||
Inception | –2.98 | % | ||
1 Year | 6.79 | |||
Class B Shares | ||||
Inception (1/31/07) | –2.94 | % | ||
1 Year | 7.08 | |||
Class C Shares | ||||
Inception (1/31/07) | –2.33 | % | ||
1 Year | 11.09 | |||
Class C5 Shares | ||||
Inception | –2.31 | % | ||
1 Year | 11.19 | |||
Class R Shares | ||||
Inception (1/31/07) | –1.84 | % | ||
1 Year | 12.69 | |||
Class R5 Shares | ||||
Inception | –1.83 | % | ||
1 Year | 12.71 | |||
Class Y Shares | ||||
Inception | –1.40 | % | ||
1 Year | 13.42 | |||
Institutional Class Shares | ||||
Inception (1/31/07) | –1.34 | % | ||
1 Year | 13.25 |
Class A5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class C5 and Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class C5 and Class R5 shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 1.07%, 1.07%, 1.82%, 1.82%, 1.82%, 1.32%, 1.32%, 0.82% and 0.82%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 4.95%, 4.95%, 5.70%, 5.70%, 5.70%, 5.20%, 5.20%, 4.70% and 4.30%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A and Class A5 share performance reflects the maximum 5.50% sales charge, and Class B, Class C and Class C5 share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C and Class C5 shares is 1% for the first year after purchase. Class R, Class R5, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012 and June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.79% for Invesco Balanced-Risk Retirement 2040 Fund. |
25 | Invesco Balanced-Risk Retirement Funds |
Invesco Balanced-Risk Retirement 2050 Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 1/31/07
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886216.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
26 | Invesco Balanced-Risk Retirement Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (1/31/07) | –3.56 | % | ||
1 Year | 6.93 | |||
Class A5 Shares | ||||
Inception | –3.59 | % | ||
1 Year | 6.79 | |||
Class B Shares | ||||
Inception (1/31/07) | –3.58 | % | ||
1 Year | 7.13 | |||
Class C Shares | ||||
Inception (1/31/07) | –2.88 | % | ||
1 Year | 11.26 | |||
Class C5 Shares | ||||
Inception | –2.93 | % | ||
1 Year | 11.06 | |||
Class R Shares | ||||
Inception (1/31/07) | –2.43 | % | ||
1 Year | 12.74 | |||
Class R5 Shares | ||||
Inception | –2.42 | % | ||
1 Year | 12.75 | |||
Class Y Shares | ||||
Inception | –2.01 | % | ||
1 Year | 13.33 | |||
Institutional Class Shares | ||||
Inception (1/31/07) | –1.97 | % | ||
1 Year | 13.18 |
Class A5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class C5 and Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class C5 and Class R5 shares. Class A share performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 1.08%, 1.08%, 1.83%, 1.83%, 1.83%, 1.33%, 1.33%, 0.83% and 0.82%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares was 8.02%, 8.02%, 8.77%, 8.77%, 8.77%, 8.27%, 8.27%, 7.77% and 7.18%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A and Class A5 share performance reflects the maximum 5.50% sales charge, and Class B, Class C and Class C5 share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C and Class C5 shares is 1% for the first year after purchase. Class R, Class R5, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012 and June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.79% for Invesco Balanced-Risk Retirement 2050 Fund. |
27 | Invesco Balanced-Risk Retirement Funds |
Invesco Balanced-Risk Retirement 2010 Fund’s, Invesco Balanced-Risk Retirement 2020 Fund’s, Invesco Balanced-Risk Retirement 2030 Fund’s, Invesco Balanced-Risk Retirement 2040 Fund’s and Invesco Balanced-Risk Retirement 2050 Fund’s investment objectives are to provide total return with a low to moderate correlation to traditional financial market indices and, as secondary objectives, capital preservation.
■ | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
■ | Unless otherwise noted, all data provided by Invesco. | |
■ | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
■ | Class A5, C5 and R5 shares are available to only certain investors. Please see the prospectus for more information. | |
■ | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
■ | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
■ | Class Y shares are available to only certain investors. Please see the prospectus for more information. | |
■ | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in Invesco Balanced-Risk Retirement Funds
■ | An underlying fund may invest a large percentage of its assets in a limited number of securities, which could negatively affect the value of the Fund. | |
■ | The Fund’s performance depends on the underlying funds in which it invests, and it is subject to the risks of the underlying funds. Market fluctuations may change the target weightings in the underlying funds. The underlying funds may change their investment objectives, policies or practices and may not achieve their investment objectives, all of which may cause the Fund to withdraw its investments therein at a disadvantageous time. | |
■ | The prices of and the income generated by an underlying fund’s securities may decline in response to, among other things, investor sentiment; general economic and market conditions; |
regional or global instability; and currency and interest rate fluctuations. | ||
■ | Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on their individual characteristics, including duration. | |
■ | The issuer of instruments in which the underlying fund invests may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating. | |
■ | An underlying fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
■ | Securities issued by foreign companies and governments located in developing countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries. | |
■ | Invesco Balanced-Risk Allocation Fund, an underlying fund, will invest in Invesco Cayman Commodity Fund I Ltd. (the subsidiary), a wholly-owned subsidiary of the fund. The underlying fund or subsidiary may invest in commodity-linked derivative instruments, |
exchange-traded notes (ETNs) and exchange-traded funds that may subject it to greater volatility. The underlying fund’s concentration of assets in a particular sector of the commodities markets may make it more susceptible to the risks of that sector. ETNs may pose risks associated with leverage, be relatively illiquid, and unable to track the applicable market benchmark or strategy accurately. | ||
■ | By investing in the subsidiary, Invesco Balanced-Risk Allocation Fund, an underlying fund, is indirectly exposed to risks associated with the subsidiary’s investments, including derivatives and commodities. Because the subsidiary is not registered under the Investment Company Act of 1940, Invesco Balanced-Risk Allocation Fund, as the sole investor in the subsidiary, will not have the protections offered to investors in U.S. registered investment companies. Changes in the laws of the U.S. and/or the Cayman Islands, under which the fund and the subsidiary, respectively, are organized, could result in the inability of the fund and/or the subsidiary to operate as described in the Fund’s prospectus and could negatively affect the Fund and its shareholders. | |
■ | The underlying funds may use enhanced investment techniques such as derivatives. The principal risk of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Derivatives are subject to counterparty risk – the risk that the other party will not complete the transaction with the fund. | |
■ | Leverage created from borrowing or certain types of transactions or instruments, including derivatives, may impair an underlying fund’s liquidity, cause it to liquidate positions at an unfavorable time, increase volatility or otherwise not achieve its intended objective. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing. | continued on page 29 | |
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
28 | Invesco Balanced-Risk Retirement Funds |
■ | Certain instruments may be subject to the risk that the other party to a contract will not fulfill its contractual obligations. | |
■ | The dollar value of an underlying fund’s foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. | |
■ | Securities issued by foreign companies and governments located in developing countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments and lack of timely information than those in developed countries. | |
■ | Certain underlying funds may engage in frequent trading of portfolio securities. Active trading results in added expenses and may result in a lower return and increased tax liability. | |
■ | The investment techniques and risk analysis used by the Fund’s and the underlying funds’ portfolio managers may not produce the desired results. | |
■ | Certain of the underlying funds are non-diversified and can invest a greater portion of their assets in a single issuer. A change in the value of the issuer could affect the value of an underlying fund more than if it was a diversified fund. |
Additional risks of investing in Invesco Balanced-Risk Retirement Now Fund, Invesco Balanced-Risk Retirement 2010 Fund and Invesco Balanced-Risk Retirement 2020 Fund.
■ | An underlying fund may be a money market fund and, if so, an investment in such underlying fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although such underlying fund seeks to preserve the value of investments at $1.00 per share, it is possible to lose money by investing in the underlying fund. Additionally, the underlying fund’s yield will vary as the short-term securities in its portfolio mature or are sold and the proceeds are reinvested in other securities. | |
■ | An underlying fund may invest in obligations issued by U.S. government agencies and instrumentalities that may receive varying levels of support from the government, which could affect the Fund’s ability to recover should they default. |
■ | Certain of the underlying funds may invest in municipal securities. Constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may affect the municipal security’s value, interest payments, repayment of principal and the underlying fund’s ability to sell it. Failure of a municipal security issuer to comply with applicable tax requirements may make income paid thereon taxable, resulting in a decline in the security’s value. | |
■ | If the seller of a repurchase agreement in which an underlying fund invests defaults on its obligation or declares bankruptcy, the underlying fund may experience delays in selling the securities underlying the repurchase agreement, resulting in losses. | |
■ | To the extent an underlying fund invests in securities issued or guaranteed by companies in the banking and financial services industries, the underlying fund’s performance will depend on the overall condition of those industries, which may be affected by the following factors: the supply of short-term financing, changes in government regulation and interest rates, and overall economy. |
About indexes used in this report
■ | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
■ | The Custom Balanced-Risk Allocation Broad Index consists of 60% of the S&P 500 Index and 40% of the Barclays Capital U.S. Aggregate Index. | |
■ | The Custom Balanced-Risk Retirement Now Index was created by Invesco to serve as a style specific benchmark for Invesco Balanced-Risk Retirement Now Fund. From the inception of the Fund to November 4, 2009, the index was composed of the Custom Independence Now Index, which included the following indices: Russell 3000®, MSCI EAFE®, FTSE NAREIT Equity REITs, Barclays Capital U.S. Universal and the three-month U.S. Treasury bill. From November 4, 2009 through November 30, 2009, the index was composed of the MSCI World Index, the JP Morgan Global Government Bond Index, and the three-month U.S. Treasury bill. Since December 1, 2009, the index is composed of the MSCI World Index, the Barclays Capital U.S. Aggregate Index and the three-month U.S. Treasury bill. |
The Russell 3000 Index is a trademark/ service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | ||
■ | The Lipper Mixed-Asset Target Allocation Conservative Funds Index is an unmanaged index considered representative of mixed-asset target allocation conservative funds tracked by Lipper. | |
■ | The Custom Balanced-Risk Retirement 2010 Index was created by Invesco to serve as a style-specific benchmark for Invesco Balanced-Risk Retirement 2010 Fund. From the inception of the Fund to November 4, 2009, the index was composed of the Custom Independence 2010 Index, which included the following indices: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs, Barclays Capital U.S. Universal and the three-month U.S. Treasury bill. From November 4, 2009 through November 30, 2009, the index was composed of the MSCI World Index, the JP Morgan Global Government Bond Index and the three-month U.S. Treasury bill. Since December 1, 2009, the index is composed of the MSCI World Index, the Barclays Capital U.S. Aggregate Index and the three-month U.S. Treasury bill. | |
■ | The Lipper Mixed-Asset Target 2010 Funds Index is an unmanaged index considered representative of mixed-asset target 2010 funds tracked by Lipper. | |
■ | The Custom Balanced-Risk Retirement 2020 Index was created by Invesco to serve as a style specific benchmark for Invesco Balanced-Risk Retirement 2020 Fund. From the inception of the Fund to November 4, 2009, the index was composed of the Custom Independence 2020 Index, which included the following indices: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and the Barclays Capital U.S. Universal Index. From November 4, 2009 through November 30, 2009, the index was composed of the MSCI World Index and the JP Morgan Global Government Bond Index. Since December 1, 2009, the index is composed of the MSCI World Index and the Barclays Capital U.S. Aggregate Index. | |
■ | The Lipper Mixed-Asset Target 2020 Funds Index is an unmanaged index considered representative of mixed-asset target 2020 funds tracked by Lipper. | |
■ | The Custom Balanced-Risk Retirement 2030 Index was created by Invesco to serve as a style specific benchmark for Invesco Balanced-Risk Retirement 2030 Fund. From the inception of the |
continued on page 30
29 | Invesco Balanced-Risk Retirement Funds |
Fund to November 4, 2009, the index was composed of the Custom Independence 2030 Index, which included the following indices: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and the Barclays Capital U.S. Universal Index. From November 4, 2009 through November 30, 2009, the index was composed of the MSCI World Index and the JP Morgan Global Government Bond Index. Since December 1, 2009, the index is composed of the MSCI World Index and the Barclays Capital U.S. Aggregate Index. | ||
■ | The Lipper Mixed-Asset Target 2030 Funds Index is an unmanaged index considered representative of mixed-asset target 2030 funds tracked by Lipper. | |
■ | The Custom Balanced-Risk Retirement 2040 Index was created by Invesco to serve as a style specific benchmark for the Invesco Balanced-Risk Retirement 2040 Fund. From the inception of the Fund to November 4, 2009, the index was composed of the Custom Independence 2040 Index, which included the following indices: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and the Barclays Capital U.S. Universal Index. From November 4, 2009 through November 30, 2009, the index was composed of the MSCI World Index and the JP Morgan Global Government Bond Index. Since December 1, 2009, the index is composed of the MSCI World Index and the Barclays Capital U.S. Aggregate Index. | |
■ | The Lipper Mixed-Asset Target 2040 Funds Index is an unmanaged index considered representative of mixed-asset target 2040 funds tracked by Lipper. | |
■ | The Custom Balanced-Risk Retirement 2050 Index was created by Invesco to serve as a style specific benchmark for Invesco Balanced-Risk Retirement 2050 Fund. From the inception of the Fund to November 4, 2009, the index was composed of the Custom Independence 2050 Index, which included the following indices: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and the Barclays Capital U.S. Universal Index. From November 4, 2009 through November 30, 2009, the index was composed of the MSCI World Index and the JP Morgan Global Government Bond Index. Since December 1, 2009, the index is composed of the MSCI World Index and the Barclays Capital U.S. Aggregate Index. |
■ | The Lipper Mixed-Asset Target 2050+ Funds Category Average represents an average of all of the funds in the Lipper Mixed-Asset Target 2050+ Funds category. | |
■ | The Barclays Capital U.S. Aggregate Index is an unmanaged index considered representative of the U.S. investment-grade, fixed-rate bond market. | |
■ | The Russell 3000 Index is an unmanaged index considered representative of the U.S. stock market. | |
■ | The MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. | |
■ | The Barclays Capital U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non-ERISA portion of the CMBS Index. | |
■ | The FTSE NAREIT Equity REITs Index is an unmanaged index considered representative of U.S. REITs. | |
■ | The T-Bill 3 Month Index is tracked by Lipper to provide performance for the three-month U.S. Treasury bill. An investment cannot be made directly in an index. | |
■ | The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries. | |
■ | The JP Morgan Global Government Bond Index is a total return, market capitalization weighted index, rebalanced monthly consisting of the following countries: Australia, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, Spain, Sweden, United Kingdom and United States. | |
■ | The composition of a custom index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. | |
■ | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
■ | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
■ | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. | |
■ | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
■ | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
30 | Invesco Balanced-Risk Retirement Funds |
Schedule of Investments
December 31, 2010
Invesco Balanced-Risk Retirement Now Fund
Schedule of Investments in Affiliated Issuers–99.66%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–60.06% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 60.06 | % | $ | 1,477,563 | $ | 15,392,154 | $ | (5,361,822 | ) | $ | 530,406 | $ | 282,527 | $ | 650,645 | 1,095,692 | $ | 12,260,799 | ||||||||||||||||||
Money Market Funds–39.60% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio–Institutional Class | 19.80 | % | 485,792 | 5,675,047 | (2,118,799 | ) | — | — | 6,022 | 4,042,040 | 4,042,040 | |||||||||||||||||||||||||
Premier Portfolio–Institutional Class | 19.80 | % | 485,792 | 5,675,047 | (2,118,799 | ) | — | — | 3,428 | 4,042,040 | 4,042,040 | |||||||||||||||||||||||||
Total Money Market Funds | 971,584 | 11,350,094 | (4,237,598 | ) | — | — | 9,450 | 8,084,080 | 8,084,080 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $19,849,953) | 99.66 | % | $ | 2,449,147 | $ | 26,742,248 | $ | (9,599,420 | ) | $ | 530,406 | $ | 282,527 | (b) | $ | 660,095 | $ | 20,344,879 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | 0.34 | % | 68,751 | |||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 20,413,630 | ||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2010 Fund
Schedule of Investments in Affiliated Issuers–99.63%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–59.85% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 59.85 | % | $ | 5,035,787 | $ | 25,982,418 | $ | (13,724,539 | ) | $ | 876,131 | $ | 509,454 | $ | 976,222 | 1,661,231 | $ | 18,589,184 | ||||||||||||||||||
Money Market Funds–39.78% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio–Institutional Class | 19.89 | % | 1,485,610 | 9,475,969 | (4,781,680 | ) | — | — | 9,987 | 6,179,899 | 6,179,899 | |||||||||||||||||||||||||
Premier Portfolio–Institutional Class | 19.89 | % | 1,485,610 | 9,475,969 | (4,781,680 | ) | — | — | 5,649 | 6,179,899 | 6,179,899 | |||||||||||||||||||||||||
Total Money Market Funds | 2,971,220 | 18,951,938 | (9,563,360 | ) | — | — | 15,636 | 12,359,798 | 12,359,798 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $30,200,308) | 99.63 | % | $ | 8,007,007 | $ | 44,934,356 | $ | (23,287,899 | ) | $ | 876,131 | $ | 509,454 | (b) | $ | 991,858 | $ | 30,948,982 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | 0.37 | % | 115,022 | |||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 31,064,004 | ||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund
Schedule of Investments in Affiliated Issuers–100.55%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–98.05% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 98.05 | % | $ | 18,081,210 | $ | 57,468,856 | $ | (22,639,836 | ) | $ | 2,679,831 | $ | 726,237 | $ | 2,892,689 | 5,008,884 | $ | 56,049,417 | ||||||||||||||||||
Money Market Funds–2.50% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio–Institutional Class | 1.25 | % | — | 1,752,562 | (1,040,447 | ) | — | — | 193 | 712,115 | 712,115 | |||||||||||||||||||||||||
Premier Portfolio–Institutional Class | 1.25 | % | — | 1,752,562 | (1,040,447 | ) | — | — | 79 | 712,115 | 712,115 | |||||||||||||||||||||||||
Total Money Market Funds | — | 3,505,124 | (2,080,894 | ) | — | — | 272 | 1,424,230 | 1,424,230 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $55,238,766) | 100.55 | % | $ | 18,081,210 | $ | 60,973,980 | $ | (24,720,730 | ) | $ | 2,679,831 | $ | 726,237 | (b) | $ | 2,892,961 | $ | 57,473,647 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.55 | )% | (310,951 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 57,162,696 | ||||||||||||||||||||||||||||||||
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by having the same investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Includes $60,029, $90,067 and $266,881 of capital gains from affiliated underlying funds for Invesco Balanced-Risk Retirement Now Fund, Invesco Balanced-Risk Retirement 2010 Fund and Invesco Balanced-Risk Retirement 2020 Fund, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
31 Invesco Balanced-Risk Retirement Funds
Schedule of Investments—(continued)
December 31, 2010
Invesco Balanced-Risk Retirement 2030 Fund
Schedule of Investments in Affiliated Issuers–100.10%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–99.62% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 99.62 | % | $ | 17,096,843 | $ | 35,803,330 | $ | (9,753,387 | ) | $ | 2,229,484 | $ | 329,268 | $ | 2,293,835 | 4,065,586 | $ | 45,493,908 | ||||||||||||||||||
Money Market Funds–0.48% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio–Institutional Class | 0.24 | % | — | 1,211,357 | (1,102,946 | ) | — | — | 45 | 108,411 | 108,411 | |||||||||||||||||||||||||
Premier Portfolio–Institutional Class | 0.24 | % | — | 1,211,357 | (1,102,946 | ) | — | — | 17 | 108,411 | 108,411 | |||||||||||||||||||||||||
Total Money Market Funds | — | 2,422,714 | (2,205,892 | ) | — | — | 62 | 216,822 | 216,822 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $43,895,766) | 100.10 | % | $ | 17,096,843 | $ | 38,226,044 | $ | (11,959,279 | ) | $ | 2,229,484 | $ | 329,268 | (b) | $ | 2,293,897 | $ | 45,710,730 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.10 | )% | (46,242 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 45,664,488 | ||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund
Schedule of Investments in Affiliated Issuers–101.83%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–99.97% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 99.97 | % | $ | 8,694,162 | $ | 17,856,769 | $ | (4,277,790 | ) | $ | 1,140,542 | $ | 142,442 | $ | 1,210,136 | 2,095,127 | $ | 23,444,477 | ||||||||||||||||||
Money Market Funds–1.86% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio–Institutional Class | 0.93 | % | — | 914,633 | (697,302 | ) | — | — | 20 | 217,331 | 217,331 | |||||||||||||||||||||||||
Premier Portfolio–Institutional Class | 0.93 | % | — | 914,633 | (697,302 | ) | — | — | 7 | 217,331 | 217,331 | |||||||||||||||||||||||||
Total Money Market Funds | — | 1,829,266 | (1,394,604 | ) | — | — | 27 | 434,662 | 434,662 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $22,952,988) | 101.83 | % | $ | 8,694,162 | $ | 19,686,035 | $ | (5,672,394 | ) | $ | 1,140,542 | $ | 142,442 | (b) | $ | 1,210,163 | $ | 23,879,139 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (1.83 | )% | (428,219 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 23,450,920 | ||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund
Schedule of Investments in Affiliated Issuers–101.00%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–100.58% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 100.58 | % | $ | 4,468,737 | $ | 6,026,566 | $ | (1,862,346 | ) | $ | 461,757 | $ | 69,559 | $ | 477,471 | 808,439 | $ | 9,120,221 | ||||||||||||||||||
Money Market Funds–0.42% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio–Institutional Class | 0.21 | % | — | 235,323 | (215,958 | ) | — | — | 6 | 19,365 | 19,365 | |||||||||||||||||||||||||
Premier Portfolio–Institutional Class | 0.21 | % | — | 235,323 | (215,958 | ) | — | — | 3 | 19,365 | 19,365 | |||||||||||||||||||||||||
Total Money Market Funds | — | 470,646 | (431,916 | ) | — | — | 9 | 38,730 | 38,730 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $8,799,530) | 101.00 | % | $ | 4,468,737 | $ | 6,497,212 | $ | (2,294,262 | ) | $ | 461,757 | $ | 69,559 | (b) | $ | 477,480 | $ | 9,158,951 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (1.00 | )% | (90,990 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 9,067,961 | ||||||||||||||||||||||||||||||||
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by having the same investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Includes $211,630, $111,648 and $44,052 of capital gains from affiliated underlying funds for Invesco Balanced-Risk Retirement 2030 Fund, Invesco Balanced-Risk Retirement 2040 Fund and Invesco Balanced-Risk Retirement 2050 Fund, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
32 Invesco Balanced-Risk Retirement Funds
Statement of Assets and Liabilities
December 31, 2010
Invesco | Invesco | Invesco | Invesco | Invesco | Invesco | |||||||||||||||||||
Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | |||||||||||||||||||
Retirement | Retirement | Retirement | Retirement | Retirement | Retirement | |||||||||||||||||||
Now Fund | 2010 Fund | 2020 Fund | 2030 Fund | 2040 Fund | 2050 Fund | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Investments in affiliated underlying funds, at value | $ | 20,344,879 | $ | 30,948,982 | $ | 57,473,647 | $ | 45,710,730 | $ | 23,879,139 | $ | 9,158,951 | ||||||||||||
Cash | 12,610 | 22,044 | 18,790 | 21,496 | 18,495 | — | ||||||||||||||||||
Receivable for: | ||||||||||||||||||||||||
Fund shares sold | 63,788 | 32,216 | 42,583 | 101,658 | 70,096 | 11,137 | ||||||||||||||||||
Dividends from affiliated underlying funds | 878 | 1,336 | 142 | 36 | 17 | 6 | ||||||||||||||||||
Fund expenses absorbed | 7,902 | 13,174 | 26,132 | 27,387 | 9,349 | 6,844 | ||||||||||||||||||
Investment for trustee deferred compensation and retirement plans | 8,196 | 8,368 | 8,398 | 8,603 | 8,794 | 7,900 | ||||||||||||||||||
Other assets | 45,674 | 152,170 | 46,175 | 47,156 | 45,343 | 45,946 | ||||||||||||||||||
Total assets | 20,483,927 | 31,178,290 | 57,615,867 | 45,917,066 | 24,031,233 | 9,230,784 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Payable for: | ||||||||||||||||||||||||
Investments purchased | — | — | — | — | 319,164 | — | ||||||||||||||||||
Fund shares reacquired | 13,067 | 35,951 | 349,319 | 180,241 | 178,817 | 82,540 | ||||||||||||||||||
Accrued fees to affiliates | 21,453 | 41,405 | 37,007 | 33,824 | 40,203 | 44,713 | ||||||||||||||||||
Accrued operating expenses | 27,581 | 28,562 | 58,318 | 29,910 | 33,334 | 27,670 | ||||||||||||||||||
Trustee deferred compensation and retirement plans | 8,196 | 8,368 | 8,527 | 8,603 | 8,795 | 7,900 | ||||||||||||||||||
Total liabilities | 70,297 | 114,286 | 453,171 | 252,578 | 580,313 | 162,823 | ||||||||||||||||||
Net assets applicable to shares outstanding | $ | 20,413,630 | $ | 31,064,004 | $ | 57,162,696 | $ | 45,664,488 | $ | 23,450,920 | $ | 9,067,961 | ||||||||||||
Net assets consist of: | ||||||||||||||||||||||||
Shares of beneficial interest | $ | 19,865,452 | $ | 30,254,047 | $ | 54,612,795 | $ | 43,877,841 | $ | 22,593,226 | $ | 8,860,331 | ||||||||||||
Undistributed net investment income | 4,281 | 4,265 | 56,053 | 8,514 | 479,004 | (7,188 | ) | |||||||||||||||||
Undistributed net realized gain(loss) | 48,971 | 57,018 | 258,967 | (36,831 | ) | (547,461 | ) | (144,603 | ) | |||||||||||||||
Unrealized appreciation | 494,926 | 748,674 | 2,234,881 | 1,814,964 | 926,151 | 359,421 | ||||||||||||||||||
$ | 20,413,630 | $ | 31,064,004 | $ | 57,162,696 | $ | 45,664,488 | $ | 23,450,920 | $ | 9,067,961 | |||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
33 Invesco Balanced-Risk Retirement Funds
Statement of Assets and Liabilities—(continued)
December 31, 2010
Invesco | Invesco | Invesco | Invesco | Invesco | Invesco | |||||||||||||||||||
Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | |||||||||||||||||||
Retirement | Retirement | Retirement | Retirement | Retirement | Retirement | |||||||||||||||||||
Now Fund | 2010 Fund | 2020 Fund | 2030 Fund | 2040 Fund | 2050 Fund | |||||||||||||||||||
Net Assets: | ||||||||||||||||||||||||
Class A | $ | 2,487,912 | $ | 6,156,472 | $ | 17,933,093 | $ | 13,983,100 | $ | 8,726,797 | $ | 3,692,938 | ||||||||||||
Class A5 | $ | 12,928,595 | $ | 16,882,954 | $ | 21,135,564 | $ | 13,388,453 | $ | 6,211,577 | $ | 1,793,144 | ||||||||||||
Class B | $ | 301,370 | $ | 697,354 | $ | 2,899,038 | $ | 3,222,604 | $ | 1,114,649 | $ | 489,275 | ||||||||||||
Class C | $ | 874,198 | $ | 1,657,973 | $ | 3,965,787 | $ | 3,549,715 | $ | 2,135,709 | $ | 708,762 | ||||||||||||
Class C5 | $ | 2,904,984 | $ | 3,644,837 | $ | 4,542,844 | $ | 2,988,589 | $ | 746,526 | $ | 334,836 | ||||||||||||
Class R | $ | 750,461 | $ | 1,150,326 | $ | 5,213,950 | $ | 6,707,044 | $ | 3,535,664 | $ | 1,707,591 | ||||||||||||
Class R5 | $ | 16,986 | $ | 397,225 | $ | 1,327,976 | $ | 695,853 | $ | 570,100 | $ | 135,278 | ||||||||||||
Class Y | $ | 136,292 | $ | 464,898 | $ | 132,870 | $ | 1,111,509 | $ | 398,017 | $ | 195,800 | ||||||||||||
Institutional Class | $ | 12,832 | $ | 11,965 | $ | 11,574 | $ | 17,621 | $ | 11,881 | $ | 10,337 | ||||||||||||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||||||||||||||||||||||
Class A | 289,884 | 696,352 | 2,093,907 | 1,718,105 | 1,119,542 | 484,876 | ||||||||||||||||||
Class A5 | 1,506,516 | 1,909,870 | 2,467,882 | 1,644,634 | 797,494 | 235,307 | ||||||||||||||||||
Class B | 35,227 | 79,228 | 341,468 | 398,641 | 144,118 | 64,776 | ||||||||||||||||||
Class C | 102,146 | 188,222 | 467,954 | 439,613 | 276,464 | 93,683 | ||||||||||||||||||
Class C5 | 339,385 | 413,581 | 535,930 | 370,128 | 96,703 | 44,271 | ||||||||||||||||||
Class R | 87,456 | 130,298 | 610,706 | 827,390 | 455,319 | 224,951 | ||||||||||||||||||
Class R5 | 1,979 | 44,973 | 155,526 | 85,877 | 73,422 | 17,808 | ||||||||||||||||||
Class Y | 15,857 | 52,540 | 15,512 | 136,316 | 50,987 | 25,677 | ||||||||||||||||||
Institutional Class | 1,493 | 1,350 | 1,346.5 | 2,158 | 1,521 | 1,356 | ||||||||||||||||||
Class A: | ||||||||||||||||||||||||
Net asset value per share | $ | 8.58 | $ | 8.84 | $ | 8.56 | $ | 8.14 | $ | 7.79 | $ | 7.62 | ||||||||||||
Maximum offering price per share | ||||||||||||||||||||||||
(Net asset value divided by 94.50%) | $ | 9.08 | $ | 9.36 | $ | 9.06 | $ | 8.61 | $ | 8.25 | $ | 8.06 | ||||||||||||
Class A5: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.58 | $ | 8.84 | $ | 8.56 | $ | 8.14 | $ | 7.79 | $ | 7.62 | ||||||||||||
Class B: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.56 | $ | 8.80 | $ | 8.49 | $ | 8.08 | $ | 7.73 | $ | 7.55 | ||||||||||||
Class C: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.56 | $ | 8.81 | $ | 8.47 | $ | 8.07 | $ | 7.73 | $ | 7.57 | ||||||||||||
Class C5: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.56 | $ | 8.81 | $ | 8.48 | $ | 8.07 | $ | 7.72 | $ | 7.56 | ||||||||||||
Class R: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.58 | $ | 8.83 | $ | 8.54 | $ | 8.11 | $ | 7.77 | $ | 7.59 | ||||||||||||
Class R5: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.58 | $ | 8.83 | $ | 8.54 | $ | 8.10 | $ | 7.76 | $ | 7.60 | ||||||||||||
Class Y: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.60 | $ | 8.85 | $ | 8.57 | $ | 8.15 | $ | 7.81 | $ | 7.63 | ||||||||||||
Institutional Class: | ||||||||||||||||||||||||
Net asset value and offering price per share | $ | 8.59 | $ | 8.86 | $ | 8.60 | $ | 8.17 | $ | 7.81 | $ | 7.62 | ||||||||||||
Cost of investments in affiliated underlying funds | $ | 19,849,953 | $ | 30,200,308 | $ | 55,238,766 | $ | 43,895,766 | $ | 22,952,988 | $ | 8,799,530 | ||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
34 Invesco Balanced-Risk Retirement Funds
Statement of Operations
For the year ended December 31, 2010
Invesco | Invesco | Invesco | Invesco | Invesco | Invesco | |||||||||||||||||||
Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | Balanced-Risk | |||||||||||||||||||
Retirement | Retirement | Retirement | Retirement | Retirement | Retirement | |||||||||||||||||||
Now Fund | 2010 Fund | 2020 Fund | 2030 Fund | 2040 Fund | 2050 Fund | |||||||||||||||||||
Investment income: | ||||||||||||||||||||||||
Dividends from affiliated underlying funds | $ | 660,095 | $ | 991,858 | $ | 2,892,961 | $ | 2,293,897 | $ | 1,210,163 | $ | 477,480 | ||||||||||||
Other income | 129 | 130 | 131 | 133 | 135 | 126 | ||||||||||||||||||
Total investment income | 660,224 | 991,988 | 2,893,092 | 2,294,030 | 1,210,298 | 477,606 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Administrative services fees | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 | ||||||||||||||||||
Custodian fees | 9,239 | 8,570 | 7,657 | 7,450 | 7,525 | 7,648 | ||||||||||||||||||
Distribution fees: | ||||||||||||||||||||||||
Class A | 4,788 | 13,986 | 36,039 | 27,308 | 16,606 | 7,626 | ||||||||||||||||||
Class A5 | 21,905 | 30,272 | 36,733 | 21,772 | 10,809 | 2,965 | ||||||||||||||||||
Class B | 3,262 | 6,464 | 24,271 | 28,335 | 9,263 | 4,390 | ||||||||||||||||||
Class C | 5,475 | 15,523 | 29,511 | 28,224 | 17,552 | 5,773 | ||||||||||||||||||
Class C5 | 19,937 | 26,341 | 29,971 | 19,608 | 5,121 | 3,392 | ||||||||||||||||||
Class R | 3,218 | 5,793 | 18,317 | 24,877 | 11,890 | 6,644 | ||||||||||||||||||
Class R5 | 219 | 1,832 | 4,330 | 2,799 | 1,878 | 466 | ||||||||||||||||||
Transfer agent fees — A, A5, B, C, C5, R, R5 and Y | 18,344 | 41,680 | 76,645 | 77,477 | 57,909 | 30,971 | ||||||||||||||||||
Transfer agent fees — Institutional | 18 | 8 | 9 | 20 | 9 | 9 | ||||||||||||||||||
Trustees’ and officers’ fees and benefits | 16,123 | 16,327 | 16,635 | 16,425 | 16,144 | 16,013 | ||||||||||||||||||
Registration and filing fees | 67,759 | 69,949 | 71,503 | 72,434 | 69,890 | 67,771 | ||||||||||||||||||
Professional services fees | 32,502 | 31,491 | 31,180 | 32,656 | 32,834 | 31,785 | ||||||||||||||||||
Other | 27,046 | 32,424 | 44,160 | 56,790 | 29,795 | 27,322 | ||||||||||||||||||
Total expenses | 279,835 | 350,660 | 476,961 | 466,175 | 337,225 | 262,775 | ||||||||||||||||||
Less: Expenses reimbursed and expense offset arrangement | (221,059 | ) | (250,470 | ) | (297,842 | ) | (313,299 | ) | (264,126 | ) | (231,524 | ) | ||||||||||||
Net expenses | 58,776 | 100,190 | 179,119 | 152,876 | 73,099 | 31,251 | ||||||||||||||||||
Net investment income | 601,448 | 891,798 | 2,713,973 | 2,141,154 | 1,137,199 | 446,355 | ||||||||||||||||||
Realized and unrealized gain (loss) from: | ||||||||||||||||||||||||
Net realized gain (loss) from affiliated underlying funds | 222,498 | 419,387 | 459,356 | 117,638 | 30,794 | 25,507 | ||||||||||||||||||
Net realized gain from distributions of affiliated underlying fund shares | 60,029 | 90,067 | 266,881 | 211,630 | 111,648 | 44,052 | ||||||||||||||||||
Net realized gain from affiliated underlying fund shares | 282,527 | 509,454 | 726,237 | 329,268 | 142,442 | 69,559 | ||||||||||||||||||
Change in net unrealized appreciation of affiliated underlying fund shares | 530,406 | 876,131 | 2,679,831 | 2,229,484 | 1,140,542 | 461,757 | ||||||||||||||||||
Net increase in net assets resulting from operations | $ | 1,414,381 | $ | 2,277,383 | $ | 6,120,041 | $ | 4,699,906 | $ | 2,420,183 | $ | 977,671 | ||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
35 Invesco Balanced-Risk Retirement Funds
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
Invesco | Invesco | Invesco | ||||||||||||||||||||||
Balanced-Risk | Balanced-Risk | Balanced-Risk | ||||||||||||||||||||||
Retirement | Retirement | Retirement | ||||||||||||||||||||||
Now Fund | 2010 Fund | 2020 Fund | ||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income | $ | 601,448 | $ | 111,903 | $ | 891,798 | $ | 369,542 | $ | 2,713,973 | $ | 1,070,354 | ||||||||||||
Net realized gain (loss) | 282,527 | (119,100 | ) | 509,454 | (124,539 | ) | 726,237 | (71,038 | ) | |||||||||||||||
Change in net unrealized appreciation | 530,406 | 271,696 | 876,131 | 654,480 | 2,679,831 | 1,927,795 | ||||||||||||||||||
Net increase in net assets resulting from operations | 1,414,381 | 264,499 | 2,277,383 | 899,483 | 6,120,041 | 2,927,111 | ||||||||||||||||||
Distributions to shareholders from net investment income: | ||||||||||||||||||||||||
Class A | (75,437 | ) | (62,912 | ) | (187,077 | ) | (224,374 | ) | (864,516 | ) | (676,463 | ) | ||||||||||||
Class A5 | (380,892 | ) | — | (518,949 | ) | — | (1,051,967 | ) | — | |||||||||||||||
Class B | (8,667 | ) | (17,762 | ) | (14,932 | ) | (25,570 | ) | (119,331 | ) | (110,865 | ) | ||||||||||||
Class C | (23,359 | ) | (10,508 | ) | (37,225 | ) | (66,117 | ) | (169,840 | ) | (113,866 | ) | ||||||||||||
Class C5 | (81,530 | ) | — | (82,477 | ) | — | (196,095 | ) | — | |||||||||||||||
Class R | (22,718 | ) | (16,046 | ) | (28,778 | ) | (48,885 | ) | (232,419 | ) | (147,451 | ) | ||||||||||||
Class R5 | (500 | ) | — | (11,644 | ) | — | (61,820 | ) | — | |||||||||||||||
Class Y | (4,256 | ) | (966 | ) | (15,755 | ) | (4,275 | ) | (6,875 | ) | (921 | ) | ||||||||||||
Institutional Class | (565 | ) | (2,670 | ) | (412 | ) | (574 | ) | (622 | ) | (671 | ) | ||||||||||||
Total distributions from net investment income | (597,924 | ) | (110,864 | ) | (897,249 | ) | (369,795 | ) | (2,703,485 | ) | (1,050,237 | ) | ||||||||||||
Distributions to shareholders from net realized gains: | ||||||||||||||||||||||||
Class A | — | — | (12,150 | ) | — | (11,225 | ) | — | ||||||||||||||||
Class A5 | — | — | (33,703 | ) | — | (13,634 | ) | — | ||||||||||||||||
Class B | — | — | (1,341 | ) | — | (1,793 | ) | — | ||||||||||||||||
Class C | — | — | (3,344 | ) | — | (2,556 | ) | — | ||||||||||||||||
Class C5 | — | — | (7,409 | ) | — | (2,947 | ) | — | ||||||||||||||||
Class R | — | — | (2,062 | ) | — | (3,153 | ) | — | ||||||||||||||||
Class R5 | — | — | (834 | ) | — | (839 | ) | — | ||||||||||||||||
Class Y | — | — | (935 | ) | — | (84 | ) | — | ||||||||||||||||
Institutional Class | — | — | (24 | ) | — | (8 | ) | — | ||||||||||||||||
Total distributions from net realized gains | — | — | (61,802 | ) | — | (36,239 | ) | — | ||||||||||||||||
Share transactions–net: | ||||||||||||||||||||||||
Class A | 1,011,539 | 375,412 | 1,190,838 | 1,760,063 | 5,605,517 | 4,318,764 | ||||||||||||||||||
Class A5 | 12,381,462 | — | 16,173,665 | — | 19,715,798 | — | ||||||||||||||||||
Class B | (87,944 | ) | 674 | 81,232 | 153,278 | 735,967 | 345,555 | |||||||||||||||||
Class C | 577,095 | 86,467 | 87,464 | 683,741 | 1,654,783 | 1,028,622 | ||||||||||||||||||
Class C5 | 2,788,212 | — | 3,466,954 | — | 4,245,840 | — | ||||||||||||||||||
Class R | 352,058 | 241,603 | 26,081 | 383,070 | 2,432,162 | 1,311,881 | ||||||||||||||||||
Class R5 | 11,866 | — | 368,472 | — | 1,237,894 | — | ||||||||||||||||||
Class Y | 113,363 | 6,956 | 366,288 | 4,265 | 93,144 | (37,119 | ) | |||||||||||||||||
Institutional Class | (39,301 | ) | 2,670 | 4 | 574 | — | 671 | |||||||||||||||||
Net increase in net assets resulting from share transactions | 17,108,350 | 713,782 | 21,760,998 | 2,984,991 | 35,721,105 | 6,968,374 | ||||||||||||||||||
Net increase in net assets | 17,924,807 | 867,417 | 23,079,330 | 3,514,679 | 39,101,422 | 8,845,248 | ||||||||||||||||||
Net assets: | ||||||||||||||||||||||||
Beginning of year | 2,488,823 | 1,621,406 | 7,984,674 | 4,469,995 | 18,061,274 | 9,216,026 | ||||||||||||||||||
End of year* | $ | 20,413,630 | $ | 2,488,823 | $ | 31,064,004 | $ | 7,984,674 | $ | 57,162,696 | $ | 18,061,274 | ||||||||||||
* Includes accumulated undistributed net investment income (loss) | $ | 4,281 | $ | 757 | $ | 4,265 | $ | 9,716 | $ | 56,053 | $ | 45,565 | ||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
36 Invesco Balanced-Risk Retirement Funds
Statement of Changes in Net Assets—(continued)
For the years ended December 31, 2010 and 2009
Invesco | Invesco | Invesco | ||||||||||||||||||||||
Balanced-Risk | Balanced-Risk | Balanced-Risk | ||||||||||||||||||||||
Retirement | Retirement | Retirement | ||||||||||||||||||||||
2030 Fund | 2040 Fund | 2050 Fund | ||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income | $ | 2,141,154 | $ | 893,973 | $ | 1,137,199 | $ | 436,829 | $ | 446,355 | $ | 209,734 | ||||||||||||
Net realized gain (loss) | 329,268 | (153,115 | ) | 142,442 | 187,866 | 69,559 | (133,010 | ) | ||||||||||||||||
Change in net unrealized appreciation | 2,229,484 | 2,218,307 | 1,140,542 | 940,337 | 461,757 | 784,598 | ||||||||||||||||||
Net increase in net assets resulting from operations | 4,699,906 | 2,959,165 | 2,420,183 | 1,565,032 | 977,671 | 861,322 | ||||||||||||||||||
Distributions to shareholders from net investment income: | ||||||||||||||||||||||||
Class A | (659,001 | ) | (448,431 | ) | (260,248 | ) | (236,711 | ) | (194,996 | ) | (119,553 | ) | ||||||||||||
Class A5 | (662,396 | ) | — | (191,647 | ) | — | (99,147 | ) | — | |||||||||||||||
Class B | (139,456 | ) | (123,125 | ) | (27,783 | ) | (37,422 | ) | (23,583 | ) | (18,898 | ) | ||||||||||||
Class C | (148,930 | ) | (111,492 | ) | (50,796 | ) | (64,979 | ) | (33,675 | ) | (22,714 | ) | ||||||||||||
Class C5 | (132,201 | ) | — | (19,815 | ) | — | (27,738 | ) | — | |||||||||||||||
Class R | (317,825 | ) | (206,281 | ) | (89,064 | ) | (93,182 | ) | (88,272 | ) | (46,915 | ) | ||||||||||||
Class R5 | (32,384 | ) | — | (16,286 | ) | — | (7,038 | ) | — | |||||||||||||||
Class Y | (58,151 | ) | (12,478 | ) | (13,347 | ) | (3,951 | ) | (11,328 | ) | (2,654 | ) | ||||||||||||
Institutional Class | (1,458 | ) | (591 | ) | (413 | ) | (606 | ) | (610 | ) | (1,093 | ) | ||||||||||||
Total distributions from net investment income | (2,151,802 | ) | (902,398 | ) | (669,399 | ) | (436,851 | ) | (486,387 | ) | (211,827 | ) | ||||||||||||
Distributions to shareholders from net realized gains: | ||||||||||||||||||||||||
Class A | — | — | (272,395 | ) | — | — | — | |||||||||||||||||
Class A5 | — | — | (200,592 | ) | — | — | — | |||||||||||||||||
Class B | — | — | (36,831 | ) | — | — | — | |||||||||||||||||
Class C | — | — | (66,787 | ) | — | — | — | |||||||||||||||||
Class C5 | — | — | (26,268 | ) | — | — | — | |||||||||||||||||
Class R | — | — | (100,069 | ) | — | — | — | |||||||||||||||||
Class R5 | — | — | (18,298 | ) | — | — | — | |||||||||||||||||
Class Y | — | — | (13,003 | ) | — | — | — | |||||||||||||||||
Institutional Class | — | — | (402 | ) | — | — | — | |||||||||||||||||
Total distributions from net realized gains | — | — | (734,645 | ) | — | — | — | |||||||||||||||||
Share transactions–net: | ||||||||||||||||||||||||
Class A | 4,897,577 | 4,340,305 | 3,793,667 | 2,102,731 | 967,731 | 927,000 | ||||||||||||||||||
Class A5 | 12,571,171 | — | 5,868,879 | — | 1,679,911 | — | ||||||||||||||||||
Class B | 603,752 | 682,879 | 295,691 | 138,048 | 32,941 | 148,211 | ||||||||||||||||||
Class C | 1,190,188 | 951,406 | 656,752 | 588,107 | 187,719 | 140,674 | ||||||||||||||||||
Class C5 | 2,791,433 | — | 705,238 | — | 309,156 | — | ||||||||||||||||||
Class R | 2,466,512 | 1,897,568 | 1,581,679 | 1,206,210 | 658,476 | 580,517 | ||||||||||||||||||
Class R5 | 625,459 | — | 535,988 | — | 123,934 | — | ||||||||||||||||||
Class Y | 865,643 | 164,740 | 305,686 | 37,270 | 135,162 | (3,226 | ) | |||||||||||||||||
Institutional Class | 6,092 | 591 | — | 606 | (11,101 | ) | (14,407 | ) | ||||||||||||||||
Net increase in net assets resulting from share transactions | 26,017,827 | 8,037,489 | 13,743,580 | 4,072,972 | 4,083,929 | 1,778,769 | ||||||||||||||||||
Net increase in net assets | 28,565,931 | 10,094,256 | 14,759,719 | 5,201,153 | 4,575,213 | 2,428,264 | ||||||||||||||||||
Net assets: | ||||||||||||||||||||||||
Beginning of year | 17,098,557 | 7,004,301 | 8,691,201 | 3,490,048 | 4,492,748 | 2,064,484 | ||||||||||||||||||
�� | ||||||||||||||||||||||||
End of year* | $ | 45,664,488 | $ | 17,098,557 | $ | 23,450,920 | $ | 8,691,201 | $ | 9,067,961 | $ | 4,492,748 | ||||||||||||
* Includes accumulated undistributed net investment income (loss) | $ | 8,514 | $ | 19,162 | $ | 479,004 | $ | 12,100 | $ | (7,188 | ) | $ | 5,000 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
37 Invesco Balanced-Risk Retirement Funds
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
AIM Growth Series (Invesco Growth Series) (the “Trust”) is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios (each constituting a “Fund”), each authorized to issue an unlimited number of shares of beneficial interest. The Funds covered in this report are Invesco Balanced-Risk Retirement Now Fund, Invesco Balanced-Risk Retirement 2010 Fund, Invesco Balanced-Risk Retirement 2020 Fund, Invesco Balanced-Risk Retirement 2030 Fund, Invesco Balanced-Risk Retirement 2040 Fund and Invesco Balanced-Risk Retirement 2050 Fund (collectively, the “Funds”). The assets, liabilities and operations of each Fund are accounted for separately. Information presented in these financial statements pertains only to the Funds. Matters affecting each Fund or class will be voted on exclusively by the shareholders of such Fund or class.
The investment objectives: to provide real return and, as a secondary objective, capital preservation for Invesco Balanced-Risk Retirement Now Fund; and to provide total return with a low to moderate correlation to traditional financial market indices and, as a secondary objective, capital preservation for Invesco Balanced-Risk Retirement 2010 Fund, Invesco Balanced-Risk Retirement 2020 Fund, Invesco Balanced-Risk Retirement 2030 Fund, Invesco Balanced-Risk Retirement 2040 Fund and Invesco Balanced-Risk Retirement 2050 Fund.
Each Fund currently consists of nine different classes of shares: Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class. Class A5, Class C5 and Class R5 shares are closed to new investors. Class A shares and Class A5 shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C and Class C5 shares are sold with a CDSC. Class R, Class R5, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
Each Fund is a “fund of funds,” in that it invests in other mutual funds advised by Invesco Advisers, Inc. (the “Adviser” or “Invesco”). The Adviser may change each Fund’s asset class allocations, the underlying funds or the target weightings in an underlying fund without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund’s accounting policies are outlined in the underlying fund’s financial statements and are available upon request.
The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements.
A. | Security Valuations — Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with valuation policy of such fund. The policies of underlying funds affiliated with the funds as a result of having the same investment advisor are set forth below. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Senior secured floating rate loans and senior secured floating rate debt securities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market |
38 Invesco Balanced-Risk Retirement Funds
quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from ordinary income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Each Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Distributions — Invesco Balanced-Risk Retirement Now Fund generally declares and pays dividends, if any, quarterly. Invesco Balanced-Risk Retirement 2010 Fund, Invesco Balanced-Risk Retirement 2020 Fund, Invesco Balanced-Risk Retirement 2030 Fund, Invesco Balanced-Risk Retirement 2040 Fund and Invesco Balanced-Risk Retirement 2050 Fund generally declare and pay dividends, if any, annually. Distributions from net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Funds may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
D. | Federal Income Taxes — The Funds intend to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Funds’ taxable earnings to shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
Each Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
E. | Expenses — Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. | |
Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | ||
F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts, including each Funds’ servicing agreements, that contain a variety of indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against such Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
39 Invesco Balanced-Risk Retirement Funds
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco indirectly as a shareholder of the underlying funds.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Funds, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to each Fund based on the percentage of assets allocated to such Sub-Adviser(s).
Invesco has contractually agreed, through at least April 30, 2012, to reimburse expenses to the extent necessary to limit total annual fund operating expenses after expense reimbursement (excluding certain items discussed below) of Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares for each Fund as shown in the following table:
Class A / A5 | Class B | Class C / C5 | Class R /R5 | Class Y | Institutional Class | |||||||||||||||||||
Invesco Balanced-Risk Retirement Now Fund | 0.25 | % | 1.00 | % | 1.00 | % | 0.50 | % | 0.00 | % | 0.00 | % | ||||||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 0.25 | % | 1.00 | % | 1.00 | % | 0.50 | % | 0.00 | % | 0.00 | % | ||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 0.25 | % | 1.00 | % | 1.00 | % | 0.50 | % | 0.00 | % | 0.00 | % | ||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 0.25 | % | 1.00 | % | 1.00 | % | 0.50 | % | 0.00 | % | 0.00 | % | ||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 0.25 | % | 1.00 | % | 1.00 | % | 0.50 | % | 0.00 | % | 0.00 | % | ||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 0.25 | % | 1.00 | % | 1.00 | % | 0.50 | % | 0.00 | % | 0.00 | % | ||||||||||||
In addition, effective June 1, 2010, Invesco has contractually agreed, through at least June 30, 2012, to reimburse expenses to the extent necessary to limit operating expenses (excluding certain items discussed below) of Class A5, Class C5, Class R5 and Class Y shares for each Fund as shown in the following table:
Class A5 | Class C5 | Class R5 | Class Y | |||||||||||||
Invesco Balanced-Risk Retirement Now Fund | 0.47 | % | 1.22 | % | 0.72 | % | 0.22 | % | ||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 0.38 | % | 1.13 | % | 0.63 | % | 0.13 | % | ||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 0.41 | % | 1.16 | % | 0.66 | % | 0.16 | % | ||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 0.29 | % | 1.04 | % | 0.54 | % | 0.04 | % | ||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 0.28 | % | 1.03 | % | 0.53 | % | 0.03 | % | ||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 0.26 | % | 1.01 | % | 0.51 | % | 0.01 | % | ||||||||
In determining Invesco’s obligation to reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; (5) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds; and (6) expenses that the Funds have incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are also excluded in determining such obligations. Unless the Board of the Trustees and Invesco mutually agree to amend or continue each Fund’s fee waiver agreement, it will terminate on April 30, 2012 or June 30, 2012, respectively.
For the year ended December 31, 2010, Invesco reimbursed the following expenses:
Fund Level | Class A | Class A5 | Class B | Class C | Class C5 | Class R | Class R5 | Class Y | Inst. Class | |||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | 202,684 | $ | 5,958 | $ | 5,984 | $ | 1,015 | $ | 1,703 | $ | 1,362 | $ | 2,002 | $ | 30 | $ | 290 | $ | 18 | ||||||||||||||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 208,782 | 14,639 | 13,990 | 1,691 | 4,062 | 3,043 | 3,032 | 423 | 800 | 8 | ||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 221,188 | 34,612 | 15,673 | 5,827 | 7,085 | 3,197 | 8,796 | 924 | 382 | 9 | ||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 235,744 | 28,969 | 14,483 | 7,515 | 7,485 | 3,261 | 13,195 | 931 | 1,487 | 20 | ||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 206,162 | 25,293 | 10,117 | 3,527 | 6,684 | 1,198 | 9,056 | 879 | 1,036 | 9 | ||||||||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 200,545 | 13,257 | 5,087 | 1,907 | 2,508 | 1,455 | 5,773 | 399 | 584 | 9 | ||||||||||||||||||||||||||||||
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations.
40 Invesco Balanced-Risk Retirement Funds
For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of:
Invesco Balanced-Risk Retirement Now Fund | $ | 13 | ||
Invesco Balanced-Risk Retirement 2010 Fund | — | |||
Invesco Balanced-Risk Retirement 2020 Fund | — | |||
Invesco Balanced-Risk Retirement 2030 Fund | 58 | |||
Invesco Balanced-Risk Retirement 2040 Fund | 46 | |||
Invesco Balanced-Risk Retirement 2050 Fund | — | |||
The Trust has entered into a master administrative services agreement with Invesco pursuant to which each Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to such Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which each Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to such Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with IDI to serve as the distributor for the Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares of each Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund’s Class A, Class A5, Class B, Class C, Class C5, Class R and Class R5 shares (collectively the “Plans”). Each Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Also, each Fund, pursuant to the Plans, reimburses IDI up to a maximum annual rate of 0.25% of each Fund’s average daily net assets of Class A5 shares, 1.00% of the average daily net assets of each Fund’s Class C5 shares and 0.50% of each Fund’s average daily net assets of Class R5 shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of each Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC are not recorded as expenses of the Funds. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A and Class A5 shares of the Funds. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Funds that IDI retained the following in front-end sales commissions from the sale of Class A and Class A5 shares and received the following in CDSC imposed on redemptions by shareholders:
Front End | ||||||||||||||||||||||||||||
Sales Charges | Contingent Deferred Sales Charges | |||||||||||||||||||||||||||
Class A | Class A5 | Class A | Class A5 | Class B | Class C | Class C5 | ||||||||||||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | 6,399 | $ | 478 | $ | — | $ | — | $ | 659 | $ | 323 | $ | 906 | ||||||||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 2,412 | 576 | — | 1 | 1,010 | 1,022 | 2,462 | |||||||||||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 11,991 | 1,994 | 12,343 | 2 | 3,666 | 406 | 884 | |||||||||||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 11,385 | 1,331 | 37 | 322 | 4,351 | 354 | 1,987 | |||||||||||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 8,101 | 848 | — | 4,008 | 1,248 | 406 | 622 | |||||||||||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 3,557 | 361 | — | 2 | 2,004 | 181 | 1,006 | |||||||||||||||||||||
The underlying Invesco Funds Institutional Class shares pay no distribution fees and the Funds pay no sales loads or other similar compensation to IDI for acquiring underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs |
41 Invesco Balanced-Risk Retirement Funds
reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Short-term Investments | ||||||||||||||||
Fund Name | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | 20,344,879 | $ | — | $ | — | $ | 20,344,879 | ||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 30,948,982 | — | — | 30,948,982 | ||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 57,473,647 | — | — | 57,473,647 | ||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 45,710,730 | — | — | 45,710,730 | ||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 23,879,139 | — | — | 23,879,139 | ||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 9,158,951 | — | — | 9,158,951 | ||||||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended December 31, 2010, the Funds received credits from this arrangement, which resulted in the reduction of the Funds’ total expenses of:
Transfer Agent Credits | ||||
Invesco Balanced-Risk Retirement Now Fund | $ | — | ||
Invesco Balanced-Risk Retirement 2010 Fund | — | |||
Invesco Balanced-Risk Retirement 2020 Fund | 149 | |||
Invesco Balanced-Risk Retirement 2030 Fund | 151 | |||
Invesco Balanced-Risk Retirement 2040 Fund | 119 | |||
Invesco Balanced-Risk Retirement 2050 Fund | — | |||
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by each Fund to pay remuneration to certain Trustees and Officers of such Fund. Trustees have the option to defer compensation payable by the Funds, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by each Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Funds may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by each Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Funds.
During the year ended December 31, 2010, the Funds in aggregate paid legal fees of $15,134 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees as shown below. A member of that firm is a Trustee of the Trust.
NOTE 6—Cash Balances
The Funds are permitted to temporarily carry a negative or overdrawn balance in their account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
42 Invesco Balanced-Risk Retirement Funds
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||||||||||
Ordinary | Total | Ordinary | Total | |||||||||||||
Income | Distributions | Income | Distributions | |||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | 597,924 | $ | 597,924 | $ | 110,864 | $ | 110,864 | ||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 959,051 | 959,051 | 369,795 | 369,795 | ||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 2,739,724 | 2,739,724 | 1,050,237 | 1,050,237 | ||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 2,151,802 | 2,151,802 | 902,398 | 902,398 | ||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 1,404,044 | 1,404,044 | 436,851 | 436,851 | ||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 486,387 | 486,387 | 211,827 | 211,827 | ||||||||||||
Tax Components of Net Assets at Period-End:
Undistributed | Net Unrealized | Temporary | Shares of | |||||||||||||||||||||
Ordinary | Appreciation — | Book/Tax | Capital Loss | Beneficial | Total | |||||||||||||||||||
Income | Investments | Differences | Carryforward | Interest | Net Assets | |||||||||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | 65,269 | $ | 490,365 | $ | (7,456 | ) | $ | — | $ | 19,865,452 | $ | 20,413,630 | |||||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 70,144 | 747,426 | (7,613 | ) | — | 30,254,047 | 31,064,004 | |||||||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 365,420 | 2,192,251 | (7,770 | ) | — | 54,612,795 | 57,162,696 | |||||||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 16,340 | 1,783,290 | (7,826 | ) | (5,157 | ) | 43,877,841 | 45,664,488 | ||||||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 487,004 | 876,691 | (8,000 | ) | (498,001 | ) | 22,593,226 | 23,450,920 | ||||||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | — | 336,334 | (7,188 | ) | (121,516 | ) | 8,860,331 | 9,067,961 | ||||||||||||||||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Funds net unrealized appreciation differences are attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Funds temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Funds to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Funds are limited to utilizing capital loss carryforward in the fiscal year ending December 31, 2011. The Funds capital loss carryforward amounts utilized in the current period to offset net realized capital gain for federal income tax purposes are as follows:
Capital Loss | ||||
Carryforward | ||||
Utilized | ||||
Invesco Balanced-Risk Retirement Now Fund | $ | 11,086 | ||
Invesco Balanced-Risk Retirement 2010 Fund | 23,195 | |||
Invesco Balanced-Risk Retirement 2020 Fund | 62,768 | |||
Invesco Balanced-Risk Retirement 2030 Fund | 21,730 | |||
Invesco Balanced-Risk Retirement 2040 Fund | — | |||
Invesco Balanced-Risk Retirement 2050 Fund | — | |||
The Funds have a capital loss carryforward as of December 31, 2010 which expires as follows:
2016 | 2017 | 2018 | Total | |||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | — | $ | — | $ | — | $ | — | ||||||||
Invesco Balanced-Risk Retirement 2010 Fund | — | — | — | — | ||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | — | — | — | — | ||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 5,157 | — | — | 5,157 | ||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | — | — | 498,001 | 498,001 | ||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 13,277 | 743 | 107,496 | 121,516 | ||||||||||||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
43 Invesco Balanced-Risk Retirement Funds
NOTE 8—Investment Securities
The aggregate amount of investment securities purchased and sold by each Fund and aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes are as follows:
At December 31, 2010 | ||||||||||||||||||||||||
Net Unrealized | ||||||||||||||||||||||||
For the year ended December 31, 2010* | Federal Tax | Unrealized | Unrealized | Appreciation | ||||||||||||||||||||
Purchases | Sales | Cost** | Appreciation | (Depreciation) | (Depreciation) | |||||||||||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | 15,392,154 | $ | 5,361,822 | $ | 19,854,514 | $ | 490,365 | $ | — | $ | 490,365 | ||||||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 25,982,418 | 13,724,539 | 30,201,556 | 747,426 | — | 747,426 | ||||||||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 57,468,856 | 22,639,836 | 55,281,396 | 2,192,251 | — | 2,192,251 | ||||||||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 35,803,330 | 9,753,387 | 43,927,440 | 1,783,290 | — | 1,783,290 | ||||||||||||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 17,856,769 | 4,277,790 | 23,002,448 | 876,691 | — | 876,691 | ||||||||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 6,026,566 | 1,862,346 | 8,822,617 | 336,334 | — | 336,334 | ||||||||||||||||||
* | Excludes U.S. Treasury obligations and money market funds, if any. |
** | Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end. |
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of distributions, on December 31, 2010. These reclassifications had no effect on the net assets of each Fund.
Undistributed | ||||||||||||
Undistributed Net | Net Realized | Shares of | ||||||||||
Investment Income (Loss) | Gain (Loss) | Beneficial Interest | ||||||||||
Invesco Balanced-Risk Retirement Now Fund | $ | — | $ | — | $ | — | ||||||
Invesco Balanced-Risk Retirement 2010 Fund | — | — | — | |||||||||
Invesco Balanced-Risk Retirement 2020 Fund | — | — | — | |||||||||
Invesco Balanced-Risk Retirement 2030 Fund | — | — | — | |||||||||
Invesco Balanced-Risk Retirement 2040 Fund | (896 | ) | 896 | — | ||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 27,844 | — | (27,844 | ) | ||||||||
44 Invesco Balanced-Risk Retirement Funds
NOTE 10—Share Information
Invesco Balanced-Risk Retirement Now Fund
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 209,797 | $ | 1,778,431 | 96,127 | $ | 771,436 | ||||||||||
Class A5(b) | 21,678 | 181,244 | — | — | ||||||||||||
Class B | 18,554 | 154,568 | 8,750 | 66,018 | ||||||||||||
Class C | 92,388 | 781,531 | 10,370 | 84,172 | ||||||||||||
Class C5(b) | 9,447 | 82,743 | — | — | ||||||||||||
Class R | 84,573 | 720,886 | 38,543 | 305,148 | ||||||||||||
Class R5(b) | 170 | 1,580 | — | — | ||||||||||||
Class Y | — | — | 824 | 6,000 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 8,346 | 70,575 | 6,696 | 53,647 | ||||||||||||
Class A5(b) | 40,538 | 343,356 | — | — | ||||||||||||
Class B | 956 | 8,060 | 2,164 | 17,373 | ||||||||||||
Class C | 2,643 | 22,299 | 1,220 | 9,822 | ||||||||||||
Class C5(b) | 9,322 | 78,772 | — | — | ||||||||||||
Class R | 2,640 | 22,339 | 1,988 | 16,046 | ||||||||||||
Class R5(b) | 12 | 100 | — | — | ||||||||||||
Class Y | 35 | 379 | 121 | 966 | ||||||||||||
Institutional Class | 21 | 199 | 334 | 2,670 | ||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A5 | 2,182,417 | 18,157,649 | — | — | ||||||||||||
Class C5 | 440,320 | 3,659,070 | — | — | ||||||||||||
Class R5 | 14,029 | 116,725 | — | — | ||||||||||||
Class Y | 15,229 | 126,705 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 22,765 | 190,590 | 2,109 | 17,122 | ||||||||||||
Class B | (22,746 | ) | (190,590 | ) | (2,109 | ) | (17,122 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (120,972 | ) | (1,028,057 | ) | (59,094 | ) | (466,793 | ) | ||||||||
Class A5(b) | (738,117 | ) | (6,300,787 | ) | — | — | ||||||||||
Class B | (6,918 | ) | (59,982 | ) | (8,904 | ) | (65,595 | ) | ||||||||
Class C | (26,516 | ) | (226,735 | ) | (933 | ) | (7,527 | ) | ||||||||
Class C5(b) | (119,704 | ) | (1,032,373 | ) | — | — | ||||||||||
Class R | (44,844 | ) | (391,167 | ) | (9,559 | ) | (79,591 | ) | ||||||||
Class R5(b) | (12,232 | ) | (106,539 | ) | — | — | ||||||||||
Class Y | (1,578 | ) | (13,721 | ) | (1 | ) | (10 | ) | ||||||||
Institutional Class | (4,530 | ) | (39,500 | ) | — | — | ||||||||||
Net increase in share activity | 2,077,723 | $ | 17,108,350 | 88,646 | $ | 713,782 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 38% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Commencement date of June 1, 2010. | |
(c) | As of the open of business on June 1, 2010, the Fund acquired all the net assets of Van Kampen In Retirement Strategy Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on January 21, 2010, and by the shareholders of Van Kampen In Retirement Strategy Fund on May 11, 2010. The acquisition was accomplished by a taxable exchange of 2,651,995 shares of the Fund for 1,941,690 shares outstanding of Van Kampen In Retirement Strategy Fund as of the close of business on May 28, 2010. Class A, Class C, Class R and Institutional Class shares of Van Kampen In Retirement Strategy Fund were exchanged for Class A5, Class C5, Class R5 and Class Y shares of the Fund, respectively, based on the relative net asset value of Van Kampen In Retirement Strategy Fund to the net asset value of the Fund on the close of business, May 28, 2010. Van Kampen In Retirement Strategy Fund’s net assets at that date of $22,060,149 were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $3,187,794. The net assets of the Fund immediately following the acquisition were $25,247,943. |
45 Invesco Balanced-Risk Retirement Funds
NOTE 10—Share Information—(continued)
Invesco Balanced-Risk Retirement 2010 Fund
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 352,223 | $ | 3,073,091 | 353,921 | $ | 2,872,368 | ||||||||||
Class A5(b) | 74,151 | 648,177 | — | — | ||||||||||||
Class B | 39,362 | 339,398 | 38,298 | 319,424 | ||||||||||||
Class C | 68,098 | 589,084 | 128,325 | 1,030,783 | ||||||||||||
Class C5(b) | 21,750 | 192,989 | — | — | ||||||||||||
Class R | 53,137 | 461,739 | 63,294 | 507,008 | ||||||||||||
Class R5(b) | 11,622 | 103,369 | — | — | ||||||||||||
Class Y | 965 | 8,602 | — | — | ||||||||||||
Institutional Class | — | 4 | — | — | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 22,019 | 192,002 | 25,930 | 219,367 | ||||||||||||
Class A5(b) | 62,001 | 540,655 | — | — | ||||||||||||
Class B | 1,824 | 15,849 | 3,011 | 25,354 | ||||||||||||
Class C | 4,478 | 38,916 | 7,332 | 61,736 | ||||||||||||
Class C5(b) | 10,309 | 89,691 | — | — | ||||||||||||
Class R | 3,497 | 30,456 | 5,785 | 48,885 | ||||||||||||
Class R5(b) | 1,374 | 11,979 | — | — | ||||||||||||
Class Y | 866 | 7,563 | 504 | 4,275 | ||||||||||||
Institutional Class | — | — | 68 | 574 | ||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A5 | 3,767,409 | 32,399,672 | — | — | ||||||||||||
Class C5 | 643,570 | 5,489,638 | — | — | ||||||||||||
Class R5 | 97,825 | 839,338 | — | — | ||||||||||||
Class Y | 41,802 | 360,338 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 12,540 | 109,875 | 6,231 | 50,401 | ||||||||||||
Class B | (12,614 | ) | (109,875 | ) | (6,271 | ) | (50,401 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (248,037 | ) | (2,184,130 | ) | (167,742 | ) | (1,382,073 | ) | ||||||||
Class A5(b) | (1,993,691 | ) | (17,414,839 | ) | — | — | ||||||||||
Class B | (19,043 | ) | (164,140 | ) | (18,684 | ) | (141,099 | ) | ||||||||
Class C | (62,482 | ) | (540,536 | ) | (55,279 | ) | (408,778 | ) | ||||||||
Class C5(b) | (262,048 | ) | (2,305,364 | ) | — | — | ||||||||||
Class R | (51,952 | ) | (466,114 | ) | (21,467 | ) | (172,823 | ) | ||||||||
Class R5(b) | (65,848 | ) | (586,214 | ) | — | — | ||||||||||
Class Y | (1,146 | ) | (10,215 | ) | (1 | ) | (10 | ) | ||||||||
Net increase in share activity | 2,573,961 | $ | 21,760,998 | 363,255 | $ | 2,984,991 | ||||||||||
(a) | There is an entity that is record owner of more than 5% of the outstanding shares of the Fund and owns 35% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. | |
(b) | Commencement date of June 1, 2010. | |
(c) | As of the open of business on June 1, 2010, the Fund acquired all the net assets of Van Kampen Retirement 2010 Strategy Fund and Van Kampen Retirement 2015 Strategy Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on January 21, 2010, and by the shareholders of Van Kampen Retirement 2010 Strategy Fund and Van Kampen Retirement 2015 Strategy Fund on May 11, 2010. The acquisition was accomplished by a taxable exchange of 4,550,606 shares of the Fund for 1,310,636 and 2,063,548 shares outstanding of Van Kampen Retirement 2010 Strategy Fund and Van Kampen Retirement 2015 Strategy Fund, respectively, as of the close of business on May 28, 2010. Class A, Class C, Class R and Institutional Class shares of Van Kampen Retirement 2010 Strategy Fund and Van Kampen Retirement 2015 Strategy Fund were exchanged for Class A5, Class C5, Class R5 and Class Y shares of the Fund, respectively, based on the relative net asset value of Van Kampen Retirement 2010 Strategy Fund and Van Kampen Retirement 2015 Strategy Fund to the net asset value of the Fund on the close of business, May 28, 2010. Van Kampen Retirement 2010 Strategy Fund’s and Van Kampen Retirement 2015 Strategy Fund’s net assets at that date of $15,220,927 and $23,868,059, respectively, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $9,166,897. The net assets of the Fund immediately following the acquisition were $48,255,883. |
46 Invesco Balanced-Risk Retirement Funds
NOTE 10—Share Information—(continued)
Invesco Balanced-Risk Retirement 2020 Fund
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 1,032,968 | $ | 8,558,636 | 960,164 | $ | 7,062,759 | ||||||||||
Class A5(b) | 200,277 | 1,694,721 | — | — | ||||||||||||
Class B | 144,101 | 1,180,893 | 87,863 | 636,071 | ||||||||||||
Class C | 248,473 | 2,061,134 | 169,178 | 1,201,702 | ||||||||||||
Class C5(b) | 24,454 | 202,416 | — | — | ||||||||||||
Class R | 325,373 | 2,722,482 | 245,907 | 1,834,664 | ||||||||||||
Class R5(b) | 69,638 | 583,495 | — | — | ||||||||||||
Class Y | 1,642 | 14,506 | 163 | 1,222 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 101,336 | 849,286 | 84,034 | 666,392 | ||||||||||||
Class A5(b) | 123,855 | 1,037,908 | — | — | ||||||||||||
Class B | 14,341 | 119,174 | 13,958 | 109,850 | ||||||||||||
Class C | 20,389 | 169,033 | 14,174 | 111,412 | ||||||||||||
Class C5(b) | 23,726 | 196,688 | — | — | ||||||||||||
Class R | 28,212 | 235,572 | 18,641 | 147,450 | ||||||||||||
Class R5(b) | 7,380 | 61,622 | — | — | ||||||||||||
Class Y | 618 | 5,182 | 116 | 921 | ||||||||||||
Institutional Class | — | — | 85 | 671 | ||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A5 | 4,807,306 | 39,227,629 | — | — | ||||||||||||
Class C5 | 705,602 | 5,687,165 | — | — | ||||||||||||
Class R5 | 152,882 | 1,242,930 | — | — | ||||||||||||
Class Y | 40,024 | 326,993 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 28,765 | 239,609 | 20,930 | 155,265 | ||||||||||||
Class B | (29,014 | ) | (239,609 | ) | (21,109 | ) | (155,265 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (495,707 | ) | (4,042,014 | ) | (490,088 | ) | (3,565,652 | ) | ||||||||
Class A5(b) | (2,663,556 | ) | (22,244,460 | ) | — | — | ||||||||||
Class B | (40,507 | ) | (324,491 | ) | (35,689 | ) | (245,101 | ) | ||||||||
Class C | (70,007 | ) | (575,384 | ) | (38,100 | ) | (284,492 | ) | ||||||||
Class C5(b) | (217,852 | ) | (1,840,429 | ) | — | — | ||||||||||
Class R | (62,558 | ) | (525,892 | ) | (85,611 | ) | (670,233 | ) | ||||||||
Class R5(b) | (74,374 | ) | (650,153 | ) | — | — | ||||||||||
Class Y | (28,747 | ) | (253,537 | ) | (5,591 | ) | (39,262 | ) | ||||||||
Net increase in share activity | 4,419,040 | $ | 35,721,105 | 939,025 | $ | 6,968,374 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 34% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Commencement date of June 1, 2010. | |
(c) | As of the open of business on June 1, 2010, the Fund acquired all the net assets of Van Kampen Retirement 2020 Strategy Fund and Van Kampen Retirement 2025 Strategy Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on January 21, 2010, and by the shareholders of Van Kampen Retirement 2020 Strategy Fund and Van Kampen Retirement 2025 Strategy Fund on May 11, 2010. The acquisition was accomplished by a taxable exchange of 5,705,814 shares of the Fund for 2,204,375 and 1,749,519 shares outstanding of Van Kampen Retirement 2020 Strategy Fund and Van Kampen Retirement 2025 Strategy Fund, respectively, as of the close of business on May 28, 2010. Class A, Class C, Class R and Institutional Class shares of Van Kampen Retirement 2020 Strategy Fund and Van Kampen Retirement 2025 Strategy Fund were exchanged for Class A5, Class C5, Class R5 and Class Y shares of the Fund, respectively, based on the relative net asset value of Van Kampen Retirement 2020 Strategy Fund and Van Kampen Retirement 2025 Strategy Fund to the net asset value of the Fund on the close of business, May 28, 2010. Van Kampen Retirement 2020 Strategy Fund’s and Van Kampen Retirement 2025 Strategy Fund’s net assets at that date of $26,045,099 and $20,439,618, respectively, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $22,931,466. The net assets of the Fund immediately following the acquisition were $69,416,183. |
47 Invesco Balanced-Risk Retirement Funds
NOTE 10—Share Information—(continued)
Invesco Balanced-Risk Retirement 2030 Fund
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 775,699 | $ | 6,156,120 | 744,792 | $ | 5,196,741 | ||||||||||
Class A5(b) | 116,246 | 947,397 | — | — | ||||||||||||
Class B | 133,364 | 1,044,948 | 154,612 | 1,003,961 | ||||||||||||
Class C | 228,133 | 1,791,386 | 177,483 | 1,231,849 | ||||||||||||
Class C5(b) | 52,173 | 408,093 | — | — | ||||||||||||
Class R | 357,815 | 2,866,204 | 347,498 | 2,352,592 | ||||||||||||
Class R5(b) | 26,137 | 210,960 | — | — | ||||||||||||
Class Y | 91,080 | 750,293 | 20,034 | 156,082 | ||||||||||||
Institutional Class | 1,966 | 15,623 | — | — | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 81,188 | 646,256 | 59,237 | 447,239 | ||||||||||||
Class A5(b) | 81,330 | 647,386 | — | — | ||||||||||||
Class B | 17,594 | 139,168 | 16,361 | 122,705 | ||||||||||||
Class C | 18,618 | 147,082 | 14,521 | 108,907 | ||||||||||||
Class C5(b) | 16,733 | 132,190 | — | — | ||||||||||||
Class R | 40,079 | 317,825 | 27,431 | 206,281 | ||||||||||||
Class R5(b) | 3,992 | 31,614 | — | — | ||||||||||||
Class Y | 5,492 | 43,774 | 1,650 | 12,478 | ||||||||||||
Institutional Class | 107 | 854 | 78 | 591 | ||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A5 | 2,703,518 | 20,952,288 | — | — | ||||||||||||
Class C5 | 467,563 | 3,586,211 | — | — | ||||||||||||
Class R5 | 129,511 | 998,529 | — | — | ||||||||||||
Class Y | 31,266 | 242,933 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 28,521 | 224,987 | 20,848 | 138,694 | ||||||||||||
Class B | (27,980 | ) | (224,987 | ) | (20,972 | ) | (138,694 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (268,143 | ) | (2,129,786 | ) | (212,272 | ) | (1,442,369 | ) | ||||||||
Class A5(b) | (1,256,460 | ) | (9,975,900 | ) | — | — | ||||||||||
Class B | (45,870 | ) | (355,377 | ) | (48,317 | ) | (305,093 | ) | ||||||||
Class C | (94,274 | ) | (748,280 | ) | (53,496 | ) | (389,350 | ) | ||||||||
Class C5(b) | (166,341 | ) | (1,335,061 | ) | — | — | ||||||||||
Class R | (91,188 | ) | (717,517 | ) | (97,363 | ) | (661,305 | ) | ||||||||
Class R5(b) | (73,763 | ) | (615,644 | ) | — | — | ||||||||||
Class Y | (20,561 | ) | (171,357 | ) | (543 | ) | (3,820 | ) | ||||||||
Institutional Class | (1,289 | ) | (10,385 | ) | — | — | ||||||||||
Net increase in share activity | 3,362,256 | $ | 26,017,827 | 1,151,582 | $ | 8,037,489 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 37% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Commencement date of June 1, 2010. | |
(c) | As of the open of business on June 1, 2010, the Fund acquired all the net assets of Van Kampen Retirement 2030 Strategy Fund and Van Kampen Retirement 2035 Strategy Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on January 21, 2010, and by the shareholders of Van Kampen Retirement 2030 Strategy Fund and Van Kampen Retirement 2035 Strategy Fund on May 11, 2010. The acquisition was accomplished by a taxable exchange of 3,331,858 shares of the Fund for 1,418,830 and 723,480 shares outstanding of Van Kampen Retirement 2030 Strategy Fund and Van Kampen Retirement 2035 Strategy Fund, respectively, as of the close of business on May 28, 2010. Class A, Class C, Class R and Institutional Class shares of Van Kampen Retirement 2030 Strategy Fund and Van Kampen Retirement 2035 Strategy Fund were exchanged for Class A5, Class C5, Class R5 and Class Y shares of the Fund, respectively, based on the relative net asset value of Van Kampen Retirement 2030 Strategy Fund and Van Kampen Retirement 2035 Strategy Fund to the net asset value of the Fund on the close of business, May 28, 2010. Van Kampen Retirement 2030 Strategy Fund’s and Van Kampen Retirement 2035 Strategy Fund’s net assets at that date of $16,916,450 and $8,863,511, respectively, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $21,086,971. The net assets of the Fund immediately following the acquisition were $46,866,932. |
48 Invesco Balanced-Risk Retirement Funds
NOTE 10—Share Information—(continued)
Invesco Balanced-Risk Retirement 2040 Fund
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 543,423 | $ | 4,196,661 | 436,623 | $ | 2,910,303 | ||||||||||
Class A5(b) | 61,564 | 479,272 | — | — | ||||||||||||
Class B | 47,462 | 364,200 | 44,606 | 281,940 | ||||||||||||
Class C | 118,180 | 895,888 | 103,071 | 652,835 | ||||||||||||
Class C5(b) | 18,095 | 139,341 | — | — | ||||||||||||
Class R | 251,769 | 1,944,451 | 216,334 | 1,449,064 | ||||||||||||
Class R5(b) | 15,279 | 119,996 | — | — | ||||||||||||
Class Y | 7,643 | 59,557 | 7,517 | 46,546 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 69,358 | 528,503 | 32,236 | 236,293 | ||||||||||||
Class A5(b) | 51,307 | 390,958 | — | — | ||||||||||||
Class B | 8,390 | 63,514 | 5,140 | 37,422 | ||||||||||||
Class C | 15,532 | 117,406 | 8,903 | 64,818 | ||||||||||||
Class C5(b) | 6,104 | 46,083 | — | — | ||||||||||||
Class R | 24,919 | 189,133 | 12,747 | 93,182 | ||||||||||||
Class R5(b) | 4,377 | 33,219 | — | — | ||||||||||||
Class Y | 1,017 | 7,764 | 539 | 3,951 | ||||||||||||
Institutional Class | — | — | 83 | 606 | ||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A5 | 1,253,825 | 9,428,773 | — | — | ||||||||||||
Class C5 | 118,905 | 884,654 | — | — | ||||||||||||
Class R5 | 91,536 | 685,610 | — | — | ||||||||||||
Class Y | 39,694 | 299,292 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 6,835 | 52,795 | 8,720 | 57,665 | ||||||||||||
Class B | (6,900 | ) | (52,795 | ) | (8,784 | ) | (57,665 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (125,447 | ) | (984,292 | ) | (165,552 | ) | (1,101,530 | ) | ||||||||
Class A5(b) | (569,202 | ) | (4,430,124 | ) | — | — | ||||||||||
Class B | (10,457 | ) | (79,228 | ) | (21,397 | ) | (123,649 | ) | ||||||||
Class C | (46,890 | ) | (356,542 | ) | (20,816 | ) | (129,546 | ) | ||||||||
Class C5(b) | (46,401 | ) | (364,840 | ) | — | — | ||||||||||
Class R | (72,070 | ) | (551,905 | ) | (49,451 | ) | (336,036 | ) | ||||||||
Class R5(b) | (37,770 | ) | (302,837 | ) | — | — | ||||||||||
Class Y | (7,578 | ) | (60,927 | ) | (1,711 | ) | (13,227 | ) | ||||||||
Net increase in share activity | 1,832,499 | $ | 13,743,580 | 608,808 | $ | 4,072,972 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 41% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Commencement date of June 1, 2010. | |
(c) | As of the open of business on June 1, 2010, the Fund acquired all the net assets of Van Kampen Retirement 2040 Strategy Fund and Van Kampen Retirement 2045 Strategy Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on January 21, 2010, and by the shareholders of Van Kampen Retirement 2040 Strategy Fund and Van Kampen Retirement 2045 Strategy Fund on May 11, 2010. The acquisition was accomplished by a taxable exchange of 1,503,960 shares of the Fund for 637,510 and 260,320 shares outstanding of Van Kampen Retirement 2040 Strategy Fund and Van Kampen Retirement 2045 Strategy Fund, respectively, as of the close of business on May 28, 2010. Class A, Class C, Class R and Institutional Class shares of Van Kampen Retirement 2040 Strategy Fund and Van Kampen Retirement 2045 Strategy Fund were exchanged for Class A5, Class C5, Class R5 and Class Y shares of the Fund, respectively, based on the relative net asset value of Van Kampen Retirement 2040 Strategy Fund and Van Kampen Retirement 2045 Strategy Fund to the net asset value of the Fund on the close of business, May 28, 2010. Van Kampen Retirement 2040 Strategy Fund’s and Van Kampen Retirement 2045 Strategy Fund’s net assets at that date of $8,119,029 and $3,179,300, respectively, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $11,445,503. The net assets of the Fund immediately following the acquisition were $22,743,832. |
49 Invesco Balanced-Risk Retirement Funds
NOTE 10—Share Information—(continued)
Invesco Balanced-Risk Retirement 2050 Fund
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 193,792 | $ | 1,449,800 | 194,631 | $ | 1,224,163 | ||||||||||
Class A5(b) | 28,297 | 216,605 | — | — | ||||||||||||
Class B | 18,513 | 138,110 | 30,202 | 185,138 | ||||||||||||
Class C | 57,907 | 427,468 | 55,841 | 345,497 | ||||||||||||
Class C5(b) | 4,932 | 36,520 | — | — | ||||||||||||
Class R | 105,046 | 780,778 | 96,031 | 621,498 | ||||||||||||
Class R5(b) | 7,504 | 57,588 | — | — | ||||||||||||
Class Y | 1,041 | 7,784 | 3,936 | 26,004 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 25,810 | 192,288 | 16,770 | 119,070 | ||||||||||||
Class A5(b) | 13,213 | 98,432 | — | — | ||||||||||||
Class B | 2,990 | 22,098 | 2,681 | 18,898 | ||||||||||||
Class C | 4,187 | 30,986 | 3,217 | 22,714 | ||||||||||||
Class C5(b) | 3,748 | 27,738 | — | — | ||||||||||||
Class R | 11,897 | 88,272 | 6,626 | 46,915 | ||||||||||||
Class R5(b) | 832 | 6,185 | — | — | ||||||||||||
Class Y | 398 | 2,962 | 374 | 2,654 | ||||||||||||
Institutional Class | — | — | 153 | 1,093 | ||||||||||||
Issued in connection with acquisitions:(c) | ||||||||||||||||
Class A5 | 357,160 | 2,603,702 | — | — | ||||||||||||
Class C5 | 78,711 | 568,290 | — | — | ||||||||||||
Class R5 | 24,953 | 181,160 | — | — | ||||||||||||
Class Y | 17,070 | 124,613 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 2,106 | 15,596 | 4,183 | 27,966 | ||||||||||||
Class B | (2,127 | ) | (15,596 | ) | (4,224 | ) | (27,966 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (92,077 | ) | (689,953 | ) | (73,056 | ) | (444,199 | ) | ||||||||
Class A5(b) | (163,363 | ) | (1,238,828 | ) | — | — | ||||||||||
Class B | (15,570 | ) | (111,671 | ) | (4,390 | ) | (27,859 | ) | ||||||||
Class C | (37,046 | ) | (270,735 | ) | (33,673 | ) | (227,537 | ) | ||||||||
Class C5(b) | (43,120 | ) | (323,392 | ) | — | — | ||||||||||
Class R | (28,235 | ) | (210,574 | ) | (13,413 | ) | (87,896 | ) | ||||||||
Class R5(b) | (15,481 | ) | (120,999 | ) | — | — | ||||||||||
Class Y | (25 | ) | (197 | ) | (4,338 | ) | (31,884 | ) | ||||||||
Institutional Class | (1,599 | ) | (11,101 | ) | (2,636 | ) | (15,500 | ) | ||||||||
Net increase in share activity | 561,464 | $ | 4,083,929 | 278,915 | $ | 1,778,769 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 22% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Commencement date of June 1, 2010. | |
(c) | As of the open of business on June 1, 2010, the Fund acquired all the net assets of Van Kampen Retirement 2050 Strategy Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on January 21, 2010, and by the shareholders of Van Kampen Retirement 2050 Strategy Fund on May 11, 2010. The acquisition was accomplished by a taxable exchange of 477,894 shares of the Fund for 280,418 shares outstanding of Van Kampen Retirement 2050 Strategy Fund as of the close of business on May 28, 2010. Class A, Class C, Class R and Institutional Class shares of Van Kampen Retirement 2050 Strategy Fund were exchanged for Class A5, Class C5, Class R5 and Class Y shares of the Fund, respectively, based on the relative net asset value of Van Kampen Retirement 2050 Strategy Fund to the net asset value of the Fund on the close of business, May 28, 2010. Van Kampen Retirement 2050 Strategy Fund’s net assets at that date of $3,477,765 were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $5,218,517. The net assets of the Fund immediately following the acquisition were $8,696,282. |
50 Invesco Balanced-Risk Retirement Funds
NOTE 11—Significant Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the ‘Agreement‘) pursuant to which the Invesco Balanced-Risk Retirement 2010 Fund (the ‘Target Fund‘) will transfer all of its assets and liabilities to the Invesco Balanced-Risk Retirement Now Fund (the ‘Acquiring Fund‘) in exchange for shares of the Acquiring Fund. The Agreement does not require approval of the Target Fund’s shareholders and, therefore, during the second quarter of 2011, your shares of the Target Fund will be converted automatically at their net asset value into shares of the corresponding class of the Acquiring Fund.
51 Invesco Balanced-Risk Retirement Funds
NOTE 12—Financial Highlights
The following schedule presents financial highlights for a share of each Fund outstanding throughout the periods indicated.
Invesco Balanced-Risk Retirement Now Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | assets with | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | Return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 8.23 | $ | 0.37 | $ | 0.26 | $ | 0.63 | $ | (0.28 | ) | $ | — | $ | (0.28 | ) | $ | 8.58 | 7.74 | % | $ | 2,488 | 0.25 | %(e) | 3.45 | %(e) | 4.35 | %(e) | 67 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | 7.59 | 0.47 | 0.61 | 1.08 | (0.44 | ) | — | (0.44 | ) | 8.23 | 14.53 | 1,399 | 0.27 | 10.47 | 5.93 | 155 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.78 | 0.43 | (2.08 | ) | (1.65 | ) | (0.51 | ) | (0.03 | ) | (0.54 | ) | 7.59 | (17.45 | ) | 942 | 0.31 | 11.88 | 4.89 | 36 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.41 | (0.07 | ) | 0.34 | (0.54 | ) | (0.04 | ) | (0.58 | ) | 9.78 | 3.47 | 807 | 0.41 | (g) | 28.75 | (g) | 4.41 | (g) | 27 | |||||||||||||||||||||||||||||||||||
Class A5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.30 | 0.22 | 0.32 | 0.54 | (0.26 | ) | — | (0.26 | ) | 8.58 | 6.53 | 12,929 | 0.25 | (e)(g) | 1.24 | (e)(g) | 4.35 | (e)(g) | 67 | |||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.24 | 0.30 | 0.27 | 0.57 | (0.25 | ) | — | (0.25 | ) | 8.56 | 6.95 | 301 | 1.00 | (e) | 4.20 | (e) | 3.60 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.60 | 0.41 | 0.61 | 1.02 | (0.38 | ) | — | (0.38 | ) | 8.24 | 13.66 | 374 | 1.02 | 11.22 | 5.18 | 155 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.79 | 0.37 | (2.09 | ) | (1.72 | ) | (0.44 | ) | (0.03 | ) | (0.47 | ) | 7.60 | (18.05 | ) | 346 | 1.06 | 12.63 | 4.14 | 36 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.34 | (0.06 | ) | 0.28 | (0.47 | ) | (0.04 | ) | (0.51 | ) | 9.79 | 2.79 | 309 | 1.16 | (g) | 29.50 | (g) | 3.66 | (g) | 27 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.23 | 0.31 | 0.27 | 0.58 | (0.25 | ) | — | (0.25 | ) | 8.56 | 7.08 | 874 | 1.00 | (e) | 4.20 | (e) | 3.60 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.59 | 0.41 | 0.61 | 1.02 | (0.38 | ) | — | (0.38 | ) | 8.23 | 13.67 | 277 | 1.02 | 11.22 | 5.18 | 155 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.79 | 0.36 | (2.09 | ) | (1.73 | ) | (0.44 | ) | (0.03 | ) | (0.47 | ) | 7.59 | (18.15 | ) | 174 | 1.06 | 12.63 | 4.14 | 36 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.34 | (0.06 | ) | 0.28 | (0.47 | ) | (0.04 | ) | (0.51 | ) | 9.79 | 2.79 | 75 | 1.16 | (g) | 29.50 | (g) | 3.66 | (g) | 27 | |||||||||||||||||||||||||||||||||||
Class C5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.30 | 0.18 | 0.32 | 0.50 | (0.24 | ) | — | (0.24 | ) | 8.56 | 6.08 | 2,905 | 1.00 | (e)(g) | 1.99 | (e)(g) | 3.60 | (e)(g) | 67 | |||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.24 | 0.35 | 0.26 | 0.61 | (0.27 | ) | — | (0.27 | ) | 8.58 | 7.47 | 750 | 0.50 | (e) | 3.70 | (e) | 4.10 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.59 | 0.45 | 0.62 | 1.07 | (0.42 | ) | — | (0.42 | ) | 8.24 | 14.38 | 371 | 0.52 | 10.72 | 5.68 | 155 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.78 | 0.40 | (2.07 | ) | (1.67 | ) | (0.49 | ) | (0.03 | ) | (0.52 | ) | 7.59 | (17.66 | ) | 107 | 0.56 | 12.13 | 4.64 | 36 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.39 | (0.07 | ) | 0.32 | (0.52 | ) | (0.04 | ) | (0.56 | ) | 9.78 | 3.21 | 53 | 0.66 | (g) | 29.00 | (g) | 4.16 | (g) | 27 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.31 | 0.20 | 0.32 | 0.52 | (0.25 | ) | — | (0.25 | ) | 8.58 | 6.34 | 17 | 0.50 | (e)(g) | 1.49 | (e)(g) | 4.10 | (e)(g) | 67 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.23 | 0.39 | 0.27 | 0.66 | (0.29 | ) | — | (0.29 | ) | 8.60 | 8.13 | 136 | —(e | ) | 3.20 | (e) | 4.60 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.59 | 0.49 | 0.61 | 1.10 | (0.46 | ) | — | (0.46 | ) | 8.23 | 14.82 | 18 | 0.02 | 10.22 | 6.18 | 155 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 8.30 | 0.10 | (0.67 | ) | (0.57 | ) | (0.14 | ) | — | (0.14 | ) | 7.59 | (6.86 | ) | 9 | 0.02 | (g) | 19.09 | (g) | 5.18 | (g) | 36 | ||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.23 | 0.39 | 0.26 | 0.65 | (0.29 | ) | — | (0.29 | ) | 8.59 | 8.00 | 13 | —(e | ) | 2.93 | (e) | 4.60 | (e) | 67 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.59 | 0.49 | 0.61 | 1.10 | (0.46 | ) | — | (0.46 | ) | 8.23 | 14.82 | 49 | 0.02 | 9.92 | 6.18 | 155 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.78 | 0.46 | (2.09 | ) | (1.63 | ) | (0.53 | ) | (0.03 | ) | (0.56 | ) | 7.59 | (17.23 | ) | 43 | 0.06 | 11.41 | 5.14 | 36 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.43 | (0.07 | ) | 0.36 | (0.56 | ) | (0.04 | ) | (0.60 | ) | 9.78 | 3.74 | 52 | 0.16 | (g) | 28.35 | (g) | 4.66 | (g) | 27 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.55%, 0.63%, 0.65% and 0.68% for the years ended December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $1,915, $8,762, $326, $548, $1,994, $644, $44, $93 and $40 for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares; October 3, 2008 for Class Y shares; and June 1, 2010 for Class A5, Class C5 and Class R5 shares. | |
(g) | Annualized. |
52 Invesco Balanced-Risk Retirement Funds
NOTE 12—Financial Highlights—(continued)
Invesco Balanced-Risk Retirement 2010 Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | assets with | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | Return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 8.49 | $ | 0.33 | $ | 0.32 | $ | 0.65 | $ | (0.28 | ) | $ | (0.02 | ) | $ | (0.30 | ) | $ | 8.84 | 7.67 | % | $ | 6,156 | 0.25 | %(e) | 1.78 | %(e) | 3.82 | %(e) | 103 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 7.72 | 0.52 | 0.68 | 1.20 | (0.43 | ) | — | (0.43 | ) | 8.49 | 15.58 | 4,731 | 0.28 | 3.92 | 6.35 | 182 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.02 | 0.45 | (2.37 | ) | (1.92 | ) | (0.35 | ) | (0.03 | ) | (0.38 | ) | 7.72 | (19.11 | ) | 2,620 | 0.33 | 5.46 | 4.99 | 37 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.43 | (0.07 | ) | 0.36 | (0.34 | ) | (0.02 | ) | (0.36 | ) | 10.02 | 3.65 | 1,645 | 0.42 | (g) | 16.42 | (g) | 4.50 | (g) | 15 | |||||||||||||||||||||||||||||||||||
Class A5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.58 | 0.20 | 0.36 | 0.56 | (0.28 | ) | (0.02 | ) | (0.30 | ) | 8.84 | 6.54 | 16,883 | 0.25 | (e)(g) | 0.97 | (e)(g) | 3.82 | (e)(g) | 103 | ||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.44 | 0.27 | 0.31 | 0.58 | (0.20 | ) | (0.02 | ) | (0.22 | ) | 8.80 | 6.90 | 697 | 1.00 | (e) | 2.53 | (e) | 3.07 | (e) | 103 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.70 | 0.45 | 0.68 | 1.13 | (0.39 | ) | — | (0.39 | ) | 8.44 | 14.64 | 588 | 1.03 | 4.67 | 5.60 | 182 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.99 | 0.39 | (2.36 | ) | (1.97 | ) | (0.29 | ) | (0.03 | ) | (0.32 | ) | 7.70 | (19.66 | ) | 411 | 1.08 | 6.21 | 4.24 | 37 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.35 | (0.06 | ) | 0.29 | (0.30 | ) | (0.02 | ) | (0.32 | ) | 9.99 | 2.92 | 340 | 1.17 | (g) | 17.17 | (g) | 3.75 | (g) | 15 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.44 | 0.27 | 0.32 | 0.59 | (0.20 | ) | (0.02 | ) | (0.22 | ) | 8.81 | 7.02 | 1,658 | 1.00 | (e) | 2.53 | (e) | 3.07 | (e) | 103 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.71 | 0.46 | 0.66 | 1.12 | (0.39 | ) | — | (0.39 | ) | 8.44 | 14.49 | 1,504 | 1.03 | 4.67 | 5.60 | 182 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.00 | 0.39 | (2.36 | ) | (1.97 | ) | (0.29 | ) | (0.03 | ) | (0.32 | ) | 7.71 | (19.64 | ) | 753 | 1.08 | 6.21 | 4.24 | 37 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.35 | (0.05 | ) | 0.30 | (0.30 | ) | (0.02 | ) | (0.32 | ) | 10.00 | 3.02 | 431 | 1.17 | (g) | 17.17 | (g) | 3.75 | (g) | 15 | |||||||||||||||||||||||||||||||||||
Class C5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.52 | 0.16 | 0.35 | 0.51 | (0.20 | ) | (0.02 | ) | (0.22 | ) | 8.81 | 6.01 | 3,645 | 1.00 | (e)(g) | 1.72 | (e)(g) | 3.07 | (e)(g) | 103 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.47 | 0.31 | 0.32 | 0.63 | (0.25 | ) | (0.02 | ) | (0.27 | ) | 8.83 | 7.49 | 1,150 | 0.50 | (e) | 2.03 | (e) | 3.57 | (e) | 103 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.72 | 0.50 | 0.67 | 1.17 | (0.42 | ) | — | (0.42 | ) | 8.47 | 15.11 | 1,064 | 0.53 | 4.17 | 6.10 | 182 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.01 | 0.43 | (2.36 | ) | (1.93 | ) | (0.33 | ) | (0.03 | ) | (0.36 | ) | 7.72 | (19.20 | ) | 602 | 0.58 | 5.71 | 4.74 | 37 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.40 | (0.06 | ) | 0.34 | (0.33 | ) | (0.02 | ) | (0.35 | ) | 10.01 | 3.41 | 119 | 0.67 | (g) | 16.67 | (g) | 4.25 | (g) | 15 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.56 | 0.18 | 0.36 | 0.54 | (0.25 | ) | (0.02 | ) | (0.27 | ) | 8.83 | 6.36 | 397 | 0.50 | (e)(g) | 1.22 | (e)(g) | 3.57 | (e)(g) | 103 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.49 | 0.36 | 0.32 | 0.68 | (0.30 | ) | (0.02 | ) | (0.32 | ) | 8.85 | 8.10 | 465 | —(e | ) | 1.53 | (e) | 4.07 | (e) | 103 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.73 | 0.54 | 0.67 | 1.21 | (0.45 | ) | — | (0.45 | ) | 8.49 | 15.64 | 85 | 0.03 | 3.67 | 6.60 | 182 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 8.79 | 0.10 | (0.77 | ) | (0.67 | ) | (0.36 | ) | (0.03 | ) | (0.39 | ) | 7.73 | (7.62 | ) | 74 | 0.04 | (g) | 8.26 | (g) | 5.28 | (g) | 37 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.51 | 0.36 | 0.31 | 0.67 | (0.30 | ) | (0.02 | ) | (0.32 | ) | 8.86 | 7.96 | 12 | —(e | ) | 1.34 | (e) | 4.07 | (e) | 103 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.74 | 0.54 | 0.68 | 1.22 | (0.45 | ) | — | (0.45 | ) | 8.51 | 15.75 | 11 | 0.04 | 3.45 | 6.59 | 182 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.03 | 0.50 | (2.39 | ) | (1.89 | ) | (0.37 | ) | (0.03 | ) | (0.40 | ) | 7.74 | (18.82 | ) | 10 | 0.08 | 5.02 | 5.24 | 37 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.45 | (0.07 | ) | 0.38 | (0.35 | ) | (0.02 | ) | (0.37 | ) | 10.03 | 3.87 | 52 | 0.17 | (g) | 16.02 | (g) | 4.75 | (g) | 15 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.55%, 0.66%, 0.69% and 0.70% for the years ended December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $5,595, $12,109, $646, $1,552, $2,634, $1,159, $366, $306 and $12 for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares; October 3, 2008 for Class Y shares; and June 1, 2010 for Class A5, Class C5 and Class R5 shares. | |
(g) | Annualized. |
53 Invesco Balanced-Risk Retirement Funds
NOTE 12—Financial Highlights—(continued)
Invesco Balanced-Risk Retirement 2020 Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | assets with | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | Return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 7.97 | $ | 0.55 | $ | 0.49 | $ | 1.04 | $ | (0.44 | ) | $ | (0.01 | ) | $ | (0.45 | ) | $ | 8.56 | 13.11 | % | $ | 17,933 | 0.25 | %(e) | 1.13 | %(e) | 6.61 | %(e) | 57 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 6.93 | 0.62 | 0.94 | 1.56 | (0.52 | ) | — | (0.52 | ) | 7.97 | 22.49 | 11,371 | 0.30 | 2.08 | 8.23 | 185 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.96 | 0.39 | (3.13 | ) | (2.74 | ) | (0.25 | ) | (0.04 | ) | (0.29 | ) | 6.93 | (27.53 | ) | 5,899 | 0.38 | 3.48 | 4.54 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.41 | (0.17 | ) | 0.24 | (0.25 | ) | (0.05 | ) | (0.30 | ) | 9.96 | 2.38 | 2,711 | 0.50 | (g) | 10.04 | (g) | 4.33 | (g) | 37 | |||||||||||||||||||||||||||||||||||
Class A5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.14 | 0.33 | 0.54 | 0.87 | (0.44 | ) | (0.01 | ) | (0.45 | ) | 8.56 | 10.75 | 21,136 | 0.25 | (e)(g) | 0.73 | (e)(g) | 6.61 | (e)(g) | 57 | ||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.91 | 0.49 | 0.48 | 0.97 | (0.38 | ) | (0.01 | ) | (0.39 | ) | 8.49 | 12.30 | 2,899 | 1.00 | (e) | 1.88 | (e) | 5.86 | (e) | 57 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.90 | 0.56 | 0.92 | 1.48 | (0.47 | ) | — | (0.47 | ) | 7.91 | 21.45 | 1,997 | 1.05 | 2.83 | 7.48 | 185 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.92 | 0.32 | (3.10 | ) | (2.78 | ) | (0.20 | ) | (0.04 | ) | (0.24 | ) | 6.90 | (28.01 | ) | 1,431 | 1.13 | 4.23 | 3.79 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.34 | (0.17 | ) | 0.17 | (0.22 | ) | (0.05 | ) | (0.27 | ) | 9.92 | 1.68 | 940 | 1.25 | (g) | 10.79 | (g) | 3.58 | (g) | 37 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.90 | 0.49 | 0.47 | 0.96 | (0.38 | ) | (0.01 | ) | (0.39 | ) | 8.47 | 12.19 | 3,966 | 1.00 | (e) | 1.88 | (e) | 5.86 | (e) | 57 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.88 | 0.56 | 0.93 | 1.49 | (0.47 | ) | — | (0.47 | ) | 7.90 | 21.66 | 2,125 | 1.05 | 2.83 | 7.48 | 185 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.92 | 0.32 | (3.12 | ) | (2.80 | ) | (0.20 | ) | (0.04 | ) | (0.24 | ) | 6.88 | (28.21 | ) | 852 | 1.13 | 4.23 | 3.79 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.34 | (0.17 | ) | 0.17 | (0.22 | ) | (0.05 | ) | (0.27 | ) | 9.92 | 1.68 | 593 | 1.25 | (g) | 10.79 | (g) | 3.58 | (g) | 37 | |||||||||||||||||||||||||||||||||||
Class C5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.04 | 0.29 | 0.54 | 0.83 | (0.38 | ) | (0.01 | ) | (0.39 | ) | 8.48 | 10.37 | 4,543 | 1.00 | (e)(g) | 1.48 | (e)(g) | 5.86 | (e)(g) | 57 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.95 | 0.53 | 0.49 | 1.02 | (0.42 | ) | (0.01 | ) | (0.43 | ) | 8.54 | 12.90 | 5,214 | 0.50 | (e) | 1.38 | (e) | 6.36 | (e) | 57 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.92 | 0.61 | 0.92 | 1.53 | (0.50 | ) | — | (0.50 | ) | 7.95 | 22.15 | 2,542 | 0.55 | 2.33 | 7.98 | 185 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.95 | 0.38 | (3.14 | ) | (2.76 | ) | (0.23 | ) | (0.04 | ) | (0.27 | ) | 6.92 | (27.72 | ) | 974 | 0.63 | 3.73 | 4.29 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.38 | (0.16 | ) | 0.22 | (0.24 | ) | (0.05 | ) | (0.29 | ) | 9.95 | 2.19 | 679 | 0.75 | (g) | 10.29 | (g) | 4.08 | (g) | 37 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 8.11 | 0.32 | 0.54 | 0.86 | (0.42 | ) | (0.01 | ) | (0.43 | ) | 8.54 | 10.67 | 1,328 | 0.50 | (e)(g) | 0.98 | (e)(g) | 6.36 | (e)(g) | 57 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.97 | 0.58 | 0.49 | 1.07 | (0.46 | ) | (0.01 | ) | (0.47 | ) | 8.57 | 13.52 | 133 | —(e | ) | 0.88 | (e) | 6.86 | (e) | 57 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.93 | 0.63 | 0.94 | 1.57 | (0.53 | ) | — | (0.53 | ) | 7.97 | 22.70 | 16 | 0.05 | 1.83 | 8.48 | 185 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 8.21 | 0.08 | (1.07 | ) | (0.99 | ) | (0.25 | ) | (0.04 | ) | (0.29 | ) | 6.93 | (12.03 | ) | 50 | 0.08 | (g) | 4.83 | (g) | 4.84 | (g) | 30 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 8.00 | 0.58 | 0.49 | 1.07 | (0.46 | ) | (0.01 | ) | (0.47 | ) | 8.60 | 13.47 | 12 | —(e | ) | 0.72 | (e) | 6.86 | (e) | 57 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.95 | 0.64 | 0.94 | 1.58 | (0.53 | ) | — | (0.53 | ) | 8.00 | 22.79 | 11 | 0.07 | 1.68 | 8.46 | 185 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.99 | 0.42 | (3.16 | ) | (2.74 | ) | (0.26 | ) | (0.04 | ) | (0.30 | ) | 6.95 | (27.41 | ) | 9 | 0.13 | 2.98 | 4.79 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.43 | (0.15 | ) | 0.28 | (0.26 | ) | (0.05 | ) | (0.31 | ) | 9.99 | 2.80 | 12 | 0.25 | (g) | 9.67 | (g) | 4.58 | (g) | 37 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.79%, 0.74%, 0.74% and 0.78% for the years ended December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $14,416, $14,693, $2,427, $2,951, $2,997, $3,663, $866, $159 and $11 for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares; October 3, 2008 for Class Y shares; and June 1, 2010 for Class A5, Class C5 and Class R5 shares. | |
(g) | Annualized. |
54 Invesco Balanced-Risk Retirement Funds
NOTE 12—Financial Highlights—(continued)
Invesco Balanced-Risk Retirement 2030 Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | assets with | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | Return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 7.58 | $ | 0.53 | $ | 0.45 | $ | 0.98 | $ | (0.42 | ) | $ | — | $ | (0.42 | ) | $ | 8.14 | 13.06 | % | $ | 13,983 | 0.25 | %(e) | 1.32 | %(e) | 6.63 | %(e) | 32 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | 6.33 | 0.57 | 1.12 | 1.69 | (0.44 | ) | — | (0.44 | ) | 7.58 | 26.76 | 8,346 | 0.33 | 2.40 | 8.05 | 201 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.89 | 0.29 | (3.62 | ) | (3.33 | ) | (0.18 | ) | (0.05 | ) | (0.23 | ) | 6.33 | (33.64 | ) | 3,088 | 0.40 | 4.07 | 3.50 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.34 | (0.14 | ) | 0.20 | (0.28 | ) | (0.05 | ) | (0.33 | ) | 9.89 | 2.00 | 1,577 | 0.50 | (g) | 13.53 | (g) | 3.60 | (g) | 31 | |||||||||||||||||||||||||||||||||||
Class A5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.73 | 0.32 | 0.51 | 0.83 | (0.42 | ) | — | (0.42 | ) | 8.14 | 10.86 | 13,388 | 0.25 | (e)(g) | 0.92 | (e)(g) | 6.63 | (e)(g) | 32 | |||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.54 | 0.46 | 0.44 | 0.90 | (0.36 | ) | — | (0.36 | ) | 8.08 | 12.08 | 3,223 | 1.00 | (e) | 2.07 | (e) | 5.88 | (e) | 32 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.31 | 0.51 | 1.12 | 1.63 | (0.40 | ) | — | (0.40 | ) | 7.54 | 25.86 | 2,424 | 1.08 | 3.15 | 7.30 | 201 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.87 | 0.22 | (3.59 | ) | (3.37 | ) | (0.14 | ) | (0.05 | ) | (0.19 | ) | 6.31 | (34.18 | ) | 1,386 | 1.15 | 4.82 | 2.75 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.27 | (0.13 | ) | 0.14 | (0.24 | ) | (0.05 | ) | (0.29 | ) | 9.87 | 1.42 | 756 | 1.25 | (g) | 14.28 | (g) | 2.85 | (g) | 31 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.54 | 0.46 | 0.43 | 0.89 | (0.36 | ) | — | (0.36 | ) | 8.07 | 11.95 | 3,550 | 1.00 | (e) | 2.07 | (e) | 5.88 | (e) | 32 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.31 | 0.52 | 1.11 | 1.63 | (0.40 | ) | — | (0.40 | ) | 7.54 | 25.86 | 2,164 | 1.08 | 3.15 | 7.30 | 201 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.87 | 0.23 | (3.60 | ) | (3.37 | ) | (0.14 | ) | (0.05 | ) | (0.19 | ) | 6.31 | (34.18 | ) | 938 | 1.15 | 4.82 | 2.75 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.27 | (0.13 | ) | 0.14 | (0.24 | ) | (0.05 | ) | (0.29 | ) | 9.87 | 1.425 | 729 | 1.25 | (g) | 14.28 | (g) | 2.85 | (g) | 31 | |||||||||||||||||||||||||||||||||||
Class C5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.65 | 0.28 | 0.50 | 0.78 | (0.36 | ) | — | (0.36 | ) | 8.07 | 10.34 | 2,989 | 1.00 | (e)(g) | 1.67 | (e)(g) | 5.88 | (e)(g) | 32 | |||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.56 | 0.51 | 0.44 | 0.95 | (0.40 | ) | — | (0.40 | ) | 8.11 | 12.71 | 6,707 | 0.50 | (e) | 1.57 | (e) | 6.38 | (e) | 32 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.31 | 0.56 | 1.12 | 1.68 | (0.43 | ) | — | (0.43 | ) | 7.56 | 26.64 | 3,934 | 0.58 | 2.65 | 7.80 | 201 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.88 | 0.26 | (3.61 | ) | (3.35 | ) | (0.17 | ) | (0.05 | ) | (0.22 | ) | 6.31 | (33.92 | ) | 1,534 | 0.65 | 4.32 | 3.25 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.32 | (0.15 | ) | 0.17 | (0.26 | ) | (0.05 | ) | (0.31 | ) | 9.88 | 1.78 | 396 | 0.75 | (g) | 13.78 | (g) | 3.35 | (g) | 31 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.69 | 0.30 | 0.51 | 0.81 | (0.40 | ) | — | (0.40 | ) | 8.10 | 10.68 | 696 | 0.50 | (e)(g) | 1.17 | (e)(g) | 6.38 | (e)(g) | 32 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.59 | 0.55 | 0.45 | 1.00 | (0.44 | ) | — | (0.44 | ) | 8.15 | 13.30 | 1,112 | —(e | ) | 1.07 | (e) | 6.88 | (e) | 32 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.33 | 0.60 | 1.12 | 1.72 | (0.46 | ) | — | (0.46 | ) | 7.59 | 27.13 | 221 | 0.08 | 2.15 | 8.30 | 201 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 7.77 | 0.06 | (1.26 | ) | (1.20 | ) | (0.19 | ) | (0.05 | ) | (0.24 | ) | 6.33 | (15.49 | ) | 50 | 0.11 | (g) | 5.07 | (g) | 3.79 | (g) | 17 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.60 | 0.55 | 0.46 | 1.01 | (0.44 | ) | — | (0.44 | ) | 8.17 | 13.43 | 18 | —(e | ) | 0.91 | (e) | 6.88 | (e) | 32 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.34 | 0.58 | 1.14 | 1.72 | (0.46 | ) | — | (0.46 | ) | 7.60 | 27.10 | 10 | 0.09 | 1.90 | 8.29 | 201 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.90 | 0.32 | (3.63 | ) | (3.31 | ) | (0.20 | ) | (0.05 | ) | (0.25 | ) | 6.34 | (33.46 | ) | 8 | 0.15 | 3.50 | 3.75 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.37 | (0.15 | ) | 0.22 | (0.29 | ) | (0.05 | ) | (0.34 | ) | 9.90 | 2.23 | 12 | 0.25 | (g) | 13.07 | (g) | 3.85 | (g) | 31 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.79%, 0.78%, 0.76% and 0.80% for the years ended December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $10,923, $8,709, $2,834, $2,822, $1,961, $4,975, $560, $561 and $20 for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares; October 3, 2008 for Class Y shares; and June 1, 2010 for Class A5, Class C5 and Class R5 shares. | |
(g) | Annualized. |
55 Invesco Balanced-Risk Retirement Funds
NOTE 12—Financial Highlights—(continued)
Invesco Balanced-Risk Retirement 2040 Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | assets with | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | Return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 7.36 | $ | 0.53 | $ | 0.42 | $ | 0.95 | $ | (0.25 | ) | $ | (0.27 | ) | $ | (0.52 | ) | $ | 7.79 | 13.03 | % | $ | 8,727 | 0.25 | %(e) | 1.94 | %(e) | 6.79 | %(e) | 26 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 6.09 | 0.53 | 1.15 | 1.68 | (0.41 | ) | — | (0.41 | ) | 7.36 | 27.59 | 4,605 | 0.33 | 4.14 | 7.69 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.83 | 0.23 | (3.78 | ) | (3.55 | ) | (0.15 | ) | (0.04 | ) | (0.19 | ) | 6.09 | (36.00 | ) | 1,907 | 0.41 | 8.63 | 2.88 | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.31 | (0.13 | ) | 0.18 | (0.28 | ) | (0.09 | ) | (0.37 | ) | 9.83 | 1.81 | 901 | 0.54 | (g) | 22.43 | (g) | 3.26 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class A5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.50 | 0.31 | 0.50 | 0.81 | (0.25 | ) | (0.27 | ) | (0.52 | ) | 7.79 | 10.92 | 6,212 | 0.25 | (e)(g) | 1.42 | (e)(g) | 6.79 | (e)(g) | 26 | ||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.32 | 0.46 | 0.41 | 0.87 | (0.19 | ) | (0.27 | ) | (0.46 | ) | 7.73 | 12.08 | 1,115 | 1.00 | (e) | 2.69 | (e) | 6.04 | (e) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.06 | 0.47 | 1.16 | 1.63 | (0.37 | ) | — | (0.37 | ) | 7.32 | 26.90 | 773 | 1.08 | 4.89 | 6.94 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.80 | 0.17 | (3.76 | ) | (3.59 | ) | (0.11 | ) | (0.04 | ) | (0.15 | ) | 6.06 | (36.53 | ) | 522 | 1.16 | 9.38 | 2.13 | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.24 | (0.13 | ) | 0.11 | (0.24 | ) | (0.09 | ) | (0.33 | ) | 9.80 | 1.15 | 500 | 1.29 | (g) | 23.18 | (g) | 2.51 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.31 | 0.46 | 0.42 | 0.88 | (0.19 | ) | (0.27 | ) | (0.46 | ) | 7.73 | 12.24 | 2,136 | 1.00 | (e) | 2.69 | (e) | 6.04 | (e) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.06 | 0.47 | 1.15 | 1.62 | (0.37 | ) | — | (0.37 | ) | 7.31 | 26.72 | 1,387 | 1.08 | 4.89 | 6.94 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.80 | 0.17 | (3.76 | ) | (3.59 | ) | (0.11 | ) | (0.04 | ) | (0.15 | ) | 6.06 | (36.53 | ) | 597 | 1.16 | 9.38 | 2.13 | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.24 | (0.13 | ) | 0.11 | (0.24 | ) | (0.09 | ) | (0.33 | ) | 9.80 | 1.15 | 277 | 1.29 | (g) | 23.18 | (g) | 2.51 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class C5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.42 | 0.28 | 0.48 | 0.76 | (0.19 | ) | (0.27 | ) | (0.46 | ) | 7.72 | 10.44 | 747 | 1.00 | (e)(g) | 2.17 | (e)(g) | 6.04 | (e)(g) | 26 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.34 | 0.51 | 0.42 | 0.93 | (0.23 | ) | (0.27 | ) | (0.50 | ) | 7.77 | 12.83 | 3,536 | 0.50 | (e) | 2.19 | (e) | 6.54 | (e) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.07 | 0.52 | 1.15 | 1.67 | (0.40 | ) | — | (0.40 | ) | 7.34 | 27.47 | 1,840 | 0.58 | 4.39 | 7.44 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.82 | 0.21 | (3.78 | ) | (3.57 | ) | (0.14 | ) | (0.04 | ) | (0.18 | ) | 6.07 | (36.27 | ) | 432 | 0.66 | 8.88 | 2.63 | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.28 | (0.13 | ) | 0.15 | (0.26 | ) | (0.09 | ) | (0.35 | ) | 9.82 | 1.59 | 153 | 0.79 | (g) | 22.68 | (g) | 3.01 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.47 | 0.30 | 0.49 | 0.79 | (0.23 | ) | (0.27 | ) | (0.50 | ) | 7.76 | 10.73 | 570 | 0.50 | (e)(g) | 1.67 | (e)(g) | 6.54 | (e)(g) | 26 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.37 | 0.55 | 0.43 | 0.98 | (0.27 | ) | (0.27 | ) | (0.54 | ) | 7.81 | 13.42 | 398 | —(e | ) | 1.69 | (e) | 7.04 | (e) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.09 | 0.56 | 1.14 | 1.70 | (0.42 | ) | — | (0.42 | ) | 7.37 | 27.96 | 75 | 0.08 | 3.89 | 7.94 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 7.56 | 0.05 | (1.32 | ) | (1.27 | ) | (0.16 | ) | (0.04 | ) | (0.20 | ) | 6.09 | (16.73 | ) | 24 | 0.10 | (g) | 10.26 | (g) | 3.19 | (g) | 29 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.38 | 0.55 | 0.42 | 0.97 | (0.27 | ) | (0.27 | ) | (0.54 | ) | 7.81 | 13.25 | 12 | —(e | ) | 1.38 | (e) | 7.04 | (e) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.09 | 0.53 | 1.18 | 1.71 | (0.42 | ) | — | (0.42 | ) | 7.38 | 28.13 | 11 | 0.08 | 3.49 | 7.94 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.84 | 0.28 | (3.82 | ) | (3.54 | ) | (0.17 | ) | (0.04 | ) | (0.21 | ) | 6.09 | (35.94 | ) | 9 | 0.15 | 7.72 | 3.14 | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.34 | (0.14 | ) | 0.20 | (0.29 | ) | (0.09 | ) | (0.38 | ) | 9.84 | 2.03 | 51 | 0.28 | (g) | 21.86 | (g) | 3.53 | (g) | 20 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.79%, 0.81%, 0.78% and 0.81% for the years ended December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $6,642, $4,324, $926, $1,755, $512, $2,378, $376, $272 and $12 for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares; October 3, 2008 for Class Y shares; and June 1, 2010 for Class A5, Class C5 and Class R5 shares. | |
(g) | Annualized. |
56 Invesco Balanced-Risk Retirement Funds
NOTE 12—Financial Highlights—(continued)
Invesco Balanced-Risk Retirement 2050 Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | assets with | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | Return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 7.13 | $ | 0.48 | $ | 0.44 | $ | 0.92 | $ | (0.43 | ) | $ | — | $ | (0.43 | ) | $ | 7.62 | 13.08 | % | $ | 3,693 | 0.25 | %(e) | 3.63 | %(e) | 6.42 | %(e) | 27 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | 5.87 | 0.45 | 1.19 | 1.64 | (0.38 | ) | — | (0.38 | ) | 7.13 | 27.92 | 2,533 | 0.32 | 7.20 | 6.87 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.78 | 0.17 | (3.84 | ) | (3.67 | ) | (0.17 | ) | (0.07 | ) | (0.24 | ) | 5.87 | (37.51 | ) | 1,248 | 0.42 | 11.10 | 2.10 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.29 | (0.14 | ) | 0.15 | (0.29 | ) | (0.10 | ) | (0.39 | ) | 9.78 | 1.55 | 1,177 | 0.54 | (g) | 24.63 | (g) | 3.01 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class A5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.27 | 0.29 | 0.49 | 0.78 | (0.43 | ) | — | (0.43 | ) | 7.62 | 10.91 | 1,793 | 0.25 | (e)(g) | 2.97 | (e)(g) | 6.42 | (e)(g) | 27 | |||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.08 | 0.42 | 0.43 | 0.85 | (0.38 | ) | — | (0.38 | ) | 7.55 | 12.13 | 489 | 1.00 | (e) | 4.38 | (e) | 5.67 | (e) | 27 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 5.84 | 0.40 | 1.18 | 1.58 | (0.34 | ) | — | (0.34 | ) | 7.08 | 27.02 | 432 | 1.07 | 7.95 | 6.12 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.75 | 0.11 | (3.82 | ) | (3.71 | ) | (0.13 | ) | (0.07 | ) | (0.20 | ) | 5.84 | (38.03 | ) | 214 | 1.17 | 11.85 | 1.35 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.21 | (0.13 | ) | 0.08 | (0.25 | ) | (0.10 | ) | (0.35 | ) | 9.75 | 0.80 | 184 | 1.29 | (g) | 25.38 | (g) | 2.26 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.09 | 0.42 | 0.44 | 0.86 | (0.38 | ) | — | (0.38 | ) | 7.57 | 12.26 | 709 | 1.00 | (e) | 4.38 | (e) | 5.67 | (e) | 27 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 5.85 | 0.40 | 1.18 | 1.58 | (0.34 | ) | — | (0.34 | ) | 7.09 | 26.97 | 487 | 1.07 | 7.95 | 6.12 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.76 | 0.10 | (3.81 | ) | (3.71 | ) | (0.13 | ) | (0.07 | ) | (0.20 | ) | 5.85 | (37.99 | ) | 253 | 1.17 | 11.85 | 1.35 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.21 | (0.12 | ) | 0.09 | (0.25 | ) | (0.10 | ) | (0.35 | ) | 9.76 | 0.90 | 150 | 1.29 | (g) | 25.38 | (g) | 2.26 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class C5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.20 | 0.25 | 0.49 | 0.74 | (0.38 | ) | — | (0.38 | ) | 7.56 | 10.40 | 335 | 1.00 | (e)(g) | 3.72 | (e)(g) | 5.67 | (e)(g) | 27 | |||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.11 | 0.46 | 0.43 | 0.89 | (0.41 | ) | — | (0.41 | ) | 7.59 | 12.74 | 1,708 | 0.50 | (e) | 3.88 | (e) | 6.17 | (e) | 27 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 5.85 | 0.44 | 1.18 | 1.62 | (0.36 | ) | — | (0.36 | ) | 7.11 | 27.80 | 969 | 0.57 | 7.45 | 6.62 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.77 | 0.14 | (3.84 | ) | (3.70 | ) | (0.15 | ) | (0.07 | ) | (0.22 | ) | 5.85 | (37.78 | ) | 275 | 0.67 | 11.35 | 1.85 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.26 | (0.14 | ) | 0.12 | (0.27 | ) | (0.10 | ) | (0.37 | ) | 9.77 | 1.29 | 151 | 0.79 | (g) | 24.88 | (g) | 2.76 | (g) | 20 | |||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10(f) | 7.24 | 0.27 | 0.51 | 0.78 | (0.42 | ) | — | (0.42 | ) | 7.60 | 10.85 | 135 | 0.50 | (e)(g) | 3.22 | (e)(g) | 6.17 | (e)(g) | 27 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.14 | 0.51 | 0.43 | 0.94 | (0.45 | ) | — | (0.45 | ) | 7.63 | 13.33 | 196 | —(e | ) | 3.38 | (e) | 6.67 | (e) | 27 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 5.87 | 0.47 | 1.19 | 1.66 | (0.39 | ) | — | (0.39 | ) | 7.14 | 28.32 | 51 | 0.07 | 6.95 | 7.12 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 7.42 | 0.04 | (1.35 | ) | (1.31 | ) | (0.17 | ) | (0.07 | ) | (0.24 | ) | 5.87 | (17.57 | ) | 42 | 0.09 | (g) | 19.27 | (g) | 2.43 | (g) | 27 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 7.14 | 0.50 | 0.43 | 0.93 | (0.45 | ) | — | (0.45 | ) | 7.62 | 13.18 | 10 | —(e | ) | 3.03 | (e) | 6.67 | (e) | 27 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 5.87 | 0.44 | 1.22 | 1.66 | (0.39 | ) | — | (0.39 | ) | 7.14 | 28.32 | 21 | 0.06 | 6.36 | 7.13 | 214 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 9.79 | 0.19 | (3.86 | ) | (3.67 | ) | (0.18 | ) | (0.07 | ) | (0.25 | ) | 5.87 | (37.42 | ) | 32 | 0.15 | 10.22 | 2.37 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07(f) | 10.02 | 0.31 | (0.14 | ) | 0.17 | (0.30 | ) | (0.10 | ) | (0.40 | ) | 9.79 | 1.78 | 51 | 0.28 | (g) | 24.12 | (g) | 3.27 | (g) | 20 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.79%, 0.82%, 0.78% and 0.82% for the years ended December 31, 2010, December 31, 2009, December 31, 2008 and December 31, 2007, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $3,052, $1,186, $439, $577, $339, $1,329, $93, $134 and $11 for Class A, Class A5, Class B, Class C, Class C5, Class R, Class R5, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares; October 3, 2008 for Class Y shares; and June 1, 2010 for Class A5, Class C5 and Class R5 shares. | |
(g) | Annualized. |
57 Invesco Balanced-Risk Retirement Funds
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Balanced-Risk Retirement Now Fund,
Invesco Balanced-Risk Retirement 2010 Fund,
Invesco Balanced-Risk Retirement 2020 Fund,
Invesco Balanced-Risk Retirement 2030 Fund,
Invesco Balanced-Risk Retirement 2040 Fund
and Invesco Balanced-Risk Retirement 2050 Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Balanced-Risk Retirement Now Fund, Invesco Balanced-Risk Retirement 2010 Fund, Invesco Balanced-Risk Retirement 2020 Fund, Invesco Balanced-Risk Retirement 2030 Fund, Invesco Balanced-Risk Retirement 2040 Fund and Invesco Balanced-Risk Retirement 2050 Fund (formerly known as AIM Balanced-Risk Retirement Now Fund, AIM Balanced-Risk Retirement 2010 Fund, AIM Balanced-Risk Retirement 2020 Fund, AIM Balanced-Risk Retirement 2030 Fund, AIM Balanced-Risk Retirement 2040 Fund and AIM Balanced-Risk Retirement 2050 Fund; six of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Funds”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
58 Invesco Balanced-Risk Retirement Funds
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010, through December 31, 2010.
In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the underlying funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund’s total return.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
Invesco Balanced-Risk Retirement Now Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,057.70 | $ | 1.30 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | ||||||||||||||||||
A5 | 1,000.00 | 1,054.50 | 5.18 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
B | 1,000.00 | 1,053.30 | 5.18 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C | 1,000.00 | 1,054.50 | 5.18 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C5 | 1,000.00 | 1,057.00 | 2.59 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R | 1,000.00 | 1,057.00 | 2.59 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R5 | 1,000.00 | 1,057.00 | 2.59 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,059.60 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,058.40 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
59 Invesco Balanced-Risk Retirement Funds
Invesco Balanced-Risk Retirement 2010 Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,058.00 | $ | 1.30 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | ||||||||||||||||||
A5 | 1,000.00 | 1,058.00 | 1.30 | 1,023.95 | 1.28 | 0.25 | ||||||||||||||||||||||||
B | 1,000.00 | 1,054.00 | 5.18 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C | 1,000.00 | 1,054.00 | 5.18 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C5 | 1,000.00 | 1,054.00 | 5.18 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
R | 1,000.00 | 1,056.20 | 2.59 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R5 | 1,000.00 | 1,056.20 | 2.59 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,059.80 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,058.50 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2020 Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,095.40 | $ | 1.32 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | ||||||||||||||||||
A5 | 1,000.00 | 1,095.40 | 1.32 | 1,023.95 | 1.28 | 0.25 | ||||||||||||||||||||||||
B | 1,000.00 | 1,092.70 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C | 1,000.00 | 1,091.60 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C5 | 1,000.00 | 1,092.80 | 5.28 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
R | 1,000.00 | 1,094.60 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R5 | 1,000.00 | 1,094.60 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,098.00 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,097.70 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2030 Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,097.30 | $ | 1.32 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | ||||||||||||||||||
A5 | 1,000.00 | 1,097.30 | 1.32 | 1,023.95 | 1.28 | 0.25 | ||||||||||||||||||||||||
B | 1,000.00 | 1,091.90 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C | 1,000.00 | 1,092.00 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C5 | 1,000.00 | 1,092.00 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
R | 1,000.00 | 1,096.70 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R5 | 1,000.00 | 1,095.40 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,098.30 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,099.50 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
60 Invesco Balanced-Risk Retirement Funds
Invesco Balanced-Risk Retirement 2040 Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,096.00 | $ | 1.32 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | ||||||||||||||||||
A5 | 1,000.00 | 1,097.50 | 1.32 | 1,023.95 | 1.28 | 0.25 | ||||||||||||||||||||||||
B | 1,000.00 | 1,092.40 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C | 1,000.00 | 1,092.50 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C5 | 1,000.00 | 1,092.60 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
R | 1,000.00 | 1,095.50 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R5 | 1,000.00 | 1,095.50 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,099.90 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,098.30 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Invesco Balanced-Risk Retirement 2050 Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,097.00 | $ | 1.32 | $ | 1,023.95 | $ | 1.28 | 0.25 | % | ||||||||||||||||||
A5 | 1,000.00 | 1,097.00 | 1.32 | 1,023.95 | 1.28 | 0.25 | ||||||||||||||||||||||||
B | 1,000.00 | 1,092.00 | 5.27 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C | 1,000.00 | 1,093.30 | 5.28 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
C5 | 1,000.00 | 1,093.30 | 5.28 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
R | 1,000.00 | 1,095.00 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
R5 | 1,000.00 | 1,096.40 | 2.64 | 1,022.68 | 2.55 | 0.50 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,099.40 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,098.00 | 0.00 | 1,025.21 | 0.00 | 0.00 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
61 Invesco Balanced-Risk Retirement Funds
Tax Information |
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Funds designate the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax
Corporate | ||||||||||||
Qualified | Dividends | |||||||||||
Dividend | Received | U.S. Treasury | ||||||||||
Income* | Deduction* | Obligations* | ||||||||||
Invesco Balanced-Risk Retirement Now Fund | 0.00% | 0.00% | 37.98% | |||||||||
Invesco Balanced-Risk Retirement 2010 Fund | 0.00% | 0.00% | 37.94% | |||||||||
Invesco Balanced-Risk Retirement 2020 Fund | 0.00% | 0.00% | 38.49% | |||||||||
Invesco Balanced-Risk Retirement 2030 Fund | 0.00% | 0.00% | 38.49% | |||||||||
Invesco Balanced-Risk Retirement 2040 Fund | 0.00% | 1.00% | 38.49% | |||||||||
Invesco Balanced-Risk Retirement 2050 Fund | 0.00% | 0.00% | 38.49% | |||||||||
* | The above percentage is based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
62 Invesco Balanced-Risk Retirement Funds
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | �� | |||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(IMAGE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886217.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during
the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to
individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is
the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and
institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886200.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to
individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is
the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and
institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
IBRR-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 | ||
Invesco Basic Value Fund |
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
11 | Financial Statements | |
13 | Notes to Financial Statements | |
20 | Financial Highlights | |
21 | Auditor’s Report | |
22 | Fund Expenses | |
23 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885002.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885003.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 | Invesco Basic Value Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885004.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885005.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Basic Value Fund |
Management’s Discussion of Fund Performance
Performance summary
On June 25, 2010, Jason Leder, Devin Armstrong, Kevin Holt, Matthew Seinsheimer and James Warwick took over management of the Fund from the prior management team. A listing of your Fund’s managers appears later in this report.
For the year ended December 31, 2010, Invesco Basic Value Fund underperformed its style-specific index, the Russell 1000 Value Index. The Fund’s underperformance was largely due to holdings in the information technology sector. Alternatively, holdings in health care contributed to the Fund’s relative performance versus the index.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares* | 6.90 | % | ||
Class B Shares* | 6.11 | |||
Class C Shares* | 6.17 | |||
Class R Shares* | 6.67 | |||
Class Y Shares* | 7.24 | |||
Institutional Class Shares* | 7.45 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Russell 1000 Value Index▼ (Style-Specific Index) | 15.51 | |||
Lipper Large-Cap Value Funds Index▼ (Peer Group Index) | 13.02 |
▼ | Lipper Inc. | |
* | Performance includes litigation proceeds. Had these proceeds not been received, total return would have been lower. |
How we invest
As noted above, the Fund’s management team changed during the reporting period. The new team seeks to exploit market inefficiencies by investing in companies that appear undervalued relative to the overall market. Ultimately, we believe that the market will recognize the value in these companies and will sell them as their stock price begins to reflect their intrinsic value. We feel that stock picking, as compared to making sector bets, provides a more consistent path to potential success. In addition, we may be able to take advantage of pricing anomalies by purchasing undervalued stocks before a recognizable catalyst arises.
The Fund’s primary investable universe includes all U.S. denominated equities. To distill the investment universe, we filter
for companies with sufficient liquidity. We filter the remaining securities on valuation metrics depending upon the growth or cyclical nature of their business. The result of this filtering process is a pool of securities that we believe are statistically inexpensive relative to the broader market. Companies identified in the filtering process are thoroughly analyzed to assess intrinsic value and their ability to achieve fair value.
We will purchase a security only if we believe the potential for stock price appreciation outweighs potential downside risk. To be eligible for inclusion in the Fund, a stock must meet the following criteria:
n | If the security is statistically cheap on the basis of its primary valuation criteria, which depends on the cyclical or growth nature of its business. |
n | If rigorous fundamental analysis shows that the company is undervalued and possesses potential financial strength and improved quality of management for future growth. |
We maintain an intense focus on the quality of a company’s accounting and on financial statement analysis. Portfolio construction is bottom-up and stock specific, concentrating on individual company fundamental analysis and valuations. Therefore, while we monitor and are aware of our positions relative to the benchmark, it does not play a major role in the construction of the Fund.
We look to manage risk through portfolio construction, chiefly diversification across most major sectors, and through the assistance of an independent quantitative risk control group. Risk management is continuous. The Fund is regularly reviewed to ensure it is optimally constructed on a risk/reward basis. We have the final say on construction of the Fund and a collegial relationship exists between the risk management team and the Fund teams.
Our sell discipline is just as important as the buy decision and is based on the same principles: relative value and fundamentals. While no sale is automatic, a security is typically sold if it meets one or more of the following criteria:
n | When we believe the target price has been realized, and if we no longer consider the company undervalued. | |
n | If we determine that a better value opportunity can be found elsewhere. | |
n | If our research shows that a company is experiencing deteriorating fundamentals beyond what we feel to be a tolerable level and the trend is likely to be a long-term issue. |
Market conditions and your Fund
Equity markets were choppy during the year as investors weighed the competing issues of solid corporate profits and soft macroeconomic data. Corporate earn-
Portfolio Composition
By sector
Financials | 31.1 | % | ||
Consumer Discretionary | 20.9 | |||
Energy | 12.9 | |||
Consumer Staples | 9.5 | |||
Information Technology | 8.7 | |||
Industrials | 7.3 | |||
Health Care | 5.4 | |||
Telecommunication Services | 1.6 | |||
Materials | 1.2 | |||
Money Market Funds Plus | ||||
Other Assets Less Liabilities | 1.4 |
Top 10 Equity Holdings*
1. | Omnicom Group Inc. | 5.1 | % | |||||
2. | Chubb Corp. | 4.7 | ||||||
3. | JPMorgan Chase & Co. | 4.3 | ||||||
4. | Royal Dutch Shell PLC-ADR | 3.8 | ||||||
5. | Molson Coors Brewing Co.-Class B | 3.8 | ||||||
6. | Time Warner Cable Inc. | 3.7 | ||||||
7. | Chevron Corp. | 3.3 | ||||||
8. | Wal-Mart Stores, Inc. | 3.2 | ||||||
9. | Comcast Corp.-Class A | 3.1 | ||||||
10. | Hewlett-Packard Co. | 3.1 |
Total Net Assets | $1.1 billion | |||
Total Number of Holdings* | 44 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
4 | Invesco Basic Value Fund |
ings were largely positive, but were often overshadowed by concerns about high unemployment, weak consumer spending, soft housing data and the possibility of additional U.S. Federal Reserve accommodation. After rising through April, major equity indexes sold off precipitously in May as the sovereign debt crisis unfolded in the eurozone while U.S. economic indicators remained weak, prompting fears of a “double-dip” recession. Uncertainty created by the debt crisis – combined with subdued employment, consumer spending and housing data – added to concerns that the recovery was slowing. Just as abruptly, however, the markets reversed course starting in September and rallied through the end of the year on modestly better economic news.
Major equity indexes produced positive returns for the fiscal year, and all 10 sectors of the S&P 500 Index posted gains. More economically sensitive sectors such as consumer discretionary and industrials had the highest returns, while less economically sensitive sectors such as health care had some of the lowest returns.
The information technology sector was the largest detractor from relative and absolute Fund performance. More specifically, the Fund’s holdings in Nokia and Microsoft detracted from performance during the first half of the year. Soon after taking over management of the Fund in June, we sold the Fund’s positions in these two companies.
Select holdings in the financials sector were also among the largest detractors from Fund returns. Moody’s and State Street detracted from performance during the first half of the year, and we also eliminated these two holdings from the Fund. Energy holding BP was the single largest detractor from Fund performance; we sold our position in BP after taking over management of the Fund.
Stock selection combined with an underweight position in the health care sector contributed to Fund performance relative to the Russell 1000 Value Index. Within health care, our holdings in Pfizer and UnitedHealth Group performed particularly well during the year.
In absolute terms, the Fund’s holdings in the consumer discretionary and financials sectors contributed the most to performance. Media companies Omnicom and Time Warner were strong performers as was financial services company Chubb.
Select holdings in the energy sector also made significant contributions to returns during the year. Since we assumed management of the Fund in June, we took advantage of weakness in select energy holdings to build our exposure to the sector. The stock price weakness was driven by the Mocondo offshore oil well incident and subsequent Gulf of Mexico drilling moratorium. Currently, the majority of the Fund’s energy holdings are in the integrated oil industry, an area that has become more attractively priced.
We believe that market volatility, and the market correction that occurred during the second quarter of 2010, created opportunities to invest in companies with attractive valuations. Our contrarian philosophy and deep value approach of buying extremely undervalued companies may capitalize on market volatility and down markets as value is created for new investment opportunities.
Thank you for your investment in Invesco Basic Value Fund and for sharing our long-term investment horizon.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF JASON LEDER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885006.jpg)
Jason Leder
Chartered Financial Analyst, portfolio manager, is lead manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Leder earned a B.A. from The University of Texas and an M.B.A. from Columbia University.
Chartered Financial Analyst, portfolio manager, is lead manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Leder earned a B.A. from The University of Texas and an M.B.A. from Columbia University.
![(PHOTO OF DEVIN ARMSTRONG)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885007.jpg)
Devin Armstrong Chartered Financial Analyst, portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Armstrong earned a B.S. in psychology and finance from the University of Illinois and an M.B.A. in finance from Columbia University.
![(PHOTO OF KEVIN HOLT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885008.jpg)
Kevin Holt
Chartered Financial Analyst, portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Holt earned a B.A. from the University of Iowa and an M.B.A. from the University of Chicago.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Holt earned a B.A. from the University of Iowa and an M.B.A. from the University of Chicago.
![(PHOTO OF MATTHEW SEINSHEIMER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885009.jpg)
Matthew Seinsheimer
Chartered Financial Analyst, portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 1992. Mr. Seinsheimer earned a B.B.A. from Southern Methodist University and an M.B.A. from The University of Texas at Austin.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 1992. Mr. Seinsheimer earned a B.B.A. from Southern Methodist University and an M.B.A. from The University of Texas at Austin.
![(PHOTO OF JAMES WARWICK)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885010.jpg)
James Warwick
Portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Warwick earned a B.B.A. from Stephen F. Austin State University and an M.B.A. from the University of Houston.
Portfolio manager, is manager of Invesco Basic Value Fund. He joined Invesco in 2010. Mr. Warwick earned a B.B.A. from Stephen F. Austin State University and an M.B.A. from the University of Houston.
5 | Invesco Basic Value Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund data from 10/18/95, index data from 10/31/95
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885011.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on.
6 | Invesco Basic Value Fund |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (10/18/95) | 7.06 | % | ||||||
10 | Years | 0.16 | ||||||
5 | Years | -3.35 | ||||||
1 | Year | 1.01 | ||||||
Class B Shares | ||||||||
Inception (10/18/95) | 7.10 | % | ||||||
10 | Years | 0.17 | ||||||
5 | Years | -3.24 | ||||||
1 | Year | 1.11 | ||||||
Class C Shares | ||||||||
Inception (5/3/99) | 2.45 | % | ||||||
10 | Years | 0.02 | ||||||
5 | Years | -2.97 | ||||||
1 | Year | 5.17 | ||||||
Class R Shares | ||||||||
10 | Years | 0.52 | % | |||||
5 | Years | -2.48 | ||||||
1 | Year | 6.67 | ||||||
Class Y Shares | ||||||||
10 | Years | 0.79 | % | |||||
5 | Years | -2.13 | ||||||
1 | Year | 7.24 | ||||||
Institutional Class Shares | ||||||||
Inception (3/15/02) | 0.86 | % | ||||||
5 | Years | -1.78 | ||||||
1 | Year | 7.45 |
Performance includes litigation proceeds. Had these proceeds not been received, total return would have been lower.
Class R shares incepted on June 3, 2002. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class R shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.41%, 2.16%, 2.16%, 1.66%, 1.16% and 0.79%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
7 | Invesco Basic Value Fund |
Invesco Basic Value Fund’s investment objective is long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | The Fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
n | The Fund may invest a large percentage of its assets in a limited number of securities or other instruments, which could negatively affect the value of the Fund. | |
n | The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results. | |
n | The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment; general economic and market conditions; regional or global instability; and currency and interest rate fluctuations. |
n | Value stocks may react differently to issuer, political, market and economic developments than the market as a whole and other types of stocks. Value stocks tend to be inexpensive relative to their earnings or assets compared to other types of stocks and may never realize their full value. Value stocks tend to be currently out-of-favor with many investors. |
About indexes used in this report
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | |
n | The Lipper Large-Cap Value Funds Index is an unmanaged index considered representative of large-cap value funds tracked by Lipper. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. | |
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | GTVLX | |
Class B Shares | GTVBX | |
Class C Shares | GTVCX | |
Class R Shares | GTVRX | |
Class Y Shares | GTVYX | |
Institutional Class Shares | GTVVX |
8 | Invesco Basic Value Fund |
Schedule of Investments(a)
December 31, 2010
Shares | Value | |||||||
Common Stocks & Other Equity Interests–98.64% | ||||||||
Advertising–5.12% | ||||||||
Omnicom Group Inc. | 1,280,021 | $ | 58,624,962 | |||||
Aerospace & Defense–2.50% | ||||||||
Honeywell International Inc. | 537,274 | 28,561,486 | ||||||
Apparel Retail–1.23% | ||||||||
TJX Cos., Inc. (The) | 316,651 | 14,056,138 | ||||||
Asset Management & Custody Banks–2.16% | ||||||||
Bank of New York Mellon Corp. (The) | 817,744 | 24,695,869 | ||||||
Brewers–3.75% | ||||||||
Molson Coors Brewing Co.–Class B | 856,273 | 42,976,342 | ||||||
Cable & Satellite–6.86% | ||||||||
Comcast Corp.–Class A | 1,626,515 | 35,734,535 | ||||||
Time Warner Cable Inc. | 648,544 | 42,823,360 | ||||||
78,557,895 | ||||||||
Casinos & Gaming–1.60% | ||||||||
International Game Technology | 1,037,632 | 18,355,710 | ||||||
Computer Hardware–4.41% | ||||||||
Dell Inc.(b) | 1,120,824 | 15,187,165 | ||||||
Hewlett-Packard Co. | 838,291 | 35,292,051 | ||||||
50,479,216 | ||||||||
Data Processing & Outsourced Services–0.89% | ||||||||
Western Union Co. | 547,294 | 10,163,249 | ||||||
Department Stores–2.38% | ||||||||
Macy’s, Inc. | 1,075,439 | 27,208,607 | ||||||
Diversified Banks–4.61% | ||||||||
Comerica Inc. | 48,758 | 2,059,538 | ||||||
U.S. Bancorp | 640,968 | 17,286,907 | ||||||
Wells Fargo & Co. | 1,079,095 | 33,441,154 | ||||||
52,787,599 | ||||||||
General Merchandise Stores–1.56% | ||||||||
Target Corp. | 296,420 | 17,823,735 | ||||||
Household Products–2.57% | ||||||||
Procter & Gamble Co. (The) | 457,124 | 29,406,787 | ||||||
Hypermarkets & Super Centers–3.21% | ||||||||
Wal-Mart Stores, Inc. | 681,642 | 36,760,953 | ||||||
Industrial Conglomerates–2.92% | ||||||||
General Electric Co. | 933,861 | 17,080,317 | ||||||
Tyco International Ltd. | 394,561 | 16,350,608 | ||||||
33,430,925 | ||||||||
Industrial Machinery–1.84% | ||||||||
Illinois Tool Works Inc. | 394,327 | 21,057,062 | ||||||
Integrated Oil & Gas–11.25% | ||||||||
Chevron Corp. | 409,211 | 37,340,504 | ||||||
Exxon Mobil Corp. | 310,103 | 22,674,731 | ||||||
Petroleo Brasileiro S.A.–ADR (Brazil) | 654,831 | 24,778,805 | ||||||
Royal Dutch Shell PLC–ADR (United Kingdom) | 658,365 | 43,965,615 | ||||||
128,759,655 | ||||||||
Investment Banking & Brokerage–3.21% | ||||||||
Goldman Sachs Group, Inc. (The) | 107,366 | 18,054,667 | ||||||
Morgan Stanley | 687,021 | 18,693,841 | ||||||
36,748,508 | ||||||||
IT Consulting & Other Services–1.63% | ||||||||
Accenture PLC–Class A (Ireland) | 385,945 | 18,714,473 | ||||||
Life & Health Insurance–3.22% | ||||||||
MetLife, Inc. | 441,388 | 19,615,283 | ||||||
Torchmark Corp. | 288,690 | 17,246,340 | ||||||
36,861,623 | ||||||||
Managed Health Care–1.54% | ||||||||
UnitedHealth Group Inc. | 486,971 | 17,584,523 | ||||||
Movies & Entertainment–2.11% | ||||||||
Time Warner Inc. | 751,868 | 24,187,593 | ||||||
Oil & Gas Drilling–1.70% | ||||||||
Noble Corp. | 542,724 | 19,413,237 | ||||||
Other Diversified Financial Services–6.97% | ||||||||
Bank of America Corp. | 2,315,672 | 30,891,065 | ||||||
JPMorgan Chase & Co. | 1,151,946 | 48,865,549 | ||||||
79,756,614 | ||||||||
Pharmaceuticals–3.88% | ||||||||
Bristol-Myers Squibb Co. | 777,493 | 20,588,014 | ||||||
Pfizer Inc. | 1,363,033 | 23,866,708 | ||||||
44,454,722 | ||||||||
Property & Casualty Insurance–10.95% | ||||||||
Allied World Assurance Co. Holdings, Ltd. | 303,351 | 18,031,183 | ||||||
Aspen Insurance Holdings Ltd. | 739,761 | 21,171,960 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Basic Value Fund
Shares | Value | |||||||
Property & Casualty Insurance–(continued) | ||||||||
Chubb Corp. (The) | 907,641 | $ | 54,131,709 | |||||
Travelers Cos., Inc. (The) | 573,497 | 31,949,518 | ||||||
125,284,370 | ||||||||
Semiconductors–1.78% | ||||||||
Intel Corp. | 969,954 | 20,398,133 | ||||||
Steel–1.24% | ||||||||
POSCO–ADR (South Korea) | 131,343 | 14,144,328 | ||||||
Wireless Telecommunication Services–1.55% | ||||||||
Vodafone Group PLC–ADR (United Kingdom) | 671,248 | 17,741,085 | ||||||
Total Common Stocks & Other Equity Interests (Cost $927,561,659) | 1,128,995,399 | |||||||
Money Market Funds–1.45% | ||||||||
Liquid Assets Portfolio–Institutional Class(c) | 8,331,175 | 8,331,175 | ||||||
Premier Portfolio–Institutional Class(c) | 8,331,175 | 8,331,175 | ||||||
Total Money Market Funds (Cost $16,662,350) | 16,662,350 | |||||||
TOTAL INVESTMENTS–100.09% (Cost $944,224,009) | 1,145,657,749 | |||||||
OTHER ASSETS LESS LIABILITIES–(0.09)% | (1,057,259 | ) | ||||||
NET ASSETS–100.00% | $ | 1,144,600,490 | ||||||
Investment Abbreviations:
ADR | – American Depositary Receipt |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |
(b) | Non-income producing security. | |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Basic Value Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments, at value (Cost $927,561,659) | $ | 1,128,995,399 | ||
Investments in affiliated money market funds, at value and cost | 16,662,350 | |||
Total investments, at value (Cost $944,224,009) | 1,145,657,749 | |||
Cash | 488,495 | |||
Receivables for: | ||||
Investments sold | 1,815,701 | |||
Fund shares sold | 328,084 | |||
Dividends | 1,728,495 | |||
Investment for trustee deferred compensation and retirement plans | 81,225 | |||
Other assets | 53,582 | |||
Total assets | 1,150,153,331 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 3,572,315 | |||
Accrued fees to affiliates | 1,256,068 | |||
Accrued other operating expenses | 222,419 | |||
Trustee deferred compensation and retirement plans | 502,039 | |||
Total liabilities | 5,552,841 | |||
Net assets applicable to shares outstanding | $ | 1,144,600,490 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,382,164,553 | ||
Undistributed net investment income | 1,680,258 | |||
Undistributed net realized gain (loss) | (440,678,061 | ) | ||
Unrealized appreciation | 201,433,740 | |||
$ | 1,144,600,490 | |||
Net Assets: | ||||
Class A | $ | 860,790,719 | ||
Class B | $ | 122,768,646 | ||
Class C | $ | 117,818,853 | ||
Class R | $ | 21,703,248 | ||
Class Y | $ | 11,809,370 | ||
Institutional Class | $ | 9,709,654 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 40,847,628 | |||
Class B | 6,543,873 | |||
Class C | 6,281,077 | |||
Class R | 1,044,084 | |||
Class Y | 557,663 | |||
Institutional Class | 447,911 | |||
Class A: | ||||
Net asset value per share | $ | 21.07 | ||
Maximum offering price per share (Net asset value of $21.07 divided by 94.50%) | $ | 22.30 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 18.76 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 18.76 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 20.79 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 21.18 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 21.68 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Basic Value Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends (net of foreign withholding taxes of $500,049) | $ | 20,843,179 | ||
Dividends from affiliated money market funds | 26,444 | |||
Total investment income | 20,869,623 | |||
Expenses: | ||||
Advisory fees | 8,264,921 | |||
Administrative services fees | 340,372 | |||
Custodian fees | 56,331 | |||
Distribution fees: | ||||
Class A | 2,251,988 | |||
Class B | 1,642,070 | |||
Class C | 1,254,866 | |||
Class R | 114,777 | |||
Transfer agent fees — A, B, C, R and Y | 4,460,537 | |||
Transfer agent fees — Institutional | 29,049 | |||
Trustees’ and officers’ fees and benefits | 52,294 | |||
Other | 429,864 | |||
Total expenses | 18,897,069 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (46,702 | ) | ||
Net expenses | 18,850,367 | |||
Net investment income | 2,019,256 | |||
Net realized and unrealized gain (loss) from: | ||||
Net realized gain from: | ||||
Investment securities (includes net gains (losses) from securities sold to affiliates of $(230,777)) | 71,016,728 | |||
Foreign currencies | 187,978 | |||
71,204,706 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (1,606,487 | ) | ||
Foreign currencies | 3,317 | |||
(1,603,170 | ) | |||
Net realized and unrealized gain | 69,601,536 | |||
Net increase in net assets resulting from operations | $ | 71,620,792 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Basic Value Fund
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,019,256 | $ | 260,703 | ||||
Net realized gain (loss) | 71,204,706 | (140,637,246 | ) | |||||
Change in net unrealized appreciation (depreciation) | (1,603,170 | ) | 676,236,493 | |||||
Net increase in net assets resulting from operations | 71,620,792 | 535,859,950 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | — | (14,272,008 | ) | |||||
Class R | — | (273,233 | ) | |||||
Class Y | — | (270,870 | ) | |||||
Institutional Class | (37,338 | ) | (1,082,601 | ) | ||||
Total distributions from net investment income | (37,338 | ) | (15,898,712 | ) | ||||
Share transactions–net: | ||||||||
Class A | (166,262,622 | ) | (149,912,944 | ) | ||||
Class B | (114,021,703 | ) | (153,607,639 | ) | ||||
Class C | (28,626,140 | ) | (28,078,780 | ) | ||||
Class R | (4,539,391 | ) | (7,110,568 | ) | ||||
Class Y | (6,039,440 | ) | 3,492,338 | |||||
Institutional Class | (24,760,458 | ) | (35,197,489 | ) | ||||
Net increase (decrease) in net assets resulting from share transactions | (344,249,754 | ) | (370,415,082 | ) | ||||
Net increase (decrease) in net assets | (272,666,300 | ) | 149,546,156 | |||||
Net assets: | ||||||||
Beginning of year | 1,417,266,790 | 1,267,720,634 | ||||||
End of year (includes undistributed net investment income of $1,680,258 and $(489,638), respectively) | $ | 1,144,600,490 | $ | 1,417,266,790 | ||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Basic Value Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by |
13 Invesco Basic Value Fund
independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | |
D. | Distributions — Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
14 Invesco Basic Value Fund
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
I. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. | |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. | ||
J. | Foreign Currency Contracts — The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .695% | ||
Next $250 million | 0 | .67% | ||
Next $500 million | 0 | .645% | ||
Next $1.5 billion | 0 | .62% | ||
Next $2.5 billion | 0 | .595% | ||
Next $2.5 billion | 0 | .57% | ||
Next $2.5 billion | 0 | .545% | ||
Over $10 billion | 0 | .52% | ||
15 Invesco Basic Value Fund
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 1.75%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012. The adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2010, the Adviser waived advisory fees of $30,505.
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of the Fund in the amount of $4,476.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $68,595 in front-end sales commissions from the sale of Class A shares and $5, $147,439 and $3,676 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
16 Invesco Basic Value Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 1,145,657,749 | $ | — | $ | — | $ | 1,145,657,749 | ||||||||
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2010, the Fund engaged in securities purchases of $129,694,638 and securities sales of $22,942,550, which resulted in net realized gains (losses) of $(230,777).
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangements are comprised of (1) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (2) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended December 31, 2010, the Fund received credits from these arrangements, which resulted in the reduction of the Fund’s total expenses of $11,721.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended December 31, 2010, the Fund paid legal fees of $5,750 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 37,338 | $ | 15,898,712 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 2,174,970 | ||
Net unrealized appreciation — investments | 186,782,303 | |||
Temporary book/tax differences | (494,713 | ) | ||
Post-October deferrals | (603,174 | ) | ||
Capital loss carryforward | (425,423,449 | ) | ||
Shares of beneficial interest | 1,382,164,553 | |||
Total net assets | $ | 1,144,600,490 | ||
17 Invesco Basic Value Fund
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $6,622,383 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 174,185,088 | ||
December 31, 2017 | 251,238,361 | |||
Total capital loss carryforward | $ | 425,423,449 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $1,052,954,177 and $1,395,675,246, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 196,427,059 | ||
Aggregate unrealized (depreciation) of investment securities | (9,644,756 | ) | ||
Net unrealized appreciation of investment securities | $ | 186,782,303 | ||
Cost of investments for tax purposes is $958,875,446. |
NOTE 10—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2010, undistributed net investment income was increased by $187,978, undistributed net realized gain (loss) was decreased by $187,978. This reclassification had no effect on the net assets of the Fund.
18 Invesco Basic Value Fund
NOTE 11—Share Information
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 2,935,798 | $ | 58,018,722 | 6,801,323 | $ | 105,436,621 | ||||||||||
Class B | 427,254 | 7,505,733 | 928,496 | 12,556,967 | ||||||||||||
Class C | 392,535 | 7,013,812 | 683,852 | 9,614,225 | ||||||||||||
Class R | 282,264 | 5,391,599 | 585,525 | 8,941,935 | ||||||||||||
Class Y | 459,140 | 9,328,135 | 331,090 | 4,914,463 | ||||||||||||
Institutional Class | 319,645 | 6,302,952 | 418,588 | 5,863,508 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | (13 | ) | (226 | ) | 701,839 | 13,609,465 | ||||||||||
Class B | (3 | ) | (30 | ) | — | — | ||||||||||
Class R | — | — | 14,244 | 273,211 | ||||||||||||
Class Y | — | — | 13,647 | 265,151 | ||||||||||||
Institutional Class | 1,748 | 37,327 | 54,463 | 1,082,183 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 4,063,329 | 80,094,884 | 6,200,939 | 99,165,231 | ||||||||||||
Class B | (4,544,032 | ) | (80,094,884 | ) | (6,960,778 | ) | (99,165,231 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (15,510,698 | ) | (304,376,002 | ) | (23,963,135 | ) | (368,124,261 | ) | ||||||||
Class B | (2,362,429 | ) | (41,432,522 | ) | (5,127,561 | ) | (66,999,375 | ) | ||||||||
Class C | (2,021,453 | ) | (35,639,952 | ) | (2,852,533 | ) | (37,693,005 | ) | ||||||||
Class R | (511,482 | ) | (9,930,990 | ) | (1,041,583 | ) | (16,325,714 | ) | ||||||||
Class Y | (787,300 | ) | (15,367,575 | ) | (103,954 | ) | (1,687,276 | ) | ||||||||
Institutional Class | (1,472,328 | ) | (31,100,737 | ) | (2,395,567 | ) | (42,143,180 | ) | ||||||||
Net increase (decrease) in share activity | (18,328,025 | ) | $ | (344,249,754 | ) | (25,711,105 | ) | $ | (370,415,082 | ) | ||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 15% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
19 Invesco Basic Value Fund
NOTE 12—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | on securities | Dividends | Distributions | net assets | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss) | unrealized) | operations | income | gains | Distributions | of period | return(a) | (000s omitted) | absorbed | absorbed | net assets | turnover(b) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 19.71 | $ | 0.06 | (c) | $ | 1.30 | $ | 1.36 | $ | — | $ | — | $ | — | $ | 21.07 | 6.90 | % | $ | 860,791 | 1.34 | %(d) | 1.34 | %(d) | 0.31 | %(d) | 85 | % | |||||||||||||||||||||||||||
Year ended 12/31/09 | 13.20 | 0.03 | (c) | 6.77 | (e) | 6.80 | (0.29 | ) | — | (0.29 | ) | 19.71 | 51.55 | (e) | 972,680 | 1.41 | 1.41 | 0.21 | 21 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 31.51 | 0.18 | (c) | (16.60 | ) | (16.42 | ) | (0.05 | ) | (1.84 | ) | (1.89 | ) | 13.20 | (51.86 | ) | 786,705 | 1.26 | 1.26 | 0.73 | 57 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 36.61 | 0.12 | 0.24 | 0.36 | (0.02 | ) | (5.44 | ) | (5.46 | ) | 31.51 | 1.07 | 2,404,900 | 1.14 | 1.17 | 0.31 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 34.22 | 0.14 | 4.38 | 4.52 | (0.03 | ) | (2.10 | ) | (2.13 | ) | 36.61 | 13.20 | 3,173,889 | 1.15 | 1.20 | 0.36 | 14 | |||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 17.68 | (0.08 | )(c) | 1.16 | 1.08 | — | — | — | 18.76 | 6.11 | 122,769 | 2.09 | (d) | 2.09 | (d) | (0.44 | )(d) | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 11.75 | (0.07 | )(c) | 6.00 | (e) | 5.93 | — | — | — | 17.68 | 50.47 | (e) | 230,190 | 2.16 | 2.16 | (0.54 | ) | 21 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 28.59 | 0.00 | (c) | (15.00 | ) | (15.00 | ) | — | (1.84 | ) | (1.84 | ) | 11.75 | (52.21 | ) | 284,106 | 2.01 | 2.01 | (0.02 | ) | 57 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 33.95 | (0.15 | ) | 0.23 | 0.08 | — | (5.44 | ) | (5.44 | ) | 28.59 | 0.31 | 1,015,776 | 1.89 | 1.92 | (0.44 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 32.09 | (0.14 | ) | 4.10 | 3.96 | — | (2.10 | ) | (2.10 | ) | 33.95 | 12.33 | 1,436,084 | 1.90 | 1.95 | (0.39 | ) | 14 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 17.67 | (0.08 | )(c) | 1.17 | 1.09 | — | — | — | 18.76 | 6.17 | 117,819 | 2.09 | (d) | 2.09 | (d) | (0.44 | )(d) | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 11.75 | (0.08 | )(c) | 6.00 | (e) | 5.92 | — | — | — | 17.67 | 50.38 | (e) | 139,794 | 2.16 | 2.16 | (0.54 | ) | 21 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 28.59 | 0.00 | (c) | (15.00 | ) | (15.00 | ) | — | (1.84 | ) | (1.84 | ) | 11.75 | (52.21 | ) | 118,379 | 2.01 | 2.01 | (0.02 | ) | 57 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 33.95 | (0.15 | ) | 0.23 | 0.08 | — | (5.44 | ) | (5.44 | ) | 28.59 | 0.31 | 399,262 | 1.89 | 1.92 | (0.44 | ) | 23 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 32.08 | (0.14 | ) | 4.11 | 3.97 | — | (2.10 | ) | (2.10 | ) | 33.95 | 12.37 | 508,775 | 1.90 | 1.95 | (0.39 | ) | 14 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 19.49 | 0.01 | (c) | 1.29 | 1.30 | — | — | — | 20.79 | 6.67 | 21,703 | 1.59 | (d) | 1.59 | (d) | 0.06 | (d) | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 13.03 | (0.01 | )(c) | 6.68 | (e) | 6.67 | (0.21 | ) | — | (0.21 | ) | 19.49 | 51.26 | (e) | 24,813 | 1.66 | 1.66 | (0.04 | ) | 21 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 31.12 | 0.12 | (c) | (16.37 | ) | (16.25 | ) | — | (1.84 | ) | (1.84 | ) | 13.03 | (51.98 | ) | 22,352 | 1.51 | 1.51 | 0.48 | 57 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 36.29 | 0.02 | 0.25 | 0.27 | — | (5.44 | ) | (5.44 | ) | 31.12 | 0.82 | 51,572 | 1.39 | 1.42 | 0.06 | 23 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 34.00 | 0.03 | 4.36 | 4.39 | — | (2.10 | ) | (2.10 | ) | 36.29 | 12.91 | 55,718 | 1.40 | 1.45 | 0.11 | 14 | ||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 19.75 | 0.11 | (c) | 1.32 | 1.43 | — | — | — | 21.18 | 7.24 | 11,809 | 1.09 | (d) | 1.09 | (d) | 0.56 | (d) | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 13.21 | 0.08 | (c) | 6.77 | (e) | 6.85 | (0.31 | ) | — | (0.31 | ) | 19.75 | 51.89 | (e) | 17,497 | 1.16 | 1.16 | 0.46 | 21 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 20.24 | 0.03 | (c) | (5.17 | ) | (5.14 | ) | (0.05 | ) | (1.84 | ) | (1.89 | ) | 13.21 | (25.00 | ) | 8,519 | 1.28 | (g) | 1.28 | (g) | 0.71 | (g) | 57 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 20.20 | 0.17 | (c) | 1.34 | 1.51 | (0.03 | ) | — | (0.03 | ) | 21.68 | 7.45 | 9,710 | 0.82 | (d) | 0.82 | (d) | 0.83 | (d) | 85 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 13.53 | 0.14 | (c) | 6.97 | (e) | 7.11 | (0.44 | ) | — | (0.44 | ) | 20.20 | 52.58 | (e) | 32,293 | 0.79 | 0.79 | 0.83 | 21 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 32.47 | 0.31 | (c) | (17.16 | ) | (16.85 | ) | (0.25 | ) | (1.84 | ) | (2.09 | ) | 13.53 | (51.63 | ) | 47,659 | 0.81 | 0.81 | 1.18 | 57 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 37.43 | 0.23 | 0.27 | 0.50 | (0.02 | ) | (5.44 | ) | (5.46 | ) | 32.47 | 1.42 | 327,654 | 0.76 | 0.79 | 0.69 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 34.95 | 0.24 | 4.53 | 4.77 | (0.19 | ) | (2.10 | ) | (2.29 | ) | 37.43 | 13.64 | 339,915 | 0.75 | 0.80 | 0.76 | 14 | |||||||||||||||||||||||||||||||||||||||
(a) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(b) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(c) | Calculated using average shares outstanding. | |
(d) | Ratios are based on average daily net assets (000’s) of $900,795, $164,207, $125,487, $22,955, $18,330 and $30,713 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(e) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received Net gains on securities (both realized and unrealized) per share would have been $6.48, $5.71, $5.71, $6.39, $6.48 and $6.68 for Class A, Class B, Class C, Class R, Class Y and Institutional Class, respectively and total return would have been lower. | |
(f) | Commencement date of October 3, 2008. | |
(g) | Annualized. |
NOTE 13—Significant Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco Van Kampen Value Opportunities Fund (the “Acquiring Fund”) in exchange for shares of the Acquiring Fund. The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2011.
20 Invesco Basic Value Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Basic Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Basic Value Fund (formerly known as AIM Basic Value Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
21 Invesco Basic Value Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,204.00 | $ | 7.50 | $ | 1,018.40 | $ | 6.87 | 1.35 | % | ||||||||||||||||||
B | 1,000.00 | 1,199.50 | 11.64 | 1,014.62 | 10.66 | 2.10 | ||||||||||||||||||||||||
C | 1,000.00 | 1,199.50 | 11.64 | 1,014.62 | 10.66 | 2.10 | ||||||||||||||||||||||||
R | 1,000.00 | 1,203.10 | 8.88 | 1,017.14 | 8.13 | 1.60 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,206.20 | 6.12 | 1,019.66 | 5.60 | 1.10 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,207.20 | 4.67 | 1,020.97 | 4.28 | .84 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
22 Invesco Basic Value Fund
Tax Information |
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 100% | |||
Corporate Dividends Received Deduction* | 100% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
23 Invesco Basic Value Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885012.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
![(INVESCO AIM LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885013.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
BVA-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Allocation Funds
Invesco Conservative Allocation Fund
Invesco Growth Allocation Fund
Invesco Moderate Allocation Fund
Invesco Moderate Growth Allocation Fund
Invesco Moderately Conservative Allocation Fund
Invesco Growth Allocation Fund
Invesco Moderate Allocation Fund
Invesco Moderate Growth Allocation Fund
Invesco Moderately Conservative Allocation Fund
2 | Long-Term Fund Performance | |
12 | Letters to Shareholders | |
14 | Performance Summary | |
14 | Management Discussion | |
24 | Supplemental Information | |
31 | Schedule of Investments | |
36 | Financial Statements | |
40 | Notes to Financial Statements | |
51 | Financial Highlights | |
56 | Auditor’s Report | |
57 | Fund Expenses | |
60 | Tax Information | |
T-1 | Trustees and Officers |
Invesco Conservative Allocation Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 4/30/04
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886102.gif)
1 | Invesco, Lipper Inc. | |
2 | Beginning 9/30/10 the Custom Conservative Allocation Index was changed to better reflect the investments of the Fund. Prior to that time, returns would have been the same as the current Custom Conservative Allocation Index. The ending value for the index as originally allocated is $14,171. | |
3 | Lipper Inc. |
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
2 | Invesco Allocation Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (4/30/04) | 2.44 | % | ||
5 Years | 1.72 | |||
1 Year | 1.35 | |||
Class B Shares | ||||
Inception (4/30/04) | 2.55 | % | ||
5 Years | 1.79 | |||
1 Year | 1.52 | |||
Class C Shares | ||||
Inception (4/30/04) | 2.54 | % | ||
5 Years | 2.11 | |||
1 Year | 5.52 | |||
Class R Shares | ||||
Inception (4/30/04) | 3.07 | % | ||
5 Years | 2.65 | |||
1 Year | 7.13 | |||
Class S Shares | ||||
Inception | 3.33 | % | ||
5 Years | 2.91 | |||
1 Year | 7.36 | |||
Class Y Shares | ||||
Inception | 3.40 | % | ||
5 Years | 3.01 | |||
1 Year | 7.63 | |||
Institutional Class Shares | ||||
Inception (4/30/04) | 3.46 | % | ||
5 Years | 2.99 | |||
1 Year | 7.69 |
Class S shares incepted on September 25, 2009. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares was 1.09%, 1.84%, 1.84%, 1.34%, 0.99%, 0.84% and 0.84%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares was 1.28%, 2.03%, 2.03%, 1.53%, 1.18%. 1.03% and 0.84%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class S, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses in the past, performance would have been lower.
1 | Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.61% for Invesco Conservative Allocation Fund. |
3 | Invesco Allocation Funds |
Invesco Growth Allocation Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 4/30/04
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886103.gif)
1 | Invesco, Lipper Inc. | |
2 | Beginning 9/30/10 the Custom Growth Allocation Index was changed to better reflect the investments of the Fund. Prior to that time, returns would have been the same as the current Custom Growth Allocation Index. The ending value for the index as originally allocated is $14,393. | |
3 | Lipper Inc. |
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
4 | Invesco Allocation Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (4/30/04) | 4.05 | % | ||
5 Years | 0.88 | |||
1 Year | 6.73 | |||
Class B Shares | ||||
Inception (4/30/04) | 4.17 | % | ||
5 Years | 0.92 | |||
1 Year | 7.02 | |||
Class C Shares | ||||
Inception (4/30/04) | 4.17 | % | ||
5 Years | 1.28 | |||
1 Year | 11.02 | |||
Class R Shares | ||||
Inception (4/30/04) | 4.69 | % | ||
5 Years | 1.79 | |||
1 Year | 12.61 | |||
Class S Shares | ||||
Inception | 4.94 | % | ||
5 Years | 2.04 | |||
1 Year | 12.92 | |||
Class Y Shares | ||||
�� | ||||
Inception | 5.02 | % | ||
5 Years | 2.15 | |||
1 Year | 13.17 | |||
Institutional Class Shares | ||||
Inception (4/30/04) | 5.27 | % | ||
5 Years | 2.36 | |||
1 Year | 13.24 |
Class S shares incepted on September 25, 2009. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares was 1.23%, 1.98%, 1.98%, 1.48%, 1.13%, 0.98% and 0.93%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares was 1.45%, 2.20%, 2.20%, 1.70%, 1.35%, 1.20% and 0.93%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class S, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses on the Fund’s Class A, B, C, R, S and Y shares in the past, performance would have been lower.
1 | Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.77% for Invesco Growth Allocation Fund. |
5 | Invesco Allocation Funds |
Invesco Moderate Allocation Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 4/30/04
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886104.gif)
1 | Invesco, Lipper Inc. | |
2 | Beginning 9/30/10 the Custom Moderate Allocation Index was changed to better reflect the investments of the Fund. Prior to that time, returns would have been the same as the current Custom Moderate Allocation Index. The ending value for the index as originally allocated is $14,533. | |
3 | Lipper Inc. |
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
6 | Invesco Allocation Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (4/30/04) | 4.11 | % | ||
5 Years | 2.06 | |||
1 Year | 5.88 | |||
Class B Shares | ||||
Inception (4/30/04) | 4.22 | % | ||
5 Years | 2.12 | |||
1 Year | 6.25 | |||
Class C Shares | ||||
Inception (4/30/04) | 4.22 | % | ||
5 Years | 2.46 | |||
1 Year | 10.26 | |||
Class R Shares | ||||
Inception (4/30/04) | 4.75 | % | ||
5 Years | 2.97 | |||
1 Year | 11.77 | |||
Class S Shares | ||||
Inception | 4.99 | % | ||
5 Years | 3.24 | |||
1 Year | 12.15 | |||
Class Y Shares | ||||
Inception | 5.08 | % | ||
5 Years | 3.34 | |||
1 Year | 12.42 | |||
Institutional Class Shares | ||||
Inception (4/30/04) | 5.28 | % | ||
5 Years | 3.49 | |||
1 Year | 12.28 |
Class S shares incepted on September 25, 2009. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares was 1.08%, 1.83%, 1.83%, 1.33%, 0.98%, 0.83% and 0.84%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares was 1.28%, 2.03%, 2.03%, 1.53%, 1.18%, 1.03% and 0.90%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class S, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses on the Fund’s Class A, B, C, R, S and Y shares in the past, performance would have been lower.
1 | Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.71% for Invesco Moderate Allocation Fund. |
7 | Invesco Allocation Funds |
Invesco Moderate Growth Allocation Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund data from 4/29/05, index data from 4/30/05
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886105.gif)
1 | Lipper Inc. | |
2 | Invesco, Lipper Inc. | |
3 | Beginning 9/30/10 the Custom Moderate Growth Allocation Index was changed to better reflect the investments of the Fund. Prior to that time, returns would have been the same as the current Custom Moderate Growth Allocation Index. The ending value for the index as originally allocated is $13,264. |
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
8 | Invesco Allocation Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (4/29/05) | 3.79 | % | ||
5 Years | 1.66 | |||
1 Year | 6.71 | |||
Class B Shares | ||||
Inception (4/29/05) | 3.91 | % | ||
5 Years | 1.69 | |||
1 Year | 6.99 | |||
Class C Shares | ||||
Inception (4/29/05) | 4.04 | % | ||
5 Years | 2.04 | |||
1 Year | 11.00 | |||
Class R Shares | ||||
Inception (4/29/05) | 4.55 | % | ||
5 Years | 2.53 | |||
1 Year | 12.62 | |||
Class Y Shares | ||||
Inception | 4.94 | % | ||
5 Years | 2.93 | |||
1 Year | 13.19 | |||
Institutional Class Shares | ||||
Inception (4/29/05) | 5.08 | % | ||
5 Years | 3.06 | |||
1 Year | 13.12 |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.11%, 1.86%, 1.86%, 1.36%, 0.86% and 0.87%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.36%, 2.11%, 2.11%, 1.61%, 1.11% and 0.95%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses on the Fund’s Class A, B, C, R and Y shares, performance would have been lower.
1 | Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.74% for Invesco Moderate Growth Allocation Fund. |
9 | Invesco Allocation Funds |
Invesco Moderately Conservative Allocation Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund data from 4/29/05, index data from 4/30/05
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886106.gif)
1 | Lipper Inc. | |
2 | Invesco, Lipper Inc. | |
3 | Beginning 9/30/10 the Custom Moderately Conservative Allocation Index was changed to better reflect the investments of the Fund. Prior to that time, returns would have been the same as the current Custom Moderately Conservative Allocation Index. The ending value for the index as originally allocated is $13,578. |
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
10 | Invesco Allocation Funds |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (4/29/05) | 2.87 | % | ||
5 Years | 1.86 | |||
1 Year | 3.36 | |||
Class B Shares | ||||
Inception (4/29/05) | 2.98 | % | ||
5 Years | 1.92 | |||
1 Year | 3.45 | |||
Class C Shares | ||||
Inception (4/29/05) | 3.16 | % | ||
5 Years | 2.30 | |||
1 Year | 7.43 | |||
Class R Shares | ||||
Inception (4/29/05) | 3.64 | % | ||
5 Years | 2.77 | |||
1 Year | 8.96 | |||
Class Y Shares | ||||
Inception | 3.98 | % | ||
5 Years | 3.12 | |||
1 Year | 9.49 | |||
Institutional Class Shares | ||||
Inception (4/29/05) | 4.17 | % | ||
5 Years | 3.30 | |||
1 Year | 9.57 |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.03%, 1.78%, 1.78%, 1.28%, 0.78% and 0.78%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.35%, 2.10%, 2.10%, 1.60%, 1.10% and 0.96%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.64% for Invesco Moderately Conservative Allocation Fund. |
11 | Invesco Allocation Funds |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886107.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886108.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
12 | Invesco Allocation Funds |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886109.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds.
As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886110.gif)
Bruce L. Crockett
Independent Chair
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
13 | Invesco Allocation Funds |
Management’s Discussion of Fund Performance
Performance Summary — Invesco Conservative Allocation Fund
For the year ended December 31, 2010, Class A shares of Invesco Conservative Allocation Fund, at net asset value (NAV), returned 7.26% and underperformed the Fund’s custom style-specific benchmark, which returned 9.17% over the same period. Weakness in fixed income markets in the first quarter of 2010 and equity markets in the second quarter detracted from the Fund’s performance. Third and fourth quarter recoveries in equity, fixed income and commodities markets, however, helped minimize underperformance for the reporting period.
Your Fund’s long-term performance appears earlier in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 7.26 | % | ||
Class B Shares | 6.52 | |||
Class C Shares | 6.52 | |||
Class R Shares | 7.13 | |||
Class S Shares | 7.36 | |||
Class Y Shares | 7.63 | |||
Institutional Class Shares | 7.69 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Conservative Allocation Indexn (Style-Specific Index) | 9.17 | |||
Custom Conservative Allocation Index — Oldn (Style-Specific Index) | 9.25 | |||
Lipper Mixed-Asset Target Allocation Conservative Funds Index▼ (Peer Group Index) | 9.99 | |||
▼Lipper Inc.; nInvesco, Lipper Inc. |
How we invest
Invesco Conservative Allocation Fund is intended for investors with relatively low risk tolerance. The Fund invests in underlying funds diversified among asset classes (stocks, bonds, commodities and cash), investment styles (value and blend/core), regions (domestic and international) and market capitalizations (mid and large). These underlying funds include bond funds, which represent 64% of the portfolio, stock funds, which represent 27% and balanced-risk allocation and commodity funds that can shift exposures between equities,
sovereign debt and commodities, representing 9% of the portfolio.
The balanced-risk allocation and commodity funds gain exposure to their underlying assets through the use of derivatives, specifically exchange-traded futures and swaps agreements. The underlying funds may use derivative instruments to implement their investment strategy.
While no fund can guarantee positive performance, the broad portfolio diversification strives to provide exposure to areas of the market that may perform well in any given period. Additionally, the
broad diversification attempts to limit exposure to any one area of the market that may be underperforming.
We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques.
While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations.
Market conditions and your Fund
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crises. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during the first quarter of 2010, driven by anticipation that improving economic conditions would boost earnings growth.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global econom-
Portfolio Composition
Target | % of Total Net Assets | |||||||
Asset Class | Allocation Range* | As of 12/31/10 | ||||||
Intermediate Term Taxable Investment Grade | 28.80 | % | 28.19 | % | ||||
Taxable Non Investment Grade | 10.24 | 10.22 | ||||||
Short Term Taxable Investment Grade | 9.60 | 9.49 | ||||||
Balanced Risk | 9.00 | 9.35 | ||||||
Large Cap Value | 7.41 | 7.70 | ||||||
International/Global Blend | 3.38 | 3.46 | ||||||
Large Cap Growth | 3.26 | 3.31 | ||||||
International/Global Growth | 3.11 | 3.18 | ||||||
Emerging Markets | 2.70 | 2.70 | ||||||
Emerging Markets Fixed-Income | 2.56 | 2.55 | ||||||
Large Cap Blend | 2.29 | 2.36 | ||||||
Mid Cap Blend | 1.76 | 1.86 | ||||||
Global Real Estate | 1.62 | 1.66 | ||||||
Small Cap Blend | 1.49 | 1.56 | ||||||
Cash Equivalents Plus Other Assets Less Liabilities | 12.80 | 12.41 |
*Percentage may not equal 100% due to rounding. |
Total Net Assets | $125.4 million |
Fund Nasdaq Symbols
Invesco Conservative Allocation Fund
Invesco Conservative Allocation Fund
Class A Shares | ACNAX | |||
Class B Shares | ACNBX | |||
Class C Shares | ACNCX | |||
Class R Shares | ACNRX | |||
Class S Shares | ACSSX | |||
Class Y Shares | ACNYX | |||
Institutional Class Shares | ACNIX |
14 | Invesco Allocation Funds |
ic slowdown. These concerns led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward.
The third quarter of 2010 witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Riskier assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at low levels. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
During the first three quarters of the reporting period, the Fund’s allocations to Invesco Core Bond Fund, Invesco Balanced-Risk Allocation Fund and Invesco Select Real Estate Income Fund contributed positively both absolutely and relatively. Although Invesco Short Term Bond Fund, Invesco Floating Rate Fund and Invesco International Total Return Fund were top contributors on an absolute basis, they detracted from overall relative performance. Invesco Large Cap Basic Value Fund, Invesco Structured Growth Fund and Invesco International Core Equity Fund each detracted on a relative and absolute basis. Invesco Select Real Estate Income Fund, Invesco International Total Return Fund, Invesco Large Cap Basic Value Fund and Invesco Structured Growth Fund were no longer held at the end of the fiscal year.
Effective November 29, 2010, strategic adjustments were made to the Fund reflecting several months of research by Invesco’s Global Asset Allocation team. This was represented by changes to the underlying allocations, including a new allocation to commodities and a new 20% maximum exchange-traded fund (ETF) exposure.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policies and the belief that the seven largest developed (G7) economies had
recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. The various commodity complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Closing out the reporting period, allocations to Invesco Large Cap Growth Fund, Invesco Endeavor Fund, Invesco Small Cap Equity Fund and Invesco Floating Rate Fund contributed on a relative and absolute basis. Only Invesco Core Bond Fund and Invesco Limited Maturity Treasury Fund detracted from overall performance. Relatively, however, Invesco Balanced-Risk Allocation Fund and Invesco Global Real Estate Fund detracted the most from performance. Invesco Limited Maturity Treasury Fund was no longer held at the end of the fiscal year.
Thank you for your continued commitment to Invesco Conservative Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886111.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
![(PHOTO OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886112.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PHOTO OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886113.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PHOTO OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886114.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
![(PHOTO OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886115.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Conservative Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
15 | Invesco Allocation Funds |
Management’s Discussion of Fund Performance
Performance Summary — Invesco Growth Allocation Fund
For the year ended December 31, 2010, Class A shares of Invesco Growth Allocation Fund, at net asset value (NAV), returned 12.91% and outperformed the Fund’s custom style-specific benchmark, which returned 12.09% over the same period. Weakness in fixed income markets in the first quarter of 2010 and equity markets in the second quarter detracted from overall performance. Third and fourth quarter recoveries in equity, fixed income and commodities markets, however, helped maximize the outperformance for the reporting period.
Your Fund’s long-term performance appears earlier in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 12.91 | % | ||
Class B Shares | 12.02 | |||
Class C Shares | 12.02 | |||
Class R Shares | 12.61 | |||
Class S Shares | 12.92 | |||
Class Y Shares | 13.17 | |||
Institutional Class Shares | 13.24 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Growth Allocation Indexn (Style-Specific Index) | 12.09 | |||
Custom Growth Allocation Index — Oldn (Style-Specific Index) | 14.84 | |||
Lipper Multi-Cap Core Funds Index▼ (Peer Group Index) | 16.63 | |||
▼Lipper Inc.; nInvesco, Lipper Inc. |
How we invest
Invesco Growth Allocation Fund is intended for investors with a relatively high risk tolerance. The Fund invests in underlying funds diversified among asset classes (stocks, bonds, and commodities), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (small, mid and large). These underlying funds include stock funds, which represent 71% of the portfolio, balanced-risk allocation and commodity funds that can shift exposures between equities, sovereign debt and commodities, which represents 22%, and one bond fund, which represents the remaining 7% of the portfolio.
The balanced-risk allocation and commodity funds gain exposure to their underlying assets through the use of derivatives, specifically exchange-traded futures and swaps agreements. The underlying funds may use derivative instruments to implement their investment strategy.
While no fund can guarantee positive performance, the broad portfolio diversification strives to provide exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming.
�� We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques.
While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations.
Market conditions and your Fund
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crises. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during the first quarter of 2010, driven by anticipation that improving economic conditions would boost earnings growth.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These concerns led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward.
Portfolio Composition
Target | % of Total Net Assets | |||||||
Asset Class | Allocation Range* | As of 12/31/10 | ||||||
Balanced Risk | 22.00 | % | 22.19 | % | ||||
Large Cap Value | 19.48 | 19.35 | ||||||
International/Global Blend | 8.88 | 8.77 | ||||||
Large Cap Growth | 8.57 | 8.46 | ||||||
International/Global Growth | 8.17 | 8.10 | ||||||
Emerging Markets | 7.10 | 7.04 | ||||||
Large Cap Blend | 6.03 | 6.00 | ||||||
Mid Cap Blend | 4.62 | 4.66 | ||||||
Global Real Estate | 4.26 | 4.29 | ||||||
Small Cap Blend | 3.91 | 3.86 | ||||||
Cash Equivalents Plus Other Assets Less Liabilities | 7.00 | 7.28 |
*Percentage may not equal 100% due to rounding. |
Total Net Assets | $477.5 million |
Fund Nasdaq Symbols
Invesco Growth Allocation Fund
Invesco Growth Allocation Fund
Class A Shares | AADAX | |||
Class B Shares | AAEBX | |||
Class C Shares | AADCX | |||
Class R Shares | AADRX | |||
Class S Shares | AADSX | |||
Class Y Shares | AADYX | |||
Institutional Class Shares | AADIX |
16 | Invesco Allocation Funds |
The third quarter witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Riskier assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at low levels. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Invesco Balanced-Risk Allocation Fund, Invesco Small Cap Growth Fund, Invesco International Growth Fund and Invesco Global Real Estate Fund were the top performing underlying funds both relatively and absolutely during the first three quarters of 2010. Invesco Large Cap Basic Value Fund, Invesco International Core Equity Fund and Invesco Structured Growth Fund posted negative returns for this same period, while also underperforming their respective benchmarks. Invesco Small Cap Growth Fund, Invesco International Growth Fund, Invesco Large Cap Basic Value Fund and Invesco Structured Growth Fund were no longer held at the end of the fiscal year.
Effective November 29, 2010, strategic adjustments were made to the Fund reflecting several months of research by Invesco’s Global Asset Allocation team. This was represented by changes to the underlying allocations, including a new allocation to commodities, and a new 20% maximum exchange-traded fund (ETF) exposure.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policy and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in
government bond yields took their valuations much closer to our estimate of fair value. The various commodity complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
During the last quarter of the reporting period, Invesco Large Cap Growth Fund, Invesco Endeavor Fund and Invesco Small Cap Equity Fund generated positive returns on an absolute and relative basis. Invesco U.S. Government Fund was the only holding with negative absolute performance for the quarter. Invesco Balanced-Risk Allocation Fund, Invesco Global Real Estate Fund and Invesco Developing Markets Fund detracted the most from relative performance. Invesco U.S. Government Fund was no longer held at the end of the fiscal year.
Thank you for your continued commitment to Invesco Growth Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886111.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
![(PHOTO OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886112.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PHOTO OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886113.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PHOTO OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886114.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
![(PHOTO OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886115.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Growth Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
17 | Invesco Allocation Funds |
Management’s Discussion of Fund Performance
Performance Summary — Invesco Moderate Allocation Fund
For the year ended December 31, 2010, Class A shares of Invesco Moderate Allocation Fund, at net asset value (NAV), returned 12.03% and outperformed the Fund’s custom style-specific benchmark, which returned 11.61% over the same period. Weakness in fixed income markets in the first quarter of 2010 and equity markets in the second quarter detracted from overall performance. Third and fourth quarter recoveries in equity, fixed income and commodities markets, however, helped maximize outperformance for the reporting period.
Your Fund’s long-term performance appears earlier in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 12.03 | % | ||
Class B Shares | 11.25 | |||
Class C Shares | 11.26 | |||
Class R Shares | 11.77 | |||
Class S Shares | 12.15 | |||
Class Y Shares | 12.42 | |||
Institutional Class Shares | 12.28 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Moderate Allocation Indexn (Style-Specific Index) | 11.61 | |||
Custom Moderate Allocation Index — Oldn (Style-Specific Index) | 12.26 | |||
Lipper Mixed-Asset Target Allocation Moderate Funds Index▼ (Peer Group Index) | 11.54 | |||
▼Lipper Inc.; nInvesco, Lipper Inc. |
How we invest
Invesco Moderate Allocation Fund is intended for investors with moderate risk tolerance. The Fund invests in underlying funds diversified among asset classes (stocks, bonds and commodities), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (small, mid and large). These underlying funds include stock funds, which represent 52% of the portfolio’s target allocation, bond funds, which represent 30.5% of the portfolio, and balanced-risk allocation and commodity funds that can shift exposures
between equities, sovereign debt and commodities, representing 17.5%.
The balanced-risk allocation and commodity funds gain exposure to their underlying assets through the use of derivatives, specifically exchange-traded futures and swaps agreements. The underlying funds may use derivative instruments to implement their investment strategy.
While no fund can guarantee positive performance, the broad portfolio diversification strives to provide exposure to areas of the market that may perform well in any given period. Additionally, the
broad diversification attempts to limit exposure to any one area of the market that may be underperforming.
We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques.
While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations.
Market conditions and your Fund
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crises. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during the first quarter of 2010, driven by anticipation that improving economic conditions would boost earnings growth.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global econom-
Portfolio Composition
Target | % of Total Net Assets | |||||||
Asset Class | Allocation Range | As of 12/31/10 | ||||||
Balanced Risk | 17.50 | % | 17.81 | % | ||||
Large Cap Value | 14.28 | 14.61 | ||||||
Intermediate Term Taxable Investment Grade | 9.15 | 8.85 | ||||||
Taxable Non Investment Grade | 6.71 | 6.63 | ||||||
International/Global Blend | 6.50 | 6.56 | ||||||
Large Cap Growth | 6.27 | 6.25 | ||||||
International/Global Growth | 5.98 | 6.02 | ||||||
Emerging Markets | 5.20 | 5.12 | ||||||
Large Cap Blend | 4.41 | 4.45 | ||||||
Mid Cap Blend | 3.38 | 3.51 | ||||||
Global Real Estate | 3.12 | 3.14 | ||||||
Small Cap Blend | 2.86 | 2.97 | ||||||
Emerging Markets Fixed-Income | 2.44 | 2.40 | ||||||
Cash Equivalents Plus Other Assets Less Liabilities | 12.20 | 11.68 |
Total Net Assets | $575.8 million |
Fund Nasdaq Symbols Invesco Moderate Allocation Fund | ||||
Class A Shares | AMKAX | |||
Class B Shares | AMKBX | |||
Class C Shares | AMKCX | |||
Class R Shares | AMKRX | |||
Class S Shares | AMKSX | |||
Class Y Shares | ABKYX | |||
Institutional Class Shares | AMLIX |
18 | Invesco Allocation Funds |
ic slowdown. These concerns led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward.
The third quarter witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Riskier assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at low levels. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Invesco Core Bond Fund, Invesco Balanced-Risk Allocation Fund and Invesco High Yield Fund were the top absolute performers for the first three quarters of 2010; they also contributed on a relative basis. Invesco International Core Equity Fund, Invesco Large Cap Basic Value Fund and Invesco Structured Growth Fund were the top detractors on an absolute and a benchmark-relative basis during this time. Invesco Large Cap Basic Value Fund and Invesco Structured Growth Fund were no longer held at the end of the fiscal year.
Effective November 29, 2010, strategic adjustments were made to the Fund reflecting several months of research by Invesco’s Global Asset Allocation team. This was represented by changes to the underlying allocations, including a new allocation to commodities, and a new 20% maximum exchange-traded fund (ETF) exposure.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policy and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures.
The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. The various commodity complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
For the fourth quarter of the reporting period, allocations within the Fund to Invesco Large Cap Growth Fund, Invesco Endeavor Fund and Invesco Small Cap Equity Fund were beneficial on an absolute and relative basis. Although it reported a positive absolute return in the fourth quarter of 2010, Invesco Diversified Dividend Fund detracted from relative performance. Invesco Core Bond Fund was the only holding to have negative performance during this time, but was positive relative to the benchmark. Invesco Balanced-Risk Allocation Fund, Invesco Global Real Estate Fund and Invesco Developing Markets Fund were the main detractors from relative performance during the fourth quarter. Despite this, the Fund as a whole ended the reporting period with positive absolute and relative performance.
Thank you for your continued commitment to Invesco Moderate Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886111.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
![(PHOTO OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886112.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PHOTO OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886113.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PHOTO OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886114.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
![(PHOTO OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886115.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
19 | Invesco Allocation Funds |
Management’s Discussion of Fund Performance
Performance Summary — Invesco Moderate Growth Allocation Fund
For the year ended December 31, 2010, Class A shares of Invesco Moderate Growth Allocation Fund, at net asset value (NAV), returned 12.89% and outperformed the Fund’s custom style-specific benchmark, which returned 11.76% over the same period. Weakness in fixed income markets in the first quarter of 2010 and equity markets in the second quarter detracted from overall performance. Third and fourth quarter recoveries in equity, fixed income and commodities markets, however, helped maximize the outperformance for the reporting period.
Your Fund’s long-term performance appears earlier in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 12.89 | % | ||
Class B Shares | 11.99 | |||
Class C Shares | 12.00 | |||
Class R Shares | 12.62 | |||
Class Y Shares | 13.19 | |||
Institutional Shares | 13.12 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Moderate Growth Allocation Indexn (Style-Specific Index) | 11.76 | |||
Custom Moderate Growth Allocation Index — Oldn (Style-Specific Index) | 13.76 | |||
Lipper Mixed-Asset Target Allocation Growth Funds Index▼ (Peer Group Index) | 12.55 | |||
▼Lipper Inc.; n Invesco, Lipper Inc. |
How we invest
Invesco Moderate Growth Allocation Fund is intended for investors with a moderate to high risk tolerance. The Fund invests in funds diversified among asset classes (stocks, bonds and commodities), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (small, mid and large). The underlying funds include stock funds, which represent 62% of the portfolio, bond funds, which represent 17% of the portfolio, and balanced-risk allocation and commodity funds that can shift exposures between equities, sovereign debt and commodities, representing 21%.
The balanced-risk allocation and commodity funds gain exposure to their underlying assets through the use of derivatives, specifically exchange-traded futures and swaps agreements. The underlying funds may use derivative instruments to implement their investment strategy.
While no fund can guarantee positive performance, the broad portfolio diversification strives to provide exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming.
We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques.
While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations.
Market conditions and your Fund
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crises. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during the first quarter of 2010, driven by anticipation that improving economic conditions would boost earnings growth.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These concerns led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward.
Portfolio Composition
Target | % of Total Net Assets | |||||||
Asset Class | Allocation Range | As of 12/31/10 | ||||||
Balanced Risk | 21.00 | % | 21.21 | % | ||||
Large Cap Value | 17.02 | 16.93 | ||||||
International/Global Blend | 7.75 | 7.67 | ||||||
Large Cap Growth | 7.48 | 7.39 | ||||||
International/Global Growth | 7.13 | 7.07 | ||||||
Emerging Markets | 6.20 | 6.16 | ||||||
Large Cap Blend | 5.26 | 5.23 | ||||||
Mid Cap Blend | 4.03 | 4.08 | ||||||
Global Real Estate | 3.72 | 3.73 | ||||||
Small Cap Blend | 3.41 | 3.39 | ||||||
Taxable Non Investment Grade | 2.89 | 2.86 | ||||||
Intermediate Term Taxable Investment Grade | 2.55 | 2.50 | ||||||
Emerging Markets Fixed-Income | 1.36 | 1.35 | ||||||
Cash Equivalents Plus Other Assets Less Liabilities | 10.20 | 10.43 |
Total Net Assets | $304.1 million |
Fund Nasdaq Symbols Invesco Moderate Growth Allocation Fund | ||||
Class A Shares | AAMGX | |||
Class B Shares | AMBGX | |||
Class C Shares | ACMGX | |||
Class R Shares | RAMGX | |||
Class Y Shares | AAMYX | |||
Institutional Class Shares | AIMGX |
20 | Invesco Allocation Funds |
The third quarter witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Riskier assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at low levels. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Of the underlying funds, Invesco Balanced-Risk Allocation Fund, Invesco High Yield Fund and Invesco Core Bond Fund contributed most during the first three quarters of the year on absolute basis while also contributing on a relative basis. Invesco Large Cap Basic Value Fund, Invesco International Core Equity Fund and Invesco Structured Growth Fund each detracted from performance on an absolute and relative basis over the same period. Invesco Large Cap Basic Value Fund and Invesco Structured Growth Fund were no longer held at the end of the fiscal year.
Effective November 29, 2010, strategic adjustments were made to the Fund reflecting several months of research by Invesco’s Global Asset Allocation team. This was represented by changes to the underlying allocations, including a new allocation to commodities, and a new 20% maximum exchange-traded fund (ETF) exposure.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policy and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much
closer to our estimate of fair value. The various commodity complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Rounding out the reporting period, allocations to Invesco Large Cap Growth Fund, Invesco Endeavor Fund and Invesco Small Cap Equity Fund contributed positively to performance on an absolute and relative basis in the fourth quarter. Conversely, only Invesco Core Bond Fund detracted from absolute performance during the quarter. Invesco Balanced-Risk Allocation Fund, Invesco Global Real Estate Fund, Invesco Developing Markets Fund, Invesco Diversified Dividend Fund and Invesco Charter Fund each underperformed their respective benchmarks while still contributing to positive absolute performance.
Thank you for your continued commitment to Invesco Moderate Growth Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886111.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
![(PHOTO OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886112.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PHOTO OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886113.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PHOTO OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886114.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
![(PHOTO OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886115.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderate Growth Allocation Fund.
He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
21 | Invesco Allocation Funds |
Management’s Discussion of Fund Performance
Performance Summary — Invesco Moderately Conservative Allocation Fund
For the year ended December 31, 2010, Class A shares of Invesco Moderately Conservative Allocation Fund, at net asset value (NAV), returned 9.33% and underperformed the Fund’s custom style-specific benchmark, which returned 9.85% over the same period. Weakness in fixed income markets in the first quarter of 2010 and equity markets in the second quarter detracted from overall performance. Third and fourth quarter recoveries in equity, fixed income and commodities markets, however, helped minimize the underperformance for the reporting period.
Your Fund’s long-term performance appears earlier in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 9.33 | % | ||
Class B Shares | 8.45 | |||
Class C Shares | 8.43 | |||
Class R Shares | 8.96 | |||
Class Y Shares | 9.49 | |||
Institutional Class Shares | 9.57 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Moderately Conservative Allocation Indexn (Style-Specific Index) | 9.85 | |||
Custom Moderately Conservative Allocation Index — Oldn (Style-Specific Index) | 11.13 | |||
Lipper Mixed-Asset Target Allocation Conservative Funds Index▼ (Peer Group Index) | 9.99 | |||
▼Lipper Inc.; nInvesco, Lipper Inc. |
How we invest
Invesco Moderately Conservative Allocation Fund is intended for investors with a low to moderate risk tolerance. The Fund invests in underlying funds diversified among asset classes (stocks, bonds and commodities), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (mid and large). The underlying funds include bond funds, which represent 54.50% of the portfolio, stock funds, which represent 32% of the portfolio, and balanced-risk allocation and commodity funds that can shift exposures between equities, sovereign debt and commodities, representing the remaining 13.50%.
The balanced-risk allocation and
commodity funds gain exposure to their underlying assets through the use of derivatives, specifically exchange-traded futures and swaps agreements. The underlying funds may use derivative instruments to implement their investment strategy.
While no fund can guarantee positive performance, the broad portfolio diversification strives to provide exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming.
We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on
an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques.
While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations.
Market conditions and your Fund
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crises. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets, such as equities, enjoyed significant price advances during the first quarter of 2010, driven by anticipation that improving economic conditions would boost earnings growth.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These concerns led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward.
The third quarter witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral
Portfolio Composition
Target | % of Total Net Assets | |||||||
Asset Class | Allocation Range | As of 12/31/10 | ||||||
Intermediate Term Taxable Investment Grade | 24.52 | % | 24.32 | % | ||||
Balanced Risk | 13.50 | 13.74 | ||||||
Taxable Non Investment Grade | 10.36 | 10.33 | ||||||
Large Cap Value | 8.78 | 8.79 | ||||||
International/Global Blend | 4.00 | 3.98 | ||||||
Large Cap Growth | 3.86 | 3.84 | ||||||
International/Global Growth | 3.68 | 3.67 | ||||||
Emerging Markets Fixed-Income | 3.27 | 3.25 | ||||||
Emerging Markets | 3.20 | 3.20 | ||||||
Large Cap Blend | 2.72 | 2.72 | ||||||
Mid Cap Blend | 2.08 | 2.12 | ||||||
Global Real Estate | 1.92 | 1.94 | ||||||
Small Cap Blend | 1.76 | 1.77 | ||||||
Cash Equivalents Plus Other Assets Less Liabilities | 16.35 | 16.33 |
Total Net Assets | $73.8 million |
Fund Nasdaq Symbols Invesco Moderately Conservative Allocation Fund | ||||
Class A Shares | CAAMX | |||
Class B Shares | CMBAX | |||
Class C Shares | CACMX | |||
Class R Shares | CMARX | |||
Class Y Shares | CAAYX | |||
Institutional Class Shares | CMAIX |
22 | Invesco Allocation Funds |
European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Riskier assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at low levels. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Invesco Core Bond Fund, Invesco U.S. Government Fund, Invesco Balanced-Risk Allocation Fund and Invesco High Yield Fund were the top contributors to the Fund on an absolute basis during the first three quarters of the reporting period. All of these, with the exception of Invesco U.S. Government Fund, also contributed on a relative basis. Invesco Large Cap Basic Value Fund, Invesco Structured Growth Fund and Invesco International Core Equity Fund were the only detractors from overall performance over that same time period and also detracted on an absolute and relative basis. Invesco U.S. Government Fund, Invesco Large Cap Basic Value Fund and Invesco Structured Growth Fund were no longer held at the end of the fiscal year.
Effective November 29, 2010, strategic adjustments were made to the Fund reflecting several months of research by Invesco’s Global Asset Allocation team. This was represented by changes to the underlying allocations, including a new allocation to commodities, and a new 20% maximum exchange-traded fund (ETF) exposure.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policy and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. The various commodity complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Rounding out the reporting period, allocations to Invesco Large Cap Growth Fund, Invesco Endeavor Fund and Invesco Small Cap Equity Fund contributed to the Fund’s performance on an absolute and relative basis for the fourth quarter. Conversely, Invesco Core Bond Fund and Invesco U.S. Government Fund detracted from performance in the fourth quarter.
Thank you for your continued commitment to Invesco Moderately Conservative Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886117.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. with a concentration in finance and real estate from the Fuqua School of Business at Duke University.
![(PHOTO OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886118.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PHOTO OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886119.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PHOTO OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886120.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned the equivalent of a B.B.A. from the KV Zurich Business School in Zurich, Switzerland.
![(PHOTO OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886121.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Moderately Conservative Allocation Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
23 | Invesco Allocation Funds |
Invesco Conservative Allocation Fund’s and Invesco Moderately Conservative Allocation Fund’s investment objective is total return consistent with a lower level of risk relative to the broad stock market.
Invesco Growth Allocation Fund’s and Invesco Moderate Growth Allocation Fund’s investment objective is long-term growth of capital consistent with a higher level of risk relative to the broad stock market.
Invesco Moderate Allocation Fund’s investment objective is total return consistent with a moderate level of risk relative to the broad stock market.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class S shares are closed to most investors. See the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in Invesco Allocation Funds
Invesco | ||||||||||||||||||||
Invesco | Invesco | Invesco | Invesco | Moderately | ||||||||||||||||
Conservative | Growth | Moderate | Moderate Growth | Conservative | ||||||||||||||||
Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | ||||||||||||||||
Active Trading Risk | X | X | X | X | X | |||||||||||||||
Cash/Cash Equivalents Risk | X | X | X | X | X | |||||||||||||||
Commodity Risk | X | X | X | X | X | |||||||||||||||
Commodity-Linked Notes | X | X | X | X | X | |||||||||||||||
Concentration Risk | X | X | X | X | X | |||||||||||||||
Convertible Securities Risk | X | X | X | X | ||||||||||||||||
Counterparty Risk | X | X | X | X | X | |||||||||||||||
Credit Risk | X | X | X | X | X | |||||||||||||||
Currency/Exchange Rate Risk | X | X | X | X | X | |||||||||||||||
Debt Securities Risk | X | X | X | X | X | |||||||||||||||
Derivatives Risk | X | X | X | X | X | |||||||||||||||
Developing Markets Securities Risk | X | X | X | X | X | |||||||||||||||
Dollar Roll Transactions Risk | X | X | X | X | X | |||||||||||||||
Exchange-Traded Funds Risk | X | X | X | X | X | |||||||||||||||
Foreign Securities Risk | X | X | X | X | X | |||||||||||||||
Fund of Funds Risk | X | X | X | X | X | |||||||||||||||
Futures Risk | X | X | X | X | X | |||||||||||||||
Growth Investing Risk | X | |||||||||||||||||||
High Yield Bond (Junk Bond) Risk | X | X | X | X | X | |||||||||||||||
Independent Management of Sector Risk | X | |||||||||||||||||||
Interest Rate Risk | X | X | X | X | X | |||||||||||||||
Issuer Specific Changes Risk | X | X | X | X | X | |||||||||||||||
Leverage Risk | X | X | X | X | X | |||||||||||||||
Limited Number of Holdings | X | X | X | X | X | |||||||||||||||
Liquidity Risk | X | X | X | X | X | |||||||||||||||
Management Risk | X | X | X | X | X | |||||||||||||||
Market Risk | X | X | X | X | X | |||||||||||||||
Market Trading Risk | X | X | X | X | X | |||||||||||||||
Mortgage- and Asset-Backed Securities Risk | X | X | X | X | X |
24 | Invesco Allocation Funds |
Invesco | ||||||||||||||||||||
Invesco | Invesco | Invesco | Invesco | Moderately | ||||||||||||||||
Conservative | Growth | Moderate | Moderate Growth | Conservative | ||||||||||||||||
Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | ||||||||||||||||
Municipal Securities Risk | X | X | X | X | ||||||||||||||||
Non-Correlation Risk | X | X | X | X | X | |||||||||||||||
Non-diversification Risk | X | X | X | X | X | |||||||||||||||
Options Risk | X | X | X | X | X | |||||||||||||||
Prepayment Risk | X | X | X | X | X | |||||||||||||||
Reinvestment Risk | X | X | X | X | X | |||||||||||||||
REIT Risk/Real Estate Risk | X | X | X | X | ||||||||||||||||
Replication Management Risk | X | X | X | X | X | |||||||||||||||
Repurchase Agreement Risk | X | |||||||||||||||||||
Reverse Repurchase Agreement Risk | X | |||||||||||||||||||
Sector Fund Risk | X | |||||||||||||||||||
Short Sales Risk | X | X | X | X | X | |||||||||||||||
Small- and Mid-Capitalization Risk | X | X | X | X | X | |||||||||||||||
Subsidiary Risk | X | X | X | X | X | |||||||||||||||
Swaps Risk | X | X | X | X | X | |||||||||||||||
Tax Risk | X | X | X | X | X | |||||||||||||||
U.S. Government Obligations Risk | X | X | X | X | X | |||||||||||||||
Value Investing Risk | X | X | X | X | X |
Principal risks defined
n | Active Trading Risk: Frequent trading of portfolio securities results in increased costs and may, thereby lower the underlying fund’s actual return. Frequent trading also may increase short term gains and losses, which may affect an underlying fund’s tax liability. | |
n | Cash/Cash Equivalents Risk: To the extent an underlying fund holds cash or cash equivalents rather than securities in which it primarily invests or uses to manage risk, the underlying fund may not achieve its investment objectives and may underperform. | |
n | Commodity Risk: Certain of the underlying funds and the Subsidiary’s significant investment exposure to the commodities markets and/or a particular sector of the commodities markets, may subject an underlying fund and the Subsidiary to greater volatility than investments in traditional securities, such as stocks and bonds. The commodities markets may fluctuate widely based on a variety of factors, including |
changes in overall market movements, domestic and foreign political and economic events and policies, war, acts of terrorism, changes in domestic or foreign interest rates and/or investor expectations concerning interest rates, domestic and foreign inflation rates and investment and trading activities of mutual funds, hedge funds and commodities funds. Prices of various commodities may also be affected by factors such as drought, floods, weather, livestock disease, embargoes, tariffs and other regulatory developments. The prices of commodities can also fluctuate widely due to supply and demand disruptions in major producing or consuming regions. Certain commodities may be produced in a limited number of countries and may be controlled by a small number of producers or groups of producers. As a result, political, economic and supply related events in such countries could have a disproportionate impact on the prices of such commodities. Because certain of the underlying fund’s and the |
Subsidiary’s performance is linked to the performance of volatile commodities, investors should be willing to assume the risks of potentially significant fluctuations in the value of an underlying fund shares. | ||
n | Commodity-Linked Notes Risk: An underlying fund’s investments in commodity-linked notes involve substantial risks, including risk of loss of a significant portion of their principal value. In addition to commodity risk, they may be subject to additional special risks, such as risk of loss of interest and principal, lack of secondary market, risk of greater volatility, that do not affect traditional equity and debt securities. | |
n | Concentration Risk: To the extent, an underlying fund invests a greater amount in any one sector or industry, an underlying fund’s performance will depend to a greater extent on the overall condition of the sector or industry, and there is increased risk to an underlying fund if conditions adversely affect that sector or industry. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
continued on page 26
25 | Invesco Allocation Funds |
n | Convertible Securities Risk: The values of convertible securities in which the underlying fund may invest may be affected by market interest rates. The values of convertible securities also may be affected by the risk of actual issuer default on interest or principal payments and the value of the underlying stock. Additionally, an issuer may retain the right to buy back its convertible securities at a time and price unfavorable to the underlying fund. | |
n | Counterparty Risk: Individually negotiated or over-the-counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligations, which may cause losses or additional costs to an underlying fund. | |
n | Credit Risk: The issuers of instruments in which an underlying fund invests may be unable to meet interest and/or principal payments. This risk is increased to the extent an underlying fund invests in junk bonds. An issuer’s securities may decrease in value if its financial strength weakens, which may reduce its credit rating and possibly its ability to meet its contractual obligations. | |
n | Currency/Exchange Rate Risk: The dollar value of an underlying fund’s foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. An underlying fund may buy or sell currencies other than the U.S. dollar in order to capitalize on anticipated changes in exchange rates. There is no guarantee that these investments will be successful. | |
n | Debt Securities Risk: The underlying funds may invest a portion of their assets in debt securities such as notes and bonds. The values of debt securities and the income they generate may be affected by changing interest rates and by changes in their effective maturities and credit quality of these securities. | |
n | Derivatives Risk: Derivatives are financial contracts whose value depends on or is derived from an underlying asset (including an underlying security), reference rate or index. Derivatives may be used as a substitute for purchasing the underlying asset or as a hedge to reduce exposure to risks. The use of derivatives involves risks similar to, as well as risks different from, and possibly greater than, the risks associated with investing directly |
in securities or other more traditional instruments. Risks to which derivatives may be subject include market, interest rate, credit, leverage and management risks. They may also be more difficult to purchase, sell or value than other investments. When used for hedging or reducing exposure, the derivative may not correlate perfectly with the underlying asset, reference rate or index. An underlying fund investing in a derivative could lose more than the cash amount invested. Over-the-counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with an underlying fund. In addition, the use of certain derivatives may cause an underlying fund to realize higher amounts of income or short-term capital gains (generally taxed at ordinary income tax rates). | ||
n | Developing Markets Securities Risk: The prices of securities issued by foreign companies and governments located in developing countries may be impacted by certain factors more than those in countries with mature economies. For example, developing countries may experience higher rates of inflation or sharply devalue their currencies against the U.S. dollar, thereby causing the value of investments issued by the government or companies located in those countries to decline. Governments in developing markets may be relatively less stable. The introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, or war may result in adverse volatility in the prices of securities or currencies. Other factors may include additional transaction costs, delays in settlement procedures, and lack of timely information. | |
n | Dollar Roll Transactions Risk: Dollar roll transactions involve the risk that the market value and yield of the securities retained by the underlying fund may decline below the price of the mortgage-related securities sold by the underlying fund that it is obligated to repurchase. Also, in the event the buyer of mortgage-related files for bankruptcy or becomes insolvent, the underlying fund’s use of the proceeds from the sale may be restricted pending a decision whether the underlying fund is obligated to repurchase mortgage-related securities. |
n | Exchange-Traded Funds Risk: An investment by the Fund or underlying fund in ETFs generally presents the same primary risks as an investment in a mutual fund. In addition, ETFs may be subject to the following risks that do not apply to Invesco mutual funds: (1) the market price of ETFs shares may trade above or below their net asset value; (2) an active trading market for the ETFs shares may not develop or be maintained; (3) trading ETFs shares may be halted if the listing exchange’s officials deem such action appropriate; (4) ETFs may not be actively managed and may not accurately track the performance of the reference index; (5) ETFs would not necessarily sell a security because the issuer of the security was in financial trouble unless the security is removed from the index that the ETF seeks to track; and (6) the value of an investment in ETFs will decline more or less in correlation with any decline in the value of the index they seek to track. ETFs may involve duplication of management fees and certain other expenses, as the Fund or underlying fund indirectly bears its proportionate share of any expenses paid by the ETFs in which it invests. Further, certain of the ETFs in which the Fund or underlying fund may invest are leveraged. The more the Fund or underlying fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. | |
n | Foreign Securities Risk: The dollar value of an underlying fund’s foreign investments may be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. The value of an underlying fund’s foreign investments may be adversely affected by political and social instability in their home countries, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations in those countries. Foreign companies generally may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting controls. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors. |
26 | Invesco Allocation Funds |
n | Fund of Funds Risk: The Fund’s performance depends on that of the underlying funds in which it invests. Accordingly, the risks associated with an investment in the Fund are also the risks associated with investments in the underlying funds. There is a risk that the advisor’s evaluations and assumptions regarding the Fund’s broad asset classes or the underlying funds in which the Fund invests may be incorrect based on actual market conditions. There is a risk that the Fund will vary from the target weightings in the underlying funds due to factors such as market fluctuations. There can be no assurance that the underlying funds will achieve their investment objectives, and their performance may be lower than their represented asset classes. The underlying funds may change their investment objectives, policies or practices without the approval of the Fund, which may cause the Fund to withdraw its investments therein at a disadvantageous time. | ||
n | Futures Risk: A decision as to whether, when and how to use futures involves the exercise of skill and judgment and even a well conceived futures transaction may be unsuccessful because of market behavior or unexpected events. | ||
n | Growth Investing Risk: Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result they tend to be more sensitive to changes in their earnings and can be more volatile. | ||
n | High Yield Bond (Junk Bond) Risk: Compared to higher quality debt securities, junk bonds involve a greater risk of default or price changes due to changes in the credit quality of the issuer because they are generally unsecured and may be subordinated to other creditors’ claims. The values of junk bonds often fluctuate more in response to company, political, regulatory or economic developments than higher quality bonds. Their values can decline significantly over short periods of time or during periods of economic difficulty when the bonds could be difficult to value or sell at a fair price. Credit ratings on junk bonds do not necessarily reflect their actual market value. | ||
n | Independent Management of Sector Risk: Underlying funds may invest in different, independently-managed sectors. Accordingly, poor performance of an investment in one sector |
may have a significant effect on an underlying fund’s net asset value. Additionally, active rebalancing of an underlying fund’s investments among the sectors may result in increased transaction costs. Independent management of sectors may also result in adverse tax consequences when one or more of an underlying fund’s portfolio managers effect transactions in the same security at or about the same time. | |||
n | Interest Rate Risk: Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on their individual characteristics. One measure of this sensitivity is called duration. The longer the duration of a particular bond, the greater is its price sensitivity is to interest rates. Similarly, a longer duration portfolio of securities has greater price sensitivity. Falling interest rates may also prompt some issuers to refinance existing debt, which could affect the Fund’s performance. | ||
n | Issuer-Specific Changes: The value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole. | ||
n | Leverage Risk: Leverage exists when an underlying fund purchases or sells an instrument or enters into a transaction without investing cash in an amount equal to the full economic exposure of the instrument or transaction and the underlying fund could lose more than it invested. Leverage created from borrowing or certain types of transactions or instruments, including derivatives, may impair the Fund’s liquidity, cause it to liquidate positions at an unfavorable time, increase volatility or otherwise not achieve its intended objective. | ||
n | Limited Number of Holdings Risk: Because a large percentage of an underlying fund’s assets may be invested in a limited number of securities, a change in the value of these securities could significantly affect the value of your investment in an underlying fund. | ||
n | Liquidity Risk: A security is considered to be illiquid if an underlying fund is unable to sell such security at a fair price within a reasonable amount of time. A security may be deemed illiquid due to a lack of trading volume in the security or if the security is privately |
placed and not traded in any public market or is otherwise restricted from trading. An underlying fund may be unable to sell illiquid securities at the time or price it desires and could lose its entire investment in such securities. | ||
n | Management Risk: The investment techniques and risk analysis used by the Fund’s and the underlying funds’ portfolio managers may not produce the desired results. | |
n | Market Risk: The prices of and the income generated by the underlying funds’ securities may decline in response to, among other things, investor sentiment; general economic and market conditions; regional or global instability; and currency and interest rate fluctuations. | |
n | Market Trading Risk: Risk is inherent in all investing. An investment in an underlying fund involves risks similar to those of investing in any fund of fixed-income securities traded on exchanges. You should anticipate that the value of the shares will decline, more or less, in correlation with any decline in value of the underlying index of certain underlying ETFs. | |
n | Mortgage- and Asset-Backed Securities Risk: Certain of the underlying funds may invest in mortgage and asset-backed securities that are subject to prepayment or call risk, which is the risk that the borrower’s payments may be received earlier or later than expected due to changes in prepayment rates on underlying loans. Faster prepayments often happen when interest rates are falling. As a result, an underlying fund may reinvest these early payments at lower interest rates, thereby reducing an underlying fund’s income. Conversely, when interest rates rise, prepayments may happen more slowly, causing the security to lengthen in duration. Longer duration securities tend to be more volatile. Securities may be prepaid at a price less than the original purchase value. | |
n | Municipal Securities Risk: An underlying fund may invest in municipal securities. Constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives, and the issuer’s regional economic conditions may affect the municipal security’s value, interest payments, repayment of principal and the underlying fund’s ability to sell it. Revenue bonds are generally not backed by the taxing power of the issuing municipality. To the extent that a municipal security is |
27 | Invesco Allocation Funds |
not heavily followed by the investment community or such security issue is relatively small, the security may be difficult to value or sell at a desirable price. If the Internal Revenue Service determines that an issuer of a municipal security has not complied with applicable tax requirements, interest from the security could be treated as taxable, which could result in a decline in the security’s value. | ||
n | Non-Correlation Risk: An underlying fund’s return may not match the return of the underlying index of certain underlying ETFs for a number of reasons. For example, an underlying fund incurs operating expenses not applicable to the underlying index of certain underlying ETFs, and incurs costs in buying and selling securities, especially when rebalancing the Fund’s securities holdings to reflect changes in the composition of the underlying index of certain underlying ETFs. In addition, the performance of an underlying fund and the underlying index of certain underlying ETFs may vary due to asset valuation differences and differences between an underlying fund’s portfolio and the underlying index of certain underlying ETFs resulting from legal restrictions, cost or liquidity constraints. | |
n | Non-Diversification Risk: Certain of the underlying funds in which the fund invests are non-diversified, meaning they can invest a greater portion of their assets in the obligations or securities of any single issuer than a diversified fund. To the extent that a large percentage of an underlying fund’s assets may be invested in a limited number of issuers, a change in the value of the issuers’ securities could affect the value of an underlying fund more than would occur in a diversified fund. | |
n | Options Risk: A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns. | |
n | Prepayment Risk: An issuer’s ability to prepay principal on a loan or debt security prior to maturity can limit an underlying fund’s potential gains. Prepayments may require the underlying fund to replace the loan or debt security with a lower yielding security, adversely affecting an underlying fund’s yield. |
n | Reinvestment Risk: Reinvestment risk is the risk that a bond’s cash flows (coupon income and principal repayment) will be reinvested at an interest rate below that on the original bond. If interest rates decline, the underlying bond may rise in value, but the cash flows received from that bond may have to be reinvested at a lower interest rate. | |
n | REIT Risk/Real Estate Risk: Investments in real estate related instruments may be affected by economic, legal, cultural, environmental or technological factors that affect property values, rents or occupancies of real estate related to an underlying fund’s holdings. Real estate companies, including real estate investment trusts or similar structures, tend to be small and mid cap companies, and their shares may be more volatile and less liquid. The value of investments in real estate related companies may be affected by the quality of management, the ability to repay loans, the utilization of leverage and financial covenants related thereto, whether the company carries adequate insurance and environmental factors. If a real estate related company defaults, an underlying fund may own real estate directly, which involves the following additional risks: environmental liabilities; difficulty in valuing and selling the real estate; and economic or regulatory changes. | |
n | Replication Management Risk: Unlike many investment companies, certain of the underlying funds are not “actively” managed. That is, an underlying fund does not utilize an investing strategy that seeks returns in excess of the underlying index of certain underlying ETFs. Therefore, it would not necessarily sell a security unless that security is removed from the underlying index of certain underlying ETFs. | |
n | Repurchase Agreement Risk: If the seller of a repurchase agreement in which an underlying fund invests defaults on its obligation or declares bankruptcy, the underlying fund may experience delays in selling the securities underlying the repurchase agreement. As a result, an underlying fund may incur losses arising from decline in the value of those securities, reduced levels of income and expenses of enforcing its rights. | |
n | Reverse Repurchase Agreement Risk: Reverse repurchase agreements involve the risk that the market value of securities to be repurchased may decline below the repurchase price, or |
that the other party may default on its obligation, causing the underlying fund to be delayed or prevented from completing the transaction. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, the underlying fund’s use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the underlying fund’s repurchase obligation. | ||
n | Sector Fund Risk: Certain of the underlying fund’s investments may be concentrated in a comparatively narrow segment of the economy. This means that an underlying fund’s investment concentration in the sector is higher than most mutual funds and the broad securities market. Consequently, an underlying fund may tend to be more volatile than other mutual funds, and consequently the value of an investment in the underlying fund may tend to rise and fall more rapidly. | |
n | Short Sales Risk: If an underlying fund sells short a security that it does not own and the security increases in value, the underlying fund will pay a higher price to repurchase the security. The more the underlying fund pays, the more it will lose on the transaction, which adversely affects its share price. As there is no limit on how much the price of the security can increase, an underlying fund’s exposure is unlimited. | |
n | Small- and Mid-Capitalization Risk: Stocks of small and mid sized companies tend to be more vulnerable to adverse developments and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small and mid sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price. | |
n | Subsidiary Risk: By investing in the Subsidiary, an underlying fund is indirectly exposed to risks associated with the Subsidiary’s investments. The derivatives and other investments held by the Subsidiary are generally similar to those that are permitted to be held by the underlying fund and are subject to the same risks that apply to similar investments if held directly by the |
28 | Invesco Allocation Funds |
underlying fund. There can be no assurance that the investment objective of the Subsidiary will be achieved. The Subsidiary is not registered under the Investment Company Act of 1940 (the 1940 Act) and, unless otherwise noted in this prospectus, is not subject to all the investor protections of the 1940 Act. Accordingly, the underlying fund, as the sole investor in the Subsidiary, will not have all of the protections offered to investors in registered investment companies. In addition, changes in the laws of the United States and/or the Cayman Islands could result in the inability of the underlying fund and/or the Subsidiary to operate as described in the underlying fund Prospectus and the SAI and could adversely affect the underlying fund. For example, the Government of the Cayman Islands does not currently impose any income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax on the Subsidiary. If Cayman Islands law changes such that the Subsidiary must pay Cayman Islands taxes, the underlying fund shareholders would likely suffer decreased investment returns. | ||
n | Swaps Risk: A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Swaps are subject to credit risk and counterparty risk. | |
n | Tax Risk: As a regulated investment company, an underlying fund must derive at least 90% of its gross income for each taxable year from sources treated as qualifying income under the Internal Revenue Code of 1986, as amended. Certain of the underlying funds intend to treat the income it derives from commodity-linked notes and the Subsidiary as qualifying income based on a number of private letter rulings provided to third-parties not associated with the underlying fund (which only these parties may cite as precedent). If, however, the IRS were to change its position with respect to the conclusions reached in these private letter rulings, the income and gains from an underlying fund’s investment in the commodity-linked notes and/or the Subsidiary might be non-qualifying income, and there is a possibility such change in position might be applied to an underlying fund |
retroactively, in which case an underlying fund might not qualify as a regulated investment company for one or more years. In this event, the underlying fund’s Board may authorize a significant change in investment strategy or underlying fund liquidation. For more information, please see the “Dividends, Distributions and Tax Matters” section in the Fund’s SAI. | ||
n | U.S. Government Obligations Risk: An underlying fund may invest in obligations issued by U.S. government agencies and instrumentalities that may receive varying levels of support from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case if the issuer defaulted, the underlying fund holding securities of the issuer might not be able to recover its investment from the U.S. Government. | |
n | Value Investing Risk: Value stocks may react differently to issuer, political, market and economic developments than the market as a whole and other types of stocks. Value stocks tend to be inexpensive relative to their earnings or assets compared to other types of stocks and may never realize their full value. Value stocks tend to be currently out-of-favor with many investors. |
About indexes used in this report
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Custom Conservative Allocation Index, created by Invesco to serve as a benchmark for Invesco Conservative Allocation Fund, is composed of the S&P 500, the MSCI EAFE® and the Barclays Capital U.S. Aggregate. | |
n | The Custom Conservative Allocation Index — Old, created by Invesco to serve as a benchmark for Invesco Conservative Allocation Fund, is composed of the following indexes: Russell 3000®, MSCI EAFE, Barclays Capital U.S. Universal, FTSE NAREIT Equity REITs and the three-month U.S. Treasury bill. The Russell 3000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | |
n | The Lipper Mixed-Asset Target Allocation Conservative Funds Index is an unmanaged index considered representative of mixed-asset target allocation conservative funds tracked by Lipper. |
n | The Custom Growth Allocation Index, created by Invesco to serve as a benchmark for Invesco Growth Allocation Fund, is composed of the S&P 500, the MSCI EAFE and the Barclays Capital U.S. Aggregate. | |
n | The Custom Growth Allocation Index — Old, created by Invesco to serve as a benchmark for Invesco Growth Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. | |
n | The Lipper Multi-Cap Core Funds Index is an unmanaged index considered representative of multi-cap core funds tracked by Lipper. | |
n | The Custom Moderate Allocation Index, created by Invesco to serve as a benchmark for Invesco Moderate Allocation Fund, is composed of the S&P 500, the MSCI EAFE and the Barclays Capital U.S. Aggregate. | |
n | The Custom Moderate Allocation Index — Old, created by Invesco to serve as a benchmark for Invesco Moderate Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. | |
n | The Lipper Mixed-Asset Target Allocation Moderate Funds Index is an unmanaged index considered representative of mixed-asset target allocation moderate funds tracked by Lipper. | |
n | The Custom Moderate Growth Allocation Index, created by Invesco to serve as a benchmark for Invesco Moderate Growth Allocation Fund, is composed of the S&P 500, the MSCI EAFE and the Barclays Capital U.S. Aggregate. | |
n | The Custom Moderate Growth Allocation Index — Old, created by Invesco to serve as a benchmark for Invesco Moderate Growth Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. | |
n | The Lipper Mixed-Asset Target Allocation Growth Funds Index is an unmanaged index considered representative of mixed-asset target allocation growth funds tracked by Lipper. | |
n | The Custom Moderately Conservative Allocation Index, created by Invesco to serve as a benchmark for Invesco Moderately Conservative Allocation Fund, is composed of the S&P 500, the MSCI EAFE and the Barclays Capital U.S. Aggregate. |
29 | Invesco Allocation Funds |
n | The Custom Moderately Conservative Allocation Index — Old, created by Invesco to serve as a benchmark for Invesco Moderately Conservative Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. | |
n | The Barclays Capital U.S. Aggregate Index is an unmanaged index considered representative of the U.S. investment-grade, fixed-rate bond market. | |
n | The Russell 3000 Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. | |
n | The Barclays Capital U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non-ERISA portion of the CMBS Index. | |
n | The FTSE NAREIT Equity REITs Index is an unmanaged index considered representative of U.S. REITs. | |
n | The T-Bill 3 Month Index is tracked by Lipper to provide performance for the 3-month U.S. Treasury Bill. An investment cannot be made directly in an index. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. | |
n | The composition of a custom index may change from time to time based on the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. | |
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
30 | Invesco Allocation Funds |
Schedule of Investments
December 31, 2010
Invesco Conservative Allocation Fund
Schedule of Investments in Affiliated Issuers–100.27%(a)
Change in | ||||||||||||||||||||||||||||||||||||
% of | Unrealized | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Appreciation | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | (Depreciation) | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–6.08% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 6.08 | % | $ | 6,926,067 | $ | 3,792,785 | $ | (3,603,434 | ) | $ | 135,096 | $ | 412,045 | $ | 397,188 | 681,494 | $ | 7,625,914 | ||||||||||||||||||
Domestic Equity Funds–16.79% | ||||||||||||||||||||||||||||||||||||
Invesco Charter Fund | 2.36 | % | 4,330,646 | 732,123 | (2,300,797 | ) | 377,305 | (180,267 | ) | 25,444 | 178,254 | 2,959,010 | ||||||||||||||||||||||||
Invesco Diversified Dividend Fund | 3.63 | % | — | 4,263,693 | (106,812 | ) | 395,250 | 1,261 | 37,013 | 371,402 | 4,553,392 | |||||||||||||||||||||||||
Invesco Endeavor Fund(b) | 1.86 | % | 2,300,183 | 395,807 | (875,650 | ) | 430,023 | 82,596 | — | 138,949 | 2,332,959 | |||||||||||||||||||||||||
Invesco Large Cap Basic Value Fund | — | % | 2,254,529 | 380,801 | (2,588,141 | ) | 291,037 | (338,226 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Large Cap Growth Fund(b) | 3.31 | % | 2,173,501 | 2,095,829 | (780,061 | ) | 758,977 | (102,789 | ) | — | 333,504 | 4,145,457 | ||||||||||||||||||||||||
Invesco Multi-Sector Fund(b) | — | % | 2,154,251 | 401,744 | (2,540,947 | ) | 257,717 | (272,765 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Small Cap Equity Fund(b) | 1.56 | % | — | 1,778,054 | (171,796 | ) | 333,784 | 14,978 | — | 153,818 | 1,955,020 | |||||||||||||||||||||||||
Invesco Structured Growth Fund | — | % | 2,183,583 | 401,717 | (2,513,907 | ) | 237,380 | (308,773 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Structured Value Fund(b) | — | % | 2,190,321 | 367,121 | (2,562,719 | ) | 163,678 | (158,401 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Van Kampen Comstock Fund | 2.21 | % | — | 2,552,687 | (75,705 | ) | 293,824 | 3,465 | 11,877 | 176,480 | 2,774,271 | |||||||||||||||||||||||||
Invesco Van Kampen Growth and Income Fund | 1.86 | % | — | 2,161,879 | (91,823 | ) | 262,897 | 4,464 | 7,262 | 121,424 | 2,337,417 | |||||||||||||||||||||||||
Total Domestic Equity Funds | 17,587,014 | 15,531,455 | (14,608,358 | ) | 3,801,872 | (1,254,457 | ) | 81,596 | 1,473,831 | 21,057,526 | ||||||||||||||||||||||||||
Fixed-Income Funds–66.02% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Commodity Strategy Fund(b) | 3.27 | % | — | 3,703,030 | — | 392,521 | — | — | 370,303 | 4,095,551 | ||||||||||||||||||||||||||
Invesco Core Bond Fund | 28.19 | % | 24,898,556 | 15,965,455 | (6,053,211 | ) | 1,408,471 | (876,878 | ) | 1,167,529 | 3,931,301 | 35,342,393 | ||||||||||||||||||||||||
Invesco Emerging Market Local Currency Debt Fund | 2.55 | % | — | 3,302,356 | (229,791 | ) | 120,891 | 9,919 | 169,117 | 302,205 | 3,203,375 | |||||||||||||||||||||||||
Invesco Floating Rate Fund | 6.39 | % | 8,518,107 | 1,607,094 | (2,528,263 | ) | 840,265 | (421,557 | ) | 440,848 | 1,035,613 | 8,015,646 | ||||||||||||||||||||||||
Invesco High Yield Fund | 3.83 | % | — | 4,753,730 | — | 44,986 | — | 31,371 | 1,131,773 | 4,798,716 | ||||||||||||||||||||||||||
Invesco International Total Return Fund | — | % | 4,559,010 | 974,688 | (5,544,850 | ) | (338,185 | ) | 349,337 | 58,086 | — | — | ||||||||||||||||||||||||
Invesco Limited Maturity Treasury Fund | — | % | 8,407,619 | 2,443,909 | (10,927,524 | ) | (172,881 | ) | 248,877 | 35,202 | — | — | ||||||||||||||||||||||||
Invesco Short Term Bond Fund | 9.49 | % | 26,254,044 | 6,380,396 | (20,977,685 | ) | 2,079,242 | (1,839,912 | ) | 696,695 | 1,367,366 | 11,896,085 | ||||||||||||||||||||||||
PowerShares 1-30 Laddered Treasury Portfolio–ETF | 12.30 | % | — | 15,893,947 | — | (468,342 | ) | — | 40,278 | 551,900 | 15,425,605 | |||||||||||||||||||||||||
Total Fixed-Income Funds | 72,637,336 | 55,024,605 | (46,261,324 | ) | 3,906,968 | (2,530,214 | ) | 2,639,126 | 8,690,461 | 82,777,371 | ||||||||||||||||||||||||||
Foreign Equity Funds–9.34% | ||||||||||||||||||||||||||||||||||||
Invesco Developing Markets Fund | 2.70 | % | — | 3,289,989 | (84,932 | ) | 174,523 | 6,794 | 32,946 | 102,238 | 3,383,047 | |||||||||||||||||||||||||
Invesco International Core Equity Fund | 3.46 | % | 3,061,375 | 1,529,826 | (467,871 | ) | 438,529 | (225,798 | ) | 81,954 | 389,583 | 4,336,061 | ||||||||||||||||||||||||
Invesco International Growth Fund | 3.18 | % | — | 3,791,656 | (156,563 | ) | 339,108 | 8,997 | 52,230 | 142,767 | 3,983,198 | |||||||||||||||||||||||||
Total Foreign Equity Funds | 3,061,375 | 8,611,471 | (709,366 | ) | 952,160 | (210,007 | ) | 167,130 | 634,588 | 11,702,306 | ||||||||||||||||||||||||||
Real Estate Funds–1.66% | ||||||||||||||||||||||||||||||||||||
Invesco Global Real Estate Fund | 1.66 | % | — | 2,029,556 | (23,240 | ) | 77,816 | 1,505 | 71,449 | 200,542 | 2,085,637 | |||||||||||||||||||||||||
Invesco Select Real Estate Income Fund | — | % | 3,345,258 | 480,446 | (4,202,105 | ) | (44,516 | ) | 420,917 | 98,571 | — | — | ||||||||||||||||||||||||
Total Real Estate Funds | 3,345,258 | 2,510,002 | (4,225,345 | ) | 33,300 | 422,422 | 170,020 | 200,542 | 2,085,637 | |||||||||||||||||||||||||||
Money Market Funds–0.38% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio | 0.19 | % | 10,507,622 | 11,176,662 | (21,447,384 | ) | — | — | 16,812 | 236,900 | 236,900 | |||||||||||||||||||||||||
Premier Portfolio | 0.19 | % | — | 10,115,529 | (9,878,629 | ) | — | — | 170 | 236,900 | 236,900 | |||||||||||||||||||||||||
Total Money Market Funds | 10,507,622 | 21,292,191 | (31,326,013 | ) | — | — | 16,982 | 473,800 | 473,800 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $121,208,620) | 100.27 | % | $ | 114,064,672 | $ | 106,762,509 | $ | (100,733,840 | ) | $ | 8,829,396 | $ | (3,160,211 | )(c) | $ | 3,472,042 | $ | 125,722,554 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.27 | )% | (334,359 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 125,388,195 | ||||||||||||||||||||||||||||||||
Investment Abbreviations:
ETF – Exchange-Traded Fund
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. | |
(c) | Includes $36,645 and $3,327 of capital gains from Invesco Balanced-Risk Allocation Fund and Invesco Developing Markets Fund, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
31 Invesco Allocation Funds
Schedule of Investments
December 31, 2010
Invesco Growth Allocation Fund
Schedule of Investments in Affiliated Issuers — 100.11%(a)
Change in | ||||||||||||||||||||||||||||||||||||
% of | Unrealized | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Appreciation | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | (Depreciation) | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–16.02% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 16.02 | % | $ | 81,557,041 | $ | 10,336,843 | $ | (21,295,893 | ) | $ | 3,679,598 | $ | 2,578,567 | $ | 3,933,926 | 6,835,854 | $ | 76,493,210 | ||||||||||||||||||
Domestic Equity Funds–42.33% | ||||||||||||||||||||||||||||||||||||
Invesco Charter Fund | 6.00 | % | — | 27,281,489 | (1,126,296 | ) | 2,430,875 | 32,745 | 249,124 | 1,724,025 | 28,618,813 | |||||||||||||||||||||||||
Invesco Diversified Dividend Fund | 9.13 | % | — | 41,884,866 | (2,150,151 | ) | 3,806,451 | 72,942 | 362,741 | 3,557,431 | 43,614,108 | |||||||||||||||||||||||||
Invesco Dynamics Fund(b) | — | % | 16,402,714 | 1,119,919 | (18,439,043 | ) | 1,519,982 | (603,572 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Endeavor Fund(b) | 4.66 | % | — | 20,618,556 | (2,005,624 | ) | 3,488,904 | 171,434 | — | 1,326,580 | 22,273,270 | |||||||||||||||||||||||||
Invesco Large Cap Basic Value Fund | — | % | 28,579,127 | 1,532,424 | (29,433,900 | ) | 13,104,114 | (13,781,765 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Large Cap Growth Fund(b) | 8.46 | % | 31,599,820 | 11,923,154 | (9,549,170 | ) | 7,442,851 | (1,028,473 | ) | — | 3,249,250 | 40,388,182 | ||||||||||||||||||||||||
Invesco Multi-Sector Fund(b) | — | % | 38,990,048 | 2,531,725 | (41,167,860 | ) | 8,852,793 | (9,206,706 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Small Cap Equity Fund(b) | 3.86 | % | — | 17,366,355 | (2,325,914 | ) | 3,150,030 | 259,703 | — | 1,451,627 | 18,450,174 | |||||||||||||||||||||||||
Invesco Small Cap Growth Fund(b) | — | % | 31,294,716 | 2,154,643 | (35,992,138 | ) | 5,273,957 | (2,731,178 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Structured Growth Fund | — | % | 31,651,405 | 2,026,320 | (32,615,815 | ) | 8,151,174 | (9,213,084 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Structured Value Fund(b) | — | % | 27,718,700 | 1,375,168 | (29,062,452 | ) | 7,987,855 | (8,019,271 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Van Kampen Comstock Fund | 5.53 | % | — | 25,076,354 | (1,559,057 | ) | 2,804,540 | 77,775 | 115,613 | 1,679,365 | 26,399,612 | |||||||||||||||||||||||||
Invesco Van Kampen Growth and Income Fund | 4.69 | % | — | 21,167,971 | (1,387,204 | ) | 2,522,787 | 76,012 | 71,293 | 1,162,575 | 22,379,566 | |||||||||||||||||||||||||
Total Domestic Equity Funds | 206,236,530 | 176,058,944 | (206,814,624 | ) | 70,536,313 | (43,893,438 | ) | 798,771 | 14,150,853 | 202,123,725 | ||||||||||||||||||||||||||
Fixed-Income Funds–13.12% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Commodity Strategy Fund(b) | 6.17 | % | — | 27,443,590 | (853,650 | ) | 2,823,817 | 49,836 | — | 2,663,978 | 29,463,593 | |||||||||||||||||||||||||
Invesco Emerging Market Local Currency Debt Fund | — | % | — | 22,893,848 | (24,526,760 | ) | — | 1,632,912 | 465,637 | — | — | |||||||||||||||||||||||||
Invesco High Yield Fund | — | % | 23,555,011 | 2,676,988 | (27,234,422 | ) | 708,757 | 293,666 | 1,684,439 | — | — | |||||||||||||||||||||||||
Invesco U.S. Government Fund | — | % | — | 5,063,825 | (5,052,311 | ) | — | (11,514 | ) | 32,386 | — | — | ||||||||||||||||||||||||
PowerShares 1-30 Laddered Treasury Portfolio–ETF | 6.95 | % | — | 34,123,121 | — | (935,291 | ) | — | 81,847 | 1,187,400 | 33,187,830 | |||||||||||||||||||||||||
Total Fixed-Income Funds | 23,555,011 | 92,201,372 | (57,667,143 | ) | 2,597,283 | 1,964,900 | 2,264,309 | 3,851,378 | 62,651,423 | |||||||||||||||||||||||||||
Foreign Equity Funds–23.91% | ||||||||||||||||||||||||||||||||||||
Invesco Developing Markets Fund | 7.04 | % | — | 33,070,435 | (1,224,711 | ) | 1,704,646 | 84,228 | 322,964 | 1,015,472 | 33,601,985 | |||||||||||||||||||||||||
Invesco International Core Equity Fund | 8.77 | % | 55,392,320 | 7,556,396 | (22,509,949 | ) | 9,858,680 | (8,438,702 | ) | 802,000 | 3,760,894 | 41,858,745 | ||||||||||||||||||||||||
Invesco International Growth Fund | 8.10 | % | 56,511,853 | 2,989,797 | (25,089,710 | ) | 9,899,797 | (5,637,530 | ) | 510,631 | 1,386,172 | 38,674,207 | ||||||||||||||||||||||||
Total Foreign Equity Funds | 111,904,173 | 43,616,628 | (48,824,370 | ) | 21,463,123 | (13,992,004 | ) | 1,635,595 | 6,162,538 | 114,134,937 | ||||||||||||||||||||||||||
Real Estate Funds–4.29% | ||||||||||||||||||||||||||||||||||||
Invesco Global Real Estate Fund | 4.29 | % | 23,221,846 | 2,168,374 | (7,359,122 | ) | 5,245,439 | (2,815,785 | ) | 1,000,948 | 1,967,380 | 20,460,752 | ||||||||||||||||||||||||
Money Market Funds–0.44% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio | 0.22 | % | — | 22,358,128 | (21,291,330 | ) | — | — | 462 | 1,066,798 | 1,066,798 | |||||||||||||||||||||||||
Premier Portfolio | 0.22 | % | — | 22,358,128 | (21,291,330 | ) | — | — | 187 | 1,066,798 | 1,066,798 | |||||||||||||||||||||||||
Total Money Market Funds | — | 44,716,256 | (42,582,660 | ) | — | — | 649 | 2,133,596 | 2,133,596 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $451,372,325) | 100.11 | % | $ | 446,474,601 | $ | 369,098,417 | $ | (384,543,812 | ) | $ | 103,521,756 | $ | (56,157,760 | )(c) | $ | 9,634,198 | $ | 477,997,643 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.11 | )% | (542,571 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 477,455,072 | ||||||||||||||||||||||||||||||||
Investment Abbreviations:
ETF – Exchange-Traded Fund
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. | |
(c) | Includes $362,946 and $32,613 of capital gains from Invesco Balanced-Risk Allocation Fund and Invesco Developing Markets Fund, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
32 Invesco Allocation Funds
Schedule of Investments
December 31, 2010
Invesco Moderate Allocation Fund
Schedule of Investments in Affiliated Issuers — 100.18%(a)
Change in | ||||||||||||||||||||||||||||||||||||
% of | Unrealized | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Appreciation | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | (Depreciation) | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–12.46% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 12.46 | % | $ | 60,010,921 | $ | 20,831,824 | $ | (13,275,032 | ) | $ | 2,842,229 | $ | 1,671,087 | $ | 3,758,324 | 6,410,570 | $ | 71,734,284 | ||||||||||||||||||
Domestic Equity Funds–31.79% | ||||||||||||||||||||||||||||||||||||
Invesco Capital Development Fund(b) | — | % | 15,671,338 | 1,437,269 | (17,581,419 | ) | 5,205,063 | (4,732,251 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Charter Fund | 4.45 | % | — | 24,365,079 | (928,486 | ) | 2,172,759 | 29,886 | 221,760 | 1,544,532 | 25,639,238 | |||||||||||||||||||||||||
Invesco Diversified Dividend Fund | 6.89 | % | — | 37,463,243 | (1,265,707 | ) | 3,458,317 | 34,698 | 324,529 | 3,237,402 | 39,690,551 | |||||||||||||||||||||||||
Invesco Endeavor Fund(b) | 3.51 | % | — | 18,475,230 | (1,529,969 | ) | 3,169,017 | 116,823 | — | 1,204,949 | 20,231,101 | |||||||||||||||||||||||||
Invesco Large Cap Basic Value Fund | — | % | 19,767,702 | 1,448,446 | (20,748,218 | ) | 9,326,020 | (9,793,950 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Large Cap Growth Fund(b) | 6.25 | % | 23,850,702 | 12,898,785 | (6,521,694 | ) | 6,146,270 | (401,582 | ) | — | 2,894,005 | 35,972,481 | ||||||||||||||||||||||||
Invesco Mid Cap Basic Value Fund(b) | — | % | 17,039,502 | 1,538,360 | (19,481,866 | ) | 1,741,538 | (837,534 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Multi-Sector Fund(b) | — | % | 18,869,576 | 1,625,720 | (20,316,438 | ) | 4,702,481 | (4,881,339 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Small Cap Equity Fund(b) | 2.97 | % | — | 15,572,405 | (1,563,813 | ) | 2,914,554 | 147,814 | — | 1,343,113 | 17,070,960 | |||||||||||||||||||||||||
Invesco Small Companies Fund(b) | — | % | 19,235,383 | 1,533,316 | (21,178,008 | ) | (620,112 | ) | 1,029,421 | — | — | — | ||||||||||||||||||||||||
Invesco Structured Growth Fund | — | % | 23,940,138 | 2,033,465 | (25,138,631 | ) | 4,897,675 | (5,732,647 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Structured Value Fund(b) | — | % | 19,171,656 | 1,332,042 | (20,485,455 | ) | 4,932,695 | (4,950,938 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Van Kampen Comstock Fund | 4.17 | % | — | 22,436,072 | (1,016,086 | ) | 2,551,770 | 48,493 | 103,440 | 1,528,006 | 24,020,249 | |||||||||||||||||||||||||
Invesco Van Kampen Growth and Income Fund | 3.55 | % | — | 18,930,618 | (863,203 | ) | 2,301,005 | 43,726 | 63,788 | 1,060,371 | 20,412,146 | |||||||||||||||||||||||||
Total Domestic Equity Funds | 157,545,997 | 161,090,050 | (158,618,993 | ) | 52,899,052 | (29,879,380 | ) | 713,517 | 12,812,378 | 183,036,726 | ||||||||||||||||||||||||||
Fixed-Income Funds–34.76% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Commodity Strategy Fund(b) | 5.35 | % | — | 28,020,100 | (172,856 | ) | 2,952,730 | 8,700 | — | 2,785,595 | 30,808,674 | |||||||||||||||||||||||||
Invesco Core Bond Fund | 8.85 | % | 114,351,508 | 10,255,067 | (77,755,247 | ) | 14,101,420 | (9,980,109 | ) | 4,834,500 | 5,669,927 | 50,972,639 | ||||||||||||||||||||||||
Invesco Emerging Market Local Currency Debt Fund | 2.40 | % | — | 17,230,505 | (4,430,443 | ) | 759,154 | 241,956 | 856,512 | 1,301,997 | 13,801,172 | |||||||||||||||||||||||||
Invesco Floating Rate Fund | 3.00 | % | 16,069,089 | 3,965,686 | (3,658,881 | ) | 1,576,942 | (685,077 | ) | 872,635 | 2,230,977 | 17,267,759 | ||||||||||||||||||||||||
Invesco High Yield Fund | 3.63 | % | 51,318,765 | 5,202,280 | (38,021,528 | ) | 4,708,340 | (2,318,021 | ) | 3,755,350 | 4,926,848 | 20,889,836 | ||||||||||||||||||||||||
Invesco International Total Return Fund | — | % | 12,523,521 | 2,225,372 | (14,838,028 | ) | (1,250,047 | ) | 1,339,182 | 160,960 | — | — | ||||||||||||||||||||||||
Invesco Short Term Bond Fund | — | % | 12,003,557 | 1,891,260 | (14,028,823 | ) | 1,455,891 | (1,321,885 | ) | 239,340 | — | — | ||||||||||||||||||||||||
PowerShares 1-30 Laddered Treasury Portfolio–ETF | 11.53 | % | — | 68,817,135 | (383,284 | ) | (2,015,935 | ) | (19,896 | ) | 173,371 | 2,375,600 | 66,398,020 | |||||||||||||||||||||||
Total Fixed-Income Funds | 206,266,440 | 137,607,405 | (153,289,090 | ) | 22,288,495 | (12,735,150 | ) | 10,892,668 | 19,290,944 | 200,138,100 | ||||||||||||||||||||||||||
Foreign Equity Funds–17.70% | ||||||||||||||||||||||||||||||||||||
Invesco Developing Markets Fund | 5.12 | % | — | 29,084,427 | (1,145,168 | ) | 1,516,059 | 79,275 | 289,046 | 891,671 | 29,505,405 | |||||||||||||||||||||||||
Invesco International Core Equity Fund | 6.56 | % | 53,626,568 | 7,750,292 | (24,835,762 | ) | 9,722,045 | (8,483,029 | ) | 718,264 | 3,394,440 | 37,780,114 | ||||||||||||||||||||||||
Invesco International Growth Fund | 6.02 | % | 41,035,276 | 2,939,579 | (13,081,159 | ) | 6,072,859 | (2,325,305 | ) | 456,900 | 1,241,622 | 34,641,250 | ||||||||||||||||||||||||
Total Foreign Equity Funds | 94,661,844 | 39,774,298 | (39,062,089 | ) | 17,310,963 | (10,729,059 | ) | 1,464,210 | 5,527,733 | 101,926,769 | ||||||||||||||||||||||||||
Real Estate Funds–3.14% | ||||||||||||||||||||||||||||||||||||
Invesco Global Real Estate Fund | 3.14 | % | — | 18,065,504 | (675,303 | ) | 673,520 | 32,624 | 623,578 | 1,740,033 | 18,096,345 | |||||||||||||||||||||||||
Invesco Real Estate Fund | — | % | 18,463,428 | 1,264,554 | (22,491,393 | ) | 3,113,518 | (350,107 | ) | 297,946 | — | — | ||||||||||||||||||||||||
Total Real Estate Funds | 18,463,428 | 19,330,058 | (23,166,696 | ) | 3,787,038 | (317,483 | ) | 921,524 | 1,740,033 | 18,096,345 | ||||||||||||||||||||||||||
Money Market Funds–0.33% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio | 0.16 | % | — | 41,031,906 | (40,085,157 | ) | — | — | 676 | 946,749 | 946,749 | |||||||||||||||||||||||||
Premier Portfolio | 0.17 | % | — | 41,031,906 | (40,085,157 | ) | — | — | 277 | 946,749 | 946,749 | |||||||||||||||||||||||||
Total Money Market Funds | — | 82,063,812 | (80,170,314 | ) | — | — | 953 | 1,893,498 | 1,893,498 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $545,406,078) | 100.18 | % | $ | 536,948,630 | $ | 460,697,447 | $ | (467,582,214 | ) | $ | 99,127,777 | $ | (51,989,985 | )(c) | $ | 17,751,196 | $ | 576,825,722 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.18 | )% | (1,018,363 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 575,807,359 | ||||||||||||||||||||||||||||||||
Investment Abbreviations:
ETF – Exchange-Traded Fund
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. | |
(c) | Includes $346,745 and $29,188 of capital gains from Invesco Balanced-Risk Allocation Fund and Invesco Developing Markets Fund, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
33 Invesco Allocation Funds
Schedule of Investments
December 31, 2010
Invesco Moderate Growth Allocation Fund
Schedule of Investments in Affiliated Issuers — 100.07%(a)
Change in | ||||||||||||||||||||||||||||||||||||
% of | Unrealized | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Appreciation | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | (Depreciation) | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–15.04% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 15.04 | % | $ | 43,472,409 | $ | 6,063,646 | $ | (6,815,307 | ) | $ | 2,375,693 | $ | 854,583 | $ | 2,363,491 | 4,086,950 | $ | 45,732,967 | ||||||||||||||||||
Domestic Equity Funds–37.02% | ||||||||||||||||||||||||||||||||||||
Invesco Charter Fund | 5.23 | % | — | 15,140,623 | (602,480 | ) | 1,351,379 | 20,330 | 138,889 | 958,425 | 15,909,852 | |||||||||||||||||||||||||
Invesco Diversified Dividend Fund | 8.00 | % | — | 23,277,150 | (1,084,024 | ) | 2,125,689 | 37,209 | 202,862 | 1,986,625 | 24,356,024 | |||||||||||||||||||||||||
Invesco Dynamics Fund(b) | — | % | 9,479,683 | 698,934 | (10,704,618 | ) | 1,602,755 | (1,076,754 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Endeavor Fund(b) | 4.08 | % | — | 11,477,526 | (1,097,742 | ) | 1,946,138 | 98,278 | — | 739,976 | 12,424,200 | |||||||||||||||||||||||||
Invesco Large Cap Basic Value Fund | — | % | 14,689,999 | 858,855 | (15,199,544 | ) | 6,222,057 | (6,571,367 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Large Cap Growth Fund(b) | 7.39 | % | 16,684,471 | 6,729,153 | (4,522,319 | ) | 4,131,011 | (553,259 | ) | — | 1,807,647 | 22,469,057 | ||||||||||||||||||||||||
Invesco Mid Cap Basic Value Fund(b) | — | % | 11,308,407 | 858,552 | (12,763,030 | ) | 147,503 | 448,568 | — | — | — | |||||||||||||||||||||||||
Invesco Multi-Sector Fund(b) | — | % | 15,013,874 | 1,057,848 | (15,927,518 | ) | 3,938,059 | (4,082,263 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Small Cap Equity Fund(b) | 3.39 | % | 12,563,110 | 1,251,330 | (6,408,761 | ) | 4,076,469 | (1,176,455 | ) | — | 810,833 | 10,305,693 | ||||||||||||||||||||||||
Invesco Structured Growth Fund | — | % | 16,751,603 | 1,163,490 | (17,336,852 | ) | 3,919,997 | (4,498,238 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Structured Value Fund(b) | — | % | 14,240,167 | 774,507 | (14,996,382 | ) | 3,749,559 | (3,767,851 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Van Kampen Comstock Fund | 4.83 | % | — | 13,959,898 | (888,436 | ) | 1,559,318 | 47,348 | 64,533 | 933,723 | 14,678,128 | |||||||||||||||||||||||||
Invesco Van Kampen Growth and Income Fund | 4.10 | % | — | 11,754,203 | (737,528 | ) | 1,405,263 | 44,105 | 39,849 | 647,587 | 12,466,043 | |||||||||||||||||||||||||
Total Domestic Equity Funds | 110,731,314 | 89,002,069 | (102,269,234 | ) | 36,175,197 | (21,030,349 | ) | 446,133 | 7,884,816 | 112,608,997 | ||||||||||||||||||||||||||
Fixed-Income Funds–23.06% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Commodity Strategy Fund(b) | 6.17 | % | — | 17,600,560 | (648,900 | ) | 1,799,521 | 24,958 | — | 1,697,662 | 18,776,139 | |||||||||||||||||||||||||
Invesco Core Bond Fund | 2.50 | % | 26,340,940 | 1,748,752 | (21,329,904 | ) | 3,773,659 | (2,910,832 | ) | 965,598 | 847,899 | 7,622,615 | ||||||||||||||||||||||||
Invesco Emerging Market Local Currency Debt Fund | 1.35 | % | — | 14,704,758 | (11,585,679 | ) | 221,307 | 764,683 | 445,912 | 387,271 | 4,105,069 | |||||||||||||||||||||||||
Invesco Floating Rate Fund | 0.84 | % | — | 3,206,660 | (745,879 | ) | 72,099 | 13,642 | 40,033 | 329,008 | 2,546,522 | |||||||||||||||||||||||||
Invesco High Yield Fund | 2.02 | % | 30,260,457 | 3,247,352 | (28,703,988 | ) | 1,882,249 | (540,772 | ) | 2,188,048 | 1,449,363 | 6,145,298 | ||||||||||||||||||||||||
PowerShares 1-30 Laddered Treasury Portfolio–ETF | 10.18 | % | — | 31,806,076 | — | (854,246 | ) | — | 76,337 | 1,107,400 | 30,951,830 | |||||||||||||||||||||||||
Total Fixed-Income Funds | 56,601,397 | 72,314,158 | (63,014,350 | ) | 6,894,589 | (2,648,321 | ) | 3,715,928 | 5,818,603 | 70,147,473 | ||||||||||||||||||||||||||
Foreign Equity Funds–20.90% | ||||||||||||||||||||||||||||||||||||
Invesco Developing Markets Fund | 6.16 | % | — | 18,129,943 | (369,466 | ) | 956,218 | 32,927 | 180,767 | 566,073 | 18,731,368 | |||||||||||||||||||||||||
Invesco International Core Equity Fund | 7.67 | % | 31,285,636 | 4,343,817 | (13,122,153 | ) | 6,747,135 | (5,929,678 | ) | 448,977 | 2,095,666 | 23,324,757 | ||||||||||||||||||||||||
Invesco International Growth Fund | 7.07 | % | 31,923,178 | 1,666,823 | (14,478,754 | ) | 6,267,730 | (3,876,434 | ) | 285,733 | 770,700 | 21,502,543 | ||||||||||||||||||||||||
Total Foreign Equity Funds | 63,208,814 | 24,140,583 | (27,970,373 | ) | 13,971,083 | (9,773,185 | ) | 915,477 | 3,432,439 | 63,558,668 | ||||||||||||||||||||||||||
Real Estate Funds–3.73% | ||||||||||||||||||||||||||||||||||||
Invesco Global Real Estate Fund | 3.73 | % | 11,930,387 | 959,178 | (2,799,072 | ) | 2,386,573 | (1,114,976 | ) | 543,888 | 1,092,509 | 11,362,090 | ||||||||||||||||||||||||
Money Market Funds–0.32% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio | 0.16 | % | — | 19,078,547 | (18,599,229 | ) | — | — | 431 | 479,318 | 479,318 | |||||||||||||||||||||||||
Premier Portfolio | 0.16 | % | — | 19,078,547 | (18,599,229 | ) | — | — | 174 | 479,318 | 479,318 | |||||||||||||||||||||||||
Total Money Market Funds | — | 38,157,094 | (37,198,458 | ) | — | — | 605 | 958,636 | 958,636 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $287,581,868) | 100.07 | % | $ | 285,944,321 | $ | 230,636,728 | $ | (240,066,794 | ) | $ | 61,803,135 | $ | (33,712,248 | )(c) | $ | 7,985,522 | $ | 304,368,831 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.07 | )% | (226,324 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 304,142,507 | ||||||||||||||||||||||||||||||||
Investment Abbreviations:
ETF – Exchange-Traded Fund
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. | |
(c) | Includes $218,057 and $18,254 of capital gains from Invesco Balanced-Risk Allocation Fund and Invesco Developing Markets Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
34 Invesco Allocation Funds
Schedule of Investments
December 31, 2010
Invesco Moderately Conservative Allocation Fund
Schedule of Investments in Affiliated Issuers — 100.15%(a)
Change in | ||||||||||||||||||||||||||||||||||||
% of | Unrealized | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Appreciation | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | (Depreciation) | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Asset Allocation Funds–9.59% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Allocation Fund | 9.59 | % | $ | 5,922,144 | $ | 2,496,435 | $ | (1,768,250 | ) | $ | 241,565 | $ | 220,348 | $ | 372,121 | 632,521 | $ | 7,077,910 | ||||||||||||||||||
Domestic Equity Funds–19.24% | ||||||||||||||||||||||||||||||||||||
Invesco Capital Development Fund(b) | — | % | 1,283,946 | 209,452 | (1,534,400 | ) | 133,050 | (92,048 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Charter Fund | 2.72 | % | — | 2,006,658 | (176,008 | ) | 170,620 | 7,438 | 17,871 | 121,006 | 2,008,708 | |||||||||||||||||||||||||
Invesco Diversified Dividend Fund | 4.15 | % | — | 3,062,944 | (279,842 | ) | 267,308 | 12,383 | 25,951 | 249,820 | 3,062,793 | |||||||||||||||||||||||||
Invesco Endeavor Fund(b) | 2.12 | % | — | 1,517,178 | (216,924 | ) | 244,987 | 18,766 | — | 93,151 | 1,564,007 | |||||||||||||||||||||||||
Invesco Large Cap Basic Value Fund | — | % | 2,918,745 | 417,045 | (3,268,926 | ) | 530,694 | (597,558 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Large Cap Growth Fund(b) | 3.84 | % | 2,815,372 | 402,331 | (862,700 | ) | 571,533 | (92,869 | ) | — | 227,970 | 2,833,667 | ||||||||||||||||||||||||
Invesco Mid Cap Basic Value Fund(b) | — | % | 1,393,381 | 218,171 | (1,683,853 | ) | (158,117 | ) | 230,418 | — | — | — | ||||||||||||||||||||||||
Invesco Multi-Sector Fund(b) | — | % | 1,237,353 | 197,605 | (1,423,834 | ) | 202,377 | (213,501 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Small Cap Equity Fund(b) | 1.77 | % | — | 1,279,788 | (218,129 | ) | 223,361 | 23,197 | — | 102,928 | 1,308,217 | |||||||||||||||||||||||||
Invesco Structured Growth Fund | — | % | 2,827,189 | 445,146 | (3,172,901 | ) | 448,437 | (547,871 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Structured Value Fund(b) | — | % | 2,833,198 | 398,776 | (3,232,721 | ) | 316,815 | (316,068 | ) | — | — | — | ||||||||||||||||||||||||
Invesco Van Kampen Comstock Fund | 2.52 | % | — | 1,840,519 | (193,836 | ) | 197,028 | 10,958 | 8,256 | 117,981 | 1,854,669 | |||||||||||||||||||||||||
Invesco Van Kampen Growth and Income Fund | 2.12 | % | — | 1,550,207 | (174,463 | ) | 176,176 | 10,929 | 5,095 | 81,187 | 1,562,849 | |||||||||||||||||||||||||
Total Domestic Equity Funds | 15,309,184 | 13,545,820 | (16,438,537 | ) | 3,324,269 | (1,545,826 | ) | 57,173 | 994,043 | 14,194,910 | ||||||||||||||||||||||||||
Fixed-Income Funds–58.40% | ||||||||||||||||||||||||||||||||||||
Invesco Balanced-Risk Commodity Strategy Fund(b) | 4.15 | % | — | 2,910,880 | (151,200 | ) | 293,462 | 8,827 | — | 276,851 | 3,061,969 | |||||||||||||||||||||||||
Invesco Core Bond Fund | 24.32 | % | 14,746,160 | 5,675,205 | (2,845,420 | ) | 741,578 | (367,059 | ) | 677,445 | 1,996,715 | 17,950,464 | ||||||||||||||||||||||||
Invesco Emerging Market Local Currency Debt Fund | 3.25 | % | — | 2,502,883 | (180,138 | ) | 65,762 | 6,528 | 119,472 | 225,947 | 2,395,035 | |||||||||||||||||||||||||
Invesco Floating Rate Fund | 5.43 | % | 3,509,152 | 1,062,159 | (762,435 | ) | 322,039 | (124,994 | ) | 192,503 | 517,561 | 4,005,921 | ||||||||||||||||||||||||
Invesco High Yield Fund | 4.90 | % | 2,989,060 | 1,175,978 | (710,804 | ) | 214,246 | (50,307 | ) | 240,289 | 853,343 | 3,618,173 | ||||||||||||||||||||||||
Invesco International Total Return Fund | — | % | 2,299,377 | 485,575 | (2,801,374 | ) | (163,403 | ) | 179,825 | 29,709 | — | — | ||||||||||||||||||||||||
Invesco Short Term Bond Fund | — | % | 7,563,696 | 1,770,371 | (9,418,462 | ) | 579,478 | (495,083 | ) | 191,244 | — | — | ||||||||||||||||||||||||
Invesco U.S. Government Fund | — | % | 8,093,995 | 1,884,655 | (10,291,762 | ) | (119,889 | ) | 433,001 | 291,607 | — | — | ||||||||||||||||||||||||
PowerShares 1-30 Laddered Treasury Portfolio–ETF | 16.35 | % | — | 12,415,342 | — | (349,327 | ) | — | 30,374 | 431,700 | 12,066,015 | |||||||||||||||||||||||||
Total Fixed-Income Funds | 39,201,440 | 29,883,048 | (27,161,595 | ) | 1,583,946 | (409,262 | ) | 1,772,643 | 4,302,117 | 43,097,577 | ||||||||||||||||||||||||||
Foreign Equity Funds–10.85% | ||||||||||||||||||||||||||||||||||||
Invesco Developing Markets Fund | 3.20 | % | — | 2,383,170 | (150,630 | ) | 121,334 | 7,807 | 23,139 | 71,301 | 2,359,345 | |||||||||||||||||||||||||
Invesco International Core Equity Fund | 3.98 | % | 3,521,598 | 631,213 | (1,344,621 | ) | 559,793 | (433,769 | ) | 57,522 | 263,631 | 2,934,214 | ||||||||||||||||||||||||
Invesco International Growth Fund | 3.67 | % | 1,795,591 | 1,006,420 | (370,781 | ) | 396,104 | (117,162 | ) | 36,489 | 97,139 | 2,710,172 | ||||||||||||||||||||||||
Total Foreign Equity Funds | 5,317,189 | 4,020,803 | (1,866,032 | ) | 1,077,231 | (543,124 | ) | 117,150 | 432,071 | 8,003,731 | ||||||||||||||||||||||||||
Real Estate Funds–1.94% | ||||||||||||||||||||||||||||||||||||
Invesco Global Real Estate Fund | 1.94 | % | — | 1,463,738 | (86,302 | ) | 53,875 | 2,164 | 49,886 | 137,834 | 1,433,475 | |||||||||||||||||||||||||
Invesco Select Real Estate Income Fund | — | % | 1,924,045 | 225,430 | (2,362,023 | ) | 11,597 | 200,951 | 57,442 | — | — | |||||||||||||||||||||||||
Total Real Estate Funds | 1,924,045 | 1,689,168 | (2,448,325 | ) | 65,472 | 203,115 | 107,328 | 137,834 | 1,433,475 | |||||||||||||||||||||||||||
Money Market Funds–0.13% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio | 0.06 | % | — | 7,628,672 | (7,581,455 | ) | — | — | 124 | 47,217 | 47,217 | |||||||||||||||||||||||||
Premier Portfolio | 0.07 | % | — | 7,628,672 | (7,581,455 | ) | — | — | 51 | 47,217 | 47,217 | |||||||||||||||||||||||||
Total Money Market Funds | — | 15,257,344 | (15,162,910 | ) | — | — | 175 | 94,434 | 94,434 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $71,139,816) | 100.15 | % | $ | 67,674,002 | $ | 66,892,618 | $ | (64,845,649 | ) | $ | 6,292,483 | $ | (2,074,749 | )(c) | $ | 2,426,590 | $ | 73,902,037 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.15 | )% | (108,506 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 73,793,531 | ||||||||||||||||||||||||||||||||
Investment Abbreviations:
ETF – Exchange-Traded Fund
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. | |
(c) | Includes $34,332 and $2,336 of capital gains from Invesco Balanced-Risk Allocation Fund and Invesco Developing Markets Fund, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
35 Invesco Allocation Funds
Statement of Assets and Liabilities
December 31, 2010
Invesco | Invesco | |||||||||||||||||||
Invesco | Invesco | Invesco | Moderate | Moderately | ||||||||||||||||
Conservative | Growth | Moderate | Growth | Conservative | ||||||||||||||||
Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | ||||||||||||||||
Assets: | ||||||||||||||||||||
Investments in affiliated underlying funds, at value | $ | 125,722,554 | $ | 477,997,643 | $ | 576,825,722 | $ | 304,368,831 | $ | 73,902,037 | ||||||||||
Cash | 11,571 | — | 54,215 | 46,662 | 18,019 | |||||||||||||||
Receivable for: | ||||||||||||||||||||
Fund shares sold | 108,114 | 913,977 | 368,833 | 384,583 | 86,329 | |||||||||||||||
Dividends — affiliated underlying funds | 257 | 283 | 689 | 236 | 142 | |||||||||||||||
Fund expenses absorbed | — | 11,763 | — | — | — | |||||||||||||||
Investment for trustee deferred compensation and retirement plans | 12,331 | 15,399 | 16,691 | 12,837 | 10,693 | |||||||||||||||
Other assets | 28,680 | 31,933 | 35,534 | 25,806 | 21,724 | |||||||||||||||
Total assets | 125,883,507 | 478,970,998 | 577,301,684 | 304,838,955 | 74,038,944 | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Payable for: | ||||||||||||||||||||
Fund shares reacquired | 342,067 | 1,040,953 | 933,376 | 375,798 | 137,586 | |||||||||||||||
Dividends | — | — | 10 | — | — | |||||||||||||||
Accrued fees to affiliates | 89,303 | 365,116 | 443,771 | 229,387 | 58,707 | |||||||||||||||
Accrued operating expenses | 43,552 | 59,724 | 56,822 | 57,752 | 33,753 | |||||||||||||||
Trustee deferred compensation and retirement plans | 20,390 | 50,133 | 60,346 | 33,511 | 15,367 | |||||||||||||||
Total liabilities | 495,312 | 1,515,926 | 1,494,325 | 696,448 | 245,413 | |||||||||||||||
Net assets applicable to shares outstanding | $ | 125,388,195 | $ | 477,455,072 | $ | 575,807,359 | $ | 304,142,507 | $ | 73,793,531 | ||||||||||
Net assets consist of: | ||||||||||||||||||||
Shares of beneficial interest | $ | 134,733,942 | $ | 573,842,573 | $ | 647,963,888 | $ | 391,294,196 | $ | 88,580,031 | ||||||||||
Undistributed net investment income | 597,727 | 6,455,438 | 8,787,774 | 6,155,626 | 1,547,402 | |||||||||||||||
Undistributed net realized gain (loss) | (14,457,408 | ) | (129,468,257 | ) | (112,363,947 | ) | (110,094,278 | ) | (19,096,123 | ) | ||||||||||
Unrealized appreciation | 4,513,934 | 26,625,318 | 31,419,644 | 16,786,963 | 2,762,221 | |||||||||||||||
$ | 125,388,195 | $ | 477,455,072 | $ | 575,807,359 | $ | 304,142,507 | $ | 73,793,531 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
36 Invesco Allocation Funds
Statement of Assets and Liabilities—(continued)
December 31, 2010
Invesco | Invesco | |||||||||||||||||||
Invesco | Invesco | Invesco | Moderate | Moderately | ||||||||||||||||
Conservative | Growth | Moderate | Growth | Conservative | ||||||||||||||||
Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | ||||||||||||||||
Net Assets: | ||||||||||||||||||||
Class A | $ | 73,383,465 | $ | 285,191,823 | $ | 334,066,955 | $ | 199,458,597 | $ | 46,954,201 | ||||||||||
Class B | $ | 14,929,227 | $ | 69,723,041 | $ | 79,149,848 | $ | 41,666,075 | $ | 9,032,401 | ||||||||||
Class C | $ | 28,247,443 | $ | 74,095,542 | $ | 104,059,638 | $ | 54,351,026 | $ | 14,493,577 | ||||||||||
Class R | $ | 5,348,358 | $ | 14,760,533 | $ | 21,639,378 | $ | 7,818,434 | $ | 3,240,643 | ||||||||||
Class S | $ | 2,564,500 | $ | 32,294,739 | $ | 34,746,107 | $ | — | $ | — | ||||||||||
Class Y | $ | 871,019 | $ | 1,277,780 | $ | 1,084,760 | $ | 833,434 | $ | 41,093 | ||||||||||
Institutional Class | $ | 44,183 | $ | 111,614 | $ | 1,060,673 | $ | 14,941 | $ | 31,616 | ||||||||||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||||||||||||||||||
Class A | 7,561,214 | 25,697,329 | 31,821,270 | 18,504,867 | 4,724,669 | |||||||||||||||
Class B | 1,548,820 | 6,380,396 | 7,566,539 | 3,922,684 | 914,407 | |||||||||||||||
Class C | 2,932,129 | 6,779,639 | 9,950,571 | 5,121,682 | 1,463,656 | |||||||||||||||
Class R | 552,736 | 1,335,624 | 2,063,043 | 730,277 | 326,647 | |||||||||||||||
Class S | 264,405 | 2,910,725 | 3,312,346 | — | — | |||||||||||||||
Class Y | 89,764 | 115,108 | 103,345 | 77,383 | 4,142 | |||||||||||||||
Institutional Class | 4,587 | 9,994 | 100,766 | 1,380.3 | 3,174 | |||||||||||||||
Class A: | ||||||||||||||||||||
Net asset value per share | $ | 9.71 | $ | 11.10 | $ | 10.50 | $ | 10.78 | $ | 9.94 | ||||||||||
Maximum offering price per share | ||||||||||||||||||||
(Net asset value of divided by 94.50%) | $ | 10.28 | $ | 11.75 | $ | 11.11 | $ | 11.41 | $ | 10.52 | ||||||||||
Class B: | ||||||||||||||||||||
Net asset value and offering price per share | $ | 9.64 | $ | 10.93 | $ | 10.46 | $ | 10.62 | $ | 9.88 | ||||||||||
Class C: | ||||||||||||||||||||
Net asset value and offering price per share | $ | 9.63 | $ | 10.93 | $ | 10.46 | $ | 10.61 | $ | 9.90 | ||||||||||
Class R: | ||||||||||||||||||||
Net asset value and offering price per share | $ | 9.68 | $ | 11.05 | $ | 10.49 | $ | 10.71 | $ | 9.92 | ||||||||||
Class S: | ||||||||||||||||||||
Net asset value and offering price per share | $ | 9.70 | $ | 11.10 | $ | 10.49 | $ | — | $ | — | ||||||||||
Class Y: | ||||||||||||||||||||
Net asset value and offering price per share | $ | 9.70 | $ | 11.10 | $ | 10.50 | $ | 10.77 | $ | 9.92 | ||||||||||
Institutional Class: | ||||||||||||||||||||
Net asset value and offering price per share | $ | 9.63 | $ | 11.17 | $ | 10.53 | $ | 10.82 | $ | 9.96 | ||||||||||
Cost of investments in affiliated underlying funds | $ | 121,208,620 | $ | 451,372,325 | $ | 545,406,078 | $ | 287,581,868 | $ | 71,139,816 | ||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
37 Invesco Allocation Funds
Statement of Operations
For the year ended December 31, 2010
Invesco | Invesco | |||||||||||||||||||
Invesco | Invesco | Invesco | Moderate | Moderately | ||||||||||||||||
Conservative | Growth | Moderate | Growth | Conservative | ||||||||||||||||
Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | Allocation Fund | ||||||||||||||||
Investment income: | ||||||||||||||||||||
Dividends from affiliated underlying funds | $ | 3,472,042 | $ | 9,634,198 | $ | 17,751,196 | $ | 7,985,522 | $ | 2,426,590 | ||||||||||
Other income | 218 | 267 | 286 | 211 | 178 | |||||||||||||||
Total investment income | 3,472,260 | 9,634,465 | 17,751,482 | 7,985,733 | 2,426,768 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Administrative services fees | 50,000 | 163,157 | 185,917 | 115,878 | 50,000 | |||||||||||||||
Custodian fees | 7,958 | 7,889 | 6,812 | 7,349 | 7,618 | |||||||||||||||
Distribution fees: | ||||||||||||||||||||
Class A | 173,797 | 667,727 | 790,742 | 460,968 | 109,910 | |||||||||||||||
Class B | 157,901 | 691,162 | 803,205 | 418,626 | 92,417 | |||||||||||||||
Class C | 269,288 | 712,920 | 999,633 | 523,218 | 146,173 | |||||||||||||||
Class R | 24,565 | 66,575 | 99,953 | 35,522 | 14,211 | |||||||||||||||
Class S | 3,030 | 39,582 | 43,679 | — | — | |||||||||||||||
Transfer agent fees — A, B, C, R, S and Y | 227,868 | 1,223,449 | 1,039,576 | 646,796 | 128,079 | |||||||||||||||
Transfer agent fees — Institutional | 45 | 37 | 256 | 13 | 17 | |||||||||||||||
Trustees’ and officers’ fees and benefits | 19,233 | 28,285 | 30,955 | 23,622 | 17,927 | |||||||||||||||
Registration and filing fees | 91,532 | 105,275 | 109,607 | 78,574 | 70,053 | |||||||||||||||
Other | 76,161 | 105,996 | 108,255 | 76,398 | 66,651 | |||||||||||||||
Total expenses | 1,101,378 | 3,812,054 | 4,218,590 | 2,386,964 | 703,056 | |||||||||||||||
Less: Expenses reimbursed and expense offset arrangement(s) | (196,492 | ) | (692,313 | ) | (824,845 | ) | (605,045 | ) | (241,355 | ) | ||||||||||
Net expenses | 904,886 | 3,119,741 | 3,393,745 | 1,781,919 | 461,701 | |||||||||||||||
Net investment income | 2,567,374 | 6,514,724 | 14,357,737 | 6,203,814 | 1,965,067 | |||||||||||||||
Realized and unrealized gain (loss) from: | ||||||||||||||||||||
Net realized gain (loss) on sales of affiliated underlying fund shares | (3,200,183 | ) | (56,553,319 | ) | (52,365,918 | ) | (33,948,559 | ) | (2,111,417 | ) | ||||||||||
Net realized gain from distributions of affiliated underlying fund shares | 39,972 | 395,559 | 375,933 | 236,311 | 36,668 | |||||||||||||||
Net realized gain (loss) from affiliated underlying fund shares | (3,160,211 | ) | (56,157,760 | ) | (51,989,985 | ) | (33,712,248 | ) | (2,074,749 | ) | ||||||||||
Change in net unrealized appreciation of affiliated underlying fund shares | 8,829,396 | 103,521,756 | 99,127,777 | 61,803,135 | 6,292,483 | |||||||||||||||
Net increase in net assets resulting from operations | $ | 8,236,559 | $ | 53,878,720 | $ | 61,495,529 | $ | 34,294,701 | $ | 6,182,801 | ||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
38 Invesco Allocation Funds
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
Invesco Conservative Allocation Fund | Invesco Growth Allocation Fund | Invesco Moderate Allocation Fund | ||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
Operations: | ||||||||||||||||||||||||
Net investment income | $ | 2,567,374 | $ | 3,415,596 | $ | 6,514,724 | $ | 7,944,067 | $ | 14,357,737 | $ | 16,856,246 | ||||||||||||
Net realized gain (loss) | (3,160,211 | ) | (7,926,520 | ) | (56,157,760 | ) | (58,727,085 | ) | (51,989,985 | ) | (45,487,542 | ) | ||||||||||||
Change in net unrealized appreciation | 8,829,396 | 19,186,080 | 103,521,756 | 166,909,615 | 99,127,777 | 146,900,051 | ||||||||||||||||||
Net increase in net assets resulting from operations | 8,236,559 | 14,675,156 | 53,878,720 | 116,126,597 | 61,495,529 | 118,268,755 | ||||||||||||||||||
Distributions to shareholders from net Investment income: | ||||||||||||||||||||||||
Class A | (1,687,583 | ) | (2,064,202 | ) | (5,275,993 | ) | (4,215,112 | ) | (8,788,740 | ) | (10,988,605 | ) | ||||||||||||
Class B | (244,920 | ) | (431,283 | ) | (862,345 | ) | (495,082 | ) | (1,547,723 | ) | (2,466,763 | ) | ||||||||||||
Class C | (458,592 | ) | (652,299 | ) | (908,248 | ) | (480,391 | ) | (2,012,241 | ) | (2,866,344 | ) | ||||||||||||
Class R | (110,446 | ) | (145,278 | ) | (238,855 | ) | (161,543 | ) | (511,429 | ) | (610,450 | ) | ||||||||||||
Class S | (58,995 | ) | (41,203 | ) | (629,175 | ) | (213,038 | ) | (949,162 | ) | (500,163 | ) | ||||||||||||
Class Y | (22,155 | ) | (35,087 | ) | (26,785 | ) | (26,273 | ) | (31,428 | ) | (41,782 | ) | ||||||||||||
Institutional Class | (1,148 | ) | (1,451 | ) | (2,352 | ) | (2,010 | ) | (29,185 | ) | (392 | ) | ||||||||||||
Total distributions from net investment income | (2,583,839 | ) | (3,370,803 | ) | (7,943,753 | ) | (5,593,449 | ) | (13,869,908 | ) | (17,474,499 | ) | ||||||||||||
Share transactions–net: | ||||||||||||||||||||||||
Class A | 5,739,931 | (14,932,501 | ) | (11,265,575 | ) | (62,602,704 | ) | (6,306,777 | ) | (46,154,932 | ) | |||||||||||||
Class B | (2,588,665 | ) | (2,558,976 | ) | (10,992,370 | ) | (8,861,768 | ) | (13,428,446 | ) | (16,173,510 | ) | ||||||||||||
Class C | 1,269,506 | 1,097,586 | (5,527,144 | ) | (3,239,527 | ) | (4,342,942 | ) | (5,994,653 | ) | ||||||||||||||
Class R | 523,825 | (65,118 | ) | 348,641 | 1,954,724 | 1,023,463 | 1,504,195 | |||||||||||||||||
Class S | 1,074,725 | 1,424,542 | 13,279,863 | 15,833,151 | 14,074,960 | 18,188,835 | ||||||||||||||||||
Class Y | (146,812 | ) | 352,209 | (216,666 | ) | 431,468 | (128,591 | ) | 272,472 | |||||||||||||||
Institutional Class | 143 | 18,477 | 497 | 17,010 | 1,000,101 | 392 | ||||||||||||||||||
Net increase (decrease) in net assets resulting from share transactions | 5,872,653 | (14,663,781 | ) | (14,372,754 | ) | (56,467,646 | ) | (8,108,232 | ) | (48,357,201 | ) | |||||||||||||
Net increase (decrease) in net assets | 11,525,373 | (3,359,428 | ) | 31,562,213 | 54,065,502 | 39,517,389 | 52,437,055 | |||||||||||||||||
Net assets: | ||||||||||||||||||||||||
Beginning of period | 113,862,822 | 117,222,250 | 445,892,859 | 391,827,357 | 536,289,970 | 483,852,915 | ||||||||||||||||||
End of period* | $ | 125,388,195 | $ | 113,862,822 | $ | 477,455,072 | $ | 445,892,859 | $ | 575,807,359 | $ | 536,289,970 | ||||||||||||
* Includes accumulated undistributed net investment income | $ | 597,727 | $ | 614,192 | $ | 6,455,438 | $ | 7,884,467 | $ | 8,787,774 | $ | 8,299,945 | ||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
39 Invesco Allocation Funds
Statement of Changes in Net Assets—(continued)
For the years ended December 31, 2010 and 2009
Invesco Moderate | Invesco Moderately | |||||||||||||||
Growth | Conservative | |||||||||||||||
Allocation Fund | Allocation Fund | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Operations: | ||||||||||||||||
Net investment income | $ | 6,203,814 | $ | 8,225,904 | $ | 1,965,067 | $ | 2,938,068 | ||||||||
Net realized gain (loss) | (33,712,248 | ) | (52,383,259 | ) | (2,074,749 | ) | (10,698,395 | ) | ||||||||
Change in net unrealized appreciation | 61,803,135 | 127,249,195 | 6,292,483 | 21,590,524 | ||||||||||||
Net increase in net assets resulting from operations | 34,294,701 | 83,091,840 | 6,182,801 | 13,830,197 | ||||||||||||
Distributions to shareholders from net investment income: | ||||||||||||||||
Class A | (5,778,612 | ) | (6,858,579 | ) | (1,279,623 | ) | (1,848,754 | ) | ||||||||
Class B | (966,856 | ) | (1,341,649 | ) | (190,356 | ) | (350,781 | ) | ||||||||
�� | ||||||||||||||||
Class C | (1,247,425 | ) | (1,566,714 | ) | (291,801 | ) | (575,049 | ) | ||||||||
Class R | (209,792 | ) | (224,036 | ) | (79,491 | ) | (108,271 | ) | ||||||||
Class Y | (26,259 | ) | (28,821 | ) | (1,225 | ) | (3,353 | ) | ||||||||
Institutional Class | (482 | ) | (561 | ) | (941 | ) | (1,401 | ) | ||||||||
Total distributions from net investment income | (8,229,426 | ) | (10,020,360 | ) | (1,843,437 | ) | (2,887,609 | ) | ||||||||
Share transactions–net: | ||||||||||||||||
Class A | 1,235,851 | (70,476,871 | ) | 3,111,725 | (26,039,140 | ) | ||||||||||
Class B | (6,708,915 | ) | (4,731,360 | ) | (664,433 | ) | (690,715 | ) | ||||||||
Class C | (2,878,596 | ) | (2,240,633 | ) | (1,140,669 | ) | 190,337 | |||||||||
Class R | 677,792 | 331,121 | 487,601 | 810,708 | ||||||||||||
Class Y | 54,857 | 89,219 | (31,466 | ) | 34,000 | |||||||||||
Institutional Class | — | 561 | 611 | 1,401 | ||||||||||||
Net increase (decrease) in net assets resulting from share transactions | (7,619,011 | ) | (77,027,963 | ) | 1,763,369 | (25,693,409 | ) | |||||||||
Net increase (decrease) in net assets | 18,446,264 | (3,956,483 | ) | 6,102,733 | (14,750,821 | ) | ||||||||||
Net assets: | ||||||||||||||||
Beginning of period | 285,696,243 | 289,652,726 | 67,690,798 | 82,441,619 | ||||||||||||
End of period* | $ | 304,142,507 | $ | 285,696,243 | $ | 73,793,531 | $ | 67,690,798 | ||||||||
* Includes accumulated undistributed net investment income | $ | 6,155,626 | $ | 8,181,238 | $ | 1,547,402 | $ | 1,425,772 | ||||||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
AIM Growth Series (Invesco Growth Series) (the “Trust”) is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios (each constituting a “Fund”), each authorized to issue an unlimited number of shares of beneficial interest. The Funds covered in this report are Invesco Conservative Allocation Fund, Invesco Growth Allocation Fund, Invesco Moderate Allocation Fund, Invesco Moderate Growth Allocation Fund, and Invesco Moderately Conservative Allocation Fund (collectively, the “Funds”). The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The investment objectives: total return consistent with a lower level of risk relative to the broad stock market for Invesco Conservative Allocation Fund and Invesco Moderately Conservative Allocation Fund, long-term growth of capital consistent with a higher level of risk relative to the broad stock market for Invesco Growth Allocation Fund and Invesco Moderate Growth Allocation Fund, and total return consistent with a moderate level of risk relative to the broad stock market for Invesco Moderate Allocation Fund.
40 Invesco Allocation Funds
Each Fund is a “fund of funds,” that invests in the Institutional Class of other mutual Funds (“underlying funds”) advised by Invesco Advisers, Inc. (the “Adviser” or “Invesco”). The Adviser may change the Fund’s asset class allocations, the underlying funds or target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund’s accounting policies are outlined in the underlying fund’s financial statements and are available upon request.
Each Fund currently consists of at least six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Invesco Conservation Allocation Fund, Invesco Growth Allocation Fund and Invesco Moderate Allocation Fund also consists of Class S shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class S, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements.
A. | Security Valuations — Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with valuation policy of such fund. The policies of underlying funds affiliated with the funds as a result of having the same investment advisor are set forth below. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Senior secured floating rate loans and senior secured floating rate debt securities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. |
41 Invesco Allocation Funds
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from ordinary income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
C. | Distributions — Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Funds may elect to treat a portion of the proceeds from redemptions as distributions for federal tax purposes. | |
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
D. | Federal Income Taxes — The Funds intend to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Funds’ taxable earnings to shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
Each Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
E. | Expenses — Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. | |
Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | ||
F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts, including each Funds’ servicing agreements, that contain a variety of indemnification clauses. Each Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against such Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco indirectly as a shareholder of the underlying funds.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Funds, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to each Fund based on the percentage of assets allocated to such Sub-Adviser(s).
42 Invesco Allocation Funds
Invesco has contractually agreed, through April 30, 2012, to reimburse expenses to the extent necessary to limit total annual fund operating expenses after expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares for each Fund as shown in the following table:
Class A | Class B | Class C | Class R | Class S | Class Y | Institutional Class | ||||||||||||||||||||||
Invesco Conservative Allocation Fund | 0.48 | % | 1.23 | % | 1.23 | % | 0.73 | % | 0.38 | % | 0.23 | % | 0.23 | % | ||||||||||||||
Invesco Growth Allocation Fund | 0.46 | % | 1.21 | % | 1.21 | % | 0.71 | % | 0.36 | % | 0.21 | % | 0.21 | % | ||||||||||||||
Invesco Moderate Allocation Fund | 0.37 | % | 1.12 | % | 1.12 | % | 0.62 | % | 0.27 | % | 0.12 | % | 0.12 | % | ||||||||||||||
Invesco Moderate Growth Allocation Fund | 0.37 | % | 1.12 | % | 1.12 | % | 0.62 | % | — | 0.12 | % | 0.12 | % | |||||||||||||||
Invesco Moderately Conservative Allocation Fund | 0.39 | % | 1.14 | % | 1.14 | % | 0.64 | % | — | 0.14 | % | 0.14 | % | |||||||||||||||
In determining the Adviser’s obligation to reimburse expenses, the following expenses are not taken into account, and could cause other expenses to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; (5) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds; and (6) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are also excluded in determining such obligation. Unless the Board of the Trustees and Invesco mutually agree to amend or continue each Fund’s fee waiver agreement, it will terminate on April 30, 2012.
Acquired Fund Fees and Expenses are not fees and expenses incurred by the Funds directly but are fees and expenses, including management fees, of the investment companies in which the Funds invest. As a result, total annual fund operating expenses may exceed the expense limits above. You incur these expenses indirectly through the valuation of each Fund’s investment in those investment companies. The impact of the Acquired Fund Fees and Expenses are included in the total return of the Funds.
For the year ended December 31, 2010, Invesco reimbursed the following expenses:
Fund Level | Class A | Class B | Class C | Class R | Class S | Class Y | Institutional Class | |||||||||||||||||||||||||
Invesco Conservative Allocation Fund | $ | — | $ | 113,161 | $ | 25,703 | $ | 43,834 | $ | 7,997 | $ | 3,289 | $ | 1,586 | $ | 33 | ||||||||||||||||
Invesco Growth Allocation Fund | — | 409,145 | 105,876 | 109,209 | 20,397 | 40,422 | 1,846 | — | ||||||||||||||||||||||||
Invesco Moderate Allocation Fund | — | 474,566 | 120,512 | 149,983 | 29,994 | 43,690 | 1,543 | — | ||||||||||||||||||||||||
Invesco Moderate Growth Allocation Fund | — | 387,562 | 87,991 | 109,975 | 14,933 | — | 1,547 | 11 | ||||||||||||||||||||||||
Invesco Moderately Conservative Allocation Fund | 113,101 | 79,383 | 16,687 | 26,393 | 5,132 | — | 106 | 17 | ||||||||||||||||||||||||
The Trust has entered into a master administrative services agreement with Invesco pursuant to which each Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to such Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations.
For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of:
Invesco Conservative Allocation Fund | $ | 255 | ||
Invesco Growth Allocation Fund | 1,554 | �� | ||
Invesco Moderate Allocation Fund | 1,270 | |||
Invesco Moderate Growth Allocation Fund | 823 | |||
Invesco Moderately Conservative Allocation Fund | 158 | |||
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which each Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to each Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C, Class R and Class S shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares, 0.50% of the average daily net assets of Class R shares and 0.15% of the average daily net assets of Class S shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”)
43 Invesco Allocation Funds
impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Funds. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Funds. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Funds that IDI retained the following in front-end sales commissions from the sale of Class A shares and received the following in CDCS imposed on redemptions by shareholders:
Front End | Contingent Deferred | |||||||||||||||
Sales Charges | Sales Charges | |||||||||||||||
Class A | Class A | Class B | Class C | |||||||||||||
Invesco Conservative Allocation Fund | $ | 37,749 | $ | — | $ | 42,721 | $ | 2,745 | ||||||||
Invesco Growth Allocation Fund | 120,890 | 50 | 146,868 | 6,036 | ||||||||||||
Invesco Moderate Allocation Fund | 115,542 | 1 | 130,121 | 13,077 | ||||||||||||
Invesco Moderate Growth Allocation Fund | 90,506 | — | 91,392 | 3,555 | ||||||||||||
Invesco Moderately Conservative Allocation Fund | 23,788 | 25 | 23,995 | 1,384 | ||||||||||||
The underlying funds pay no distribution fees and the Fund’s pays no sales loads or other similar compensation to IDI for acquiring underlying fund shares. Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Equity Securities | ||||||||||||||||
Fund Name | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Invesco Conservative Allocation Fund | $ | 125,722,554 | $ | — | $ | — | $ | 125,722,554 | ||||||||
Invesco Growth Allocation Fund | 477,997,643 | — | — | 477,997,643 | ||||||||||||
Invesco Moderate Allocation Fund | 576,825,722 | — | — | 576,825,722 | ||||||||||||
Invesco Moderate Growth Allocation Fund | 304,368,831 | — | — | 304,368,831 | ||||||||||||
Invesco Moderately Conservative Allocation Fund | 73,902,037 | — | — | 73,902,037 | ||||||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended December 31, 2010, the Funds received credits from this arrangement, which resulted in the reduction of the Funds’ total expenses of:
Transfer Agent Credits | ||||
Invesco Conservative Allocation Fund | $ | 634 | ||
Invesco Growth Allocation Fund | 3,864 | |||
Invesco Moderate Allocation Fund | 3,287 | |||
Invesco Moderate Growth Allocation Fund | 2,203 | |||
Invesco Moderately Conservative Allocation Fund | 378 | |||
44 Invesco Allocation Funds
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by each Fund to pay remuneration to certain Trustees and Officers of such Fund. Trustees have the option to defer compensation payable by the Funds, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by each Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Funds may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by each Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Funds.
During the year ended December 31, 2010, the Funds in aggregate paid legal fees of $15,999 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees as shown below. A member of that firm is a Trustee of the Trust.
NOTE 6—Cash Balances
The Funds are permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary | Ordinary | |||||||
Income | Income | |||||||
Invesco Conservative Allocation Fund | $ | 2,583,839 | $ | 3,370,803 | ||||
Invesco Growth Allocation Fund | 7,943,753 | 5,593,449 | ||||||
Invesco Moderate Allocation Fund | 13,869,908 | 17,474,499 | ||||||
Invesco Moderate Growth Allocation Fund | 8,229,426 | 10,020,360 | ||||||
Invesco Moderately Conservative Allocation Fund | 1,843,437 | 2,887,609 | ||||||
Tax Components of Net Assets at Period-End:
Net Unrealized | ||||||||||||||||||||||||||||
Appreciation | Temporary | Shares of | ||||||||||||||||||||||||||
Undistributed | (Depreciation) | Book/Tax | Capital Loss | Post-October | Beneficial | Total | ||||||||||||||||||||||
Ordinary Income | -Investments | Differences | Carryforward | Deferrals | Interest | Net Assets | ||||||||||||||||||||||
Invesco Conservative Allocation Fund | $ | 617,007 | $ | (1,449,017 | ) | $ | (19,279 | ) | $ | (6,978,917 | ) | $ | (1,515,541 | ) | $ | 134,733,942 | $ | 125,388,195 | ||||||||||
Invesco Growth Allocation Fund | 6,504,182 | 22,018,408 | (48,743 | ) | (124,861,348 | ) | — | 573,842,573 | 477,455,072 | |||||||||||||||||||
Invesco Moderate Allocation Fund | 8,846,615 | 22,013,388 | (58,841 | ) | (95,575,022 | ) | (7,382,669 | ) | 647,963,888 | 575,807,359 | ||||||||||||||||||
Invesco Moderate Growth Allocation Fund | 6,187,979 | 9,287,134 | (32,353 | ) | (101,711,864 | ) | (882,585 | ) | 391,294,196 | 304,142,507 | ||||||||||||||||||
Invesco Moderately Conservative Allocation Fund | 1,561,805 | (252,917 | ) | (14,404 | ) | (15,730,340 | ) | (350,644 | ) | 88,580,031 | 73,793,531 | |||||||||||||||||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Funds net unrealized appreciation (depreciation) differences are attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Funds temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Funds to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Funds have a capital loss carryforward as of December 31, 2010 which expires as follows:
2016 | 2017 | 2018 | Total | |||||||||||||
Invesco Conservative Allocation Fund | $ | 395,093 | $ | 1,241,687 | $ | 5,342,137 | $ | 6,978,917 | ||||||||
Invesco Growth Allocation Fund | 9,881,853 | 47,552,386 | 67,427,109 | 124,861,348 | ||||||||||||
Invesco Moderate Allocation Fund | 7,253,954 | 36,934,284 | 51,386,784 | 95,575,022 | ||||||||||||
Invesco Moderate Growth Allocation Fund | 18,579,835 | 32,878,215 | 50,253,814 | 101,711,864 | ||||||||||||
Invesco Moderately Conservative Allocation Fund | 4,413,256 | 2,232,985 | 9,084,099 | 15,730,340 | ||||||||||||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
45 Invesco Allocation Funds
NOTE 8—Investment Securities
The aggregate amount of investment securities purchased and sold by each Fund and aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes are as follows:
At December 31, 2010 | ||||||||||||||||||||||||
For the year ended | Net Unrealized | |||||||||||||||||||||||
December 31, 2010* | Federal Tax | Unrealized | Unrealized | Appreciation | ||||||||||||||||||||
Purchases | Sales | Cost** | Appreciation | (Depreciation) | (Depreciation) | |||||||||||||||||||
Invesco Conservative Allocation Fund | $ | 85,470,318 | $ | 69,407,827 | $ | 127,171,571 | $ | — | $ | (1,449,017 | ) | $ | (1,449,017 | ) | ||||||||||
Invesco Growth Allocation Fund | 324,382,161 | 341,961,152 | 455,979,235 | 30,339,079 | (8,320,671 | ) | 22,018,408 | |||||||||||||||||
Invesco Moderate Allocation Fund | 378,633,635 | 387,411,900 | 554,812,334 | 29,641,399 | (7,628,011 | ) | 22,013,388 | |||||||||||||||||
Invesco Moderate Growth Allocation Fund | 192,479,634 | 202,868,336 | 295,081,697 | 13,057,038 | (3,769,904 | ) | 9,287,134 | |||||||||||||||||
Invesco Moderately Conservative Allocation Fund | 51,635,274 | 49,682,739 | 74,154,954 | 741,443 | (994,360 | ) | (252,917 | ) | ||||||||||||||||
* | Excludes U.S. Treasury obligations and money market funds, if any. |
** | Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end. |
NOTE 9—Share Information
Invesco Conservative Allocation Fund
Summary of Share Activity | ||||||||||||||||
Year ended | Year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 2,594,308 | $ | 24,576,796 | 3,958,596 | $ | 34,663,826 | ||||||||||
Class B | 527,399 | 4,963,806 | 513,871 | 4,418,542 | ||||||||||||
Class C | 910,112 | 8,556,456 | 1,270,982 | 10,955,507 | ||||||||||||
Class R | 189,897 | 1,793,874 | 282,426 | 2,461,518 | ||||||||||||
Class S(b) | 206,279 | 1,950,409 | 150,395 | 1,419,316 | ||||||||||||
Class Y | 19,417 | 182,584 | 78,828 | 719,545 | ||||||||||||
Institutional Class | 4,009 | 37,982 | 2,942 | 25,180 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 164,630 | 1,580,440 | 211,205 | 1,951,559 | ||||||||||||
Class B | 23,778 | 226,601 | 43,162 | 396,224 | ||||||||||||
Class C | 46,325 | 441,481 | 67,780 | 622,213 | ||||||||||||
Class R | 11,541 | 110,446 | 15,693 | 144,692 | ||||||||||||
Class S(b) | 6,152 | 58,995 | 4,459 | 41,203 | ||||||||||||
Class Y | 2,267 | 21,745 | 3,513 | 32,464 | ||||||||||||
Institutional Class | 57 | 543 | 158 | 1,451 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 285,696 | 2,709,405 | 249,476 | 2,181,424 | ||||||||||||
Class B | (288,416 | ) | (2,709,405 | ) | (249,101 | ) | (2,181,424 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (2,435,575 | ) | (23,126,710 | ) | (5,896,672 | ) | (53,729,310 | ) | ||||||||
Class B | (539,056 | ) | (5,069,667 | ) | (605,888 | ) | (5,192,318 | ) | ||||||||
Class C | (820,566 | ) | (7,728,431 | ) | (1,215,991 | ) | (10,480,134 | ) | ||||||||
Class R | (146,475 | ) | (1,380,495 | ) | (300,189 | ) | (2,671,328 | ) | ||||||||
Class S(b) | (99,084 | ) | (934,679 | ) | (3,796 | ) | (35,977 | ) | ||||||||
Class Y | (36,558 | ) | (351,141 | ) | (42,994 | ) | (399,800 | ) | ||||||||
Institutional Class | (4,009 | ) | (38,382 | ) | (874 | ) | (8,154 | ) | ||||||||
Net increase (decrease) in share activity | 622,128 | $ | 5,872,653 | (1,462,019 | ) | $ | (14,663,781 | ) | ||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in aggregate own 14% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party |
46 Invesco Allocation Funds
NOTE 9—Share Information—(continued)
record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | ||
(b) | Commencement date of September 25, 2009. |
Invesco Growth Allocation Fund
Summary of Share Activity | ||||||||||||||||
Year ended | Year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 3,441,616 | $ | 35,404,485 | 4,737,788 | $ | 39,566,736 | ||||||||||
Class B | 714,311 | 7,165,109 | 1,334,836 | 10,816,371 | ||||||||||||
Class C | 1,205,523 | 12,208,607 | 1,432,508 | 11,799,930 | ||||||||||||
Class R | 330,885 | 3,384,954 | 572,692 | 4,855,095 | ||||||||||||
Class S(b) | 1,490,893 | 15,047,613 | 1,575,316 | 15,662,266 | ||||||||||||
Class Y | 21,404 | 223,878 | 79,895 | 660,810 | ||||||||||||
Institutional Class | 9 | 95 | 1,695 | 15,000 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 474,700 | 5,164,730 | 418,618 | 4,118,916 | ||||||||||||
Class B | 78,520 | 841,736 | 49,733 | 482,666 | ||||||||||||
Class C | 82,321 | 882,452 | 48,771 | 472,919 | ||||||||||||
Class R | 22,008 | 238,616 | 16,461 | 161,316 | ||||||||||||
Class S(b) | 57,835 | 629,175 | 21,672 | 213,038 | ||||||||||||
Class Y | 2,435 | 26,490 | 2,662 | 26,168 | ||||||||||||
Institutional Class | 197 | 2,157 | 203 | 2,010 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 653,072 | 6,677,568 | 914,798 | 7,648,571 | ||||||||||||
Class B | (664,698 | ) | (6,677,568 | ) | (932,559 | ) | (7,648,571 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (5,716,067 | ) | (58,512,358 | ) | (12,477,311 | ) | (113,936,927 | ) | ||||||||
Class B | (1,227,000 | ) | (12,321,647 | ) | (1,533,725 | ) | (12,512,234 | ) | ||||||||
Class C | (1,842,883 | ) | (18,618,203 | ) | (1,895,598 | ) | (15,512,376 | ) | ||||||||
Class R | (322,702 | ) | (3,274,929 | ) | (369,110 | ) | (3,061,687 | ) | ||||||||
Class S(b) | (230,772 | ) | (2,396,925 | ) | (4,219 | ) | (42,153 | ) | ||||||||
Class Y | (47,065 | ) | (467,034 | ) | (28,950 | ) | (255,510 | ) | ||||||||
Institutional Class | (158 | ) | (1,755 | ) | — | — | ||||||||||
Net increase (decrease) in share activity | (1,475,616 | ) | $ | (14,372,754 | ) | (6,033,824 | ) | $ | (56,467,646 | ) | ||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 6% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity is also owned beneficially. | |
(b) | Commencement date of September 25, 2009. |
47 Invesco Allocation Funds
NOTE 9—Share Information—(continued)
Invesco Moderate Allocation Fund
Summary of Share Activity | ||||||||||||||||
Year ended | Year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 4,410,898 | $ | 43,978,342 | 5,118,519 | $ | 43,397,841 | ||||||||||
Class B | 881,385 | 8,697,799 | 1,460,074 | 12,345,257 | ||||||||||||
Class C | 1,795,179 | 17,789,286 | 1,919,028 | 16,382,295 | ||||||||||||
Class R | 626,813 | 6,218,560 | 599,966 | 5,116,341 | ||||||||||||
Class S(b) | 1,647,612 | 16,154,155 | 1,827,628 | 17,768,240 | ||||||||||||
Class Y | 25,056 | 256,176 | 60,280 | 501,689 | ||||||||||||
Institutional Class | 123,376 | 1,234,072 | — | — | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 820,603 | 8,468,579 | 1,112,894 | 10,593,668 | ||||||||||||
Class B | 145,164 | 1,493,697 | 251,852 | 2,390,352 | ||||||||||||
Class C | 189,323 | 1,946,244 | 290,386 | 2,755,593 | ||||||||||||
Class R | 48,380 | 498,790 | 63,403 | 602,955 | ||||||||||||
Class S(b) | 91,960 | 947,955 | 52,419 | 498,505 | ||||||||||||
Class Y | 2,501 | 25,798 | 3,952 | 37,624 | ||||||||||||
Institutional Class | 2,787 | 28,846 | 40 | 392 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 909,319 | 9,019,208 | 1,376,302 | 11,560,416 | ||||||||||||
Class B | (915,206 | ) | (9,019,208 | ) | (1,384,074 | ) | (11,560,416 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (6,806,163 | ) | (67,772,906 | ) | (12,562,972 | ) | (111,706,857 | ) | ||||||||
Class B | (1,479,046 | ) | (14,600,734 | ) | (2,340,787 | ) | (19,348,703 | ) | ||||||||
Class C | (2,440,247 | ) | (24,078,472 | ) | (3,067,735 | ) | (25,132,541 | ) | ||||||||
Class R | (575,531 | ) | (5,693,887 | ) | (502,306 | ) | (4,215,101 | ) | ||||||||
Class S(b) | (299,309 | ) | (3,027,150 | ) | (7,964 | ) | (77,910 | ) | ||||||||
Class Y | (41,749 | ) | (410,565 | ) | (33,091 | ) | (266,841 | ) | ||||||||
Institutional Class | (26,488 | ) | (262,817 | ) | — | — | ||||||||||
Net increase (decrease) in share activity | (863,383 | ) | $ | (8,108,232 | ) | (5,762,186 | ) | $ | (48,357,201 | ) | ||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 7% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity is also owned beneficially. | |
(b) | Commencement date of September 25, 2009. |
48 Invesco Allocation Funds
NOTE 9—Share Information—(continued)
Invesco Moderate Growth Allocation Fund
Summary of Share Activity | ||||||||||||||||
Year ended | Year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 3,102,911 | $ | 31,630,102 | 3,896,314 | $ | 33,205,791 | ||||||||||
Class B | 685,042 | 6,880,577 | 802,668 | 6,768,358 | ||||||||||||
Class C | 978,292 | 9,806,305 | 1,145,558 | 9,601,120 | ||||||||||||
Class R | 262,453 | 2,617,008 | 194,321 | 1,643,623 | ||||||||||||
Class Y | 11,228 | 112,734 | 25,835 | 221,833 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 530,229 | 5,609,826 | 687,500 | 6,662,229 | ||||||||||||
Class B | 90,994 | 949,062 | 138,207 | 1,321,254 | ||||||||||||
Class C | 116,319 | 1,212,042 | 159,896 | 1,527,010 | ||||||||||||
Class R | 19,961 | 209,790 | 23,061 | 222,445 | ||||||||||||
Class Y | 2,426 | 25,641 | 2,949 | 28,548 | ||||||||||||
Institutional Class | — | — | 57 | 561 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 513,524 | 5,187,062 | 638,379 | 5,401,925 | ||||||||||||
Class B | (522,328 | ) | (5,187,062 | ) | (649,775 | ) | (5,401,925 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (4,067,156 | ) | (41,191,139 | ) | (12,255,250 | ) | (115,746,816 | ) | ||||||||
Class B | (940,942 | ) | (9,351,492 | ) | (908,515 | ) | (7,419,047 | ) | ||||||||
Class C | (1,385,289 | ) | (13,896,943 | ) | (1,627,058 | ) | (13,368,763 | ) | ||||||||
Class R | (212,153 | ) | (2,149,006 | ) | (187,956 | ) | (1,534,947 | ) | ||||||||
Class Y | (8,468 | ) | (83,518 | ) | (20,689 | ) | (161,162 | ) | ||||||||
Net increase (decrease) in share activity | (822,957 | ) | $ | (7,619,011 | ) | (7,934,498 | ) | $ | (77,027,963 | ) | ||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 7% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity is also owned beneficially. |
49 Invesco Allocation Funds
NOTE 9—Share Information—(continued)
Invesco Moderately Conservative Allocation Fund
Summary of Share Activity | ||||||||||||||||
Year ended | Year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 1,078,643 | $ | 10,422,782 | 1,583,230 | $ | 13,853,198 | ||||||||||
Class B | 268,632 | 2,561,611 | 299,106 | 2,601,061 | ||||||||||||
Class C | 325,450 | 3,103,006 | 432,842 | 3,765,308 | ||||||||||||
Class R | 103,714 | 999,185 | 123,245 | 1,081,125 | ||||||||||||
Class Y | 769 | 7,440 | 3,586 | 32,845 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 123,430 | 1,209,614 | 187,603 | 1,748,606 | ||||||||||||
Class B | 18,671 | 182,046 | 36,745 | 340,262 | ||||||||||||
Class C | 28,532 | 278,766 | 59,632 | 553,982 | ||||||||||||
Class R | 8,031 | 78,627 | 11,488 | 106,840 | ||||||||||||
Class Y | 89 | 874 | 361 | 3,353 | ||||||||||||
Institutional Class | 62 | 611 | 150 | 1,401 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 102,329 | 985,802 | 140,677 | 1,224,565 | ||||||||||||
Class B | (103,223 | ) | (985,802 | ) | (141,841 | ) | (1,224,565 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (979,368 | ) | (9,506,473 | ) | (4,552,935 | ) | (42,865,509 | ) | ||||||||
Class B | (251,532 | ) | (2,422,288 | ) | (282,503 | ) | (2,407,473 | ) | ||||||||
Class C | (470,877 | ) | (4,522,441 | ) | (486,319 | ) | (4,128,953 | ) | ||||||||
Class R | (61,427 | ) | (590,211 | ) | (44,425 | ) | (377,257 | ) | ||||||||
Class Y | (4,166 | ) | (39,780 | ) | (234 | ) | (2,198 | ) | ||||||||
Net increase (decrease) in share activity | 187,759 | $ | 1,763,369 | (2,629,592 | ) | $ | (25,693,409 | ) | ||||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 8% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by this entity is also owned beneficially. |
NOTE 10—Significant Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the “Target Fund(s)” listed below would transfer all of its assets and liabilities to the “Acquiring Fund” listed below in exchange for shares of the Acquiring Fund. The Agreement requires approval of the Target Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2011.
Target Fund(s) | Acquiring Fund | |||
Invesco Moderate Growth Allocation Fund | Invesco Growth Allocation Fund | |||
Invesco Van Kampen Asset Allocation Growth Fund | Invesco Growth Allocation Fund | |||
Invesco Van Kampen Asset Allocation Moderate Fund | Invesco Moderate Allocation Fund | |||
Invesco Conservative Allocation Fund | Invesco Moderately Conservative Allocation Fund | |||
Invesco Van Kampen Asset Allocation Conservative Fund | Invesco Moderately Conservative Allocation Fund | |||
50 Invesco Allocation Funds
NOTE 11—Financial Highlights
The following schedule presents financial highlights for a share of each Fund outstanding throughout the periods indicated.
Invesco Conservative Allocation Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | assets with | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | Distributions | of period | return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.26 | $ | 0.23 | $ | 0.45 | $ | 0.68 | $ | (0.23 | ) | $ | — | $ | (0.23 | ) | $ | 9.71 | 7.37 | % | $ | 73,383 | 0.48 | %(e) | 0.64 | %(e) | 2.41 | %(e) | 62 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.52 | 0.27 | 0.78 | 1.05 | (0.31 | ) | — | (0.31 | ) | 9.26 | 12.28 | 64,366 | 0.48 | 0.67 | 3.02 | 30 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 10.55 | 0.45 | (1.98 | ) | (1.53 | ) | (0.42 | ) | (0.08 | ) | (0.50 | ) | 8.52 | (14.49 | ) | 71,799 | 0.48 | 0.59 | 4.55 | 23 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 10.64 | 0.46 | 0.05 | 0.51 | (0.40 | ) | (0.20 | ) | (0.60 | ) | 10.55 | 4.79 | 74,783 | 0.49 | 0.65 | 4.18 | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.41 | 0.35 | 0.36 | 0.71 | (0.33 | ) | (0.15 | ) | (0.48 | ) | 10.64 | 6.84 | 44,595 | 0.49 | 0.72 | 3.32 | 34 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.20 | 0.16 | 0.44 | 0.60 | (0.16 | ) | — | (0.16 | ) | 9.64 | 6.52 | 14,929 | 1.23 | (e) | 1.39 | (e) | 1.66 | (e) | 62 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.47 | 0.20 | 0.77 | 0.97 | (0.24 | ) | — | (0.24 | ) | 9.20 | 11.45 | 16,787 | 1.23 | 1.42 | 2.27 | 30 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 10.48 | 0.38 | (1.97 | ) | (1.59 | ) | (0.34 | ) | (0.08 | ) | (0.42 | ) | 8.47 | (15.08 | ) | 17,977 | 1.23 | 1.34 | 3.80 | 23 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 10.59 | 0.37 | 0.04 | 0.41 | (0.32 | ) | (0.20 | ) | (0.52 | ) | 10.48 | 3.88 | 19,796 | 1.24 | 1.40 | 3.43 | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.36 | 0.27 | 0.37 | 0.64 | (0.26 | ) | (0.15 | ) | (0.41 | ) | 10.59 | 6.14 | 20,482 | 1.24 | 1.47 | 2.57 | 34 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.19 | 0.16 | 0.44 | 0.60 | (0.16 | ) | — | (0.16 | ) | 9.63 | 6.52 | 28,247 | 1.23 | (e) | 1.39 | (e) | 1.66 | (e) | 62 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.46 | 0.20 | 0.77 | 0.97 | (0.24 | ) | — | (0.24 | ) | 9.19 | 11.46 | 25,705 | 1.23 | 1.42 | 2.27 | 30 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 10.48 | 0.38 | (1.98 | ) | (1.60 | ) | (0.34 | ) | (0.08 | ) | (0.42 | ) | 8.46 | (15.19 | ) | 22,624 | 1.23 | 1.34 | 3.80 | 23 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 10.58 | 0.37 | 0.05 | 0.42 | (0.32 | ) | (0.20 | ) | (0.52 | ) | 10.48 | 3.98 | 22,327 | 1.24 | 1.40 | 3.43 | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.36 | 0.27 | 0.36 | 0.63 | (0.26 | ) | (0.15 | ) | (0.41 | ) | 10.58 | 6.04 | 18,436 | 1.24 | 1.47 | 2.57 | 34 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.23 | 0.21 | 0.45 | 0.66 | (0.21 | ) | — | (0.21 | ) | 9.68 | 7.13 | 5,348 | 0.73 | (e) | 0.89 | (e) | 2.16 | (e) | 62 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.50 | 0.24 | 0.77 | 1.01 | (0.28 | ) | — | (0.28 | ) | 9.23 | 11.93 | 4,595 | 0.73 | 0.92 | 2.77 | 30 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 10.52 | 0.43 | (1.98 | ) | (1.55 | ) | (0.39 | ) | (0.08 | ) | (0.47 | ) | 8.50 | (14.67 | ) | 4,246 | 0.73 | 0.84 | 4.30 | 23 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 10.62 | 0.43 | 0.04 | 0.47 | (0.37 | ) | (0.20 | ) | (0.57 | ) | 10.52 | 4.46 | 4,831 | 0.74 | 0.90 | 3.93 | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.39 | 0.33 | 0.36 | 0.69 | (0.31 | ) | (0.15 | ) | (0.46 | ) | 10.62 | 6.60 | 4,182 | 0.74 | 0.97 | 3.07 | 34 | ||||||||||||||||||||||||||||||||||||||
Class S | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.26 | 0.24 | 0.44 | 0.68 | (0.24 | ) | — | (0.24 | ) | 9.70 | 7.36 | 2,565 | 0.38 | (e) | 0.54 | (e) | 2.51 | (e) | 62 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09(f) | $ | 9.35 | 0.08 | 0.14 | 0.22 | (0.31 | ) | — | (0.31 | ) | 9.26 | 2.35 | 1,398 | 0.38 | (g) | 0.48 | (g) | 3.12 | (g) | 30 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.25 | 0.25 | 0.45 | 0.70 | (0.25 | ) | — | (0.25 | ) | 9.70 | 7.63 | 871 | 0.23 | (e) | 0.39 | (e) | 2.66 | (e) | 62 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.52 | 0.29 | 0.77 | 1.06 | (0.33 | ) | — | (0.33 | ) | 9.25 | 12.47 | 968 | 0.23 | 0.42 | 3.27 | 30 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | $ | 9.57 | 0.10 | (0.65 | ) | (0.55 | ) | (0.42 | ) | (0.08 | ) | (0.50 | ) | 8.52 | (5.67 | ) | 556 | 0.23 | (g) | 0.34 | (g) | 4.80 | (g) | 23 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.18 | 0.25 | 0.45 | 0.70 | (0.25 | ) | — | (0.25 | ) | 9.63 | 7.69 | 44 | 0.23 | (e) | 0.30 | (e) | 2.66 | (e) | 62 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.45 | 0.29 | 0.77 | 1.06 | (0.33 | ) | — | (0.33 | ) | 9.18 | 12.57 | 42 | 0.23 | 0.23 | 3.27 | 30 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 10.48 | 0.49 | (2.00 | ) | (1.51 | ) | (0.44 | ) | (0.08 | ) | (0.52 | ) | 8.45 | (14.35 | ) | 19 | 0.23 | 0.26 | 4.80 | 23 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 10.66 | 0.50 | (0.05 | ) | 0.45 | (0.43 | ) | (0.20 | ) | (0.63 | ) | 10.48 | 4.13 | 11 | 0.21 | 0.21 | 4.45 | 22 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.42 | 0.38 | 0.37 | 0.75 | (0.36 | ) | (0.15 | ) | (0.51 | ) | 10.66 | 7.16 | 116 | 0.23 | 0.31 | 3.57 | 34 | ||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.61%, 0.60%, 0.60%, 0.62% and 0.61% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $69,519, $15,790, $26,929, $4,913, $2,020, $975 and $45 for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of September 25, 2009 for Class S shares and October 3, 2008 for Class Y shares. | |
(g) | Annualized. |
51 Invesco Allocation Funds
NOTE 11—Financial Highlights—(continued)
Invesco Growth Allocation Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | assets with | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income | unrealized) | operations | income | gains | Distributions | of period | return(a) | (000s omitted) | reimbursements(b) | reimbursements | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 10.02 | $ | 0.17 | (d) | $ | 1.12 | $ | 1.29 | $ | (0.21 | ) | $ | — | $ | (0.21 | ) | $ | 11.10 | 12.91 | % | $ | 285,192 | 0.46 | %(e) | 0.61 | %(e) | 1.69 | %(e) | 73 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.76 | 0.18 | (d) | 2.24 | 2.42 | (0.16 | ) | — | (0.16 | ) | 10.02 | 31.22 | 269,062 | 0.46 | 0.68 | 2.13 | 28 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 14.21 | 0.14 | (d) | (5.91 | ) | (5.77 | ) | (0.01 | ) | (0.67 | ) | (0.68 | ) | 7.76 | (40.62 | ) | 258,136 | 0.46 | 0.59 | 1.16 | 16 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 13.73 | 0.22 | (d) | 0.83 | 1.05 | (0.19 | ) | (0.38 | ) | (0.57 | ) | 14.21 | 7.75 | 486,834 | 0.47 | 0.56 | 1.53 | 5 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 12.22 | 0.10 | 1.93 | 2.03 | (0.10 | ) | (0.42 | ) | (0.52 | ) | 13.73 | 16.63 | 246,635 | 0.47 | 0.63 | 0.90 | 24 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.88 | 0.10 | (d) | 1.09 | 1.19 | (0.14 | ) | — | (0.14 | ) | 10.93 | 12.02 | 69,723 | 1.21 | (e) | 1.36 | (e) | 0.94 | (e) | 73 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.64 | 0.12 | (d) | 2.19 | 2.31 | (0.07 | ) | — | (0.07 | ) | 9.88 | 30.20 | 73,887 | 1.21 | 1.43 | 1.38 | 28 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 14.10 | 0.05 | (d) | (5.83 | ) | (5.78 | ) | (0.01 | ) | (0.67 | ) | (0.68 | ) | 7.64 | (41.00 | ) | 65,395 | 1.21 | 1.34 | 0.41 | 16 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 13.64 | 0.11 | (d) | 0.82 | 0.93 | (0.09 | ) | (0.38 | ) | (0.47 | ) | 14.10 | 6.89 | 129,577 | 1.22 | 1.31 | 0.78 | 5 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 12.16 | 0.02 | 1.90 | 1.92 | (0.02 | ) | (0.42 | ) | (0.44 | ) | 13.64 | 15.77 | 110,172 | 1.22 | 1.38 | 0.15 | 24 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.88 | 0.10 | (d) | 1.09 | 1.19 | (0.14 | ) | — | (0.14 | ) | 10.93 | 12.02 | 74,096 | 1.21 | (e) | 1.36 | (e) | 0.94 | (e) | 73 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.64 | 0.12 | (d) | 2.19 | 2.31 | (0.07 | ) | — | (0.07 | ) | 9.88 | 30.20 | 72,462 | 1.21 | 1.43 | 1.38 | 28 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 14.10 | 0.05 | (d) | (5.83 | ) | (5.78 | ) | (0.01 | ) | (0.67 | ) | (0.68 | ) | 7.64 | (41.00 | ) | 59,190 | 1.21 | 1.34 | 0.41 | 16 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 13.63 | 0.11 | (d) | 0.83 | 0.94 | (0.09 | ) | (0.38 | ) | (0.47 | ) | 14.10 | 6.97 | 102,941 | 1.22 | 1.31 | 0.78 | 5 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 12.15 | 0.02 | 1.90 | 1.92 | (0.02 | ) | (0.42 | ) | (0.44 | ) | 13.63 | 15.78 | 75,611 | 1.22 | 1.38 | 0.15 | 24 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.98 | 0.15 | (d) | 1.11 | 1.26 | (0.19 | ) | — | (0.19 | ) | 11.05 | 12.61 | 14,761 | 0.71 | (e) | 0.86 | (e) | 1.44 | (e) | 73 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.73 | 0.16 | (d) | 2.22 | 2.38 | (0.13 | ) | — | (0.13 | ) | 9.98 | 30.81 | 13,034 | 0.71 | 0.93 | 1.88 | 28 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 14.18 | 0.11 | (d) | (5.88 | ) | (5.77 | ) | (0.01 | ) | (0.67 | ) | (0.68 | ) | 7.73 | (40.70 | ) | 8,386 | 0.71 | 0.84 | 0.91 | 16 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 13.70 | 0.19 | (d) | 0.83 | 1.02 | (0.16 | ) | (0.38 | ) | (0.54 | ) | 14.18 | 7.52 | 12,231 | 0.72 | 0.81 | 1.28 | 5 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 12.20 | 0.07 | 1.92 | 1.99 | (0.07 | ) | (0.42 | ) | (0.49 | ) | 13.70 | 16.34 | 9,617 | 0.72 | 0.88 | 0.65 | 24 | ||||||||||||||||||||||||||||||||||||||
Class S | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 10.02 | 0.18 | (d) | 1.12 | 1.30 | (0.22 | ) | — | (0.22 | ) | 11.10 | 13.02 | 32,295 | 0.36 | (e) | 0.51 | (e) | 1.79 | (e) | 73 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09(f) | $ | 9.61 | 0.06 | (d) | 0.51 | 0.57 | (0.16 | ) | — | (0.16 | ) | 10.02 | 6.00 | 15,961 | 0.36 | (g) | 0.47 | (g) | 2.23 | (g) | 28 | |||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 10.02 | 0.20 | (d) | 1.12 | 1.32 | (0.24 | ) | — | (0.24 | ) | 11.10 | 13.17 | 1,278 | 0.21 | (e) | 0.36 | (e) | 1.94 | (e) | 73 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.77 | 0.21 | (d) | 2.23 | 2.44 | (0.19 | ) | — | (0.19 | ) | 10.02 | 31.50 | 1,386 | 0.21 | 0.43 | 2.38 | 28 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | $ | 10.26 | 0.03 | (d) | (1.84 | ) | (1.81 | ) | (0.01 | ) | (0.67 | ) | (0.68 | ) | 7.77 | (17.65 | ) | 658 | 0.21 | (g) | 0.46 | (g) | 1.42 | (g) | 16 | |||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 10.08 | 0.21 | (d) | 1.12 | 1.33 | (0.24 | ) | — | (0.24 | ) | 11.17 | 13.24 | 112 | 0.13 | (e) | 0.13 | (e) | 2.02 | (e) | 73 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.82 | 0.21 | (d) | 2.26 | 2.47 | (0.21 | ) | — | (0.21 | ) | 10.08 | 31.59 | 100 | 0.16 | 0.16 | 2.43 | 28 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 14.25 | 0.18 | (d) | (5.93 | ) | (5.75 | ) | (0.01 | ) | (0.67 | ) | (0.68 | ) | 7.82 | (40.36 | ) | 63 | 0.12 | 0.12 | 1.50 | 16 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 13.77 | 0.28 | (d) | 0.82 | 1.10 | (0.24 | ) | (0.38 | ) | (0.62 | ) | 14.25 | 8.09 | 97 | 0.08 | 0.08 | 1.91 | 5 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 12.25 | 0.16 | 1.92 | 2.08 | (0.14 | ) | (0.42 | ) | (0.56 | ) | 13.77 | 16.98 | 147 | 0.12 | 0.12 | 1.24 | 24 | ||||||||||||||||||||||||||||||||||||||
(a) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(b) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.77%, 0.82%, 0.80%, 0.80% and 0.83% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(d) | Calculated using average shares outstanding. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $267,091, $69,116, $71,292, $13,315, $26,388, $1,205 and $103 for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of September 25, 2009 for Class S shares and October 3, 2008 for Class Y shares. | |
(g) | Annualized. |
52 Invesco Allocation Funds
NOTE 11—Financial Highlights—(continued)
Invesco Moderate Allocation Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | assets with | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | Distributions | of period | return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.63 | $ | 0.29 | $ | 0.86 | $ | 1.15 | $ | (0.28 | ) | $ | — | $ | (0.28 | ) | $ | 10.50 | 12.03 | % | $ | 334,067 | 0.37 | %(e) | 0.52 | %(e) | 2.87 | %(e) | 69 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.87 | 0.31 | 1.80 | 2.11 | (0.35 | ) | — | (0.35 | ) | 9.63 | 26.86 | 312,736 | 0.37 | 0.57 | 3.64 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 12.35 | 0.40 | (4.25 | ) | (3.85 | ) | (0.30 | ) | (0.33 | ) | (0.63 | ) | 7.87 | (31.11 | ) | 294,668 | 0.37 | 0.52 | 3.76 | 13 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.23 | 0.41 | 0.45 | 0.86 | (0.37 | ) | (0.37 | ) | (0.74 | ) | 12.35 | 7.14 | 466,753 | 0.38 | 0.50 | 3.20 | 6 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.49 | 0.31 | 1.04 | 1.35 | (0.28 | ) | (0.33 | ) | (0.61 | ) | 12.23 | 11.73 | 312,300 | 0.38 | 0.53 | 2.56 | 21 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.59 | 0.21 | 0.87 | 1.08 | (0.21 | ) | — | (0.21 | ) | 10.46 | 11.25 | 79,150 | 1.12 | (e) | 1.27 | (e) | 2.12 | (e) | 69 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.85 | 0.25 | 1.77 | 2.02 | (0.28 | ) | — | (0.28 | ) | 9.59 | 25.80 | 85,714 | 1.12 | 1.32 | 2.89 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 12.27 | 0.32 | (4.20 | ) | (3.88 | ) | (0.21 | ) | (0.33 | ) | (0.54 | ) | 7.85 | (31.57 | ) | 85,928 | 1.12 | 1.27 | 3.01 | 13 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.17 | 0.31 | 0.44 | 0.75 | (0.28 | ) | (0.37 | ) | (0.65 | ) | 12.27 | 6.24 | 155,059 | 1.13 | 1.25 | 2.45 | 6 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.45 | 0.21 | 1.03 | 1.24 | (0.19 | ) | (0.33 | ) | (0.52 | ) | 12.17 | 10.86 | 146,751 | 1.13 | 1.28 | 1.81 | 21 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.59 | 0.21 | 0.87 | 1.08 | (0.21 | ) | — | (0.21 | ) | 10.46 | 11.26 | 104,060 | 1.12 | (e) | 1.27 | (e) | 2.12 | (e) | 69 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.85 | 0.25 | 1.77 | 2.02 | (0.28 | ) | — | (0.28 | ) | 9.59 | 25.80 | 99,807 | 1.12 | 1.32 | 2.89 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 12.27 | 0.32 | (4.20 | ) | (3.88 | ) | (0.21 | ) | (0.33 | ) | (0.54 | ) | 7.85 | (31.57 | ) | 88,392 | 1.12 | 1.27 | 3.01 | 13 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.17 | 0.31 | 0.44 | 0.75 | (0.28 | ) | (0.37 | ) | (0.65 | ) | 12.27 | 6.24 | 141,090 | 1.13 | 1.25 | 2.45 | 6 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.45 | 0.21 | 1.03 | 1.24 | (0.19 | ) | (0.33 | ) | (0.52 | ) | 12.17 | 10.86 | 114,828 | 1.13 | 1.28 | 1.81 | 21 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.62 | 0.26 | 0.87 | 1.13 | (0.26 | ) | — | (0.26 | ) | 10.49 | 11.77 | 21,639 | 0.62 | (e) | 0.77 | (e) | 2.62 | (e) | 69 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.87 | 0.29 | 1.79 | 2.08 | (0.33 | ) | — | (0.33 | ) | 9.62 | 26.44 | 18,886 | 0.62 | 0.82 | 3.39 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 12.33 | 0.37 | (4.23 | ) | (3.86 | ) | (0.27 | ) | (0.33 | ) | (0.60 | ) | 7.87 | (31.24 | ) | 14,176 | 0.62 | 0.77 | 3.51 | 13 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.21 | 0.38 | 0.45 | 0.83 | (0.34 | ) | (0.37 | ) | (0.71 | ) | 12.33 | 6.90 | 19,332 | 0.63 | 0.75 | 2.95 | 6 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.48 | 0.28 | 1.03 | 1.31 | (0.25 | ) | (0.33 | ) | (0.58 | ) | 12.21 | 11.41 | 15,294 | 0.63 | 0.78 | 2.31 | 21 | ||||||||||||||||||||||||||||||||||||||
Class S | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.62 | 0.30 | 0.86 | 1.16 | (0.29 | ) | — | (0.29 | ) | 10.49 | 12.15 | 34,746 | 0.27 | (e) | 0.42 | (e) | 2.97 | (e) | 69 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09(f) | $ | 9.48 | 0.10 | 0.39 | 0.49 | (0.35 | ) | — | (0.35 | ) | 9.62 | 5.23 | 18,006 | 0.27 | (g) | 0.40 | (g) | 3.74 | (g) | 21 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.62 | 0.31 | 0.88 | 1.19 | (0.31 | ) | — | (0.31 | ) | 10.50 | 12.42 | 1,085 | 0.12 | (e) | 0.27 | (e) | 3.12 | (e) | 69 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.87 | 0.34 | 1.78 | 2.12 | (0.37 | ) | — | (0.37 | ) | 9.62 | 27.02 | 1,131 | 0.12 | 0.32 | 3.89 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | $ | 9.77 | 0.08 | (1.34 | ) | (1.26 | ) | (0.31 | ) | (0.33 | ) | (0.64 | ) | 7.87 | (12.84 | ) | 680 | 0.12 | (g) | 0.33 | (g) | 4.01 | (g) | 13 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.66 | 0.32 | 0.86 | 1.18 | (0.31 | ) | — | (0.31 | ) | 10.53 | 12.28 | 1,061 | 0.11 | (e) | 0.11 | (e) | 3.13 | (e) | 69 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.89 | 0.34 | 1.80 | 2.14 | (0.37 | ) | — | (0.37 | ) | 9.66 | 27.21 | 11 | 0.13 | 0.19 | 3.88 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 12.39 | 0.43 | (4.27 | ) | (3.84 | ) | (0.33 | ) | (0.33 | ) | (0.66 | ) | 7.89 | (30.92 | ) | 8 | 0.13 | 0.17 | 4.00 | 13 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.26 | 0.45 | 0.46 | 0.91 | (0.41 | ) | (0.37 | ) | (0.78 | ) | 12.39 | 7.49 | 12 | 0.09 | 0.09 | 3.49 | 6 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.52 | 0.34 | 1.04 | 1.38 | (0.31 | ) | (0.33 | ) | (0.64 | ) | 12.26 | 11.96 | 156 | 0.10 | 0.10 | 2.83 | 21 | ||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.71%, 0.72%, 0.75%, 0.76% and 0.80% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $316,297, $80,321, $99,963, $19,991, $29,119, $1,028 and $745 for Class A, Class B, Class C, Class R, Class S, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of September 25, 2009 for Class S shares and October 3, 2008 for Class Y shares. | |
(g) | Annualized. |
53 Invesco Allocation Funds
NOTE 11—Financial Highlights—(continued)
Invesco Moderate Growth Allocation Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | assets with | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | Distributions | of period | return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.84 | $ | 0.24 | $ | 1.02 | $ | 1.26 | $ | (0.32 | ) | $ | — | $ | (0.32 | ) | $ | 10.78 | 12.89 | % | $ | 199,459 | 0.37 | %(e) | 0.58 | %(e) | 2.42 | %(e) | 68 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.84 | 0.25 | 2.14 | 2.39 | (0.39 | ) | — | (0.39 | ) | 9.84 | 30.53 | 181,286 | 0.37 | 0.62 | 2.90 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 13.13 | 0.28 | (5.10 | ) | (4.82 | ) | (0.01 | ) | (0.46 | ) | (0.47 | ) | 7.84 | (36.71 | ) | 199,591 | 0.37 | 0.56 | 2.50 | 19 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.74 | 0.34 | 0.57 | 0.91 | (0.28 | ) | (0.24 | ) | (0.52 | ) | 13.13 | 7.19 | 358,335 | 0.37 | 0.54 | 2.54 | 2 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.35 | 0.24 | 1.45 | 1.69 | (0.16 | ) | (0.14 | ) | (0.30 | ) | 12.74 | 14.92 | 130,088 | 0.38 | 0.71 | 1.97 | 21 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.71 | 0.17 | 0.99 | 1.16 | (0.25 | ) | — | (0.25 | ) | 10.62 | 11.99 | 41,666 | 1.12 | (e) | 1.33 | (e) | 1.67 | (e) | 68 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.72 | 0.18 | 2.11 | 2.29 | (0.30 | ) | — | (0.30 | ) | 9.71 | 29.68 | 44,746 | 1.12 | 1.37 | 2.15 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 13.05 | 0.19 | (5.05 | ) | (4.86 | ) | (0.01 | ) | (0.46 | ) | (0.47 | ) | 7.72 | (37.25 | ) | 40,380 | 1.12 | 1.31 | 1.75 | 19 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.67 | 0.24 | 0.57 | 0.81 | (0.19 | ) | (0.24 | ) | (0.43 | ) | 13.05 | 6.44 | 70,657 | 1.12 | 1.29 | 1.79 | 2 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.32 | 0.15 | 1.44 | 1.59 | (0.10 | ) | (0.14 | ) | (0.24 | ) | 12.67 | 14.04 | 52,329 | 1.13 | 1.46 | 1.22 | 21 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.70 | 0.17 | 0.99 | 1.16 | (0.25 | ) | — | (0.25 | ) | 10.61 | 12.00 | 54,351 | 1.12 | (e) | 1.33 | (e) | 1.67 | (e) | 68 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.72 | 0.18 | 2.10 | 2.28 | (0.30 | ) | — | (0.30 | ) | 9.70 | 29.55 | 52,488 | 1.12 | 1.37 | 2.15 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 13.04 | 0.19 | (5.04 | ) | (4.85 | ) | (0.01 | ) | (0.46 | ) | (0.47 | ) | 7.72 | (37.19 | ) | 44,256 | 1.12 | 1.31 | 1.75 | 19 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.66 | 0.24 | 0.57 | 0.81 | (0.19 | ) | (0.24 | ) | (0.43 | ) | 13.04 | 6.45 | 69,400 | 1.12 | 1.29 | 1.79 | 2 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.31 | 0.15 | 1.44 | 1.59 | (0.10 | ) | (0.14 | ) | (0.24 | ) | 12.66 | 14.05 | 42,266 | 1.13 | 1.46 | 1.22 | 21 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.78 | 0.22 | 1.01 | 1.23 | (0.30 | ) | — | (0.30 | ) | 10.71 | 12.62 | 7,818 | 0.62 | (e) | 0.83 | (e) | 2.17 | (e) | 68 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.79 | 0.23 | 2.12 | 2.35 | (0.36 | ) | — | (0.36 | ) | 9.78 | 30.21 | 6,454 | 0.62 | 0.87 | 2.65 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 13.09 | 0.25 | (5.08 | ) | (4.83 | ) | (0.01 | ) | (0.46 | ) | (0.47 | ) | 7.79 | (36.90 | ) | 4,912 | 0.62 | 0.81 | 2.25 | 19 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.70 | 0.31 | 0.57 | 0.88 | (0.25 | ) | (0.24 | ) | (0.49 | ) | 13.09 | 6.98 | 5,475 | 0.62 | 0.79 | 2.29 | 2 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.34 | 0.21 | 1.43 | 1.64 | (0.14 | ) | (0.14 | ) | (0.28 | ) | 12.70 | 14.47 | 2,378 | 0.63 | 0.96 | 1.72 | 21 | ||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.83 | 0.27 | 1.02 | 1.29 | (0.35 | ) | — | (0.35 | ) | 10.77 | 13.19 | 833 | 0.12 | (e) | 0.33 | (e) | 2.67 | (e) | 68 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.84 | 0.28 | 2.14 | 2.42 | (0.43 | ) | — | (0.43 | ) | 9.83 | 30.90 | 710 | 0.12 | 0.37 | 3.15 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | $ | 9.89 | 0.05 | (1.63 | ) | (1.58 | ) | (0.01 | ) | (0.46 | ) | (0.47 | ) | 7.84 | (15.98 | ) | 503 | 0.12 | (g) | 0.47 | (g) | 2.75 | (g) | 19 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.88 | 0.27 | 1.02 | 1.29 | (0.35 | ) | — | (0.35 | ) | 10.82 | 13.12 | 15 | 0.12 | (e) | 0.20 | (e) | 2.67 | (e) | 68 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 7.88 | 0.27 | 2.15 | 2.42 | (0.42 | ) | — | (0.42 | ) | 9.88 | 30.85 | 14 | 0.13 | 0.21 | 3.14 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 13.16 | 0.29 | (5.10 | ) | (4.81 | ) | (0.01 | ) | (0.46 | ) | (0.47 | ) | 7.88 | (36.55 | ) | 10 | 0.13 | 0.19 | 2.75 | 19 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 12.76 | 0.38 | 0.57 | 0.95 | (0.31 | ) | (0.24 | ) | (0.55 | ) | 13.16 | 7.42 | 12 | 0.10 | 0.12 | 2.82 | 2 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 11.36 | 0.27 | 1.45 | 1.72 | (0.18 | ) | (0.14 | ) | (0.32 | ) | 12.76 | 15.17 | 66 | 0.12 | 0.26 | 2.22 | 21 | ||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.74%, 0.75%, 0.77%, 0.78% and 0.82% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $184,387, $41,863, $52,322, $7,104, $736 and $14 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of October 3, 2008 for Class Y shares. | |
(g) | Annualized. |
54 Invesco Allocation Funds
NOTE 11—Financial Highlights—(continued)
Invesco Moderately Conservative Allocation Fund
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average net | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | assets with | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expense | and/or expense | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | Distributions | of period | return(b) | (000s omitted) | reimbursements(c) | reimbursements | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.35 | $ | 0.29 | $ | 0.58 | $ | 0.87 | $ | (0.28 | ) | $ | — | $ | (0.28 | ) | $ | 9.94 | 9.33 | % | $ | 46,954 | 0.39 | %(e) | 0.73 | %(e) | 3.04 | %(e) | 70 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.35 | 0.32 | 1.12 | 1.44 | (0.44 | ) | — | (0.44 | ) | 9.35 | 17.28 | 41,152 | 0.39 | 0.71 | 3.66 | 26 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 11.24 | 0.46 | (2.84 | ) | (2.38 | ) | (0.40 | ) | (0.11 | ) | (0.51 | ) | 8.35 | (21.20 | ) | 58,819 | 0.39 | 0.63 | 4.45 | 28 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 11.09 | 0.48 | 0.21 | 0.69 | (0.35 | ) | (0.19 | ) | (0.54 | ) | 11.24 | 6.23 | 83,101 | 0.39 | 0.67 | 4.12 | 8 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.60 | 0.36 | 0.50 | 0.86 | (0.27 | ) | (0.10 | ) | (0.37 | ) | 11.09 | 8.13 | 21,713 | 0.40 | 1.37 | 3.26 | 29 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.30 | 0.22 | 0.56 | 0.78 | (0.20 | ) | — | (0.20 | ) | 9.88 | 8.45 | 9,032 | 1.14 | (e) | 1.48 | (e) | 2.29 | (e) | 70 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.31 | 0.26 | 1.11 | 1.37 | (0.38 | ) | — | (0.38 | ) | 9.30 | 16.46 | 9,129 | 1.14 | 1.46 | 2.91 | 26 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 11.16 | 0.38 | (2.80 | ) | (2.42 | ) | (0.32 | ) | (0.11 | ) | (0.43 | ) | 8.31 | (21.69 | ) | 8,897 | 1.14 | 1.38 | 3.70 | 28 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 11.03 | 0.39 | 0.21 | 0.60 | (0.28 | ) | (0.19 | ) | (0.47 | ) | 11.16 | 5.40 | 11,156 | 1.14 | 1.42 | 3.37 | 8 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.57 | 0.27 | 0.50 | 0.77 | (0.21 | ) | (0.10 | ) | (0.31 | ) | 11.03 | 7.29 | 7,916 | 1.15 | 2.12 | 2.51 | 29 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.32 | 0.22 | 0.56 | 0.78 | (0.20 | ) | — | (0.20 | ) | 9.90 | 8.43 | 14,494 | 1.14 | (e) | 1.48 | (e) | 2.29 | (e) | 70 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.33 | 0.26 | 1.11 | 1.37 | (0.38 | ) | — | (0.38 | ) | 9.32 | 16.42 | 14,731 | 1.14 | 1.46 | 2.91 | 26 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 11.17 | 0.37 | (2.78 | ) | (2.41 | ) | (0.32 | ) | (0.11 | ) | (0.43 | ) | 8.33 | (21.57 | ) | 13,118 | 1.14 | 1.38 | 3.70 | 28 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 11.03 | 0.39 | 0.22 | 0.61 | (0.28 | ) | (0.19 | ) | (0.47 | ) | 11.17 | 5.49 | 14,454 | 1.14 | 1.42 | 3.37 | 8 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.57 | 0.27 | 0.50 | 0.77 | (0.21 | ) | (0.10 | ) | (0.31 | ) | 11.03 | 7.29 | 8,833 | 1.15 | 2.12 | 2.51 | 29 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.34 | 0.27 | 0.56 | 0.83 | (0.25 | ) | — | (0.25 | ) | 9.92 | 8.96 | 3,241 | 0.64 | (e) | 0.98 | (e) | 2.79 | (e) | 70 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.34 | 0.30 | 1.12 | 1.42 | (0.42 | ) | — | (0.42 | ) | 9.34 | 17.05 | 2,580 | 0.64 | 0.96 | 3.41 | 26 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 11.21 | 0.42 | (2.81 | ) | (2.39 | ) | (0.37 | ) | (0.11 | ) | (0.48 | ) | 8.34 | (21.31 | ) | 1,552 | 0.64 | 0.88 | 4.20 | 28 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 11.07 | 0.45 | 0.20 | 0.65 | (0.32 | ) | (0.19 | ) | (0.51 | ) | 11.21 | 5.91 | 1,396 | 0.64 | 0.92 | 3.87 | 8 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.59 | 0.33 | 0.50 | 0.83 | (0.25 | ) | (0.10 | ) | (0.35 | ) | 11.07 | 7.84 | 495 | 0.65 | 1.62 | 3.01 | 29 | ||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.34 | 0.32 | 0.56 | 0.88 | (0.30 | ) | — | (0.30 | ) | 9.92 | 9.49 | 41 | 0.14 | (e) | 0.48 | (e) | 3.29 | (e) | 70 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.35 | 0.35 | 1.11 | 1.46 | (0.47 | ) | — | (0.47 | ) | 9.34 | 17.54 | 70 | 0.14 | 0.46 | 3.91 | 26 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | $ | 9.59 | 0.10 | (0.83 | ) | (0.73 | ) | (0.40 | ) | (0.11 | ) | (0.51 | ) | 8.35 | (7.56 | ) | 31 | 0.14 | (g) | 0.42 | (g) | 4.70 | (g) | 28 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.37 | 0.32 | 0.57 | 0.89 | (0.30 | ) | — | (0.30 | ) | 9.96 | 9.57 | 32 | 0.14 | (e) | 0.36 | (e) | 3.29 | (e) | 70 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | $ | 8.38 | 0.35 | 1.11 | 1.46 | (0.47 | ) | — | (0.47 | ) | 9.37 | 17.48 | 29 | 0.14 | 0.32 | 3.91 | 26 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | $ | 11.27 | 0.48 | (2.83 | ) | (2.35 | ) | (0.43 | ) | (0.11 | ) | (0.54 | ) | 8.38 | (20.88 | ) | 25 | 0.14 | 0.27 | 4.70 | 28 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | $ | 11.11 | 0.50 | 0.22 | 0.72 | (0.37 | ) | (0.19 | ) | (0.56 | ) | 11.27 | 6.51 | 31 | 0.14 | 0.27 | 4.37 | 8 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | $ | 10.61 | 0.38 | 0.51 | 0.89 | (0.29 | ) | (0.10 | ) | (0.39 | ) | 11.11 | 8.41 | 58 | 0.14 | 0.99 | 3.51 | 29 | ||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.64%, 0.67%, 0.69%, 0.70% and 0.74% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(e) | Ratios are based on average daily net assets (000’s omitted) of $43,964, $9,242, $14,617, $2,842, $59 and $30 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of October 3, 2008 for Class Y shares. | |
(g) | Annualized. |
55 Invesco Allocation Funds
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Conservative Allocation Fund,
Invesco Growth Allocation Fund,
Invesco Moderate Allocation Fund,
Invesco Moderate Growth Allocation Fund,
Invesco Moderately Conservative Allocation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Conservative Allocation Fund, Invesco Growth Allocation Fund, Invesco Moderate Allocation Fund, Invesco Moderate Growth Allocation Fund and Invesco Moderately Conservative Allocation Fund (formerly known as AIM Conservative Allocation Fund, AIM Growth Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund; five of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
56 Invesco Allocation Funds
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010, through December 31, 2010.
In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the underlying funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund’s total return.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
Invesco Conservative Allocation Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,069.10 | $ | 2.50 | $ | 1,022.79 | $ | 2.45 | 0.48 | % | ||||||||||||||||||
B | 1,000.00 | 1,066.30 | 6.41 | 1,019.00 | 6.26 | 1.23 | ||||||||||||||||||||||||
C | 1,000.00 | 1,065.20 | 6.40 | 1,019.00 | 6.26 | 1.23 | ||||||||||||||||||||||||
R | 1,000.00 | 1,069.00 | 3.81 | 1,021.53 | 3.72 | 0.73 | ||||||||||||||||||||||||
S | 1,000.00 | 1,070.20 | 2.04 | 1,023.24 | 1.99 | 0.39 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,070.60 | 1.20 | 1,024.05 | 1.17 | 0.23 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,071.10 | 1.20 | 1,024.05 | 1.17 | 0.23 | ||||||||||||||||||||||||
57 Invesco Allocation Funds
Invesco Growth Allocation Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,196.00 | $ | 2.55 | $ | 1,022.89 | $ | 2.35 | 0.46 | % | ||||||||||||||||||
B | 1,000.00 | 1,191.40 | 6.68 | 1,019.11 | 6.16 | 1.21 | ||||||||||||||||||||||||
C | 1,000.00 | 1,191.40 | 6.68 | 1,019.11 | 6.16 | 1.21 | ||||||||||||||||||||||||
R | 1,000.00 | 1,194.40 | 3.93 | 1,021.63 | 3.62 | 0.71 | ||||||||||||||||||||||||
S | 1,000.00 | 1,196.00 | 1.94 | 1,023.44 | 1.79 | 0.35 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,197.50 | 1.16 | 1,024.15 | 1.07 | 0.21 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,197.80 | 0.78 | 1,024.50 | 0.71 | 0.14 | ||||||||||||||||||||||||
Invesco Moderate Allocation Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,145.30 | $ | 2.00 | $ | 1,023.34 | $ | 1.89 | 0.37 | % | ||||||||||||||||||
B | 1,000.00 | 1,141.10 | 6.04 | 1,019.56 | 5.70 | 1.12 | ||||||||||||||||||||||||
C | 1,000.00 | 1,141.10 | 6.04 | 1,019.56 | 5.70 | 1.12 | ||||||||||||||||||||||||
R | 1,000.00 | 1,143.90 | 3.35 | 1,022.08 | 3.16 | 0.62 | ||||||||||||||||||||||||
S | 1,000.00 | 1,145.40 | 1.46 | 1,023.84 | 1.38 | 0.27 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,146.90 | 0.65 | 1,024.60 | 0.61 | 0.12 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,146.50 | 0.65 | 1,024.60 | 0.61 | 0.12 | ||||||||||||||||||||||||
Invesco Moderate Growth Allocation Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,176.70 | $ | 2.03 | $ | 1,023.34 | $ | 1.89 | 0.37 | % | ||||||||||||||||||
B | 1,000.00 | 1,171.80 | 6.13 | 1,019.56 | 5.70 | 1.12 | ||||||||||||||||||||||||
C | 1,000.00 | 1,171.90 | 6.13 | 1,019.56 | 5.70 | 1.12 | ||||||||||||||||||||||||
R | 1,000.00 | 1,175.40 | 3.40 | 1,022.08 | 3.16 | 0.62 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,177.50 | 0.66 | 1,024.60 | 0.61 | 0.12 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,177.60 | 0.66 | 1,024.60 | 0.61 | 0.12 | ||||||||||||||||||||||||
58 Invesco Allocation Funds
Invesco Moderately Conservative Allocation Fund
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,096.80 | $ | 2.06 | $ | 1,023.24 | $ | 1.99 | 0.39 | % | ||||||||||||||||||
B | 1,000.00 | 1,092.70 | 6.01 | 1,019.46 | 5.80 | 1.14 | ||||||||||||||||||||||||
C | 1,000.00 | 1,092.50 | 6.01 | 1,019.46 | 5.80 | 1.14 | ||||||||||||||||||||||||
R | 1,000.00 | 1,095.50 | 3.38 | 1,021.98 | 3.26 | 0.64 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,097.30 | 0.74 | 1,024.50 | 0.71 | 0.14 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,098.10 | 0.74 | 1,024.50 | 0.71 | 0.14 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
59 Invesco Allocation Funds
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Funds designate the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax
Corporate | ||||||||||||
Qualified | Dividends | |||||||||||
Dividend | Received | U.S. Treasury | ||||||||||
Income* | Deduction* | Obligations* | ||||||||||
Invesco Conservative Allocation Fund | 9.00% | 3.50 | % | 11.88 | % | |||||||
Invesco Growth Allocation Fund | 49.00% | 23.50 | % | 17.34 | % | |||||||
Invesco Moderate Allocation Fund | 17.00% | 6.50 | % | 12.48 | % | |||||||
Invesco Moderate Growth Allocation Fund | 26.50% | 12.00 | % | 14.20 | % | |||||||
Invesco Moderately Conservative Allocation Fund | 9.00% | 5.00 | % | 11.60 | % | |||||||
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
60 Invesco Allocation Funds
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(GRAPHICS)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886116.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information
is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886100.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
AAS-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Convertible Securities Fund
2 | Letters to Shareholders | ||
4 | Performance Summary | ||
4 | Management Discussion | ||
6 | Long-Term Fund Performance | ||
8 | Supplemental Information | ||
9 | Schedule of Investments | ||
14 | Financial Statements | ||
16 | Notes to Financial Statements | ||
23 | Financial Highlights | ||
24 | Auditor's Report | ||
25 | Fund Expenses | ||
26 | Approval of Investment Advisory and Sub-Advisory Agreements | ||
28 | Tax Information | ||
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883752.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![(-s- Philip Taylor)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883753.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 | Invesco Convertible Securities Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883754.jpg)
Bruce Crokett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883755.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Convertible Securities Fund |
Management’s Discussion of Fund Performance
Performance summary
All share classes of Invesco Convertible Securities Fund, at net asset value (NAV), posted positive returns for the three-month reporting period ended December 31, 2010. At NAV, the Fund outperformed its broad market/style-specific index, the BofA Merrill Lynch All Convertibles All Qualities Index for the period. The Fund’s security selection in and underweight exposure to the financials sector contributed to returns, as did security selection in the industrials sector.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 9/30/10 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 7.86 | % | ||
Class B Shares | 7.64 | |||
Class C Shares | 7.64 | |||
Class Y Shares | 7.92 | |||
BofA Merrill Lynch All Convertibles All Qualities Index▼ (Broad Market/Style-Specific Index) | 7.45 | |||
Lipper Convertible Securities Funds Index▼ (Peer Group Index) | 9.00 | |||
▼Lipper Inc. |
How we invest
Our investment objective is to seek a high level of total return on Fund assets through a combination of current income and capital appreciation.
The Fund normally invests at least 80% of its net assets (plus any borrowings for investment purposes) in convertible securities. A convertible security is a bond, preferred stock or other security that may be converted into a prescribed amount of common stock at a prestated price. We may retain that common stock to permit its orderly sale or to establish long-term holding periods for tax purposes. The Fund is not required to sell the common stock to ensure that the required percentage of its assets is invested in convertible securities. The Fund’s convertible securities may include lower rated fixed-income securities
commonly known as junk bonds. The convertible securities also may include exchangeable and synthetic convertible securities. In deciding which securities to buy, hold or sell, we consider market, economic and political conditions.
The remaining 20% of the Fund’s assets may be invested in common stocks directly, nonconvertible preferred stock, nonconvertible fixed-income securities and foreign securities (including depositary receipts). The Fund’s fixed-income investments may include zero coupon securities, which are purchased at a discount and generally accrue interest, but make no payment until maturity.
We have considerable discretion in deciding which investments we buy, hold or sell on a day-to-day basis and which investment strategies we use. For example, we may, at our discretion, use
some permitted investment strategies while not using others. We sell a security when we believe that it no longer fits the Fund’s investment criteria.
Market conditions and your Fund
Market conditions during the three-month period covered in this report were influenced by two broad themes: private sector recovery and concerns over sovereign creditworthiness. In the U.S. and across the developed world, a gradual and somewhat lackluster recovery continued, with central banks keeping interest rates at low levels and with few of them withdrawing their quantitative easing measures. This helped private sector companies improve their balance sheets and earnings.
After being choppy for most of 2010, U.S. equity markets reversed course during the last quarter of the year and rallied on modestly better economic news: tame inflation, rising industrial production and upwardly revised third-quarter GDP. Retail sales – arguably the most influential data point in the fourth quarter — were 5.5% higher this holiday season than last year.1
For the year, major U.S. equity market indexes rose by double digits. Those same indexes produced positive returns for the fourth quarter. For the fourth quarter, small-cap stocks outperformed large-cap stocks and growth stocks slightly outperformed value stocks.
For the year, major U.S. equity market indexes rose by double digits. Those same indexes produced positive returns for the fourth quarter. For the fourth quarter, small-cap stocks outperformed large-cap stocks and growth stocks slightly outperformed value stocks.
During the three-month reporting period, convertible bonds, as measured by the BofA Merrill Lynch All Convertibles All Qualities Index, underperformed equities, as measured by the S&P 500 Index.2 In terms of the new issue market,
Portfolio Composition | ||||
By sector | ||||
Health Care | 21.0 | % | ||
Information Technology | 19.9 | |||
Financials | 14.2 | |||
Consumer Discretionary | 13.8 | |||
Industrials | 7.3 | |||
Energy | 4.9 | |||
Telecommunication Services | 4.2 | |||
Materials | 4.0 | |||
Consumer Staples | 3.1 | |||
Utilities | 1.4 | |||
Money Market Funds | ||||
Plus Other Assets Less Liabilities | 6.2 |
Top 10 Equity Holdings*
1. | General Motors Co. | 1.3 | % | ||||||
2. | Swift Mandatory Common Exchange Security Trust | 1.1 | |||||||
3. | Citigroup Inc. | 1.0 | |||||||
4. | Wintrust Financial Corp. | 1.0 | |||||||
5. | Bank of America Corp. | 1.0 | |||||||
6. | Apache Corp. | 0.9 | |||||||
7. | Hartford Financial Services Group Inc. | 0.9 | |||||||
8. | Crown Castle International Corp. | 0.9 | |||||||
9. | KeyCorp | 0.9 | |||||||
10. | HealthSouth Corp. | 0.9 |
Total Net Assets | $165.3 million | |||
Total Number of Holdings* | 164 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
4 | Invesco Convertible Securities Fund |
there were 26 new deals for $12.7 billion in total proceeds in the fourth quarter of 2010.3
We believe the current market reflects a fairly balanced opportunity between credit and equity, and as such we are mainly focused on total return “traditional” convertibles, rather than “busted” convertibles, whose underlying equity is trading well below its conversion value, or equity-sensitive convertibles.
We believe the current market reflects a fairly balanced opportunity between credit and equity, and as such we are mainly focused on total return “traditional” convertibles, rather than “busted” convertibles, whose underlying equity is trading well below its conversion value, or equity-sensitive convertibles.
We found value in new issues and in the information technology and consumer discretionary sectors. At the close of the reporting period, we were underweight in the financials sector. It is our view that credit should continue to tighten but volatility will likely remain elevated as investors try to gauge the speed of the economy’s recovery and as earnings growth becomes more challenging.
The Fund generated positive returns for the reporting period. The Fund’s overweight exposure to the consumer discretionary sector was a contributor for the period, but it was offset by weak security selection. Strong security selection and our underweight exposure to the financials sector contributed to Fund performance.
Strong security selection in the industrials sector was a main contributor for the reporting period. However, it was slightly offset by the Fund’s underweight exposure to the sector.
Thank you for investing in Invesco Convertible Securities Fund and for sharing our long-term investment horizon.
1 Bloomberg
2 Lipper Inc.
3 BofA Merrill Lynch
2 Lipper Inc.
3 BofA Merrill Lynch
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF ELLEN GOLD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883756.jpg)
Ellen Gold
Portfolio manager, is manager of Invesco Convertible Securities Fund. She joined Invesco in 2010. Ms. Gold earned a B.B.A. from George Washington University and an M.B.A. from New York University.
Portfolio manager, is manager of Invesco Convertible Securities Fund. She joined Invesco in 2010. Ms. Gold earned a B.B.A. from George Washington University and an M.B.A. from New York University.
![(PHOTO OF RAMEZ NASHED)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883757.jpg)
Ramez Nashed
Portfolio manager, is manager of Invesco Convertible Securities Fund. He joined Invesco in 2010. Mr. Nashed earned a B.A. in finance from New Jersey City University and an M.B.A. from Seton Hall University.
Portfolio manager, is manager of Invesco Convertible Securities Fund. He joined Invesco in 2010. Mr. Nashed earned a B.A. in finance from New Jersey City University and an M.B.A. from Seton Hall University.
5 | Invesco Convertible Securities Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment — Oldest Share Class
Fund and index data from 12/31/00
Fund and index data from 12/31/00
![(PEFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883758.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
6 Invesco Convertible Securities Fund
Average Annual Total Returns | ||||||||
As of 12/31/10, including maximum applicable sales charges | ||||||||
Class A Shares | ||||||||
Inception (7/28/97) | 6.17 | % | ||||||
10 | Years | 5.34 | ||||||
5 | Years | 6.28 | ||||||
1 | Year | 11.46 | ||||||
Class B Shares | ||||||||
Inception (10/31/85) | 7.83 | % | ||||||
10 | Years | 5.30 | ||||||
5 | Years | 6.37 | ||||||
1 | Year | 12.04 | ||||||
Class C Shares | ||||||||
Inception (7/28/97) | 5.83 | % | ||||||
10 | Years | 5.16 | ||||||
5 | Years | 6.71 | ||||||
1 | Year | 16.08 | ||||||
Class Y Shares | ||||||||
Inception (7/28/97) | 6.88 | % | ||||||
10 | Years | 6.21 | ||||||
5 | Years | 7.77 | ||||||
1 | Year | 18.24 |
Effective June 1, 2010, Class A, Class B, Class C and Class I shares of the predecessor fund advised by Morgan Stanley Investment Advisors Inc. were reorganized into Class A, Class B, Class C and Class Y shares, respectively, of Invesco Convertible Securities Fund. Returns shown above for Class A, Class B, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Convertible Securities Fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, and Class Y shares was 1.13%, 1.88%, 1.88% and 0.88%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
7 Invesco Convertible Securities Fund
Invesco Convertible Securities Fund’s investment objective is to seek a high level of total return on its assets through a combination of current income and capital appreciation.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | In general, stock and other equity securities values fluctuate in response to activities specific to the company as well as general market, economic and political conditions. | |
n | Investments in convertible securities subject the Fund to the risks associated with both fixed-income securities, including credit risk and interest rate risk, and common stocks. A portion of the Fund’s convertible securities may be rated below investment grade. Exchangeable and synthetic convertible securities may be more volatile and less liquid than traditional convertible securities. | |
n | All fixed-income securities are subject to two types of risk: credit risk and interest rate risk. When the general level of interest rates goes up, the prices of most fixed-income securities go down. When the general level of interest rates goes down, the prices of most fixed-income securities go up. Lower rated fixed-income securities (commonly known as junk bonds) are subject to greater risk of loss of income and principal than higher-rated securities. The prices of junk bonds are likely to be more sensitive to adverse economic changes or individual corporate developments and may be subject to a greater risk of default than higher-rated securities. During an economic downturn or substantial period of rising interest rates, junk bond issuers and, in particular, highly leveraged issuers may experience financial stress. |
About indexes used in this report
n | The BofA Merrill Lynch All Convertibles All Qualities Index is an unmanaged index that measures the performance of U.S. dollar-denominated convertible securities not currently in bankruptcy with a total market value greater than $50 million at issuance. | |
n | The Lipper Convertible Securities Fund Index represents the average performance of the 10 largest convertible securities mutual funds, as classified by Lipper Inc. | |
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. |
n | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | CNSAX | |||
Class B Shares | CNSBX | |||
Class C Shares | CNSCX | |||
Class C Shares | CNSDX |
8 Invesco Convertible Securities Fund
Schedule of Investments(a)
December 31, 2010
Principal | ||||||||
Amount | Value | |||||||
Bonds & Notes–76.07% | ||||||||
Advertising–0.83% | ||||||||
Interpublic Group of Cos., Inc. (The), Sr. Unsec. Conv. Global Putable Notes, 4.25%, 03/15/23 | $ | 1,220,000 | $ | 1,364,875 | ||||
Aerospace & Defense–0.66% | ||||||||
AAR Corp., Sr. Unsec. Conv. Putable Notes, 1.75%, 02/01/26 | 1,000,000 | 1,097,500 | ||||||
Agricultural Products–0.70% | ||||||||
Archer-Daniels-Midland Co., Sr. Unsec. Conv. Notes, 0.88%, 02/15/14 | 1,125,000 | 1,154,531 | ||||||
Airlines–0.76% | ||||||||
AMR Corp., Sr. Unsec. Gtd. Conv. Notes, 6.25%, 10/15/14 | 1,100,000 | 1,251,250 | ||||||
Alternative Carriers–1.33% | ||||||||
Globalstar Inc., Sr. Unsec. Conv. Putable Notes, 5.75%, 04/01/28 | 270,000 | 234,900 | ||||||
Level 3 Communications Inc., Sr. Unsec. Conv. Notes, 6.50%, 10/01/16 | 378,000 | 409,657 | ||||||
TW Telecom Inc., Sr. Unsec. Conv. Putable Deb., 2.38%, 04/01/26 | 1,400,000 | 1,548,750 | ||||||
2,193,307 | ||||||||
Apparel Retail–0.49% | ||||||||
Charming Shoppes Inc., Sr. Unsec. Conv. Notes, 1.13%, 05/01/14 | 967,000 | 812,280 | ||||||
Application Software–2.00% | ||||||||
Cadence Design Systems Inc., Sr. Conv. Notes, 2.63%, 06/01/15(b) | 616,000 | 781,550 | ||||||
Concur Technologies Inc., Sr. Unsec. Conv. Notes, 2.50%, 04/15/15(b) | 480,000 | 569,400 | ||||||
Nuance Communications Inc., Sr. Unsec. Conv. Global Putable Deb., 2.75%, 08/15/27 | 827,000 | 974,826 | ||||||
Salesforce.com Inc., Sr. Unsec. Conv. Notes, 0.75%, 01/15/15(b) | 595,000 | 983,981 | ||||||
3,309,757 | ||||||||
Asset Management & Custody Banks–0.92% | ||||||||
Affiliated Managers Group, Inc., Sr. Unsec. Conv. Putable Notes, 3.95%, 08/15/38 | 614,000 | 683,075 | ||||||
Janus Capital Group, Inc., Sr. Unsec. Conv. Notes, 3.25%, 07/15/14 | 710,000 | 844,900 | ||||||
1,527,975 | ||||||||
Auto Parts & Equipment–0.50% | ||||||||
Borg Warner Automotive, Inc., Sr. Unsec. Conv. Notes, 3.50%, 04/15/12 | 366,000 | 820,298 | ||||||
Automobile Manufacturers–0.71% | ||||||||
Ford Motor Co., Sr. Unsec. Conv. Notes, 4.25%, 11/15/16 | 585,000 | 1,172,194 | ||||||
Automotive Retail–0.75% | ||||||||
Sonic Automotive Inc., Sr. Unsec. Conv. Putable Notes, 5.00%, 10/01/29 | 997,000 | 1,243,758 | ||||||
Biotechnology–5.41% | ||||||||
Alexion Pharmaceuticals Inc., Sr. Unsec. Conv. Notes, 1.38%, 02/01/12 | 230,000 | 1,178,175 | ||||||
Amgen, Inc.–Series B, Sr. Unsec. Conv. Notes, 0.38%, 02/01/13 | 775,000 | 778,875 | ||||||
BioMarin Pharmaceutical Inc., Sr. Sub. Conv. Notes, 1.88%, 04/23/17 | 762,000 | 1,098,232 | ||||||
Cephalon, Inc., Sr. Unsec. Conv. Sub. Notes, 2.50%, 05/01/14 | 1,055,000 | 1,201,381 | ||||||
Gilead Sciences, Inc., Sr. Conv. Notes, 1.63%, 05/01/16(b) | 1,445,000 | 1,510,025 | ||||||
Incyte Corp. Ltd., Sr. Unsec. Conv. Notes, 4.75%, 10/01/15 | 485,000 | 1,009,406 | ||||||
Isis Pharmaceuticals Inc., Unsec. Conv. Sub. Putable Notes, 2.63%, 02/15/27 | 283,000 | 277,694 | ||||||
Onyx Pharmaceuticals Inc., Sr. Unsec. Conv. Notes, 4.00%, 08/15/16 | 755,000 | 906,944 | ||||||
Theravance Inc., Sr. Unsec. Conv. Sub. Notes, 3.00%, 01/15/15 | 860,000 | 975,025 | ||||||
8,935,757 | ||||||||
Brewers–0.84% | ||||||||
Molson Coors Brewing Co., Sr. Unsec. Gtd. Conv. Notes, 2.50%, 07/30/13 | 1,200,000 | 1,395,000 | ||||||
Broadcasting–0.59% | ||||||||
Central European Media Enterprises Ltd., Sr. Sec. Gtd. Conv. Bonds, 3.50%, 03/15/13(b) | 1,100,000 | 981,750 | ||||||
Cable & Satellite–1.49% | ||||||||
Virgin Media Inc., Sr. Unsec. Conv. Global Notes, 6.50%, 11/15/16 | 1,050,000 | 1,743,000 | ||||||
XM Satellite Radio Inc., Sr. Unsec. Conv. Sub. Notes, 7.00%, 12/01/14(b) | 590,000 | 727,175 | ||||||
2,470,175 | ||||||||
Casinos & Gaming–1.56% | ||||||||
International Game Technology, Sr. Unsec. Conv. Notes, 3.25%, 05/01/14 | 1,132,000 | 1,311,705 | ||||||
MGM Resorts International, Sr. Unsec. Gtd. Conv. Notes, 4.25%, 04/15/15(b) | 1,150,000 | 1,265,000 | ||||||
2,576,705 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Convertible Securities Fund
Principal | ||||||||
Amount | Value | |||||||
Coal & Consumable Fuels–1.33% | ||||||||
Alpha Natural Resources Inc., Sr. Unsec. Conv. Notes, 2.38%, 04/15/15 | $ | 600,000 | $ | 805,500 | ||||
Peabody Energy Corp., Jr. Unsec. Conv. Sub. Deb., 4.75%, 12/15/66 | 1,075,000 | 1,396,156 | ||||||
2,201,656 | ||||||||
Communications Equipment–2.01% | ||||||||
Arris Group Inc., Sr. Unsec. Conv. Putable Notes, 2.00%, 11/15/26 | 1,050,000 | 1,074,937 | ||||||
Ciena Corp., Sr. Unsec. Conv. Notes, 4.00%, 03/15/15(b) | 1,180,000 | 1,483,850 | ||||||
Ixia, Sr. Conv. Notes, 3.00%, 12/15/15(b) | 360,000 | 401,850 | ||||||
Powerwave Technologies Inc., Unsec. Conv. Sub. Putable Notes, 3.88%, 10/01/27 | 400,000 | 354,000 | ||||||
3,314,637 | ||||||||
Computer Storage & Peripherals–3.23% | ||||||||
EMC Corp., Sr. Unsec. Conv. Notes, Series A, 1.75%, 12/01/11 | 850,000 | 1,233,562 | ||||||
Series B, 1.75%, 12/01/13 | 445,000 | 672,506 | ||||||
NetApp Inc., Sr. Unsec. Conv. Notes, 1.75%, 06/01/13 | 655,000 | 1,170,813 | ||||||
SanDisk Corp., Sr. Unsec. Conv. Notes, 1.00%, 05/15/13 | 1,170,000 | 1,131,975 | ||||||
1.50%, 08/15/17 | 1,000,000 | 1,133,750 | ||||||
5,342,606 | ||||||||
Construction Materials–0.89% | ||||||||
Cemex S.A.B. de C.V., (Mexico), Unsec. Sub. Conv. Notes, 4.88%, 03/15/15(b) | 1,340,000 | 1,470,650 | ||||||
Construction, Farm Machinery & Heavy Trucks–1.92% | ||||||||
ArvinMeritor Inc., Sr. Unsec. Gtd. Conv. Putable Notes, 4.63%, 03/01/26(c) | 850,000 | 1,078,437 | ||||||
Terex Corp., Sr. Unsec. Conv. Sub. Notes, 4.00%, 06/01/15 | 400,000 | 818,500 | ||||||
Titan International Inc., Sr. Gtd. Conv. Sub. Notes, 5.63%, 01/15/17(b) | 610,000 | 1,284,050 | ||||||
3,180,987 | ||||||||
Data Processing & Outsourced Services–0.54% | ||||||||
Alliance Data Systems Corp., Sr. Unsec. Conv. Notes, 1.75%, 08/01/13 | 835,000 | 899,713 | ||||||
Department Stores–0.85% | ||||||||
Saks Inc., Sr. Unsec. Gtd. Conv. Putable Notes, 2.00%, 03/15/24 | 1,355,000 | 1,410,894 | ||||||
Electrical Components & Equipment–0.48% | ||||||||
EnerSys, Sr. Unsec. Conv. Putable Notes, 3.38%, 06/01/38 | 700,000 | 788,375 | ||||||
Electronic Manufacturing Services–0.32% | ||||||||
TTM Technologies Inc., Sr. Unsec. Conv. Notes, 3.25%, 05/15/15 | 440,000 | 528,550 | ||||||
Footwear–0.46% | ||||||||
Iconix Brand Group Inc., Sr. Conv. Sub. Notes, 1.88%, 06/30/12 | 750,000 | 757,500 | ||||||
Gold–0.62% | ||||||||
Newmont Mining Corp., Sr. Unsec. Gtd. Conv. Notes, 3.00%, 02/15/12 | 730,000 | 1,019,263 | ||||||
Health Care Equipment–6.28% | ||||||||
HeartWare International Inc., Sr. Unsec. Conv. Notes, 3.50%, 12/15/17 | 1,100,000 | 1,219,625 | ||||||
Hologic Inc., Series 2010, Sr. Unsec. Conv. Putable Notes, 2.00%, 12/15/37(c) | 1,900,000 | 1,995,000 | ||||||
Insulet Corp., Sr. Unsec. Conv. Global Notes, 5.38%, 06/15/13 | 585,000 | 622,294 | ||||||
Kinetic Concepts Inc., Sr. Unsec. Gtd. Conv. Notes, 3.25%, 04/15/15(b) | 1,139,000 | 1,203,069 | ||||||
Medtronic Inc., Series B, Sr. Unsec. Conv. Global Notes, 1.63%, 04/15/13 | 850,000 | 859,562 | ||||||
NuVasive Inc., Sr. Unsec. Conv. Notes, 2.25%, 03/15/13 | 1,175,000 | 1,151,500 | ||||||
Teleflex Inc., Sr. Unsec. Sub. Conv. Notes, 3.88%, 08/01/17 | 780,000 | 822,900 | ||||||
Volcano Corp., Sr. Unsec. Conv. Notes, 2.88%, 09/01/15 | 810,000 | 939,600 | ||||||
Wright Medical Group, Inc., Sr. Unsec. Conv. Notes, 2.63%, 12/01/14 | 1,650,000 | 1,561,312 | ||||||
10,374,862 | ||||||||
Health Care Facilities–0.92% | ||||||||
Lifepoint Hospitals Inc., Sr. Unsec. Sub. Conv. Notes, 3.50%, 05/15/14 | 1,100,000 | 1,115,125 | ||||||
NovaMed Inc., Sr. Unsec. Sub. Conv. Notes, 1.00%, 06/15/12 | 450,000 | 410,625 | ||||||
1,525,750 | ||||||||
Health Care Services–1.30% | ||||||||
Chemed Corp., Sr. Unsec. Gtd. Conv. Notes, 1.88%, 05/15/14 | 1,150,000 | 1,154,313 | ||||||
Omnicare Inc., Sr. Conv. Sub. Notes, 3.75%, 12/15/25 | 891,000 | 997,920 | ||||||
2,152,233 | ||||||||
Homebuilding–0.99% | ||||||||
Lennar Corp., Sr. Conv. Putable Notes, 2.75%, 12/15/20(b) | 1,490,000 | 1,635,275 | ||||||
Hotels, Resorts & Cruise Lines–0.80% | ||||||||
Gaylord Entertainment Co., Sr. Gtd. Conv. Notes, 3.75%, 10/01/14(b) | 220,000 | 321,750 | ||||||
Home Inns & Hotels Management Inc., Sr. Conv. Notes, 2.00%, 12/15/15(b) | 1,000,000 | 1,005,000 | ||||||
1,326,750 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Convertible Securities Fund
Principal | ||||||||
Amount | Value | |||||||
Industrial REIT’s–0.67% | ||||||||
ProLogis, Sr. Unsec. Conv. Notes, 3.25%, 03/15/15 | $ | 1,000,000 | $ | 1,112,500 | ||||
Internet Retail–0.91% | ||||||||
priceline.com, Inc., Sr. Unsec. Conv. Notes, 1.25%, 03/15/15(b) | 1,020,000 | 1,501,950 | ||||||
Internet Software & Services–3.31% | ||||||||
Digital River, Inc., Sr. Unsec. Conv. Putable Notes, 2.00%, 11/01/30(b) | 900,000 | 884,250 | ||||||
Equinix Inc., Sub. Unsec. Conv. Notes, 2.50%, 04/15/12 | 1,700,000 | 1,742,500 | ||||||
GSI Commerce Inc., Sr. Unsec. Conv. Putable Notes, 2.50%, 06/01/27 | 850,000 | 927,562 | ||||||
RightNow Technologies, Inc., Sr. Unsec. Conv. Putable Notes, 2.50%, 11/15/30(b) | 794,000 | 793,008 | ||||||
VeriSign Inc., Jr. Unsec. Sub. Conv. Global Notes, 3.25%, 08/15/37 | 1,000,000 | 1,126,250 | ||||||
5,473,570 | ||||||||
Investment Banking & Brokerage–1.77% | ||||||||
Jefferies Group Inc., Sr. Unsec. Conv. Putable Notes, 3.88%, 11/01/29 | 1,324,000 | 1,395,165 | ||||||
Knight Capital Group Inc., Sr. Sub. Conv. Notes, 3.50%, 03/15/15(b) | 600,000 | 573,000 | ||||||
MF Global Holdings Ltd., Sr. Unsec. Conv. Putable Notes, 9.00%, 06/20/38 | 800,000 | 962,000 | ||||||
2,930,165 | ||||||||
IT Consulting & Other Services–0.52% | ||||||||
CACI International Inc., Sr. Unsec. Sub. Conv. Notes, 2.13%, 05/01/14 | 750,000 | 859,688 | ||||||
Life & Health Insurance–0.72% | ||||||||
American Equity Investment Life Holding Co., Sr. Unsec. Conv. Notes, 3.50%, 09/15/15(b) | 1,005,000 | 1,189,669 | ||||||
Life Sciences Tools & Services–0.35% | ||||||||
Life Technologies Corp., Sr. Unsec. Conv. Putable Notes, 1.50%, 02/15/24 | 470,000 | 569,875 | ||||||
Managed Health Care–0.19% | ||||||||
AMERIGROUP Corp., Sr. Unsec. Conv. Global Notes, 2.00%, 05/15/12 | 270,000 | 315,225 | ||||||
Marine–0.34% | ||||||||
DryShips, Inc., Sr. Unsec. Conv. Notes, 5.00%, 12/01/14 | 550,000 | 566,500 | ||||||
Metal & Glass Containers–0.56% | ||||||||
Owens-Brockway Glass Container Inc., Sr. Unsec. Gtd. Conv. Notes, 3.00%, 06/01/15(b) | 910,000 | 920,238 | ||||||
Movies & Entertainment–0.41% | ||||||||
Liberty Media LLC, Sr. Unsec. Conv. Putable Notes, 3.13%, 03/30/23 | 600,000 | 675,750 | ||||||
Office REIT’s–0.62% | ||||||||
SL Green Operating Partnership LP, Sr. Unsec. Gtd. Conv. Notes, 3.00%, 10/15/17(b) | 1,000,000 | 1,026,250 | ||||||
Oil & Gas Equipment & Services–1.49% | ||||||||
Cameron International Corp., Sr. Unsec. Conv. Putable Global Notes, 2.50%, 06/15/26 | 887,000 | 1,292,802 | ||||||
SESI LLC, Sr. Unsec. Gtd. Conv. Putable Global Notes, 1.50%, 12/15/26(c)(d) | 1,145,000 | 1,172,194 | ||||||
2,464,996 | ||||||||
Oil & Gas Exploration & Production–0.49% | ||||||||
Chesapeake Energy Corp., Sr. Unsec. Gtd. Conv. Putable Notes, 2.50%, 05/15/37 | 900,000 | 807,750 | ||||||
Packaged Foods & Meats–0.82% | ||||||||
Smithfield Foods Inc., Sr. Unsec. Conv. Notes, 4.00%, 06/30/13 | 1,150,000 | 1,346,938 | ||||||
Pharmaceuticals–4.39% | ||||||||
Allergen Inc., Sr. Unsec. Conv. Putable Global Notes, 1.50%, 04/01/26 | 500,000 | 567,500 | ||||||
Endo Pharmaceuticals Holdings Inc., Sr. Unsec. Sub. Conv. Notes, 1.75%, 04/15/15 | 1,100,000 | 1,468,500 | ||||||
Mylan Labs Inc., Sr. Unsec. Gtd. Conv. Notes, 1.25%, 03/15/12 | 1,450,000 | 1,542,437 | ||||||
Nektar Therapeutics, Unsec. Sub. Conv. Notes, 3.25%, 09/28/12 | 1,200,000 | 1,212,000 | ||||||
Salix Pharmaceuticals Ltd., Sr. Unsec. Conv. Notes, 2.75%, 05/15/15 | 1,000,000 | 1,278,750 | ||||||
Viropharma Inc., Sr. Unsec. Conv. Notes, 2.00%, 03/15/17 | 1,050,000 | 1,181,250 | ||||||
7,250,437 | ||||||||
Regional Banks–0.87% | ||||||||
CapitalSource Inc., Sr. Unsec. Sub. Gtd. Conv. Putable Notes, 7.25%, 07/15/37 | 1,400,000 | 1,438,500 | ||||||
Semiconductors–4.05% | ||||||||
Advanced Micro Devices, Inc., Sr. Unsec. Conv. Global Notes, 6.00%, 05/01/15 | 386,000 | 390,825 | ||||||
Intel Corp., Jr. Unsec. Conv. Sub. Deb., 2.95%, 12/15/35(b) | 550,000 | 550,687 | ||||||
2.95%, 12/15/35 | 676,000 | 676,845 | ||||||
Micron Technology, Inc., Sr. Unsec. Conv. Notes, 1.88%, 06/01/14 | 1,660,000 | 1,577,000 | ||||||
ON Semiconductor Corp., Sr. Unsec. Gtd. Conv. Sub. Putable Notes, 2.63%, 12/15/26(b) | 1,000,000 | 1,176,250 | ||||||
SunPower Corp., Sr. Unsec. Conv. Notes, 4.75%, 04/15/14 | 615,000 | 569,644 | ||||||
Suntech Power Holdings Co., Ltd. (Cayman Islands), Sr. Unsec. Conv. Global Notes, 3.00%, 03/15/13 | 1,360,000 | 1,198,500 | ||||||
Xilinx Inc., Sr. Conv. Notes, 2.63%, 06/15/17(b) | 470,000 | 553,425 | ||||||
6,693,176 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Convertible Securities Fund
Principal | ||||||||
Amount | Value | |||||||
Specialized Consumer Services–0.26% | ||||||||
Sotheby’s, Sr. Unsec. Gtd. Conv. Global Notes, 3.13%, 06/15/13 | $ | 300,000 | $ | 435,375 | ||||
Specialized Finance–0.76% | ||||||||
PHH Corp., Sr. Unsec. Conv. Notes, 4.00%, 09/01/14 | 1,120,000 | 1,262,800 | ||||||
Specialty Properties–0.17% | ||||||||
Rayonier TRS Holdings Inc., Sr. Unsec. Gtd. Conv. Notes, 3.75%, 10/15/12 | 250,000 | 277,500 | ||||||
Steel–1.94% | ||||||||
Allegheny Technologies Inc., Sr. Unsec. Conv. Notes, 4.25%, 06/01/14 | 552,000 | 835,590 | ||||||
ArcelorMittal, Sr. Unsec. Conv. Notes, 5.00%, 05/15/14 | 500,000 | 725,000 | ||||||
Steel Dynamics Inc., Sr. Unsec. Gtd. Conv. Notes, 5.13%, 06/15/14 | 1,300,000 | 1,654,250 | ||||||
3,214,840 | ||||||||
Systems Software–2.76% | ||||||||
Microsoft Corp., Sr. Unsec. Conv. Notes, –%, 06/15/13(b) | 1,000,000 | 1,078,750 | ||||||
Rovi Corp., Sr. Unsec. Conv. Putable Notes, 2.63%, 02/15/40(b) | 900,000 | 1,302,750 | ||||||
Symantec Corp.–Class B, Sr. Unsec. Conv. Global Notes, 1.00%, 06/15/13 | 1,350,000 | 1,540,687 | ||||||
TeleCommunication Systems Inc., Sr. Unsec. Conv. Notes, 4.50%, 11/01/14(b) | 669,000 | 638,059 | ||||||
4,560,246 | ||||||||
Technology Distributors–1.13% | ||||||||
Anixter International Inc., Sr. Unsec. Conv. Global Notes, 1.00%, 02/15/13 | 1,050,000 | 1,179,938 | ||||||
SYNNEX Corp., Sr. Conv. Putable Notes, 4.00%, 05/15/18(b) | 560,000 | 690,900 | ||||||
1,870,838 | ||||||||
Thrifts & Mortgage Finance–0.54% | ||||||||
MGIC Investment Corp., Sr. Unsec. Conv. Notes, 5.00%, 05/01/17 | 260,000 | 299,975 | ||||||
PMI Group Inc., Sr. Unsec. Conv. Notes, 4.50%, 04/15/20 | 720,000 | 597,600 | ||||||
897,575 | ||||||||
Trading Companies & Distributors–0.80% | ||||||||
United Rentals Inc., Sr. Unsec. Conv. Notes, 4.00%, 11/15/15 | 600,000 | 1,320,750 | ||||||
Trucking–0.80% | ||||||||
Avis Budget Group Inc., Sr. Conv. Notes, 3.50%, 10/01/14 | 1,100,000 | 1,320,000 | ||||||
Wireless Telecommunication Services–1.95% | ||||||||
Clearwire Communications LLC/Clearwire Finance Inc., Sr. Unsec. Gtd. Conv. Putable Notes, 8.25%, 12/01/40(b) | 1,000,000 | 1,020,000 | ||||||
Leap Wireless International Inc., Sr. Unsec. Conv. Global Notes, 4.50%, 07/15/14 | 600,000 | 540,000 | ||||||
SBA Communications Corp., Sr. Unsec. Conv. Notes, 1.88%, 05/01/13 | 1,480,000 | 1,666,850 | ||||||
3,226,850 | ||||||||
Total Bonds & Notes (Cost $110,710,589) | 125,766,764 | |||||||
Shares | ||||||||
Preferred Stocks–17.04% | ||||||||
Asset Management & Custody Banks–0.41% | ||||||||
AMG Capital Trust II, 5.15% Pfd. | 17,000 | 685,313 | ||||||
Automobile Manufacturers–1.29% | ||||||||
General Motors Co., Series B, 4.75% Pfd. | 39,300 | 2,126,523 | ||||||
Diversified Banks–0.56% | ||||||||
Wells Fargo & Co., Series L, 7.5% Pfd. | 925 | 925,509 | ||||||
Diversified Capital Markets–0.75% | ||||||||
UBS AG (Switzerland), 9.38% Pfd. | 44,800 | 1,236,346 | ||||||
Electric Utilities–1.43% | ||||||||
NextEra Energy, Inc., 8.38% Pfd. | 24,300 | 1,205,523 | ||||||
PPL Corp., 9.50% Pfd. | 21,000 | 1,154,370 | ||||||
2,359,893 | ||||||||
Health Care Facilities–0.86% | ||||||||
HealthSouth Corp., Series A, 6.5% Pfd. | 1,470 | 1,429,943 | ||||||
Health Care Services–0.57% | ||||||||
Omnicare Capital Trust II, Series B, 4.00% Pfd. | 24,300 | 940,410 | ||||||
Household Appliances–0.91% | ||||||||
Stanley Black & Decker, 4.75% Pfd. | 14,000 | 1,511,720 | ||||||
Multi-Line Insurance–0.93% | ||||||||
Hartford Financial Services Group Inc., Series F, 7.25% Pfd. | 60,240 | 1,542,746 | ||||||
Oil & Gas Exploration & Production–0.96% | ||||||||
Apache Corp., Series D, 6.00% Pfd. | 24,000 | 1,590,240 | ||||||
Oil & Gas Storage & Transportation–0.64% | ||||||||
El Paso Corp., 4.99% Pfd. | 900 | 1,058,850 | ||||||
Other Diversified Financial Services–1.98% | ||||||||
Bank of America Corp., Series L, 7.25% Pfd. | 1,700 | 1,626,849 | ||||||
Citigroup Inc., 7.50% Pfd. | 12,100 | 1,653,949 | ||||||
3,280,798 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Convertible Securities Fund
Shares | Value | |||||||
Packaged Foods & Meats–0.74% | ||||||||
2009 Dole Food Automatic Common Exchange Security Trust, 7.00% Pfd.(b) | 93,400 | $ | 1,217,114 | |||||
Railroads–0.45% | ||||||||
Kansas City Southern, 5.13% Pfd. | 460 | 736,115 | ||||||
Regional Banks–2.55% | ||||||||
KeyCorp., Series A, 7.75% Pfd. | 13,700 | 1,467,270 | ||||||
Synovus Financial Corp., 8.25% Pfd. | 44,700 | 1,113,924 | ||||||
Wintrust Financial Corp., 7.50% Pfd. | 29,200 | 1,629,418 | ||||||
4,210,612 | ||||||||
Trucking–1.11% | ||||||||
2010 Swift Mandatory Common Exchange Security Trust, 6.00% Pfd.(b) | 145,300 | 1,830,489 | ||||||
Wireless Telecommunication Services–0.90% | ||||||||
Crown Castle International Corp., 6.25% Pfd. | 24,000 | 1,486,500 | ||||||
Total Preferred Stocks (Cost $25,323,441) | 28,169,121 | |||||||
Common Stocks–0.70% | ||||||||
Pharmaceuticals–0.70% | ||||||||
Merck & Co., Inc. (Cost $1,167,268) | 32,165 | 1,159,226 | ||||||
Money Market Funds–6.10% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 5,039,708 | 5,039,708 | ||||||
Premier Portfolio–Institutional Class(e) | 5,039,708 | 5,039,708 | ||||||
Total Money Market Funds (Cost $10,079,416) | 10,079,416 | |||||||
TOTAL INVESTMENTS–99.91% (Cost $147,280,714) | 165,174,527 | |||||||
OTHER ASSETS LESS LIABILITIES–0.09% | 145,380 | |||||||
NET ASSETS–100.00% | $ | 165,319,907 | ||||||
Investment Abbreviations:
Conv. | – Convertible | |
Deb. | – Debentures | |
Gtd. | – Guaranteed | |
Jr. | – Junior | |
Pfd. | – Preferred | |
REIT | – Real Estate Investment Trust | |
Sec. | – Secured | |
Sr. | – Senior | |
Sub. | – Subordinated | |
Unsec. | – Unsecured |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended. The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at December 31, 2010 was $32,571,164, which represented 19.70% of the Fund’s Net Assets. | |
(c) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. | |
(d) | Non-income producing security. | |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Convertible Securities Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments, at value (Cost $137,201,298) | $ | 155,095,111 | ||
Investments in affiliated money market funds, at value and cost | 10,079,416 | |||
Total investments, at value (Cost $147,280,714) | 165,174,527 | |||
Receivable for: | ||||
Fund shares sold | 1,840,506 | |||
Dividends and interest | 788,251 | |||
Investment for trustee deferred compensation and retirement plans | 1,189 | |||
Other assets | 38,668 | |||
Total assets | 167,843,141 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 2,234,390 | |||
Fund shares reacquired | 47,522 | |||
Accrued fees to affiliates | 110,780 | |||
Accrued other operating expenses | 67,020 | |||
Trustee deferred compensation and retirement plans | 63,522 | |||
Total liabilities | 2,523,234 | |||
Net assets applicable to shares outstanding | $ | 165,319,907 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 149,549,844 | ||
Undistributed net investment income | (307,674 | ) | ||
Undistributed net realized gain (loss) | (1,816,076 | ) | ||
Unrealized appreciation | 17,893,813 | |||
$ | 165,319,907 | |||
Net Assets: | ||||
Class A | $ | 118,358,893 | ||
Class B | $ | 11,037,657 | ||
Class C | $ | 18,719,293 | ||
Class Y | $ | 17,204,064 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 5,903,331 | |||
Class B | 549,054 | |||
Class C | 938,718 | |||
Class Y | 857,071 | |||
Class A: | ||||
Net asset value per share | $ | 20.05 | ||
Maximum offering price per share | ||||
(Net asset value of $20.05 divided by 94.50%) | $ | 21.22 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 20.10 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 19.94 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 20.07 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Convertible Securities Fund
Statement of Operations
For the period October 1, 2010 to December 31, 2010 and the year ended September 30, 2010
Three months ended | Year ended | |||||||
December 31, | September 30, | |||||||
2010 | 2010 | |||||||
Investment income: | ||||||||
Dividends | $ | 406,020 | $ | 1,239,313 | ||||
Dividends from affiliated money market funds | 2,345 | 1,747 | ||||||
Interest | 804,630 | 3,538,748 | ||||||
Total investment income | 1,212,995 | 4,779,808 | ||||||
Expenses: | ||||||||
Advisory fees | 179,710 | 552,047 | ||||||
Administrative services fees | 12,603 | 73,551 | ||||||
Custodian fees | 1,994 | 7,493 | ||||||
Distribution fees: | ||||||||
Class A | 64,392 | 211,578 | ||||||
Class B | 29,289 | 139,502 | ||||||
Class C | 31,938 | 69,290 | ||||||
Transfer agent fees | 43,182 | 133,471 | ||||||
Trustees’ and officers’ fees and benefits | 704 | 19,921 | ||||||
Reports to shareholders | 22,058 | 72,995 | ||||||
Other | 32,762 | 114,790 | ||||||
Total expenses | 418,632 | 1,394,638 | ||||||
Less: Fees waived | (2,655 | ) | (3,297 | ) | ||||
Net expenses | 415,977 | 1,391,341 | ||||||
Net investment income | 797,018 | 3,388,467 | ||||||
Realized and unrealized gain from: | ||||||||
Net realized gain from investment securities | 1,567,801 | 9,546,377 | ||||||
Change in net unrealized appreciation of investment securities | 7,983,768 | 2,371,711 | ||||||
Net realized and unrealized gain | 9,551,569 | 11,918,088 | ||||||
Net increase in net assets resulting from operations | $ | 10,348,587 | $ | 15,306,555 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Convertible Securities Fund
Statement of Changes in Net Assets
For the period October 1, 2010 to December 31, 2010 and the years ended September 30, 2010 and
September 30, 2009
Three months ended | Year ended | Year ended | ||||||||||
December 31, | September 30, | September 30, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
Operations: | ||||||||||||
Net investment income | $ | 797,018 | $ | 3,388,467 | $ | 2,471,416 | ||||||
Net realized gain | 1,567,801 | 9,546,377 | (12,350,486 | ) | ||||||||
Change in net unrealized appreciation | 7,983,768 | 2,371,711 | 21,688,003 | |||||||||
Net increase in net assets resulting from operations | 10,348,587 | 15,306,555 | 11,808,933 | |||||||||
Distributions to shareholders from net investment income: | ||||||||||||
Class A | (698,557 | ) | (3,370,546 | ) | (2,426,653 | ) | ||||||
Class B | (53,056 | ) | (430,399 | ) | (428,301 | ) | ||||||
Class C | (66,401 | ) | (232,490 | ) | (135,667 | ) | ||||||
Class Y | (91,541 | ) | (27,272 | ) | (21,180 | ) | ||||||
Total distributions from net investment income | (909,555 | ) | (4,060,707 | ) | (3,011,801 | ) | ||||||
Distributions to shareholders from net realized gains: | ||||||||||||
Class A | — | — | (626,149 | ) | ||||||||
Class B | — | — | (167,950 | ) | ||||||||
Class C | — | — | (42,670 | ) | ||||||||
Class Y | — | — | (697 | ) | ||||||||
Total distributions from net realized gains | — | — | (837,466 | ) | ||||||||
Share transactions–net: | ||||||||||||
Class A | 20,457,788 | (283,724 | ) | (5,280,569 | ) | |||||||
Class B | (1,214,641 | ) | (6,813,077 | ) | (7,459,474 | ) | ||||||
Class C | 8,356,485 | (2,550,131 | ) | (208,321 | ) | |||||||
Class Y | 12,840,424 | (2,514,198 | ) | 727,435 | ||||||||
Net increase in net assets resulting from share transactions | 40,440,056 | (2,032,472 | ) | (12,220,929 | ) | |||||||
Net increase in net assets | 49,879,088 | 9,213,376 | (4,261,263 | ) | ||||||||
Net assets: | ||||||||||||
Beginning of year | 115,440,819 | 106,227,443 | 110,488,706 | |||||||||
End of year (includes undistributed net investment income of $(307,674), $(239,533) and $205,309, respectively) | $ | 165,319,907 | $ | 115,440,819 | $ | 106,227,443 | ||||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Convertible Securities Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
Prior to June 1, 2010, the Fund operated as Morgan Stanley Convertible Securities Trust (the “Acquired Fund”). The Acquired Fund was reorganized on June 1, 2010 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”). Upon closing of the Reorganization, holders of the Acquired Fund’s Class A, Class B, Class C and Class I shares received Class A, Class B, Class C and Class Y shares, respectively, of the Fund. Information for the Acquired Fund’s — Class I shares prior to the Reorganization is included with Class Y shares of the Fund throughout this report.
16 Invesco Convertible Securities Fund
The Fund’s investment objective is to seek a high level of total return on its assets through a combination of current income and capital appreciation.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from |
17 Invesco Convertible Securities Fund
investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | |
D. | Distributions — Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $750 million | 0 | .520% | ||
Next $250 million | 0 | .470% | ||
Next $500 million | 0 | .420% | ||
Next $500 million | 0 | .395% | ||
Next $1 billion | 0 | .370% | ||
Over $3 billion | 0 | .345% | ||
Prior to the Reorganization, the Acquired Funds paid an advisory fee of $369,642 during the year ended September 30, 2010 to Morgan Stanley Investment Advisors, Inc. (“MSIA”) based on the accrual rates above of the Acquired Fund’s average daily net assets.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
Effective on the Reorganization date, the Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 1.27%, 2.02%, 2.02% and 1.02%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that
18 Invesco Convertible Securities Fund
the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012. The Adviser did not waive fees and/or reimburse expenses during the period under the expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2012, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the period October 1, 2010 through December 31, 2010 and the year ended September 30, 2010, the Adviser waived advisory fees of $2,655 and $1,660. MSIA waived advisory fees of $1,637 for the year ended September 30, 2010.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. Prior to the Reorganization, the Acquired Fund paid an administrative fee of $56,838 to Morgan Stanley Services Company, Inc. For the period October 1, 2010 to December 31, 2010 and the year ended September 30, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the period October 1, 2010 to December 31, 2010 and the year ended September 30, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. Prior to the Reorganization, the Acquired Fund paid $97,688 for the year ended September 30, 2010 to Morgan Stanley Trust, which served as the Acquired Fund’s transfer agent.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the “Plan”) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates; (1) Class A — up to 0.25% of the average daily net assets of Class A shares; (2) Class B — up to 1.00% of the average daily net assets of Class B shares and (3) Class C — up to 1.00% of the average daily net assets of Class C shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
Prior to the Reorganization, the Acquired Fund had entered into master distribution agreements with Morgan Stanley Distributors Inc. (“MSDI”) to serve as the distributor for the Class A, Class B and Class C shares. Pursuant to such agreements, the Acquired Fund paid $320,502 to MSDI for the year ended September 30, 2010.
For the period October 1, 2010 to December 31, 2010 and the year ended September 30, 2010, expenses incurred under these agreements are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $13,163 in front-end sales commissions from the sale of Class A shares and $1, $1,101 and $59 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
19 Invesco Convertible Securities Fund
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 26,892,153 | $ | 12,515,610 | $ | — | $ | 39,407,763 | ||||||||
Corporate Debt Securities | — | 125,766,764 | — | 125,766,764 | ||||||||||||
Total Investments | $ | 26,892,153 | $ | 138,282,374 | $ | — | $ | 165,174,527 | ||||||||
NOTE 4—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
20 Invesco Convertible Securities Fund
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Period October 1, 2010 to December 31, 2010 and the Years ended September 30, 2010 and 2009:
December 31, | September 30, | |||||||||||
2010 | 2010 | 2009 | ||||||||||
Ordinary income | $ | 909,555 | $ | 4,060,707 | $ | 2,964,487 | ||||||
Long-term capital gain | — | — | 837,412 | |||||||||
Total distributions | $ | 909,555 | $ | 4,060,707 | $ | 3,801,899 | ||||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 113,906 | ||
Net unrealized appreciation — investments | 17,535,648 | |||
Temporary book/tax differences | (63,415 | ) | ||
Capital loss carryover | (1,816,076 | ) | ||
Shares of beneficial interest | 149,549,844 | |||
Total net assets | $ | 165,319,907 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to book to tax accretion and amortization differences.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $1,523,405 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 1,816,076 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 7—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the period October 1, 2010 to December 31, 2010 was $66,300,792 and $31,334,059, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 18,423,952 | ||
Aggregate unrealized (depreciation) of investment securities | (888,304 | ) | ||
Net unrealized appreciation of investment securities | $ | 17,535,648 | ||
Cost of investments for tax purposes is $147,638,879. |
21 Invesco Convertible Securities Fund
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of bond premium amortization and convertible preferred securities, on December 31, 2010, undistributed net investment income (loss) was increased by $44,396 and undistributed net realized gain (loss) was decreased by $44,396. This reclassification had no effect on the net assets of the Fund.
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||||||||||
Three months ended | Year ended | Year ended | ||||||||||||||||||||||
December 31, 2010(a) | September 30, 2010 | September 30, 2009 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
Sold: | ||||||||||||||||||||||||
Class A | 1,138,109 | $ | 22,182,037 | 565,189 | $ | 10,162,291 | 310,393 | $ | 4,309,966 | |||||||||||||||
Class B | 48,269 | 940,232 | 74,263 | 1,326,904 | 66,890 | 932,683 | ||||||||||||||||||
Class C | 444,869 | 8,665,075 | 212,648 | 3,798,774 | 56,632 | 831,831 | ||||||||||||||||||
Class Y | 672,492 | 13,053,367 | 191,691 | 3,514,793 | 89,287 | 1,301,204 | ||||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||||||
Class A | — | — | 129,383 | 2,292,795 | 215,540 | 2,935,986 | ||||||||||||||||||
Class B | — | — | 16,787 | 297,894 | 42,099 | 563,598 | ||||||||||||||||||
Class C | — | — | 8,445 | 149,078 | 12,812 | 174,105 | ||||||||||||||||||
Class Y | — | — | 729 | 12,810 | 1,424 | 21,725 | ||||||||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||||||||||
Class A | 75,484 | 1,483,015 | 61,822 | 1,122,182 | 27,482 | 378,693 | ||||||||||||||||||
Class B | (74,769 | ) | (1,483,015 | ) | (61,691 | ) | (1,122,182 | ) | (27,522 | ) | (378,693 | ) | ||||||||||||
Reacquired: | ||||||||||||||||||||||||
Class A | (165,310 | ) | (3,207,264 | ) | (780,050 | ) | (13,860,992 | ) | (932,707 | ) | (12,905,214 | ) | ||||||||||||
Class B | (34,965 | ) | (671,858 | ) | (412,305 | ) | (7,315,693 | ) | (627,825 | ) | (8,577,062 | ) | ||||||||||||
Class C | (15,891 | ) | (308,590 | ) | (79,529 | ) | (1,397,721 | ) | (92,702 | ) | (1,214,257 | ) | ||||||||||||
Class Y | (10,888 | ) | (212,943 | ) | (57,506 | ) | (1,013,405 | ) | (35,733 | ) | (595,494 | ) | ||||||||||||
Net increase (decrease) in share activity | 2,077,400 | $ | 40,440,056 | (130,124 | ) | $ | (2,032,472 | ) | (893,930 | ) | (12,220,929 | ) | ||||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 57% of the outstanding shares of the Fund. The Fund and the Fund’s principal underwriter or adviser, are parties to participation agreements with these entities whereby these entities sell units of interest in separate accounts funding variable products that are invested in the Fund. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, third party record keeping and account servicing and administrative services. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10—Significant Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco Van Kampen Harbor Fund (the “Target Fund”) in exchange for shares of the Fund. The Agreement requires approval of the Target Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2011.
22 Invesco Convertible Securities Fund
NOTE 11—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | Ratio of net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | net assets | investment | |||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | income | Rebate | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expenses | to average | from | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | Distributions | of period | return(b) | (000s omitted) | absorbed | net assets | affiliates | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended 12/31/10 | $ | 18.71 | $ | 0.12 | $ | 1.35 | $ | 1.47 | $ | (0.13 | ) | $ | — | $ | (0.13 | ) | $ | 20.05 | 7.86 | % | $ | 118,359 | 1.09 | %(d)(f) | 2.42 | %(d) | — | 24 | % | |||||||||||||||||||||||||||
Year ended 09/30/10 | 16.86 | 0.59 | 1.97 | 2.56 | (0.71 | ) | — | (0.71 | ) | 18.71 | 15.45 | 90,840 | 1.17 | (e) | 3.33 | (e) | — | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 | 15.35 | 0.40 | 1.72 | 2.12 | (0.49 | ) | (0.12 | ) | (0.61 | ) | 16.86 | 14.80 | 82,241 | 1.27 | (e) | 2.86 | (e) | 0.00 | (g) | 104 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 | 19.01 | 0.32 | (3.52 | ) | (3.20 | ) | (0.46 | ) | — | (0.46 | ) | 15.35 | (17.05 | ) | 80,731 | 1.12 | (e) | 1.76 | (e) | 0.01 | 95 | |||||||||||||||||||||||||||||||||||
Year ended 09/30/07 | 17.29 | 0.39 | 1.84 | 2.23 | (0.51 | ) | — | (0.51 | ) | 19.01 | 13.03 | 108,594 | 1.10 | (e) | 2.16 | (e) | 0.00 | (g) | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 09/30/06 | 16.46 | 0.43 | 0.82 | 1.25 | (0.42 | ) | — | (0.42 | ) | 17.29 | 7.64 | 111,137 | 1.12 | 2.55 | — | 58 | ||||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended 12/31/10 | 18.76 | 0.08 | 1.35 | 1.43 | (0.09 | ) | — | (0.09 | ) | 20.10 | 7.64 | 11,038 | 1.84 | (d)(f) | 1.67 | (d)(e) | — | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/10 | 16.90 | 0.46 | 1.97 | 2.43 | (0.57 | ) | — | (0.57 | ) | 18.76 | 14.61 | 11,454 | 1.92 | (e) | 2.58 | (e) | — | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 | 15.39 | 0.29 | 1.72 | 2.01 | (0.38 | ) | (0.12 | ) | (0.50 | ) | 16.90 | 13.93 | 16,790 | 2.02 | (e) | 2.11 | (e) | 0.00 | (g) | 104 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 | 19.03 | 0.19 | (3.51 | ) | (3.32 | ) | (0.32 | ) | — | (0.32 | ) | 15.39 | (17.64 | ) | 23,691 | 1.88 | (e) | 1.00 | (e) | 0.01 | 95 | |||||||||||||||||||||||||||||||||||
Year ended 09/30/07 | 17.31 | 0.26 | 1.83 | 2.09 | (0.37 | ) | — | (0.37 | ) | 19.03 | 12.14 | 42,383 | 1.86 | (e) | 1.40 | (e) | 0.00 | (g) | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 09/30/06 | 16.48 | 0.30 | 0.82 | 1.12 | (0.29 | ) | — | (0.29 | ) | 17.31 | 6.85 | 51,695 | 1.88 | 1.79 | — | 58 | ||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended 12/31/10 | 18.61 | 0.08 | 1.34 | 1.42 | (0.09 | ) | — | (0.09 | ) | 19.94 | 7.64 | 18,719 | 1.84 | (d)(f) | 1.67 | (d)(e) | — | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/10 | 16.77 | 0.46 | 1.96 | 2.42 | (0.58 | ) | — | (0.58 | ) | 18.61 | 14.62 | 9,486 | 1.92 | (e) | 2.58 | (e) | — | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 | 15.28 | 0.30 | 1.70 | 2.00 | (0.39 | ) | (0.12 | ) | (0.51 | ) | 16.77 | 13.96 | 6,175 | 2.02 | (e) | 2.11 | (e) | 0.00 | (g) | 104 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 | 18.91 | 0.18 | (3.49 | ) | (3.31 | ) | (0.32 | ) | — | (0.32 | ) | 15.28 | (17.68 | ) | 5,981 | 1.88 | (e) | 1.00 | (e) | 0.01 | 95 | |||||||||||||||||||||||||||||||||||
Year ended 09/30/07 | 17.20 | 0.25 | 1.83 | 2.08 | (0.37 | ) | — | (0.37 | ) | 18.91 | 12.18 | 8,453 | 1.86 | (e) | 1.40 | (e) | 0.00 | (g) | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 09/30/06 | 16.38 | 0.32 | 0.82 | 1.14 | (0.32 | ) | — | (0.32 | ) | 17.20 | 7.00 | 8,339 | 1.73 | 1.94 | — | 58 | ||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three months ended 12/31/10 | 18.73 | 0.13 | 1.35 | 1.48 | (0.14 | ) | — | (0.14 | ) | 20.07 | 7.92 | 17,204 | 0.84 | (d)(f) | 2.67 | (d)(e) | — | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/10 | 16.87 | 0.64 | 1.97 | 2.61 | (0.75 | ) | — | (0.75 | ) | 18.73 | 15.78 | 3,661 | 0.92 | (e) | 3.58 | (e) | — | 85 | ||||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 | 15.37 | 0.57 | 1.58 | 2.15 | (0.53 | ) | (0.12 | ) | (0.65 | ) | 16.87 | 15.07 | 1,022 | 1.02 | (e) | 3.11 | (e) | 0.00 | (g) | 104 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 | 19.02 | 0.36 | (3.50 | ) | (3.14 | ) | (0.51 | ) | — | (0.51 | ) | 15.37 | (16.82 | ) | 86 | 0.88 | (e) | 2.00 | (e) | 0.01 | 95 | |||||||||||||||||||||||||||||||||||
Year ended 09/30/07 | 17.28 | 0.45 | 1.84 | 2.29 | (0.55 | ) | — | (0.55 | ) | 19.02 | 13.42 | 589 | 0.86 | (e) | 2.40 | (e) | 0.00 | (g) | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 09/30/06 | 16.46 | 0.47 | 0.81 | 1.28 | (0.46 | ) | — | (0.46 | ) | 17.28 | 7.90 | 4,474 | 0.88 | 2.79 | — | 58 | ||||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges. | |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(d) | Ratios are annualized and based on average daily net assets (000’s) of $102,188, $11,620, $12,671 and $10,633 for Class A, Class B, Class C, and Class Y shares, respectively. | |
(e) | The ratios reflect the rebate of certain Portfolio expenses in connection with investments in an affiliated during the period. The effect of the rebate on the ratios is disclosed in the above table as “Rebate from affiliate”. | |
(f) | Ratio of expenses to average net assets without fee waivers and/or expense reimbursements for the three months ended December 31, 2010 were 1.10%, 1.85% 1.85% and 0.85% for Class A, Class B, Class C and Class Y, respectively. | |
(g) | Amount is less than 0.005%. |
NOTE 12—Change in Independent Registered Public Accounting Firm (unaudited)
In connection with the Reorganization of the Fund, the Audit Committee of the Board of Trustees of the Trust appointed, and the Board of Trustees ratified and approved, PricewaterhouseCoopers LLP (“PWC”) as the independent registered public accounting firm of the Fund for the fiscal year following May 31, 2010. The predecessor fund’s financial statements were audited by a different independent registered public accounting firm (the “Prior Auditor”). Concurrent with the closing of the Reorganization, the Prior Auditor resigned as the independent registered public accounting firm of the predecessor fund. The Prior Auditor’s report on the financial statements of the Fund for the past two years did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period the Prior Auditor was engaged, there were no disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its report.
23 Invesco Convertible Securities Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Convertible Securities Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Convertible Securities Fund (formerly known as AIM Convertible Securities Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the periods indicated, the changes in its net assets and the financial highlights for the each of the period ended December 31, 2010 and the year ended September 30, 2010, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The statement of changes in net assets and the financial highlights of the Fund for the periods ended September 30, 2009 and prior were audited by other independent auditors whose report dated November 24, 2009 expressed an unqualified opinion on those financials statements.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
24 Invesco Convertible Securities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,188.40 | $ | 5.85 | $ | 1,019.86 | $ | 5.40 | 1.06 | % | ||||||||||||||||||
B | 1,000.00 | 1,183.50 | 9.96 | 1,016.08 | 9.20 | 1.81 | ||||||||||||||||||||||||
C | 1,000.00 | 1,183.80 | 9.96 | 1,016.08 | 9.20 | 1.81 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,189.70 | 4.47 | 1,021.12 | 4.13 | 0.81 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
25 Invesco Convertible Securities Fund
Approval of Investment Advisory and Sub-advisory Agreements |
The Board of Trustees (the Board) of AIM Growth Series (Invesco Growth Series) (the Company) is required under the Investment Company Act of 1940 to approve the Invesco Convertible Securities Fund (the Fund) investment advisory agreements. During meetings held on December 1-2, 2009, the Board as a whole and the disinterested or “independent” Trustees, voting separately approved (i) an amendment to the Company’s investment advisory agreement with Invesco Advisers, Inc. (Invesco Advisers) to add the Fund and (ii) an amendment to the Master Intergroup Sub-Advisory Contract for Mutual Funds (the sub-advisory contracts) with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the Affiliated Sub-Advisers) to add the Fund. In doing so, the Board determined that the investment advisory agreements are in the best interests of the Fund and its shareholders and that the compensation to Invesco Advisers and the Affiliated Sub-Advisers under the Fund’s investment advisory agreements is fair and reasonable.
The Board’s Fund Evaluation Process
The Fund was formed to acquire the assets and liabilities of a Morgan Stanley retail fund (the Acquired Fund) with substantially similar investment objectives, strategies and risks. At the time of approval of the investment advisory agreements, the Fund had no assets and no performance history and the portfolio managers were not employed by Invesco Advisers or one of the Affiliated Sub-Advisers.
In determining to approve the Fund’s investment advisory agreements, the Board considered among other things, the factors discussed below in evaluating the fairness and reasonableness of the Fund’s investment advisory agreements. The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreements. The Board considered the information provided to them and did not identify any information that was controlling. One Trustee may have weighed a particular piece of information differently than another.
Factors and Conclusions and Summary of Evaluation of Investment Advisory Agreements
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the advisory services to be provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement. The Board’s review of the qualifications of Invesco Advisers to provide these services included the Board’s consideration of Invesco Advisers’ portfolio and product review process, various back office support functions provided by Invesco Advisers and its affiliates, and Invesco Adviser’s global trading operations. In determining whether to approve the Fund’s investment advisory agreement, the Board considered the prior relationship between Invesco Advisers and the series portfolios of funds advised by Invesco Advisers (the Invesco Funds), as well as the Board’s knowledge of Invesco Advisers’ operations. The Board concluded that the nature, extent and quality of the advisory services to be provided to the Fund support the Board’s approval of the investment advisory agreements.
The Board reviewed the services to be provided by the Affiliated Sub-Advisers under the sub-advisory contracts. The Board noted that the Affiliated Sub-Advisers, which have offices and personnel that are located in financial centers around the world, can provide research and investment analysis on the markets and economies of various countries in which the Fund invests and make recommendations on securities of companies located in such countries. The Board concluded that the sub-advisory contracts will benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services to be provided by the Affiliated Sub-Advisers are appropriate.
B. | Fund Performance |
The Fund will retain the performance track record of the Acquired Fund. The Board considered the performance of the Acquired Fund and the fact that the Fund is to be managed by substantially the same portfolio management team as managed the Acquired Fund. The Board did not view Fund performance as a relevant factor in considering whether to approve the sub-advisory contracts, as no Affiliated Sub-Adviser currently manages assets of the Fund.
C. | Advisory and Sub-Advisory Fees and Fee Waivers |
The Board considered that the contractual advisory fee rate of the Fund is the same as that of the Acquired Fund, that the board of the Acquired Fund had approved such fee, and that Invesco Advisers has contractually agreed to limit expenses of the Fund through June 30, 2012. The Board was provided with a comparison of the contractual advisory fee of the Fund to the uniform fee schedule applicable to other Invesco Funds and with materials prepared by Lipper, Inc. for the board of the Acquired Fund.
The Board also considered the services to be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts and the services to be provided by Invesco Advisers pursuant to the Fund’s investment advisory agreement, as well as the allocation of fees between Invesco Advisers and the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that the sub-advisory fees have no direct effect on the Fund or its shareholders, as they are paid by Invesco Advisers to the Affiliated Sub-Advisers, and that Invesco Advisers and the Affiliated Sub-Advisers are affiliates.
After taking account of the Fund’s contractual advisory fee rate, the contractual sub-advisory fee rate, the expense limits and other relevant factors, the Board concluded that the Fund’s advisory and sub-advisory fees were fair and reasonable.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from such economies of scale through contractual breakpoints in the Fund’s advisory fee schedule. The Board noted that the Fund’s contractual advisory fee schedule provides for breakpoints. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of all of the Invesco Funds and other clients advised by Invesco Advisers.
E. | Profitability and Financial Resources |
The Board considered information from the 2009 contract renewal process provided by Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services. The Board noted that Invesco Advisers continues to operate at a net profit. The Board concluded that the Fund’s fees were fair and
26 Invesco Convertible Securities Fund
reasonable, and that the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund are not anticipated to be excessive in light of the nature, quality and extent of the services provided. The Board considered whether Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the Fund’s investment advisory agreement, and concluded that Invesco Advisers has the financial resources necessary to fulfill these obligations. The Board also considered whether each Affiliated Sub-Adviser is financially sound and has the resources necessary to perform its obligations under its respective sub-advisory contract, and concluded that each Affiliated Sub-Adviser has the financial resources necessary to fulfill these obligations.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits to be received by Invesco Advisers and its affiliates resulting from Invesco Advisers’ relationship with the Fund, including the fees to be received by Invesco Advisers and its affiliates for their provision of administrative, transfer agency and distribution services to the Fund. The Board considered the performance of Invesco Advisers and its affiliates in providing these services to other Invesco Funds and the organizational structure employed by Invesco Advisers and its affiliates to provide these services. The Board also considered that these services will be provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board. The Board concluded that Invesco Advisers and its affiliates were providing these services to Invesco Funds in accordance with the terms of their contracts, and were qualified to provide these services to the Fund.
The Board considered the benefits realized by Invesco Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements shift the payment obligation for research and execution services from Invesco Advisers and the Affiliated Sub-Advisers to the funds and therefore may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board concluded that Invesco Advisers’ and the Affiliated Sub-Advisers’ soft dollar arrangements are appropriate. The Board also concluded that, based on its review and representations made by the Chief Compliance Officer of Invesco Advisers, these arrangements are consistent with regulatory requirements.
The Board considered the fact that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers will receive advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through at least June 30, 2011, the advisory fees payable by the Fund in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds is in the best interests of the Fund and its shareholders.
27 Invesco Convertible Securities Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 31.59% | |||
Corporate Dividends Received Deduction* | 38.48% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
Section 19
Form 1099-DIV for the calendar year will report distributions for federal income tax purposes. The Fund’s annual report to shareholders will include information regarding the tax character of Fund distributions for the fiscal year. This Notice is sent to comply with certain Securities and Exchange Commission requirements.
Shareholders were sent a notice from the Fund that set forth an estimate on a per share basis of the source or sources from which the distribution was paid in September 2010. Subsequently, certain of these estimates have been corrected. Listed below is a written statement of the sources of this distribution, as corrected, on a generally accepted accounting principles (“GAAP”) basis and as noted above are not being provided for tax reporting purposes.
During the quarter ending September 2010, Invesco Convertible Securities Fund (“the Fund”) declared a quarterly distribution, which was payable to shareholders on September 16, 2010. This distribution, determined in accordance with generally accepted accounting principles, is estimated to be from the following sources: (1) $0.1437 (Class A), $0.1105 (Class B), $0.1094 (Class C) and $0.1551 (Class Y) per share from net investment income; and (2) $0.0278 (Class A), $0.0278 (Class B), $0.0278 (Class C) and $0.0278 (Class Y) per share from return of principal.
28 Invesco Convertible Securities Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![()](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883759.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the period between June 1, 2010, and June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website, sec.gov. Proxy voting information for the predecessor fund prior to its reorganization with the Fund on June 1, 2010, is not available on the Invesco website but is or will be available on the SEC website under the predecessor fund.
![(INESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7883760.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
MS-CSEC-AR-1 Invesco Distributors, Inc.
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Global Equity Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
11 | Financial Statements | |
13 | Notes to Financial Statements | |
21 | Financial Highlights | |
22 | Auditor’s Report | |
23 | Fund Expenses | |
24 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885102.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885103.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 Invesco Global Equity Fund
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885104.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885105.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 Invesco Global Equity fund
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2010, Invesco Global Equity Fund, at net asset value (NAV), outpaced its style-specific benchmark, the MSCI World Index. This was due largely to the Fund’s stock selection in the consumer staples, financials, health care and telecommunication services sectors relative to the index. The Fund also benefited from positive stock selection in the materials sector. Select holdings in the consumer discretionary, information technology (IT) and utilities sectors were detractors from the Fund’s positive returns.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 13.00 | % | ||
Class B Shares | 12.18 | |||
Class C Shares | 12.09 | |||
Class R Shares | 12.68 | |||
Class Y Shares | 13.27 | |||
Institutional Class Shares | 13.76 | |||
MSCI World Index▼ (Broad Market/Style-Specific Index) | 11.76 | |||
Lipper Global Multi-Cap Core Funds Index▼ (Peer Group Index) | 13.70 | |||
▼ | Lipper Inc. |
How we invest
We manage your Fund to provide exposure to global large-cap stocks. The portfolio is designed to outperform the MSCI World Index while minimizing the amount of additional risk relative to the benchmark. The Fund can be used as a long-term allocation to large-cap stocks that complements other style-specific strategies within a diversified asset allocation strategy.
The investment process integrates the following key steps:
n | Universe development | |
n | Stock rankings | |
n | Risk assessment | |
n | Portfolio construction | |
n | Trading |
While the companies included in the MSCI World Index are used as a general guide for developing the Fund’s invest-able universe, non-benchmark stocks may also be considered. Each stock in the universe is evaluated on four factors:
company earnings momentum, price trend, management action and relative valuation. The scores from these four factors are combined to arrive at an overall alpha score (excess return forecast) for each stock. Each alpha score is relative to the other securities within the same industry. Stocks also are evaluated on a multitude of other factors to develop a stock-specific risk forecast and transaction cost forecast.
We then incorporate the alpha forecast, risk forecast and transaction cost forecast using an optimizer (a software tool) to build a portfolio that we believe is an optimal balance of the stocks’ potential risk and return. This portfolio is constructed according to certain constraints to increase the probability that the Fund’s relative performance and volatility remain within the Fund’s strategy guidelines. We continually monitor the portfolio, and the overall investment process is repeated on a
monthly basis to determine which companies should be bought or sold in the portfolio.
In terms of risk management, we seek to minimize any style biases in the portfolio. Active managers of global portfolios typically add value in one of, or a combination of, five areas: beta bias (relative volatility), style bias, sector/ industry over- and underweight, country over- and underweight and stock selection. We attempt to add value through our stock selection decisions. Consequently, our risk management process seeks to neutralize the Fund’s exposure relative to the benchmark with regard to the other exposures.
Market conditions and your Fund
After rallying for much of 2009 on prospects of improving global economic conditions, global equity markets faced headwinds in 2010. Notably, several southern European economies, including Greece, Spain, Portugal and Italy faced solvency concerns amid massive fiscal deficits. Although the U.S. economy continued with a positive growth rate in 2010, investors remained concerned about high unemployment and a still-weak housing market. The period ended with a market upswing as a flurry of private sector merger and acquisition activity began – a sign of cash-rich corporations and strong balance sheets.
In contrast, China enacted credit-tightening measures in early 2010 in an attempt to slow its economy. The combination of robust domestic economic developments and largely upbeat corporate earnings supported Asian equity markets during the period. However, concerns about potential overheating in emerging market economies, coupled with concerns of a potential double-dip recession in developed economies, continued to foster uncertainty about the pace and vigor of a global economic recovery.
Portfolio Composition
By sector
Financials | 20.2 | % | ||
Health Care | 13.4 | |||
Information Technology | 13.1 | |||
Energy | 12.7 | |||
Consumer Discretionary | 11.3 | |||
Materials | 8.2 | |||
Industrials | 6.1 | |||
Telecommunication Services | 5.2 | |||
Consumer Staples | 4.5 | |||
Utilities | 3.4 | |||
Money Market Funds Plus | ||||
Other Assets Less Liabilities | 1.9 |
Top 10 Equity Holdings*
1. | Chevron Corp. | 3.4 | % | |||||
2. | Canon Inc. | 3.1 | ||||||
3. | Exxon Mobil Corp. | 2.7 | ||||||
4. | International Business Machines Corp. | 2.6 | ||||||
5. | Microsoft Corp. | 2.6 | ||||||
6. | BCE Inc. | 2.5 | ||||||
7. | Novo Nordisk A.S.-Class B | 2.4 | ||||||
8. | BHP Billiton PLC | 2.3 | ||||||
9. | BHP Billiton Ltd. | 2.1 | ||||||
10. | ConocoPhillips | 2.1 |
Total Net Assets | $170.6 million | |||
Total Number of Holdings* | 115 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
*Excluding money market fund holdings.
4 Invesco Global Equity Fund |
At the beginning of the year, riskier assets, like stocks, were outperforming securities considered safe havens, such as U.S. Treasuries. This trend continued through the middle of April 2010. Renewed credit problems overseas and the market correction that occurred in May, June and August, however, created a more uncertain environment, which prompted many investors to favor safety over risk. Although the path to economic recovery remained uncertain, several positive trends fueled a resurgence in global equity markets during the last few months of the reporting period.
Regarding the results of Invesco Global Equity Fund, it’s important to understand our investment process to better evaluate the drivers of our relative performance versus the benchmark. We generally evaluate performance based on the effectiveness of our stock selection and risk management.
Our stock selection model, based on the four factors (company earnings momentum, price trend, management action and relative value) that make up our alpha (excess return) forecast for stocks in our investment universe, was a detractor from Fund performance for the reporting period. However, when selecting Fund holdings we use our optimization software to assist in making investment decisions, based on risk and transaction cost forecasts, as well as our alpha forecast. Consequently, while our stock selection model may identify a stock with an attractive alpha forecast, the optimizer may indicate that its transaction costs are too high and/or its risk level is unacceptable.
For the reporting period, Invesco Global Equity Fund at NAV outperformed its style-specific benchmark, the MSCI World Index. Our stock selection in four sectors – consumer staples, financials, health care and telecommunication services – was extremely strong and contributed to our performance compared to the index. In contrast, stock selection in the consumer discretionary, IT and utilities sectors detracted from the overall positive performance of the Fund. In addition, the Fund has exposure to index future contracts. These future contracts are used for hedging small amounts of cash. During the fiscal year, the exposure to index futures was a slight contributor to overall performance.
In the health care sector, Novo Nordisk, a Denmark-based pharmaceutical company which operates in two business segments – diabetes care and biopharmaceuticals – contributed to Fund performance. Also contributing to the
outperformance of the Fund versus its benchmark was Canada-based telecommunication services company, BCE.
On the other hand, a primary detractor from Fund returns was U.S.-based utility company, Mirant. Mirant is an energy company that produces and sells electricity in the United States. We liquidated our position in Mirant during the reporting period. Also detracting from Fund performance was software giant Microsoft.
When looking closely at the regions in which the Fund invests, stock selection in North America (specifically the United States) lagged the MSCI World Index. Conversely, stock selection was strong in both Europe and Asia/Pacific, which contributed to positive relative performance for the year. Leading the way in Europe were Denmark and Sweden, while Japan and Hong Kong helped boost performance in the Asia/Pacific region.
Market participants are vacillating between inconsistent economic data and strong momentum in earnings from the corporate sector. At the same time, consumers, financial institutions and select governments are working to repair balance sheets. While these ultimately healthy initiatives may temper the pace of economic recovery in the near term, falling government bond yields lowered mortgage rates to even more affordable levels, thus providing some level of support for the housing market. In the face of these conflicting signals, we believe above-average equity market and foreign exchange volatility may persist.
We caution investors against making investment decisions based on short-term performance. As always, we recommend that you consult your financial adviser to discuss your individual financial program.
We welcome any new investors who have joined the Fund during the year, and to all of our shareholders, we say thank you for your continued investment in Invesco Global Equity Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF KARL GEORG BAYER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885106.jpg)
Karl Georg Bayer
Head of research for Invesco global quantitative equity Germany, is manager of Invesco Global Equity Fund. He joined Invesco in 1991. Mr. Bayer earned Diplom Kaufmann and Diplom Ingenieur degrees from the University of Darmstadt.
Head of research for Invesco global quantitative equity Germany, is manager of Invesco Global Equity Fund. He joined Invesco in 1991. Mr. Bayer earned Diplom Kaufmann and Diplom Ingenieur degrees from the University of Darmstadt.
![(PHOTO OF UWE DRAEGER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885107.jpg)
Uwe Draeger
Portfolio manager, is manager of Invesco Global Equity Fund. He joined Invesco Deutschland in 2005. Mr. Draeger earned a Diplom-Ökonom degree from Hochshüle für Ökonomie Berlin, an M.A. from City of London Polytechnic and an M.B.A. from Anglia Business School (Cambridge).
Portfolio manager, is manager of Invesco Global Equity Fund. He joined Invesco Deutschland in 2005. Mr. Draeger earned a Diplom-Ökonom degree from Hochshüle für Ökonomie Berlin, an M.A. from City of London Polytechnic and an M.B.A. from Anglia Business School (Cambridge).
![(PHOTO OF MICHAEL FRAIKIN)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885108.jpg)
Michael Fraikin
Portfolio manager, is manager of Invesco Global Equity Fund. He joined Invesco Deutschland in 1997. Mr. Fraikin earned an M.S. in accounting and finance from the London School of Economics and a B.A. with honors from the University of Reutlingen and Middle-sex University (London) within the combined European study program.
Portfolio manager, is manager of Invesco Global Equity Fund. He joined Invesco Deutschland in 1997. Mr. Fraikin earned an M.S. in accounting and finance from the London School of Economics and a B.A. with honors from the University of Reutlingen and Middle-sex University (London) within the combined European study program.
![(PHOTO OF JENS LANGEWAND)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885109.jpg)
Jens Langewand
Managing director of research for Invesco global quantitative equity Germany, is manager of Invesco Global Equity Fund. He joined Invesco in 2007. Mr. Langewand earned a Diplom Kaufmann degree from the University of Münster and a Ph.D. from the University of Augsburg.
Managing director of research for Invesco global quantitative equity Germany, is manager of Invesco Global Equity Fund. He joined Invesco in 2007. Mr. Langewand earned a Diplom Kaufmann degree from the University of Münster and a Ph.D. from the University of Augsburg.
![(PHOTO OF ALEXANDER UHLMANN)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885110.jpg)
Alexander Uhlmann
Chartered Financial Analyst, portfolio manager, is manager of Invesco Global Equity Fund. He joined Invesco Deutschland in 1997. Mr. Uhlmann earned a Diplom Betriebswirt (FH) degree from the Business School for Banking and Finance (HfB) in Frankfurt. He is a member of the German CFA Society.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Global Equity Fund. He joined Invesco Deutschland in 1997. Mr. Uhlmann earned a Diplom Betriebswirt (FH) degree from the Business School for Banking and Finance (HfB) in Frankfurt. He is a member of the German CFA Society.
5 Invesco Global Equity Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Index data from 8/31/97, Fund data from 9/15/97
Index data from 8/31/97, Fund data from 9/15/97
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885111.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating changes in value during the early years shown in the chart. The vertical axis, the
one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on.
6 Invesco Global Equity Fund
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (9/15/97) | 5.17 | % | ||
10 Years | 2.75 | |||
5 Years | -0.91 | |||
1 Year | 6.79 | |||
Class B Shares | ||||
Inception (9/15/97) | 5.29 | % | ||
10 Years | 2.82 | |||
5 Years | -0.82 | |||
1 Year | 7.18 | |||
Class C Shares | ||||
Inception (1/2/98) | 5.34 | % | ||
10 Years | 2.67 | |||
5 Years | -0.54 | |||
1 Year | 11.09 | |||
Class R Shares | ||||
10 Years | 3.12 | % | ||
5 Years | -0.03 | |||
1 Year | 12.68 | |||
Class Y Shares | ||||
10 Years | 3.39 | % | ||
5 Years | 0.32 | |||
1 Year | 13.27 | |||
Institutional Class Shares | ||||
10 Years | 3.72 | % | ||
5 Years | 0.75 | |||
1 Year | 13.76 |
Class R shares incepted on October 31, 2005. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class R shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Institutional Class shares incepted on April 30, 2004. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.66%, 2.41%, 2.41%, 1.91%, 1.41% and 0.86%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based
on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
A redemption fee of 2% will be imposed on certain redemptions or exchanges out of the Fund within 31 days of purchase. Exceptions to the redemption fee are listed in the Fund’s prospectus.
7 Invesco Global Equity Fund
Invesco Global Equity Fund’s investment objective is long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class Y shares are available only to certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | The dollar value of the Fund’s foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. | |
n | Securities issued by foreign companies and governments located in developing countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries. | |
n | Prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. |
n | An investment by the Fund in ETFs generally presents the same primary risks as an investment in a mutual fund. In addition, ETFs may be subject to the following: a discount of the ETF’s shares to its net asset value; failure to develop an active trading market for the ETF’s shares; the listing exchange halting trading of the ETF’s shares; failure of the ETF’s shares to track the referenced index; and holding troubled securities in the referenced index. ETFs may involve duplication of management fees and certain other expenses, as the fund indirectly bears its proportionate share of any expenses paid by the ETFs in which it invests. Further, certain of the ETFs in which each fund may invest are leveraged. The more a fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. | |
n | The Fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
n | Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. | |
n | The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results. |
About indexes used in this report
n | The MSCI World Index is an unmanaged index considered representative of stocks of developed countries. | |
n | The Lipper Global Multi-Cap Core Funds Index is an unmanaged index considered representative of global multi-cap core funds tracked by Lipper. |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. | |
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally organized according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | GTNDX | |||
Class B Shares | GNDBX | |||
Class C Shares | GNDCX | |||
Class R Shares | GTNRX | |||
Class Y Shares | GTNYX | |||
Institutional Class Shares | GNDIX |
8 Invesco Global Equity Fund
Schedule of Investments(a)
December 31, 2010
Shares | Value | |||||||
Common Stocks–98.09% | ||||||||
Australia–3.18% | ||||||||
Australia & New Zealand Banking Group Ltd. | 36,146 | $ | 862,494 | |||||
BHP Billiton Ltd. | 77,359 | 3,592,863 | ||||||
Rio Tinto Ltd. | 11,043 | 964,515 | ||||||
5,419,872 | ||||||||
Bermuda–0.84% | ||||||||
Arch Capital Group Ltd.(b) | 16,190 | 1,425,530 | ||||||
Botswana–1.99% | ||||||||
Petrofac Ltd. | 136,691 | 3,387,990 | ||||||
Canada–5.47% | ||||||||
ATCO Ltd.–Class I | 12,200 | 723,583 | ||||||
BCE Inc. | 120,500 | 4,269,999 | ||||||
Canadian Imperial Bank of Commerce | 8,000 | 628,337 | ||||||
George Weston Ltd. | 19,100 | 1,612,574 | ||||||
Penn West Energy Trust | 14,000 | 334,664 | ||||||
Rogers Communications, Inc.–Class B(c) | 50,700 | 1,758,969 | ||||||
9,328,126 | ||||||||
Denmark–2.91% | ||||||||
Carlsberg A.S.–Class B | 2,674 | 267,870 | ||||||
Coloplast A.S.–Class B | 4,519 | 614,400 | ||||||
Novo Nordisk A.S.–Class B | 36,311 | 4,089,071 | ||||||
4,971,341 | ||||||||
Finland–1.98% | ||||||||
Fortum Oyj | 55,368 | 1,680,743 | ||||||
Stora Enso Oyj–Class R | 147,682 | 1,517,523 | ||||||
UPM-Kymmene Oyj | 10,330 | 182,598 | ||||||
3,380,864 | ||||||||
France–1.66% | ||||||||
Sanofi-Aventis S.A. | 39,288 | 2,524,361 | ||||||
Total S.A. | 5,861 | 311,423 | ||||||
2,835,784 | ||||||||
Germany–1.86% | ||||||||
Deutsche Lufthansa AG(b) | 81,615 | 1,784,779 | ||||||
Hannover Rueckversicherung AG | 26,028 | 1,396,780 | ||||||
3,181,559 | ||||||||
Hong Kong–2.58% | ||||||||
Cheung Kong (Holdings) Ltd. | 92,000 | 1,416,019 | ||||||
CLP Holdings Ltd. | 133,000 | 1,079,701 | ||||||
SJM Holdings Ltd. | 262,000 | 415,948 | ||||||
Swire Pacific Ltd.–Class A | 90,500 | 1,485,236 | ||||||
4,396,904 | ||||||||
Italy–2.03% | ||||||||
Enel S.p.A. | 39,034 | 195,199 | ||||||
Eni S.p.A. | 26,219 | 572,839 | ||||||
Mediaset S.p.A. | 103,765 | 628,164 | ||||||
Terna–Rete Elettrica Nazionale S.p.A. | 490,104 | 2,070,805 | ||||||
3,467,007 | ||||||||
Japan–12.04% | ||||||||
Brother Industries, Ltd. | 87,600 | 1,298,418 | ||||||
Canon Inc. | 102,300 | 5,241,793 | ||||||
Daito Trust Construction Co., Ltd. | 20,400 | 1,396,331 | ||||||
Honda Motor Co., Ltd. | 36,600 | 1,445,853 | ||||||
Hoya Corp. | 21,100 | 512,239 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 341,600 | 1,846,146 | ||||||
Mizuho Financial Group, Inc. | 942,400 | 1,775,049 | ||||||
Resona Holdings, Inc.(c) | 25,800 | 154,679 | ||||||
Sekisui Chemical Co., Ltd. | 73,000 | 523,932 | ||||||
Seven & I Holdings Co., Ltd. | 12,400 | 331,257 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 30,800 | 1,096,560 | ||||||
Takeda Pharmaceutical Co., Ltd. | 36,700 | 1,804,955 | ||||||
Tokio Marine Holdings, Inc. | 79,700 | 2,381,286 | ||||||
Yamada Denki Co., Ltd. | 10,930 | 745,441 | ||||||
20,553,939 | ||||||||
Netherlands–0.24% | ||||||||
STMicroelectronics N.V. | 39,817 | 412,942 | ||||||
New Zealand–0.21% | ||||||||
Telecom Corp. of New Zealand Ltd. | 207,831 | 351,188 | ||||||
Norway–0.37% | ||||||||
Statoil A.S.A. | 26,252 | 624,629 | ||||||
Singapore–0.57% | ||||||||
United Overseas Bank Ltd. | 69,000 | 978,876 | ||||||
Spain–1.72% | ||||||||
Banco Bilbao Vizcaya Argentaria, S.A. | 122,909 | 1,242,422 | ||||||
Banco Santander S.A. | 158,450 | 1,684,589 | ||||||
2,927,011 | ||||||||
Sweden–3.46% | ||||||||
Alfa Laval A.B. | 61,983 | 1,307,674 | ||||||
Nordea Bank A.B. | 130,427 | 1,420,492 | ||||||
SKF A.B.–Class B | 60,935 | 1,757,655 | ||||||
Svenska Handelsbanken A.B.–Class A | 44,316 | 1,417,927 | ||||||
5,903,748 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Global Equity Fund
Shares | Value | |||||||
Switzerland–2.06% | ||||||||
Banque Cantonale Vaudoise | 501 | $ | 263,402 | |||||
Novartis AG | 39,218 | 2,310,485 | ||||||
Roche Holding AG | 6,451 | 946,340 | ||||||
3,520,227 | ||||||||
United Kingdom–9.00% | ||||||||
AstraZeneca PLC | 51,827 | 2,373,386 | ||||||
BHP Billiton PLC | 98,194 | 3,916,620 | ||||||
British American Tobacco PLC | 87,283 | 3,361,793 | ||||||
BT Group PLC | 803,299 | 2,268,450 | ||||||
HSBC Holdings PLC | 17,129 | 174,626 | ||||||
Mondi PLC | 192,537 | 1,544,232 | ||||||
Next PLC | 55,840 | 1,720,210 | ||||||
15,359,317 | ||||||||
United States–43.92% | ||||||||
Allied World Assurance Co. Holdings, Ltd. | 8,400 | 499,297 | ||||||
American Express Co. | 38,200 | 1,639,544 | ||||||
Amgen Inc.(b) | 30,900 | 1,696,410 | ||||||
Apple Inc.(b) | 2,000 | 645,120 | ||||||
Capital One Financial Corp. | 32,800 | 1,395,968 | ||||||
Cardinal Health, Inc. | 39,000 | 1,494,090 | ||||||
Chevron Corp. | 64,234 | 5,861,353 | ||||||
Cisco Systems, Inc.(b) | 11,300 | 228,599 | ||||||
Citigroup Inc.(b) | 158,900 | 751,597 | ||||||
Coca-Cola Enterprises, Inc. | 21,100 | 528,133 | ||||||
ConocoPhillips | 51,980 | 3,539,838 | ||||||
D.R. Horton, Inc. | 98,900 | 1,179,877 | ||||||
Domtar Corp. | 17,000 | 1,290,640 | ||||||
Exxon Mobil Corp. | 62,965 | 4,604,001 | ||||||
Ford Motor Co.(b) | 65,500 | 1,099,745 | ||||||
Forest Laboratories, Inc.(b) | 15,400 | 492,492 | ||||||
Franklin Resources, Inc. | 11,800 | 1,312,278 | ||||||
Gannett Co., Inc. | 91,300 | 1,377,717 | ||||||
Gap, Inc. (The) | 89,228 | 1,975,508 | ||||||
Goldman Sachs Group, Inc. (The) | 7,308 | 1,228,913 | ||||||
Humana Inc.(b) | 15,400 | 842,996 | ||||||
IAC/InterActiveCorp(b) | 120,700 | 3,464,090 | ||||||
InterDigital, Inc. | 14,300 | 595,452 | ||||||
International Business Machines Corp. | 30,441 | 4,467,521 | ||||||
Johnson & Johnson | 26,464 | 1,636,798 | ||||||
JPMorgan Chase & Co. | 61,400 | 2,604,588 | ||||||
KBR, Inc. | 22,000 | 670,340 | ||||||
Lexmark International, Inc.–Class A(b) | 8,300 | 289,006 | ||||||
Limited Brands, Inc. | 113,600 | 3,490,928 | ||||||
M&T Bank Corp. | 12,500 | 1,088,125 | ||||||
Macy’s, Inc. | 17,700 | 447,810 | ||||||
McDonald’s Corp. | 25,311 | 1,942,872 | ||||||
Microsoft Corp. | 156,197 | 4,361,020 | ||||||
Northrop Grumman Corp. | 23,628 | 1,530,622 | ||||||
Oil States International, Inc.(b) | 9,300 | 596,037 | ||||||
Oshkosh Corp.(b) | 59,200 | 2,086,208 | ||||||
Peabody Energy Corp. | 23,000 | 1,471,540 | ||||||
PPG Industries, Inc. | 6,200 | 521,234 | ||||||
Procter & Gamble Co. (The) | 19,337 | 1,243,949 | ||||||
Prudential Financial, Inc. | 5,000 | 293,550 | ||||||
R. R. Donnelley & Sons Co. | 72,900 | 1,273,563 | ||||||
Sprint Nextel Corp.(b) | 57,700 | 244,071 | ||||||
Sunoco, Inc. | 4,800 | 193,488 | ||||||
Time Warner, Inc. | 14,900 | 479,333 | ||||||
Travelers Cos., Inc. (The) | 6,200 | 345,402 | ||||||
TRW Automotive Holdings Corp.(b) | 34,100 | 1,797,070 | ||||||
Tyson Foods, Inc.–Class A | 15,400 | 265,188 | ||||||
UnitedHealth Group, Inc. | 56,500 | 2,040,215 | ||||||
Valero Energy Corp. | 10,800 | 249,696 | ||||||
Vishay Intertechnology, Inc.(b) | 55,900 | 820,612 | ||||||
Walter Energy, Inc. | 3,700 | 473,008 | ||||||
Wells Fargo & Co. | 9,200 | 285,108 | ||||||
74,952,560 | ||||||||
Total Common Stocks & Other Equity Interests (Cost $148,534,284) | 167,379,414 | |||||||
Money Market Funds–1.16% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 994,022 | 994,022 | ||||||
Premier Portfolio–Institutional Class(d) | 994,022 | 994,022 | ||||||
Total Money Market Funds (Cost $1,988,044) | 1,988,044 | |||||||
TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)–99.25% (Cost $150,522,328) | 169,367,458 | |||||||
Investments Purchased with Cash Collateral from Securities on Loan | ||||||||
Money Market Funds–0.59% | ||||||||
Liquid Assets Portfolio–Institutional Class (Cost $1,004,210)(d)(e) | 1,004,210 | 1,004,210 | ||||||
TOTAL INVESTMENTS–99.84% (Cost $151,526,538) | 170,371,668 | |||||||
OTHER ASSETS LESS LIABILITIES–0.16% | 270,789 | |||||||
NET ASSETS–100.00% | $ | 170,642,457 | ||||||
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |
(b) | Non-income producing security. | |
(c) | All or a portion of this security was out on loan at December 31, 2010. | |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. | |
(e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Global Equity Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments, at value (Cost $148,534,284)* | $ | 167,379,414 | ||
Investments in affiliated money market funds, at value and cost | 2,992,254 | |||
Total investments, at value (Cost $151,526,538) | 170,371,668 | |||
Cash | 11,974 | |||
Foreign currencies, at value (Cost $1,305,123) | 1,300,902 | |||
Receivable for: | ||||
Deposits with brokers for open futures contracts | 117,000 | |||
Fund shares sold | 51,802 | |||
Dividends | 322,226 | |||
Investment for trustee deferred compensation and retirement plans | 22,849 | |||
Other assets | 34,298 | |||
Total assets | 172,232,719 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 258,218 | |||
Collateral upon return of securities loaned | 1,004,210 | |||
Variation margin | 20,525 | |||
Accrued fees to affiliates | 152,807 | |||
Accrued other operating expenses | 95,985 | |||
Trustee deferred compensation and retirement plans | 58,517 | |||
Total liabilities | 1,590,262 | |||
Net assets applicable to shares outstanding | $ | 170,642,457 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 274,337,549 | ||
Undistributed net investment income | 1,574,351 | |||
Undistributed net realized gain (loss) | (124,120,492 | ) | ||
Unrealized appreciation | 18,851,049 | |||
$ | 170,642,457 | |||
Net Assets: | ||||
Class A | $ | 124,101,709 | ||
Class B | $ | 14,370,304 | ||
Class C | $ | 11,534,551 | ||
Class R | $ | 1,146,019 | ||
Class Y | $ | 719,880 | ||
Institutional Class | $ | 18,769,994 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 11,557,426 | |||
Class B | 1,415,683 | |||
Class C | 1,138,142 | |||
Class R | 106,660 | |||
Class Y | 66,889 | |||
Institutional Class | 1,725,278 | |||
Class A: | ||||
Net asset value per share | $ | 10.74 | ||
Maximum offering price per share (Net asset value of $10.74 divided by 94.50%) | $ | 11.37 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 10.15 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 10.13 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 10.74 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.76 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 10.88 | ||
* | At December 31, 2010, securities with an aggregate value of $954,838 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Global Equity Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends (net of foreign withholding taxes of $279,525) | $ | 4,551,264 | ||
Dividends from affiliated money market funds (includes securities lending income of $88,029) | 89,110 | |||
Total investment income | 4,640,374 | |||
Expenses: | ||||
Advisory fees | 1,373,956 | |||
Administrative services fees | 50,000 | |||
Custodian fees | 50,110 | |||
Distribution fees: | ||||
Class A | 312,199 | |||
Class B | 162,672 | |||
Class C | 117,819 | |||
Class R | 4,767 | |||
Transfer agent fees — A, B, C, R and Y | 574,956 | |||
Trustees’ and officers’ fees and benefits | 20,891 | |||
Other | 199,001 | |||
Total expenses | 2,866,371 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (3,586 | ) | ||
Net expenses | 2,862,785 | |||
Net investment income | 1,777,589 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 6,486,421 | |||
Foreign currencies | (113,971 | ) | ||
Futures contracts | 34,951 | |||
6,407,401 | ||||
Change in net unrealized appreciation of: | ||||
Investment securities | 11,570,120 | |||
Foreign currencies | 75,202 | |||
Futures contracts | 8,818 | |||
11,654,140 | ||||
Net realized and unrealized gain | 18,061,541 | |||
Net increase in net assets resulting from operations | $ | 19,839,130 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Global Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,777,589 | $ | 1,889,425 | ||||
Net realized gain (loss) | 6,407,401 | (52,163,152 | ) | |||||
Change in net unrealized appreciation | 11,654,140 | 92,943,632 | ||||||
Net increase in net assets resulting from operations | 19,839,130 | 42,669,905 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (1,605,468 | ) | (2,635,923 | ) | ||||
Class B | (68,172 | ) | (67,659 | ) | ||||
Class C | (53,549 | ) | (44,289 | ) | ||||
Class R | (11,253 | ) | (11,789 | ) | ||||
Class Y | (11,076 | ) | (13,707 | ) | ||||
Institutional Class | (391,580 | ) | (495,331 | ) | ||||
Total distributions from net investment income | (2,141,098 | ) | (3,268,698 | ) | ||||
Distributions to shareholders from net realized gains: | ||||||||
Share transactions-net: | ||||||||
Class A | (26,874,922 | ) | (22,111,954 | ) | ||||
Class B | (6,900,885 | ) | (7,226,100 | ) | ||||
Class C | (2,717,280 | ) | (3,358,065 | ) | ||||
Class R | 155,694 | 114,435 | ||||||
Class Y | 8,841 | 310,186 | ||||||
Institutional Class | (1,102,545 | ) | 1,189,162 | |||||
Net increase (decrease) in net assets resulting from share transactions | (37,431,097 | ) | (31,082,336 | ) | ||||
Net increase (decrease) in net assets | (19,733,065 | ) | 8,318,871 | |||||
Net assets: | ||||||||
Beginning of year | 190,375,522 | 182,056,651 | ||||||
End of year (includes undistributed net investment income of $1,574,351 and $2,051,832, respectively) | $ | 170,642,457 | $ | 190,375,522 | ||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Global Equity Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
13 Invesco Global Equity Fund
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees |
14 Invesco Global Equity Fund
and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | ||
D. | Distributions — Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. | |
J. | Redemption Fees — The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions or exchanges of shares within 31 days of purchase. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. | |
K. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. | |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. | ||
L. | Foreign Currency Contracts — The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and |
15 Invesco Global Equity Fund
reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. | ||
M. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. | |
N. | Collateral — To the extent the Fund has pledged or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .80% | ||
Next $250 million | 0 | .78% | ||
Next $500 million | 0 | .76% | ||
Next $1.5 billion | 0 | .74% | ||
Next $2.5 billion | 0 | .72% | ||
Next $2.5 billion | 0 | .70% | ||
Next $2.5 billion | 0 | .68% | ||
Over $10 billion | 0 | .66% | ||
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares to 2.25%, 3.00%, 3.00%, 2.50%, 2.00% and 2.00%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012. The Advisor did not waive fees and/or reimburse expenses during the period under the expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2010, the Adviser waived advisory fees of $1,246.
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of the Fund in the amount of $632.
16 Invesco Global Equity Fund
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with IDI to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $10,663 in front-end sales commissions from the sale of Class A shares and $0, $27,216 and $821 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1* | Level 2* | Level 3 | Total | |||||||||||||
Australia | $ | 1,827,009 | $ | 3,592,863 | $ | — | $ | 5,419,872 | ||||||||
Bermuda | 1,425,530 | — | — | 1,425,530 | ||||||||||||
Botswana | — | 3,387,990 | — | 3,387,990 | ||||||||||||
Canada | 9,328,126 | — | — | 9,328,126 | ||||||||||||
Denmark | 882,270 | 4,089,071 | — | 4,971,341 | ||||||||||||
Finland | 1,700,121 | 1,680,743 | — | 3,380,864 | ||||||||||||
France | — | 2,835,784 | — | 2,835,784 | ||||||||||||
Germany | 3,181,559 | — | — | 3,181,559 | ||||||||||||
Hong Kong | 1,495,649 | 2,901,255 | — | 4,396,904 | ||||||||||||
Italy | 3,467,007 | — | — | 3,467,007 | ||||||||||||
Japan | 13,866,293 | 6,687,646 | — | 20,553,939 | ||||||||||||
Netherlands | — | 412,942 | — | 412,942 | ||||||||||||
New Zealand | 351,188 | — | — | 351,188 | ||||||||||||
17 Invesco Global Equity Fund
Level 1* | Level 2* | Level 3 | Total | |||||||||||||
Norway | $ | 624,629 | $ | — | $ | — | $ | 624,629 | ||||||||
Singapore | 978,876 | — | — | 978,876 | ||||||||||||
Spain | 1,242,422 | 1,684,589 | — | 2,927,011 | ||||||||||||
Sweden | 4,146,093 | 1,757,655 | — | 5,903,748 | ||||||||||||
Switzerland | 3,520,227 | — | — | 3,520,227 | ||||||||||||
United Kingdom | 1,720,210 | 13,639,107 | — | 15,359,317 | ||||||||||||
United States | 77,944,814 | — | — | 77,944,814 | ||||||||||||
$ | 127,702,023 | $ | 42,669,645 | $ | — | $ | 170,371,668 | |||||||||
Futures** | 8,818 | — | — | 8,818 | ||||||||||||
Total Investments | $ | 127,710,841 | $ | 42,669,645 | $ | — | $ | 170,380,486 | ||||||||
* | Transfers occurred between Level 1 and Level 2 due to foreign fair value adjustments. |
** | Unrealized appreciation. |
NOTE 4—Derivative Investments
The Fund has implemented the required disclosures about derivative instruments and hedging activities in accordance with GAAP. This disclosure is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position and financial performance. The enhanced disclosure has no impact on the results of operations reported in the financial statements.
Value of Derivative Instruments at Period-End
The Table below summarizes the value of the Fund’s derivative instruments, detailed by primary risk exposure, held as of December 31, 2010:
Value | ||||||||
Risk Exposure/ Derivative Type | Assets | Liabilities | ||||||
Interest rate risk | ||||||||
Futures contracts(a) | $ | 24,635 | $ | (15,817 | ) | |||
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets & Liabilities. |
Effect of Derivative Instruments for the year ended December 31, 2010
The table below summarizes the gains (losses) on derivative instruments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain on | ||||
Statement of Operations | ||||
Futures* | ||||
Realized Gain | ||||
Interest rate risk | $ | 34,951 | ||
Change in Unrealized Appreciation | ||||
Interest rate risk | 8,818 | |||
Total | $ | 43,769 | ||
* | The average value of futures outstanding during the period was $2,369,527. |
Open Futures Contracts | ||||||||||||||||
Unrealized | ||||||||||||||||
Number of | Month/ | Appreciation | ||||||||||||||
Contract | Contracts | Commitment | Value | (Depreciation) | ||||||||||||
CME E-Mini S&P 500 Index | 26 | March-2011/Long | $ | 1,628,900 | $ | 21,840 | ||||||||||
FTSE 100 Index | 3 | March-2011/Long | 275,757 | 2,792 | ||||||||||||
SGX NIKKEI 225 Index | 6 | March-2011/Long | 377,077 | 3 | ||||||||||||
Subtotal | $ | 2,281,734 | $ | 24,635 | ||||||||||||
Dow Jones EURO STOXX 50 Index | 17 | March-2011/Long | $ | 635,096 | $ | (15,817 | ) | |||||||||
Total | $ | 2,916,830 | $ | 8,818 | ||||||||||||
18 Invesco Global Equity Fund
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended December 31, 2010, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,708.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended December 31, 2010, the Fund paid legal fees of $2,894 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 2,141,098 | $ | 3,268,698 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 1,742,866 | ||
Net unrealized appreciation — investments | 18,700,422 | |||
Net unrealized appreciation (depreciation) — other investments | (2,899 | ) | ||
Temporary book/tax differences | (72,272 | ) | ||
Post-October deferrals | (112,058 | ) | ||
Capital loss carryforward | (123,951,151 | ) | ||
Shares of beneficial interest | 274,337,549 | |||
Total net assets | $ | 170,642,457 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $1,322,159 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 58,614,758 | ||
December 31, 2017 | 65,336,393 | |||
Total capital loss carryforward | $ | 123,951,151 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
19 Invesco Global Equity Fund
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $123,866,013 and $163,017,529, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 23,789,806 | ||
Aggregate unrealized (depreciation) of investment securities | (5,089,384 | ) | ||
Net unrealized appreciation of investment securities | $ | 18,700,422 | ||
Cost of investments for tax purposes is $151,671,246. |
NOTE 10—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions, on December 31, 2010, undistributed net investment income was decreased by $113,972 and undistributed net realized gain (loss) was increased by $113,972. This reclassification had no effect on the net assets of the Fund.
NOTE 11—Share Information
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 626,072 | $ | 6,153,988 | 1,020,154 | $ | 8,422,482 | ||||||||||
Class B | 101,100 | 923,955 | 214,316 | 1,652,754 | ||||||||||||
Class C | 104,533 | 961,390 | 120,761 | 930,034 | ||||||||||||
Class R | 33,094 | 322,070 | 39,575 | 321,617 | ||||||||||||
Class Y | 41,867 | 429,928 | 95,559 | 747,571 | ||||||||||||
Institutional Class | 66,132 | 647,553 | 475,993 | 3,515,660 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 138,845 | 1,466,204 | 252,236 | 2,431,301 | ||||||||||||
Class B | 6,583 | 65,703 | 7,124 | 64,776 | ||||||||||||
Class C | 4,967 | 49,522 | 4,311 | 39,523 | ||||||||||||
Class R | 1,065 | 11,253 | 1,228 | 11,789 | ||||||||||||
Class Y | 792 | 8,380 | 1,111 | 10,694 | ||||||||||||
Institutional Class | 36,629 | �� | 391,559 | 50,802 | 495,331 | |||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 326,040 | 3,176,549 | 489,477 | 3,889,156 | ||||||||||||
Class B | (346,199 | ) | (3,176,549 | ) | (523,567 | ) | (3,889,156 | ) | ||||||||
Reacquired:(b) | ||||||||||||||||
Class A | (3,874,643 | ) | (37,671,663 | ) | (4,577,532 | ) | (36,854,893 | ) | ||||||||
Class B | (517,309 | ) | (4,713,994 | ) | (683,719 | ) | (5,054,474 | ) | ||||||||
Class C | (404,447 | ) | (3,728,192 | ) | (578,459 | ) | (4,327,622 | ) | ||||||||
Class R | (18,369 | ) | (177,629 | ) | (28,914 | ) | (218,971 | ) | ||||||||
Class Y | (44,418 | ) | (429,467 | ) | (51,747 | ) | (448,079 | ) | ||||||||
Institutional Class | (222,959 | ) | (2,141,657 | ) | (328,865 | ) | (2,821,829 | ) | ||||||||
Net increase (decrease) in share activity | (3,940,625 | ) | $ | (37,431,097 | ) | (4,000,156 | ) | $ | (31,082,336 | ) | ||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 18% of the outstanding shares of the Fund. IADI has an agreement with these entities to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco Aim and/or Invesco Aim affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Net of redemption fees of $5,561 and $2,049 allocated among the classes based on relative net assets of each class for the years ended December 31, 2010 and 2009, respectively. |
20 Invesco Global Equity Fund
NOTE 12—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income | unrealized) | operations | income | gains | Distributions | of period(a) | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.63 | $ | 0.11 | (d) | $ | 1.14 | $ | 1.25 | $ | (0.14 | ) | $ | — | $ | (0.14 | ) | $ | 10.74 | 13.00 | % | $ | 124,102 | 1.61 | %(e) | 1.61 | %(e) | 1.09 | %(e) | 74 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 7.70 | 0.09 | (d) | 2.02 | 2.11 | (0.18 | ) | — | (0.18 | ) | 9.63 | 27.47 | 138,058 | 1.66 | 1.66 | 1.13 | 72 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.81 | 0.15 | (d) | (6.67 | ) | (6.52 | ) | (0.03 | ) | (0.56 | ) | (0.59 | ) | 7.70 | (43.90 | ) | 132,058 | 1.54 | 1.54 | 1.22 | 114 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 16.47 | 0.22 | (d) | 0.63 | 0.85 | (0.31 | ) | (2.20 | ) | (2.51 | ) | 14.81 | 5.19 | 317,181 | 1.39 | 1.49 | 1.27 | 160 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 15.54 | 0.19 | 2.73 | 2.92 | (0.20 | ) | (1.79 | ) | (1.99 | ) | 16.47 | 18.88 | 324,111 | 1.45 | 1.64 | 1.09 | 166 | |||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.09 | 0.03 | (d) | 1.08 | 1.11 | (0.05 | ) | — | (0.05 | ) | 10.15 | 12.18 | 14,370 | 2.36 | (e) | 2.36 | (e) | 0.34 | (e) | 74 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.21 | 0.03 | (d) | 1.88 | 1.91 | (0.03 | ) | — | (0.03 | ) | 9.09 | 26.50 | 19,741 | 2.41 | 2.41 | 0.38 | 72 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.04 | 0.06 | (d) | (6.30 | ) | (6.24 | ) | (0.03 | ) | (0.56 | ) | (0.59 | ) | 7.21 | (44.32 | ) | 22,770 | 2.29 | 2.29 | 0.47 | 114 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 15.73 | 0.09 | (d) | 0.59 | 0.68 | (0.17 | ) | (2.20 | ) | (2.37 | ) | 14.04 | 4.33 | 78,326 | 2.14 | 2.24 | 0.52 | 160 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 14.92 | 0.06 | 2.62 | 2.68 | (0.08 | ) | (1.79 | ) | (1.87 | ) | 15.73 | 18.02 | 100,141 | 2.20 | 2.39 | 0.34 | 166 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.08 | 0.03 | (d) | 1.07 | 1.10 | (0.05 | ) | — | (0.05 | ) | 10.13 | 12.09 | 11,535 | 2.36 | (e) | 2.36 | (e) | 0.34 | (e) | 74 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.20 | 0.03 | (d) | 1.88 | 1.91 | (0.03 | ) | — | (0.03 | ) | 9.08 | 26.54 | 13,008 | 2.41 | 2.41 | 0.38 | 72 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.02 | 0.06 | (d) | (6.29 | ) | (6.23 | ) | (0.03 | ) | (0.56 | ) | (0.59 | ) | 7.20 | (44.30 | ) | 13,575 | 2.29 | 2.29 | 0.47 | 114 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 15.71 | 0.09 | (d) | 0.59 | 0.68 | (0.17 | ) | (2.20 | ) | (2.37 | ) | 14.02 | 4.35 | 40,480 | 2.14 | 2.24 | 0.52 | 160 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 14.89 | 0.06 | 2.63 | 2.69 | (0.08 | ) | (1.79 | ) | (1.87 | ) | 15.71 | 18.12 | 41,261 | 2.20 | 2.39 | 0.34 | 166 | |||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.63 | 0.08 | (d) | 1.14 | 1.22 | (0.11 | ) | — | (0.11 | ) | 10.74 | 12.68 | 1,146 | 1.86 | (e) | 1.86 | (e) | 0.84 | (e) | 74 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.68 | 0.07 | (d) | 2.01 | 2.08 | (0.13 | ) | — | (0.13 | ) | 9.63 | 27.14 | 875 | 1.91 | 1.91 | 0.88 | 72 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.81 | 0.11 | (d) | (6.65 | ) | (6.54 | ) | (0.03 | ) | (0.56 | ) | (0.59 | ) | 7.68 | (44.03 | ) | 607 | 1.79 | 1.79 | 0.97 | 114 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 16.46 | 0.18 | (d) | 0.63 | 0.81 | (0.26 | ) | (2.20 | ) | (2.46 | ) | 14.81 | 4.97 | 488 | 1.64 | 1.74 | 1.02 | 160 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 15.53 | 0.12 | 2.76 | 2.88 | (0.16 | ) | (1.79 | ) | (1.95 | ) | 16.46 | 18.62 | 170 | 1.70 | 1.89 | 0.84 | 166 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.65 | 0.13 | (d) | 1.15 | 1.28 | (0.17 | ) | — | (0.17 | ) | 10.76 | 13.27 | 720 | 1.36 | (e) | 1.36 | (e) | 1.34 | (e) | 74 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.71 | 0.12 | (d) | 2.01 | 2.13 | (0.19 | ) | — | (0.19 | ) | 9.65 | 27.69 | 662 | 1.41 | 1.41 | 1.38 | 72 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 10.46 | 0.03 | (d) | (2.19 | ) | (2.16 | ) | (0.03 | ) | (0.56 | ) | (0.59 | ) | 7.71 | (20.46 | ) | 183 | 1.53 | (g) | 1.53 | (g) | 1.23 | (g) | 114 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.77 | 0.17 | (d) | 1.17 | 1.34 | (0.23 | ) | — | (0.23 | ) | 10.88 | 13.76 | 18,770 | 0.97 | (e) | 0.97 | (e) | 1.73 | (e) | 74 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.81 | 0.16 | (d) | 2.06 | 2.22 | (0.26 | ) | — | (0.26 | ) | 9.77 | 28.47 | 18,031 | 0.86 | 0.86 | 1.93 | 72 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.94 | 0.22 | (d) | (6.76 | ) | (6.54 | ) | (0.03 | ) | (0.56 | ) | (0.59 | ) | 7.81 | (43.64 | ) | 12,864 | 1.07 | 1.07 | 1.69 | 114 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 16.60 | 0.29 | (d) | 0.63 | 0.92 | (0.38 | ) | (2.20 | ) | (2.58 | ) | 14.94 | 5.58 | 79,762 | 0.99 | 1.67 | 1.67 | 160 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 15.64 | 0.23 | 2.79 | 3.02 | (0.27 | ) | (1.79 | ) | (2.06 | ) | 16.60 | 19.40 | 66,018 | 1.03 | 1.22 | 1.50 | 166 | |||||||||||||||||||||||||||||||||||||||
(a) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. | |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(d) | Calculated using average shares outstanding. | |
(e) | Ratios are based on average daily net assets (000’s) of $124,879, $16,267, $11,782, $953, $610 and $17,252 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively | |
(f) | Commencement date of October 3, 2008. | |
(g) | Annualized. |
21 Invesco Global Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Global Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Global Equity Fund (formerly known as AIM Global Equity Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
22 Invesco Global Equity Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,255.10 | $ | 9.09 | $ | 1,017.14 | $ | 8.13 | 1.60 | % | ||||||||||||||||||
B | 1,000.00 | 1,249.70 | 13.33 | 1,013.36 | 11.93 | 2.35 | ||||||||||||||||||||||||
C | 1,000.00 | 1,248.80 | 13.32 | 1,013.36 | 11.93 | 2.35 | ||||||||||||||||||||||||
R | 1,000.00 | 1,251.50 | 10.50 | 1,015.88 | 9.40 | 1.85 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,255.00 | 7.67 | 1,018.40 | 6.87 | 1.35 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,258.70 | 5.69 | 1,020.16 | 5.09 | 1.00 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
23 Invesco Global Equity Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 100.00% | |||
Corporate Dividends Received Deduction* | 98.10% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
24 Invesco Global Equity Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(IMAGE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885112.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website,
invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885100.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
GEQ-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Income Allocation Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
10 | Schedule of Investments | |
11 | Financial Statements | |
13 | Notes to Financial Statements | |
19 | Financial Highlights | |
20 | Auditor’s Report | |
21 | Fund Expenses | |
22 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886302.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886303.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 | Invesco Income Allocation Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886304.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886305.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Income Allocation Fund |
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2010, Class A shares of Invesco Income Allocation Fund, at net asset value (NAV), returned 10.02% and underperformed the Fund’s custom style-specific benchmark, which returned 11.29% over the same period. Weakness in fixed income markets in the first quarter of 2010, and equity markets, in the second quarter, detracted from the Fund’s performance. Third and fourth quarter recoveries in equity and fixed income markets, however, helped minimize the underperformance for the reporting period.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 10.02 | % | ||
Class B Shares | 9.19 | |||
Class C Shares | 9.18 | |||
Class R Shares | 9.74 | |||
Class Y Shares | 10.42 | |||
Institutional Class Shares | 10.30 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Custom Income Allocation Index■ (Style-Specific Index) | 11.29 | |||
Lipper Mixed-Asset Target Allocation Conservative Funds Index▼ | ||||
(Peer Group Index) | 9.99 |
▼ | Lipper Inc.; ■ Invesco, Lipper Inc. |
How we invest
Invesco Income Allocation Fund invests in underlying funds diversified among asset classes (bonds, stocks and cash), investment styles (value and blend/core), regions (domestic and international) and market capitalizations (large and mid). These underlying funds include bond funds, which represent 65% of the portfolio, and stock funds, which represent the remaining 35% of the portfolio. The underlying funds invest in a wide range of income-producing securities, which may generate an attractive yield with less price volatility than individual asset classes.
The Fund may also invest a significant portion of its assets in derivative instruments such as options, futures (including currency futures), forward currency contracts and swap agreements (including interest rate, currency, total return
and credit default swaps). The Fund may engage in these transactions for hedging or non-hedging purposes. The underlying funds may use derivative instruments to implement their investment strategy.
While no fund can guarantee positive performance, the broad portfolio diversification strives to provide exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming.
We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques.
While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations.
Market conditions and your Fund
The first quarter of 2010 was characterized by a healthy recovery in global equities from the 2008-2009 financial crisis. Hopes for a relatively rapid, sustained recovery were fueled by record amounts of monetary and fiscal stimulus and an exceptionally low interest rate policy. Not surprising, cyclical assets such as equities enjoyed significant price advances during the first quarter of 2010, driven by anticipation that improving economic conditions would boost earnings growth.
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments led global investors to seek out safety, driving government bond yields of the world’s largest industrial countries downward.
The third quarter witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Riskier assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic
Portfolio Composition
Target | % of Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10 | ||||||
Intermediate Term Taxable Investment Grade | 38.00 | % | 36.87 | % | ||||
Taxable Non Investment Grade | 21.00 | 21.41 | ||||||
Large Cap Value | 15.00 | 15.41 | ||||||
Sector | 8.00 | 8.14 | ||||||
Real Estate | 7.00 | 7.08 | ||||||
Short Term Taxable Investment Grade | 6.00 | 5.67 | ||||||
International Blend | 5.00 | 5.41 | ||||||
Other Assets Less Liabilities | 0.00 | 0.01 |
Total Net Assets | $84.0 million |
4 | Invesco Income Allocation Fund |
events and the U.S. policy response, resulting in yields across the yield curve hovering at low levels. The policy response also proved to be a boon for equities, which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policy and the belief that the seven largest developed (G7) economies had recovered since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The fourth quarter rise in government bond yields took their valuations much closer to our estimate of fair value. The various commodity complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
For the reporting period Invesco Diversified Dividend Fund, Invesco High Yield Fund, Invesco Select Real Estate Income Fund and Invesco Core Bond Fund contributed the most to Fund performance of all the underlying funds, while, at NAV, also outperforming their respective broad market benchmarks. While all of the underlying funds at NAV had positive absolute performance for 2010, Invesco Utilities Fund, Invesco Short Term Bond Fund, Invesco International Total Return Fund, Invesco International Core Equity Fund and Invesco U.S. Government Fund each detracted from relative performance.
Finally, we thank you for your continued commitment to Invesco Income Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF GARY WENDLER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886306.jpg)
Gary Wendler
Head of Product Development and Investment Performance/ Risk, is manager of Invesco Income Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
Head of Product Development and Investment Performance/ Risk, is manager of Invesco Income Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
5 | Invesco Income Allocation Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund and index data from 10/31/05
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886307.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
6 | Invesco Income Allocation Fund |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (10/31/05) | 3.63 | % | ||||||
5 | Years | 3.27 | ||||||
1 | Year | 3.99 | ||||||
Class B Shares | ||||||||
Inception (10/31/05) | 3.83 | % | ||||||
5 | Years | 3.34 | ||||||
1 | Year | 4.19 | ||||||
Class C Shares | ||||||||
Inception (10/31/05) | 3.99 | % | ||||||
5 | Years | 3.68 | ||||||
1 | Year | 8.18 | ||||||
Class R Shares | ||||||||
Inception (10/31/05) | 4.52 | % | ||||||
5 | Years | 4.22 | ||||||
1 | Year | 9.74 | ||||||
Class Y Shares | ||||||||
Inception | 4.90 | % | ||||||
5 | Years | 4.58 | ||||||
1 | Year | 10.42 | ||||||
Institutional Class Shares | ||||||||
Inception (10/31/05) | 5.03 | % | ||||||
5 | Years | 4.73 | ||||||
1 | Year | 10.30 |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 0.90%, 1.65%, 1.65%, 1.15%, 0.65% and 0.66%, respectively.1,2 The total annual Fund
operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.36%, 2.11%, 2.11%, 1.61%, 1.11% and 1.01%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses, performance would have been lower.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.60% for Invesco Income Allocation Fund. |
7 | Invesco Income Allocation Fund |
Invesco Income Allocation Fund’s investment objective is current income and, secondarily, growth of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | Certain underlying funds may engage in frequent trading of portfolio securities. Active trading results in added expenses and may result in a lower return and increased tax liability. | |
n | The issuer of instruments in which the underlying fund invests may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating. | |
n | Derivatives may be more difficult to purchase, sell or value than other investments and may be subject to market, interest rate, credit, leverage, counterparty and management risks. An underlying fund investing in a derivative could lose more than the cash amount invested or incur higher taxes. Over-the-counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the Fund. | |
n | Securities issued by foreign companies and governments located in developing countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduc- |
tion of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries. | ||
n | Dollar roll transactions involve the risk that the market value and yield of the securities retained by the underlying fund may decline below the price of the mortgage-related securities sold by the underlying fund that it is obligated to repurchase. | |
n | An investment by the Fund in exchange-traded funds (ETFs) generally presents the same primary risks as an investment in a mutual fund. In addition, ETFs may be subject to the following: a discount of the ETF’s shares to its net asset value; failure to develop an active trading market for the ETF’s shares; the listing exchange halting trading of the ETF’s shares; failure of the ETF’s shares to track the referenced index; and holding troubled securities in the referenced index. ETFs may involve duplication of management fees and certain other expenses, as the fund indirectly bears its proportionate share of any expenses paid by the ETFs in which it invests. Further, certain of the ETFs in which the Fund may invest are leveraged. The more a fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. | |
n | An underlying fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
n | The Fund’s performance depends on the underlying funds in which it invests, and it is subject to the risks of the underlying funds. Market fluctuations may change the target weightings in the underlying funds. The underlying |
funds may change their investment objectives, policies or practices and may not achieve their investment objectives, all of which may cause the Fund to withdraw its investments therein at a disadvantageous time. | ||
n | Junk bonds involve a greater risk of default or price changes due to changes in the credit quality of the issuer. The values of junk bonds fluctuate more than those of high- quality bonds in response to company, political, regulatory or economic developments. Values of junk bonds can decline significantly over short periods of time. | |
n | To the extent an underlying fund invests in securities issued or guaranteed by companies in the banking and financial services industries, the fund’s performance will depend on the overall condition of those industries, which may be affected by the following factors: the supply of short-term financing; changes in government regulation and interest rates; and overall economy. | |
n | Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. | |
Specific bonds differ in their sensitivity to changes in interest rates depending on their individual characteristics, including duration. | ||
n | Leverage created from borrowing or certain types of transactions or instruments, including derivatives, may impair an underlying fund’s liquidity, cause it to liquidate positions at an unfavorable time, increase volatility or otherwise not achieve its intended objective. | |
n | An underlying fund may invest a large percentage of its assets in a limited number of securities or other instruments, which could negatively affect the value of the Fund. | |
n | An underlying fund may hold illiquid securities that it is unable to sell at the preferred time or price and could lose its entire investment in such securities. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | ALAAX | |
Class B Shares | BLIAX | |
Class C Shares | CLIAX | |
Class R Shares | RLIAX | |
Class Y Shares | ALAYX | |
Institutional Class Shares | ILAAX |
8 | Invesco Income Allocation Fund |
n | The investment techniques and risk analysis used by the Fund’s and the underlying funds’ portfolio managers may not produce the desired results. | |
n | The prices of and the income generated by the underlying funds’ securities may decline in response to, among other things, investor sentiment; general economic and market conditions; regional or global instability; and currency and interest rate fluctuations. | |
n | Certain of the underlying funds may invest in mortgage and asset-backed securities that are subject to prepayment or call risk, which is the risk that the borrower’s payments may be received earlier or later than expected due to changes in prepayment rates on underlying loans. Securities may be prepaid at a price less than the original purchase value. | |
n | Certain of the underlying funds are non-diversified and can invest a greater portion of their assets in a single issuer. A change in the value of the issuer could affect the value of an underlying fund more than if it was a diversified fund. | |
n | An issuer’s ability to prepay principal on a loan or debt security prior to maturity can limit an underlying fund’s potential gains. Prepayments may require the underlying fund to replace the loan or debt security with a lower yielding security, adversely affecting the Fund’s yield. | |
n | Investments in real estate related instruments may be affected by economic, legal, cultural, environmental or technological factors that affect property values, rents or occupancies of real estate related to an underlying fund’s holdings. | |
n | Reinvestment risk is the risk that a bond’s cash flows (coupon income and principal repayment) will be reinvested at an interest rate below that on the original bond. | |
n | Reverse repurchase agreements involve the risk that the market value of securities to be repurchased may decline below the repurchase price or that the other party may default on its obligation, resulting in delays, additional costs or the restriction of proceeds from the sale. | |
n | Certain of the underlying funds’ investments are concentrated in a |
comparatively narrow segment of the economy, which may make the underlying fund more volatile. | ||
n | An underlying fund may invest in obligations issued by U.S. government agencies and instrumentalities that may receive varying levels of support from the government, which could affect the Fund’s ability to recover should they default. | |
n | The following factors may affect an underlying fund’s investments in the utilities sector: governmental regulation, economic factors, ability of the issuer to obtain financing, prices of natural resources and risks associated with nuclear power. | |
n | Short sales may cause the Fund to repurchase a security at a higher price, thereby causing a loss. As there is no limit on how much the price of the security can increase, the Fund’s exposure is unlimited. |
About indexes used in this report
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Custom Income Allocation Index, created by Invesco to serve as a benchmark for Invesco Income Allocation Fund, is composed of the following indexes: Russell 3000®, MSCI EAFE®, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based on the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | |
n | The Lipper Mixed-Asset Target Allocation Conservative Funds Index is an unmanaged index considered representative of mixed-asset target allocation conservative funds tracked by Lipper. | |
n | The Russell 3000 Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. |
n | The FTSE NAREIT Equity REITs Index is an unmanaged index considered representative of U.S. REITs. | |
n | The Barclays Capital U.S. Universal Index represents the union of the U.S. Aggregate Index, the U.S. High-Yield Corporate Index, the 144A Index, the Eurodollar Index, the Emerging Markets Index, and the non-ERISA portion of the CMBS Index. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
9 | Invesco Income Allocation Fund |
Schedule of Investments
December 31, 2010
Invesco Income Allocation Fund
Schedule of Investments in Affiliated Issuers–99.99%(a)
Schedule of Investments in Affiliated Issuers–99.99%(a)
Change in | ||||||||||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||||||||||
% of Net | Value | Purchases | Proceeds | Appreciation | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | (Depreciation) | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Domestic Equity Funds–23.55% | ||||||||||||||||||||||||||||||||||||
Invesco Diversified Dividend Fund | 15.41 | % | $ | 12,238,160 | $ | 1,505,201 | $ | (2,297,859 | ) | $ | 2,014,083 | $ | (514,837 | ) | $ | 291,904 | 1,055,852 | $ | 12,944,748 | |||||||||||||||||
Invesco Utilities Fund | 8.14 | % | 6,220,628 | 1,175,108 | (781,733 | ) | 411,194 | (183,234 | ) | 190,069 | 457,045 | 6,841,963 | ||||||||||||||||||||||||
Total Domestic Equity Funds | 18,458,788 | 2,680,309 | (3,079,592 | ) | 2,425,277 | (698,071 | ) | 481,973 | 1,512,897 | 19,786,711 | ||||||||||||||||||||||||||
Fixed-Income Funds–63.95% | ||||||||||||||||||||||||||||||||||||
Invesco Core Bond Fund | 16.81 | % | 12,882,293 | 2,580,944 | (1,703,775 | ) | 632,071 | (266,521 | ) | 607,209 | 1,571,192 | 14,125,012 | ||||||||||||||||||||||||
Invesco Floating Rate Fund | 6.99 | % | 5,540,695 | 859,066 | (819,177 | ) | 465,389 | (173,831 | ) | 292,850 | 758,675 | 5,872,142 | ||||||||||||||||||||||||
Invesco High Yield Fund | 14.42 | % | 11,785,310 | 2,068,555 | (2,364,370 | ) | 933,034 | (309,720 | ) | 936,141 | 2,856,795 | 12,112,809 | ||||||||||||||||||||||||
Invesco Income Fund | 8.38 | % | 6,464,366 | 1,149,925 | (849,508 | ) | 509,712 | (230,741 | ) | 359,479 | 1,403,138 | 7,043,754 | ||||||||||||||||||||||||
Invesco International Total Return Fund | 5.07 | % | 3,705,509 | 1,211,571 | (487,187 | ) | (207,581 | ) | 103,839 | 270,255 | 388,682 | 4,259,952 | ||||||||||||||||||||||||
Invesco Short Term Bond Fund | 5.67 | % | 4,270,475 | 1,024,682 | (565,416 | ) | 103,895 | (73,490 | ) | 120,893 | 547,143 | 4,760,146 | ||||||||||||||||||||||||
Invesco U.S. Government Fund | 6.61 | % | 4,921,220 | 1,207,156 | (661,616 | ) | 54,643 | 30,734 | 192,098 | 619,658 | 5,552,137 | |||||||||||||||||||||||||
Total Fixed-Income Funds | 49,569,868 | 10,101,899 | (7,451,049 | ) | 2,491,163 | (919,730 | ) | 2,778,925 | 8,145,283 | 53,725,952 | ||||||||||||||||||||||||||
Foreign Equity Funds–5.41% | ||||||||||||||||||||||||||||||||||||
Invesco International Core Equity Fund | 5.41 | % | 3,964,315 | 865,692 | (501,382 | ) | 439,650 | (220,753 | ) | 86,296 | 408,582 | 4,547,522 | ||||||||||||||||||||||||
Real Estate Funds–7.08% | ||||||||||||||||||||||||||||||||||||
Invesco Select Real Estate Income Fund | 7.08 | % | 6,056,396 | 809,104 | (1,716,842 | ) | 1,163,064 | (366,203 | ) | 242,899 | 729,511 | 5,945,519 | ||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $85,363,223) | 99.99 | % | 78,049,367 | 14,457,004 | (12,748,865 | ) | 6,519,154 | (2,204,757 | )(b) | 3,590,093 | 84,005,704 | |||||||||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | 0.01 | % | 8,800 | |||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 84,014,504 | ||||||||||||||||||||||||||||||||
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Includes $66,199 of capital gains from Invesco International Total Return Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Income Allocation Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments in affiliated underlying funds, at value (Cost $85,363,223) | $ | 84,005,704 | ||
Receivable for: | ||||
Fund shares sold | 150,411 | |||
Dividends from affiliated underlying funds | 132 | |||
Investment for trustee deferred compensation and retirement plans | 10,605 | |||
Other assets | 38,213 | |||
Total assets | 84,205,065 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased — affiliated underlying funds | 24,629 | |||
Fund shares reacquired | 49,392 | |||
Accrued fees to affiliates | 68,756 | |||
Accrued other operating expenses | 33,145 | |||
Trustee deferred compensation and retirement plans | 14,639 | |||
Total liabilities | 190,561 | |||
Net assets applicable to shares outstanding | $ | 84,014,504 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 96,832,986 | ||
Undistributed net investment income | 236,264 | |||
Undistributed net realized gain (loss) | (11,697,227 | ) | ||
Unrealized appreciation (depreciation) | (1,357,519 | ) | ||
$ | 84,014,504 | |||
Net Assets: | ||||
Class A | $ | 55,555,928 | ||
Class B | $ | 6,810,670 | ||
Class C | $ | 19,801,753 | ||
Class R | $ | 1,077,745 | ||
Class Y | $ | 757,377 | ||
Institutional Class | $ | 11,031 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 5,761,129 | |||
Class B | 705,586 | |||
Class C | 2,051,253 | |||
Class R | 111,681 | |||
Class Y | 78,513 | |||
Institutional Class | 1,144 | |||
Class A: | ||||
Net asset value per share | $ | 9.64 | ||
Maximum offering price per share | ||||
(Net asset value of $9.64 divided by 94.50%) | $ | 10.20 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 9.65 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 9.65 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 9.65 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 9.65 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 9.64 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Income Allocation Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends from affiliated underlying funds | $ | 3,590,093 | ||
Other income | 169 | |||
Total investment income | 3,590,262 | |||
Expenses: | ||||
Administrative services fees | 50,000 | |||
Custodian fees | 7,955 | |||
Distribution fees: | ||||
Class A | 128,368 | |||
Class B | 66,249 | |||
Class C | 203,879 | |||
Class R | 4,408 | |||
Transfer agent fees — A, B, C, R and Y | 133,271 | |||
Transfer agent fees — Institutional | 8 | |||
Trustees’ and officers’ fees and benefits | 17,857 | |||
Registration and filing fees | 68,675 | |||
Other | 59,204 | |||
Total expenses | 739,874 | |||
Less: Expenses reimbursed and expense offset arrangement(s) | (313,124 | ) | ||
Net expenses | 426,750 | |||
Net investment income | 3,163,512 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) on sales of affiliated underlying fund shares | (2,270,956 | ) | ||
Net realized gain from distributions of affiliated underlying fund shares | 66,199 | |||
Net realized gain (loss) from affiliated underlying fund shares | (2,204,757 | ) | ||
Change in net unrealized appreciation of affiliated underlying fund shares | 6,519,154 | |||
Net gain from affiliated underlying funds | 4,314,397 | |||
Net increase in net assets resulting from operations | $ | 7,477,909 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Income Allocation Fund
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 3,163,512 | $ | 3,356,321 | ||||
Net realized gain (loss) | (2,204,757 | ) | (4,968,204 | ) | ||||
Change in net unrealized appreciation | 6,519,154 | 14,968,944 | ||||||
Net increase in net assets resulting from operations | 7,477,909 | 13,357,061 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (2,117,104 | ) | (2,237,128 | ) | ||||
Class B | (220,994 | ) | (270,350 | ) | ||||
Class C | (675,031 | ) | (792,754 | ) | ||||
Class R | (35,041 | ) | (25,524 | ) | ||||
Class Y | (24,386 | ) | (19,252 | ) | ||||
Institutional Class | (463 | ) | (540 | ) | ||||
Total distributions from net investment income | (3,073,019 | ) | (3,345,548 | ) | ||||
Share transactions–net: | ||||||||
Class A | 3,325,615 | (912,208 | ) | |||||
Class B | (121,734 | ) | (1,466,926 | ) | ||||
Class C | (2,195,003 | ) | (1,093,605 | ) | ||||
Class R | 309,294 | 222,892 | ||||||
Class Y | 273,738 | 166,277 | ||||||
Institutional Class | 331 | (3,183 | ) | |||||
Net increase (decrease) in net assets resulting from share transactions | 1,592,241 | (3,086,753 | ) | |||||
Net increase in net assets | 5,997,131 | 6,924,760 | ||||||
Net assets: | ||||||||
Beginning of year | 78,017,373 | 71,092,613 | ||||||
End of year (includes undistributed net investment income of $236,264 and $145,771, respectively) | $ | 84,014,504 | $ | 78,017,373 | ||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Income Allocation Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is current income and, secondarily, growth of capital. The Fund is a “fund of funds,” in that it invests in the Institutional Class of other mutual funds (“underlying funds”) advised by Invesco Advisers, Inc. (the “Adviser” or “Invesco”). The Adviser may change the Fund’s asset class allocations, the underlying funds or the target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund’s accounting policies are outlined in the underlying fund’s financial statements and are available upon request.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other
13 Invesco Income Allocation Fund
Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with valuation policy of such fund. The policies of underlying funds affiliated with the funds as a result of having the same investment advisor are set forth below. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Senior secured floating rate loans and senior secured floating rate debt securities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from ordinary income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. |
14 Invesco Income Allocation Fund
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Distributions — Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
D. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
E. | Expenses — Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. | |
Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | ||
F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco indirectly as a shareholder of the underlying funds.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2012, to reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares to 0.28%, 1.03%, 1.03%, 0.53%, 0.03% and 0.03% of average daily net assets, respectively. In determining Invesco’s obligation to reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are also excluded in determining such obligation. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012.
For the year ended December 31, 2010, the Adviser reimbursed fund level expenses of $179,704 and reimbursed class level expenses of $85,564, $11,040, $33,974, $1,469, $877 and $8 of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively.
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of the Fund in the amount of $141.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations
15 Invesco Income Allocation Fund
approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $21,460 in front-end sales commissions from the sale of Class A shares and $1, $10,988 and $2,251 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
The underlying funds pay no distribution fees and the Fund pays no sales loads or other similar compensation to IDI for acquiring underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 84,005,704 | $ | — | $ | — | $ | 84,005,704 | ||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended December 31, 2010, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $347.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended December 31, 2010, the Fund paid legal fees of $2,665 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
16 Invesco Income Allocation Fund
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 3,073,019 | $ | 3,345,548 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 249,945 | ||
Net unrealized appreciation (depreciation) — investments | (8,630,330 | ) | ||
Temporary book/tax differences | (13,682 | ) | ||
Capital loss carryforward | (4,424,415 | ) | ||
Shares of beneficial interest | 96,832,986 | |||
Total net assets | $ | 84,014,504 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 1,851,625 | ||
December 31, 2017 | 2,118,568 | |||
December 31, 2018 | 454,222 | |||
Total capital loss carryforward | $ | 4,424,415 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $14,457,004 and $12,748,865, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 1,835,557 | ||
Aggregate unrealized (depreciation) of investment securities | (10,465,887 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (8,630,330 | ) | |
Cost of investments for tax purposes is $92,636,034. |
17 Invesco Income Allocation Fund
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||
Year ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 1,701,479 | $ | 15,997,414 | 1,545,536 | $ | 12,867,824 | ||||||||||
Class B | 289,423 | 2,714,608 | 219,021 | 1,817,135 | ||||||||||||
Class C | 355,379 | 3,335,373 | 738,508 | 6,084,823 | ||||||||||||
Class R | 43,661 | 412,075 | 36,384 | 307,472 | ||||||||||||
Class Y | 37,440 | 361,393 | 29,493 | 240,316 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 190,356 | 1,779,503 | 222,610 | 1,848,069 | ||||||||||||
Class B | 21,027 | 196,766 | 28,818 | 238,250 | ||||||||||||
Class C | 60,937 | 570,120 | 78,132 | 649,015 | ||||||||||||
Class R | 3,741 | 35,041 | 2,967 | 24,844 | ||||||||||||
Class Y | 2,348 | 21,989 | 2,216 | 18,704 | ||||||||||||
Institutional Class | 36 | 331 | 65 | 540 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 115,582 | 1,083,978 | 193,059 | 1,576,358 | ||||||||||||
Class B | (115,576 | ) | (1,083,978 | ) | (193,011 | ) | (1,576,358 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (1,657,959 | ) | (15,535,280 | ) | (2,079,211 | ) | (17,204,459 | ) | ||||||||
Class B | (208,942 | ) | (1,949,130 | ) | (237,900 | ) | (1,945,953 | ) | ||||||||
Class C | (648,251 | ) | (6,100,496 | ) | (963,748 | ) | (7,827,443 | ) | ||||||||
Class R | (14,612 | ) | (137,822 | ) | (13,218 | ) | (109,424 | ) | ||||||||
Class Y | (11,595 | ) | (109,644 | ) | (10,888 | ) | (92,743 | ) | ||||||||
Institutional Class | — | — | (459 | ) | (3,723 | ) | ||||||||||
Net increase (decrease) in share activity | 164,474 | $ | 1,592,241 | (401,626 | ) | $ | (3,086,753 | ) | ||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 27% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
18 Invesco Income Allocation Fund
NOTE 10—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income | unrealized) | operations | income | gains | Distributions | of period | return(a) | (000s omitted) | absorbed(b) | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.13 | $ | 0.40 | (d) | $ | 0.50 | $ | 0.90 | $ | (0.39 | ) | $ | — | $ | (0.39 | ) | $ | 9.64 | 10.02 | % | $ | 55,556 | 0.28 | %(e) | 0.67 | %(e) | 4.22 | %(e) | 16 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 7.94 | 0.41 | (d) | 1.19 | 1.60 | (0.41 | ) | — | (0.41 | ) | 9.13 | 20.80 | 49,394 | 0.28 | 0.74 | 4.94 | 20 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.60 | 0.55 | (d) | (2.46 | ) | (1.91 | ) | (0.55 | ) | (0.20 | ) | (0.75 | ) | 7.94 | (18.88 | ) | 43,926 | 0.28 | 0.67 | 5.69 | 27 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 10.85 | 0.54 | (d) | (0.17 | ) | 0.37 | (0.47 | ) | (0.15 | ) | (0.62 | ) | 10.60 | 3.40 | 60,193 | 0.28 | 0.70 | 4.92 | 10 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.12 | 0.39 | 0.75 | 1.14 | (0.39 | ) | (0.02 | ) | (0.41 | ) | 10.85 | 11.48 | 21,022 | 0.29 | 1.96 | 4.86 | 21 | |||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.13 | 0.33 | (d) | 0.51 | 0.84 | (0.32 | ) | — | (0.32 | ) | 9.65 | 9.31 | 6,811 | 1.03 | (e) | 1.42 | (e) | 3.47 | (e) | 16 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.95 | 0.35 | (d) | 1.18 | 1.53 | (0.35 | ) | — | (0.35 | ) | 9.13 | 19.74 | 6,573 | 1.03 | 1.49 | 4.19 | 20 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.61 | 0.48 | (d) | (2.46 | ) | (1.98 | ) | (0.48 | ) | (0.20 | ) | (0.68 | ) | 7.95 | (19.46 | ) | 7,177 | 1.03 | 1.42 | 4.94 | 27 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 10.86 | 0.46 | (d) | (0.17 | ) | 0.29 | (0.39 | ) | (0.15 | ) | (0.54 | ) | 10.61 | 2.62 | 11,412 | 1.03 | 1.45 | 4.17 | 10 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.12 | 0.31 | 0.76 | 1.07 | (0.31 | ) | (0.02 | ) | (0.33 | ) | 10.86 | 10.74 | 6,018 | 1.04 | 2.71 | 4.11 | 21 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.14 | 0.33 | (d) | 0.50 | 0.83 | (0.32 | ) | — | (0.32 | ) | 9.65 | 9.18 | 19,802 | 1.03 | (e) | 1.42 | (e) | 3.47 | (e) | 16 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.95 | 0.35 | (d) | 1.19 | 1.54 | (0.35 | ) | — | (0.35 | ) | 9.14 | 19.87 | 20,859 | 1.03 | 1.49 | 4.19 | 20 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.61 | 0.48 | (d) | (2.46 | ) | (1.98 | ) | (0.48 | ) | (0.20 | ) | (0.68 | ) | 7.95 | (19.47 | ) | 19,324 | 1.03 | 1.42 | 4.94 | 27 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 10.86 | 0.46 | (d) | (0.17 | ) | 0.29 | (0.39 | ) | (0.15 | ) | (0.54 | ) | 10.61 | 2.62 | 25,286 | 1.03 | 1.45 | 4.17 | 10 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.12 | 0.31 | 0.76 | 1.07 | (0.31 | ) | (0.02 | ) | (0.33 | ) | 10.86 | 10.74 | 9,905 | 1.04 | 2.71 | 4.11 | 21 | |||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.13 | 0.37 | (d) | 0.51 | 0.88 | (0.36 | ) | — | (0.36 | ) | 9.65 | 9.86 | 1,078 | 0.53 | (e) | 0.92 | (e) | 3.97 | (e) | 16 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.95 | 0.39 | (d) | 1.18 | 1.57 | (0.39 | ) | — | (0.39 | ) | 9.13 | 20.34 | 721 | 0.53 | 0.99 | 4.69 | 20 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.61 | 0.52 | (d) | (2.45 | ) | (1.93 | ) | (0.53 | ) | (0.20 | ) | (0.73 | ) | 7.95 | (19.06 | ) | 419 | 0.53 | 0.92 | 5.44 | 27 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 10.86 | 0.51 | (d) | (0.17 | ) | 0.34 | (0.44 | ) | (0.15 | ) | (0.59 | ) | 10.61 | 3.14 | 394 | 0.53 | 0.95 | 4.67 | 10 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.11 | 0.43 | 0.70 | 1.13 | (0.36 | ) | (0.02 | ) | (0.38 | ) | 10.86 | 11.41 | 107 | 0.54 | 2.21 | 4.61 | 21 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.13 | 0.42 | (d) | 0.51 | 0.93 | (0.41 | ) | — | (0.41 | ) | 9.65 | 10.42 | 757 | 0.03 | (e) | 0.42 | (e) | 4.47 | (e) | 16 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.94 | 0.44 | (d) | 1.18 | 1.62 | (0.43 | ) | — | (0.43 | ) | 9.13 | 21.10 | 459 | 0.03 | 0.49 | 5.19 | 20 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(f) | 8.93 | 0.12 | (d) | (0.94 | ) | (0.82 | ) | (0.17 | ) | — | (0.17 | ) | 7.94 | (9.14 | ) | 234 | 0.03 | (g) | 0.57 | (g) | 5.94 | (g) | 27 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.13 | 0.42 | (d) | 0.50 | 0.92 | (0.41 | ) | — | (0.41 | ) | 9.64 | 10.30 | 11 | 0.03 | (e) | 0.33 | (e) | 4.47 | (e) | 16 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 7.94 | 0.43 | (d) | 1.19 | 1.62 | (0.43 | ) | — | (0.43 | ) | 9.13 | 21.10 | 10 | 0.04 | 0.39 | 5.18 | 20 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 10.60 | 0.56 | (d) | (2.44 | ) | (1.88 | ) | (0.58 | ) | (0.20 | ) | (0.78 | ) | 7.94 | (18.67 | ) | 12 | 0.04 | 0.36 | 5.93 | 27 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 10.85 | 0.57 | (d) | (0.17 | ) | 0.40 | (0.50 | ) | (0.15 | ) | (0.65 | ) | 10.60 | 3.66 | 10 | 0.03 | 0.33 | 5.17 | 10 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.11 | 0.53 | 0.65 | 1.18 | (0.42 | ) | (0.02 | ) | (0.44 | ) | 10.85 | 11.87 | 57 | 0.03 | 1.58 | 5.11 | 21 | |||||||||||||||||||||||||||||||||||||||
(a) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(b) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.60%, 0.62%, 0.71%, 0.69% and 0.64% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(d) | Calculated using average shares outstanding. | |
(e) | Ratios are based on average daily net assets (000’s) of $51,347, $6,625, $20,388, $882, $526 and $11 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of October 3, 2008 for Class Y shares. | |
(g) | Annualized. |
19 Invesco Income Allocation Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Income Allocation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Income Allocation Fund (formerly known as AIM Income Allocation Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
20 Invesco Income Allocation Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010, through December 31, 2010.
In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the underlying funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund’s total return.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,091.20 | $ | 1.48 | $ | 1,023.79 | $ | 1.43 | 0.28 | % | ||||||||||||||||||
B | 1,000.00 | 1,087.00 | 5.42 | 1,020.01 | 5.24 | 1.03 | ||||||||||||||||||||||||
C | 1,000.00 | 1,087.00 | 5.42 | 1,020.01 | 5.24 | 1.03 | ||||||||||||||||||||||||
R | 1,000.00 | 1,091.00 | 2.79 | 1,022.53 | 2.70 | 0.53 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,093.70 | 0.16 | 1,025.05 | 0.15 | 0.03 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,092.60 | 0.16 | 1,025.05 | 0.15 | 0.03 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
21 Invesco Income Allocation Fund
Tax Information |
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 17.72% | |||
Corporate Dividends Received Deduction* | 15.05% | |||
U.S. Treasury Obligations* | 2.49% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
22 Invesco Income Allocation Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(GRAPHICS)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886308.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines.
The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886300.gif)
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
INCAL-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco International Allocation Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
10 | Financial Statements | |
12 | Notes to Financial Statements | |
18 | Financial Highlights | |
19 | Auditor’s Report | |
20 | Fund Expenses | |
21 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILLIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886402.jpg)
Phillip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website — invesco.com/us — offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus — investment management — Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best — manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change — investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![(-s-Philip Taylor)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886403.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
2 Invesco International Allocation Fund
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886404.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![(-s- BRUCE L. CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886405.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 Invesco International Allocation Fund
Management’s Discussion of Fund Performance
Performance summary
For the year ended December 31, 2010, all share classes of Invesco International Allocation Fund, at net asset value, delivered double-digit gains, meaningfully outperforming the Fund’s broad market/style-specific benchmark, the MSCI EAFE Index. The Fund’s broad diversification across style, market-cap, developed and emerging markets enabled it to successfully navigate the volatile market environment.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 12.04 | % | ||
Class B Shares | 11.18 | |||
Class C Shares | 11.18 | |||
Class R Shares | 11.84 | |||
Class Y Shares | 12.29 | |||
Institutional Class Shares | 12.37 | |||
MSCI EAFE Index▼ (Broad Market/Style-Specific Index) | 7.75 | |||
Lipper International Multi-Cap Core Funds Index▼ (Peer Group Index) | 12.54 | |||
▼ | Lipper Inc. |
How we invest
The Fund offers investors convenient entry into international markets through a single, broadly diversified portfolio that has the flexibility to invest across investment styles (growth, value and core), market capitalizations (small and large), sectors and countries, both emerging and developed.
The resulting portfolio blends five unique, complementary and established funds — Invesco International Core Equity Fund, Invesco International Growth Fund, PowerShares International Dividend Achievers Portfolio, Invesco International Small Company Fund and Invesco Developing Markets Fund — to create a versatile core holding that provides broad international diversification. The underlying funds may use derivative instruments to implement their investment strategy.
We determine target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds in the portfolio are actively managed by their
respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio quarterly to maintain the target asset class allocations.
Market conditions and your Fund
After rallying for much of 2009 on prospects of improving global economic conditions, global equity markets faced headwinds in early 2010. Notably, several southern European economies, including Greece, Spain, Portugal and Italy, faced solvency concerns amid massive fiscal deficits. Although the U.S. economy returned to a positive growth rate in 2009, investors continued to be concerned about high unemployment and a still-weak housing market. Equity markets, however, seemed to shrug off some of the macroeconomic burdens that pulled them into double-digit losses
in the first half of 2010, ending the year with strong positive gains.
Looking to Asian markets, growth fundamentals remained stronger here than in the west. We saw marginal differences in stock valuations, with slight premiums in some areas.
Emerging markets, the biggest winners in 2010, saw exports slow down during the latter half of the period. The deceleration in exports was offset, however, by strong growth in retail and auto sales, as well as strong housing markets in emerging economies. The key driver for growth in domestic demand was low interest rates and underleveraged consumers.
Turning to Europe, European Central Bank (ECB) officials showed little sign they were willing to provide additional economic stimulus. As a result, we saw the slide in the euro’s value reverse during the first half of 2010. Since June, the euro appreciated by double digits versus the dollar, which sparked numerous headlines downplaying growth prospects for the eurozone economy.
Within this environment, each of the underlying funds in Invesco International Allocation Fund delivered positive, and in some cases double digit, returns contributing positively to the Fund’s absolute results. On a relative basis, four of the five underlying funds meaningfully outperformed the MSCI EAFE Index.
PowerShares International Dividend Achievers Portfolio was the largest contributor to Invesco International Allocation Fund’s overall return. PowerShares International Dividend Achievers Portfolio is designed to identify an international group of ADRs (American Depository Receipts) that have increased their annual dividend for five or more consecutive fiscal years. Over the period, the portfolio’s investment process helped deliver strong returns in both the financials and energy sectors, outperforming the MSCI EAFE Index and contributing to overall outperformance
Risk Allocation
By asset class
Target | Total Net Assets | |||||||
Asset Class | Allocation | As of 12/31/10 | ||||||
Emerging Markets | 5.00 | % | 5.12 | % | ||||
International/Global Blend | 35.00 | 34.98 | ||||||
International/Global Growth | 32.50 | 33.52 | ||||||
International/Global Value | 27.50 | 26.16 | ||||||
Cash Equivalents Plus Other Assets Less Liabilities | 0.00 | 0.22 |
Total Net Assets | $208.5 million |
4 Invesco International Allocation Fund
versus the index. Geographically, the portfolio’s meaningful exposure in the very strong performing Canadian market (a market not represented in the index) added to both absolute and relative outperformance.
Invesco International Growth Fund delivered positive returns and outperformed the MSCI EAFE Index. This fund’s investment process primarily focuses on bottom-up stock selection decisions. When the portfolio managers select individual stocks for the strategy they seek to identify those that offer attractive combinations of earnings growth, quality and valuation characteristics. Therefore, over the long term it is stock selection that drives the fund’s relative results. The fund at NAV outperformed the MSCI EAFE Index over the fiscal year. The fund’s allocations in Europe and Asia provided the largest positive contribution to this outperformance. Relative results also benefited from the fund’s exposure to strong performing emerging market stocks, a segment of the market not represented in the Index.
Invesco International Small Company Fund’s small-cap focus drove outperformance versus the large cap-oriented MSCI EAFE Index as small-caps continued to generally outperform their larger-cap peers over the period. Within this environment, the team’s bias for companies with well-capitalized balance sheets, excess return, free cash flow generation and pricing power remained unwavering. In addition, the fund’s nimble asset size lets the team invest in micro-cap companies, which often offer undiscovered and under-researched investment opportunities.
Invesco International Core Equity Fund is the largest allocation in International Allocation Fund. The fund invests primarily in stocks of mid- and large-cap foreign companies with a record of stable earnings and strong balance sheets. Although the fund was positioned well for the period it modestly underperformed the MSCI EAFE Index. Stock selection within the telecommunication services and information technology sectors made the largest contribution to the fund’s relative results. Stock selection and the fund’s underweight position in consumer discretionary and consumer staples detracted from relative performance, failing to keep pace with the benchmark’s very strong gains. Geographically, all international regions in the fund generated positive absolute performance. Asia/Pacific contributed the most to absolute returns, while Europe contributed the least on a relative basis. The fund also benefited from favorable Japanese stock selection throughout the period.
Invesco Developing Markets Fund is a dedicated emerging markets fund. Emerging markets, as a broad category, continued to perform strongly. The fund delivered positive returns over the period and meaningfully outperformed the MSCI EAFE Index. The fund’s allocations in the Asia/Pacific region provided the largest positive contribution to this relative outperformance, with exposure in smaller Southeast Asian markets leading the gains. Exposure to the strong performing mid- and small-cap segment of the market versus the index, which maintains a larger-cap bias, was also beneficial. Although the team still believes emerging markets are a very attractive long-term story, current market indicators led the team to be relatively cautious in the short term.
Invesco International Allocation Fund remains diversified across five complementary and established funds. The goal of this asset allocation is to create a portfolio we consider to be a versatile core holding that provides broad international diversification.
Over the past 12 months, the Fund, at net asset value, experienced double-digit returns. While we are pleased to provide shareholders with this strong performance, it would be imprudent for us to suggest that such a level of performance is sustainable over the long term.
We thank you for your continued investment in Invesco International Allocation Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF GARY WENDLER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886406.jpg)
Gary Wendler
Head of Product Development and Investment Performance/Risk, is manager of Invesco International Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
Head of Product Development and Investment Performance/Risk, is manager of Invesco International Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
5 Invesco International Allocation Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment — Oldest Share Classes since Inception
Fund and index data from 10/31/05
![(LINE-GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886407.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
6 Invesco International Allocation Fund
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (10/31/05) | 4.09 | % | ||||||
5 Years | 2.69 | |||||||
1 Year | 5.82 | |||||||
Class B Shares | ||||||||
Inception (10/31/05) | 4.29 | % | ||||||
5 Years | 2.74 | |||||||
1 Year | 6.18 | |||||||
Class C Shares | ||||||||
Inception (10/31/05) | 4.45 | % | ||||||
5 Years | 3.08 | |||||||
1 Year | 10.18 | |||||||
Class R Shares | ||||||||
Inception (10/31/05) | 4.99 | % | ||||||
5 Years | 3.60 | |||||||
1 Year | 11.84 | |||||||
Class Y Shares | ||||||||
Inception | 5.36 | % | ||||||
5 Years | 3.97 | |||||||
1 Year | 12.29 | |||||||
Institutional Class Shares | ||||||||
Inception (10/31/05) | 5.51 | % | ||||||
5 Years | 4.10 | |||||||
1 Year | 12.37 |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.34%, 2.09%, 2.09%, 1.59%, 1.09% and 1.08%, respectively. 1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.66%, 2.41%, 2.41%, 1.91%, 1.41% and 1.13%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent
deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses on the Fund’s Class A, B, C, R and Y shares, performance would have been lower.
A redemption fee of 2% will be imposed on certain redemptions or exchanges out of the Fund within 31 days of purchase. Exceptions to the redemption fee are listed in the Fund’s prospectus.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.88% for Invesco International Allocation Fund. |
continued from page 8
About indexes used in this report
n | The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. | |
n | The Lipper International Multi-Cap Core Funds Index is an unmanaged index considered representative of international multi-cap core funds tracked by Lipper. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net |
assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. |
n | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
7 Invesco International Allocation Fund
Invesco International Allocation Fund’s investment objective is long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | Certain underlying funds may engage in frequent trading of portfolio securities. Active trading results in added expenses and may result in a lower return and increased tax liability. | |
n | Derivatives may be more difficult to purchase, sell or value than other investments and may be subject to market, interest rate, credit, leverage, counterparty and management risks. An underlying fund investing in a derivative could lose more than the cash amount invested or incur higher taxes. Over-the-counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the Fund. | |
n | Securities issued by foreign companies and governments located in developing countries may be affected more negatively by inflation, devaluation of their currencies, higher transaction costs, delays in settlement, adverse political developments, the introduction of capital controls, withholding taxes, nationalization of private assets, expropriation, social unrest, war or lack of timely information than those in developed countries. |
n | An investment by the Fund in exchange-traded funds (ETFs) generally presents the same primary risks as an investment in a mutual fund. In addition, ETFs may be subject to the following: a discount of the ETF’s shares to its net asset value; failure to develop an active trading market for the ETF’s shares; the listing exchange halting trading of the ETF’s shares; failure of the ETF’s shares to track the referenced index; and holding troubled securities in the referenced index. ETFs may involve duplication of management fees and certain other expenses, as the fund indirectly bears its proportionate share of any expenses paid by the ETFs in which it invests. Further, certain of the ETFs in which each fund may invest are leveraged. The more a fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. | |
n | An underlying fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
n | The Fund’s performance depends on the underlying funds in which it invests, and it is subject to the risks of the underlying funds. Market fluctuations may change the target weightings in the underlying funds. The underlying funds may change their investment objectives, policies or practices and may not achieve their investment objectives, all of which may cause the fund to withdraw its investments therein at a disadvantageous time. | |
n | Junk bonds involve a greater risk of default or price changes due to changes in the credit quality of the issuer. The values of junk bonds fluctuate more than those of high- |
quality bonds in response to company, political, regulatory or economic developments. Values of junk bonds can decline significantly over short periods of time. | ||
n | The prices of initial public offering (IPO) securities fluctuate more than prices of equity securities of companies with longer trading histories. In addition, companies offering securities in IPOs may have less experienced management or limited operating histories. There can be no assurance that the Fund will have favorable IPO investment opportunities. | |
n | Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on their individual characteristics, including duration. | |
n | Leverage created from borrowing or certain types of transactions or instruments, including derivatives, may impair an underlying fund’s liquidity, cause it to liquidate positions at an unfavorable time, increase volatility or otherwise not achieve its intended objective. | |
n | An underlying fund may invest a large percentage of its assets in a limited number of securities or other instruments, which could negatively affect the value of the Fund. | |
n | The investment techniques and risk analysis used by the Fund’s and the underlying funds’ portfolio managers may not produce the desired results. | |
n | The prices of and the income generated by the underlying funds’ securities may decline in response to, among other things, investor sentiment; general economic and market conditions; regional or global instability; and currency and interest rate fluctuations. |
continued on page 7
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | AINAX | |||
Class B Shares | INABX | |||
Class C Shares | INACX | |||
Class R Shares | RINAX | |||
Class Y Shares | AINYX | |||
Institutional Class Shares | INAIX |
8 Invesco International Allocation Fund
Schedule of Investments
December 31, 2010
Invesco International Allocation Fund
Schedule of Investments in Affiliated Issuers–100.48%(a)
% of | Change in | |||||||||||||||||||||||||||||||||||
Net | Value | Purchases | Proceeds | Unrealized | Realized | Dividend | Shares | Value | ||||||||||||||||||||||||||||
Assets | 12/31/09 | at Cost | from Sales | Appreciation | Gain (Loss) | Income | 12/31/10 | 12/31/10 | ||||||||||||||||||||||||||||
Foreign Equity Funds–99.78% | ||||||||||||||||||||||||||||||||||||
Invesco Developing Markets Fund | 5.12 | % | $ | 11,800,029 | $ | 382,760 | $ | (3,404,094 | ) | $ | 1,760,378 | $ | 151,377 | $ | 104,546 | 322,753 | $ | 10,679,901 | ||||||||||||||||||
Invesco International Core Equity Fund | 34.98 | % | 75,611,068 | 7,668,442 | (13,194,666 | ) | 8,522,700 | (5,680,569 | ) | 1,384,604 | 6,552,289 | 72,926,975 | ||||||||||||||||||||||||
Invesco International Growth Fund | 22.39 | % | 49,610,643 | 1,819,560 | (9,351,906 | ) | 6,423,356 | (1,833,700 | ) | 614,717 | 1,672,686 | 46,667,953 | ||||||||||||||||||||||||
Invesco International Small Company Fund | 11.13 | % | 22,940,782 | 815,320 | (5,117,032 | ) | 8,589,684 | (4,030,307 | ) | 279,835 | 1,242,552 | 23,198,447 | ||||||||||||||||||||||||
PowerShares International Dividend Achievers Portfolio–ETF | 26.16 | % | 58,834,851 | 1,788,980 | (11,138,545 | ) | 7,245,501 | (2,198,740 | ) | 1,557,021 | 3,541,042 | 54,532,047 | ||||||||||||||||||||||||
Total Foreign Equity Fund | 218,797,373 | 12,475,062 | (42,206,243 | ) | 32,541,619 | (13,591,939 | ) | 3,940,723 | 13,331,322 | 208,005,323 | ||||||||||||||||||||||||||
Money Market Funds–0.70% | ||||||||||||||||||||||||||||||||||||
Liquid Assets Portfolio | 0.35 | % | 811,914 | 4,788,367 | (4,865,994 | ) | — | — | 310 | 734,287 | 734,287 | |||||||||||||||||||||||||
Premier Portfolio | 0.35 | % | 811,914 | 4,788,367 | (4,865,994 | ) | — | — | 145 | 734,287 | 734,287 | |||||||||||||||||||||||||
Total Money Market Funds | 1,623,828 | 9,576,734 | (9,731,988 | ) | — | — | 455 | 1,468,574 | 1,468,574 | |||||||||||||||||||||||||||
TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $231,842,117) | 100.48 | % | $ | 220,421,201 | $ | 22,051,796 | $ | (51,938,231 | ) | $ | 32,541,619 | $ | (13,591,939 | )(b) | $ | 3,941,178 | $ | 209,473,897 | ||||||||||||||||||
OTHER ASSETS LESS LIABILITIES | (0.48 | )% | (1,008,242 | ) | ||||||||||||||||||||||||||||||||
NET ASSETS | 100.00 | % | $ | 208,465,655 | ||||||||||||||||||||||||||||||||
Investment Abbreviations:
ETF | – Exchange-Traded Fund |
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by either having the same investment adviser or an investment adviser under common control with the Fund’s investment adviser. The Fund invests in Institutional Class shares of the mutual funds listed. | |
(b) | Includes $10,549 of capital gains from Invesco Developing Markets Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco International Allocation Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments in affiliated underlying funds, at value (Cost $231,842,117) | $ | 209,473,897 | ||
Receivable for: | ||||
Investments sold | 59,662 | |||
Fund shares sold | 358,075 | |||
Dividends | 30 | |||
Investment for trustee deferred compensation and retirement plans | 11,274 | |||
Other assets | 38,955 | |||
Total assets | 209,941,893 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,773 | |||
Fund shares reacquired | 359,309 | |||
Amount due custodian | 775,036 | |||
Accrued fees to affiliates | 271,302 | |||
Accrued other operating expenses | 43,000 | |||
Trustee deferred compensation and retirement plans | 25,818 | |||
Total liabilities | 1,476,238 | |||
Net assets applicable to shares outstanding | $ | 208,465,655 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 305,752,351 | ||
Undistributed net investment income | 2,596,084 | |||
Undistributed net realized gain (loss) | (77,514,560 | ) | ||
Unrealized appreciation (depreciation) | (22,368,220 | ) | ||
$ | 208,465,655 | |||
Net Assets: | ||||
Class A | $ | 140,375,361 | ||
Class B | $ | 17,336,284 | ||
Class C | $ | 40,020,345 | ||
Class R | $ | 5,679,437 | ||
Class Y | $ | 4,964,893 | ||
Institutional Class | $ | 89,335 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 13,901,513 | |||
Class B | 1,738,929 | |||
Class C | 4,014,977 | |||
Class R | 564,726 | |||
Class Y | 491,637 | |||
Institutional Class | 8,795 | |||
Class A: | ||||
Net asset value per share | $ | 10.10 | ||
Maximum offering price per share | ||||
(Net asset value of $10.10 divided by 94.50%) | $ | 10.69 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 9.97 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 9.97 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 10.06 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.10 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 10.16 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco International Allocation Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends from affiliated underlying funds | $ | 3,941,178 | ||
Other income | 184 | |||
Total investment income | 3,941,362 | |||
Expenses: | ||||
Administrative services fees | 50,000 | |||
Custodian fees | 8,637 | |||
Distribution fees: | ||||
Class A | 344,278 | |||
Class B | 172,868 | |||
Class C | 395,028 | |||
Class R | 24,760 | |||
Transfer agent fees — A, B, C, R and Y | 582,915 | |||
Transfer agent fees — Institutional | 45 | |||
Trustees’ and officers’ fees and benefits | 21,698 | |||
Other | 128,382 | |||
Total expenses | 1,728,611 | |||
Less: Expenses reimbursed and expense offset arrangement(s) | (425,354 | ) | ||
Net expenses | 1,303,257 | |||
Net investment income | 2,638,105 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) on sales of affiliated underlying fund shares | (13,602,488 | ) | ||
Net realized gain from distributions of affiliated underlying fund shares | 10,549 | |||
Net realized gain (loss) from affiliated underlying fund shares | (13,591,939 | ) | ||
Change in net unrealized appreciation of affiliated underlying fund shares | 32,541,619 | |||
Net gain from affiliated underlying funds | 18,949,680 | |||
Net increase in net assets resulting from operations | $ | 21,587,785 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco International Allocation Fund
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 2,638,105 | $ | 3,728,685 | ||||
Net realized gain (loss) | (13,591,939 | ) | (23,880,385 | ) | ||||
Change in net unrealized appreciation | 32,541,619 | 79,432,673 | ||||||
Net increase in net assets resulting from operations | 21,587,785 | 59,280,973 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (2,762,003 | ) | (3,356,382 | ) | ||||
Class B | (230,723 | ) | (220,910 | ) | ||||
Class C | (532,336 | ) | (480,815 | ) | ||||
Class R | (100,816 | ) | (87,625 | ) | ||||
Class Y | (110,839 | ) | (105,383 | ) | ||||
Institutional Class | (1,958 | ) | (1,758 | ) | ||||
Total distributions from net investment income | (3,738,675 | ) | (4,252,873 | ) | ||||
Share transactions–net: | ||||||||
Class A | (20,760,576 | ) | (9,083,036 | ) | ||||
Class B | (3,436,850 | ) | (3,498,215 | ) | ||||
Class C | (5,655,560 | ) | (3,950,138 | ) | ||||
Class R | 545,401 | 653,537 | ||||||
Class Y | 599,563 | 2,653,502 | ||||||
Institutional Class | 15,365 | 1,143 | ||||||
Net increase (decrease) in net assets resulting from share transactions | (28,692,657 | ) | (13,223,207 | ) | ||||
Net increase (decrease) in net assets | (10,843,547 | ) | 41,804,893 | |||||
Net assets: | ||||||||
Beginning of year | 219,309,202 | 177,504,309 | ||||||
End of year (includes undistributed net investment income of $2,596,084 and $3,696,654, respectively) | $ | 208,465,655 | $ | 219,309,202 | ||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco International Allocation Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital. The Fund is a “fund of funds,” in that it invests in the Institutional Class of other mutual funds (“underlying funds”) advised by Invesco Advisers, Inc. (the “Adviser” or “Invesco”). The Adviser may change the Fund’s asset class allocations, the underlying funds or the target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund’s accounting policies are outlined in the underlying fund’s financial statements and are available upon request.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other
12 Invesco International Allocation Fund
Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with valuation policy of such fund. The policies of underlying funds affiliated with the funds as a result of having the same investment advisor are set forth below. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from ordinary income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Distributions — Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
D. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to |
13 Invesco International Allocation Fund
federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | ||
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
E. | Expenses — Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. | |
Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | ||
F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
H. | Redemption Fees — The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions or exchanges of shares within 31 days of purchase. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco indirectly as a shareholder of the underlying funds.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares to 0.43%, 1.18%, 1.18%, 0.68%, 0.18% and 0.18%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are also excluded in determining such obligation. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012.
Acquired Fund Fees and Expenses are not fees and expenses incurred by the Funds directly but are fees and expenses, including management fees, of the investment companies in which the Funds invest. As a result, total annual fund operating expenses may exceed the expense limits above. You incur these expenses indirectly through the valuation of each Fund’s investment in those investment companies. The impact of the Acquired Fund Fees and Expenses are included in the total return of the Funds.
For the year ended December 31, 2010, the Adviser reimbursed class level expenses of $282,273, $35,433, $80,971, $10,150, $8,242 and $2 of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively.
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of the Fund in the amount of $615.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
14 Invesco International Allocation Fund
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $31,570 in front-end sales commissions from the sale of Class A shares and $4, $33,646 and $2,151 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
The underlying funds pay no distribution fees and the Fund pays no sales loads or other similar compensation to IDI for acquiring underlying fund shares.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 209,473,897 | $ | — | $ | — | $ | 209,473,897 | ||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangements are comprised of (1) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (2) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended December 31, 2010, the Fund received credits from these arrangements, which resulted in the reduction of the Fund’s total expenses of $7,668.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended December 31, 2010, the Fund paid legal fees of $2,996 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
15 Invesco International Allocation Fund
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 3,738,675 | $ | 4,252,873 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 2,620,884 | ||
Net unrealized appreciation (depreciation) — investments | (39,803,375 | ) | ||
Temporary book/tax differences | (24,801 | ) | ||
Post-October deferrals | (356,435 | ) | ||
Capital loss carryforward | (59,722,969 | ) | ||
Shares of beneficial interest | 305,752,351 | |||
Total net assets | $ | 208,465,655 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 27,122,541 | ||
December 31, 2017 | 23,283,288 | |||
December 31, 2018 | 9,317,140 | |||
Total capital loss carryforward | $ | 59,722,969 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $12,475,062 and $42,206,243, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 1,392,788 | ||
Aggregate unrealized (depreciation) of investment securities | (41,196,163 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (39,803,375 | ) | |
Cost of investments for tax purposes is $249,277,272. |
16 Invesco International Allocation Fund
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||
Years ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 2,512,749 | $ | 23,354,511 | 3,721,654 | $ | 29,109,177 | ||||||||||
Class B | 247,830 | 2,263,386 | 358,433 | 2,733,130 | ||||||||||||
Class C | 504,814 | 4,640,871 | 723,501 | 5,794,356 | ||||||||||||
Class R | 160,100 | 1,456,846 | 181,590 | 1,444,870 | ||||||||||||
Class Y | 205,549 | 2,005,439 | 422,278 | 3,095,182 | ||||||||||||
Institutional Class | 1,565 | 15,000 | 984 | 9,000 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 249,834 | 2,468,356 | 350,558 | 3,155,204 | ||||||||||||
Class B | 22,075 | 215,451 | 23,359 | 207,663 | ||||||||||||
Class C | 50,868 | 496,468 | 51,098 | 454,187 | ||||||||||||
Class R | 10,173 | 100,109 | 9,702 | 86,931 | ||||||||||||
Class Y | 9,894 | 97,748 | 10,595 | 95,252 | ||||||||||||
Institutional Class | 180 | 1,781 | 195 | 1,758 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 180,311 | 1,658,417 | 259,605 | 1,961,066 | ||||||||||||
Class B | (183,043 | ) | (1,658,417 | ) | (264,387 | ) | (1,961,066 | ) | ||||||||
Reacquired:(b) | ||||||||||||||||
Class A | (5,240,535 | ) | (48,241,860 | ) | (5,925,012 | ) | (43,308,483 | ) | ||||||||
Class B | (469,919 | ) | (4,257,270 | ) | (623,989 | ) | (4,477,942 | ) | ||||||||
Class C | (1,197,918 | ) | (10,792,899 | ) | (1,441,378 | ) | (10,198,681 | ) | ||||||||
Class R | (110,682 | ) | (1,011,554 | ) | (127,329 | ) | (878,264 | ) | ||||||||
Class Y | (162,435 | ) | (1,503,624 | ) | (64,457 | ) | (536,932 | ) | ||||||||
Institutional Class | (141 | ) | (1,416 | ) | (1,287 | ) | (9,615 | ) | ||||||||
Net increase (decrease) in share activity | (3,208,731 | ) | $ | (28,692,657 | ) | (2,334,287 | ) | $ | (13,223,207 | ) | ||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 30% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | Net of redemption fees of $5,852 and $5,629 allocated among the classes based on relative net assets of each class for the years ended December 31, 2010 and 2009, respectively. |
17 Invesco International Allocation Fund
NOTE 10—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | (losses) on | Dividends | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | Distributions | of period(b) | return(c) | (000s omitted) | absorbed(d) | absorbed | net assets | turnover(e) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 9.20 | $ | 0.14 | $ | 0.96 | $ | 1.10 | $ | (0.20 | ) | $ | — | $ | (0.20 | ) | $ | 10.10 | 12.04 | % | $ | 140,375 | 0.43 | %(f) | 0.64 | %(f) | 1.50 | %(f) | 6 | % | ||||||||||||||||||||||||||
Year ended 12/31/09 | 6.79 | 0.17 | 2.45 | 2.62 | (0.21 | ) | — | (0.21 | ) | 9.20 | 38.68 | 148,986 | 0.44 | 0.76 | 2.22 | 11 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.14 | 0.18 | (6.43 | ) | (6.25 | ) | (0.01 | ) | (1.09 | ) | (1.10 | ) | 6.79 | (44.27 | ) | 120,847 | 0.44 | 0.65 | 1.56 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 13.29 | 0.32 | 1.05 | 1.37 | (0.26 | ) | (0.26 | ) | (0.52 | ) | 14.14 | 10.37 | 280,140 | 0.44 | 0.60 | 2.25 | 2 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.71 | 0.42 | 2.41 | 2.83 | (0.23 | ) | (0.02 | ) | (0.25 | ) | 13.29 | 26.42 | 129,474 | 0.44 | 0.84 | 3.36 | 2 | |||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.09 | 0.07 | 0.94 | 1.01 | (0.13 | ) | — | (0.13 | ) | 9.97 | 11.18 | 17,336 | 1.18 | (f) | 1.39 | (f) | 0.75 | (f) | 6 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.68 | 0.11 | 2.40 | 2.51 | (0.10 | ) | — | (0.10 | ) | 9.09 | 37.68 | 19,284 | 1.19 | 1.51 | 1.47 | 11 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.06 | 0.09 | (6.37 | ) | (6.28 | ) | (0.01 | ) | (1.09 | ) | (1.10 | ) | 6.68 | (44.74 | ) | 17,571 | 1.19 | 1.40 | 0.81 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 13.23 | 0.21 | 1.05 | 1.26 | (0.17 | ) | (0.26 | ) | (0.43 | ) | 14.06 | 9.61 | 40,466 | 1.19 | 1.34 | 1.50 | 2 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.70 | 0.32 | 2.41 | 2.73 | (0.18 | ) | (0.02 | ) | (0.20 | ) | 13.23 | 25.50 | 21,839 | 1.19 | 1.59 | 2.61 | 2 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.09 | 0.07 | 0.94 | 1.01 | (0.13 | ) | — | (0.13 | ) | 9.97 | 11.18 | 40,020 | 1.18 | (f) | 1.39 | (f) | 0.75 | (f) | 6 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.68 | 0.11 | 2.40 | 2.51 | (0.10 | ) | — | (0.10 | ) | 9.09 | 37.68 | 42,315 | 1.19 | 1.51 | 1.47 | 11 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.05 | 0.09 | (6.36 | ) | (6.27 | ) | (0.01 | ) | (1.09 | ) | (1.10 | ) | 6.68 | (44.70 | ) | 35,579 | 1.19 | 1.40 | 0.81 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 13.23 | 0.21 | 1.04 | 1.25 | (0.17 | ) | (0.26 | ) | (0.43 | ) | 14.05 | 9.53 | 89,841 | 1.19 | 1.35 | 1.50 | 2 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.70 | 0.32 | 2.41 | 2.73 | (0.18 | ) | (0.02 | ) | (0.20 | ) | 13.23 | 25.50 | 39,826 | 1.19 | 1.59 | 2.61 | 2 | |||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.16 | 0.12 | 0.96 | 1.08 | (0.18 | ) | — | (0.18 | ) | 10.06 | 11.84 | 5,679 | 0.68 | (f) | 0.89 | (f) | 1.25 | (f) | 6 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.75 | 0.15 | 2.43 | 2.58 | (0.17 | ) | — | (0.17 | ) | 9.16 | 38.38 | 4,625 | 0.69 | 1.01 | 1.97 | 11 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.12 | 0.15 | (6.42 | ) | (6.27 | ) | (0.01 | ) | (1.09 | ) | (1.10 | ) | 6.75 | (44.48 | ) | 2,980 | 0.69 | 0.90 | 1.31 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 13.27 | 0.29 | 1.05 | 1.34 | (0.23 | ) | (0.26 | ) | (0.49 | ) | 14.12 | 10.16 | 4,211 | 0.69 | 0.85 | 2.00 | 2 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.71 | 0.39 | 2.40 | 2.79 | (0.21 | ) | (0.02 | ) | (0.23 | ) | 13.27 | 26.07 | 1,071 | 0.69 | 1.09 | 3.11 | 2 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.20 | 0.16 | 0.97 | 1.13 | (0.23 | ) | — | (0.23 | ) | 10.10 | 12.29 | 4,965 | 0.18 | (f) | 0.39 | (f) | 1.75 | (f) | 6 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.80 | 0.21 | 2.44 | 2.65 | (0.25 | ) | — | (0.25 | ) | 9.20 | 38.99 | 4,033 | 0.19 | 0.51 | 2.47 | 11 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(g) | 9.83 | 0.03 | (1.96 | ) | (1.93 | ) | (0.01 | ) | (1.09 | ) | (1.10 | ) | 6.80 | (19.74 | ) | 477 | 0.19 | (h) | 0.64 | (h) | 1.81 | (h) | 38 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 9.23 | 0.17 | 0.99 | 1.16 | (0.23 | ) | — | (0.23 | ) | 10.16 | 12.59 | 89 | 0.16 | (f) | 0.16 | (f) | 1.77 | (f) | 6 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 6.83 | 0.19 | 2.46 | 2.65 | (0.25 | ) | — | (0.25 | ) | 9.23 | 38.90 | 66 | 0.18 | 0.23 | 2.48 | 11 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 14.17 | 0.21 | (6.45 | ) | (6.24 | ) | (0.01 | ) | (1.09 | ) | (1.10 | ) | 6.83 | (44.11 | ) | 50 | 0.15 | 0.15 | 1.85 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 13.31 | 0.36 | 1.05 | 1.41 | (0.29 | ) | (0.26 | ) | (0.55 | ) | 14.17 | 10.66 | 64 | 0.17 | 0.17 | 2.52 | 2 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 10.72 | 0.44 | 2.41 | 2.85 | (0.24 | ) | (0.02 | ) | (0.26 | ) | 13.31 | 26.64 | 69 | 0.18 | 0.34 | 3.62 | 2 | |||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. | |
(c) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(d) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.88%, 0.90%, 0.98%, 0.96% and 1.01% for the years ended December 31, 2010, December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, respectively. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(f) | Ratios are based on average daily net assets (000’s) of $137,711, $17,287, $39,503, $4,952, $4,021 and $69 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(g) | Commencement date of October 3, 2008 for Class Y shares. | |
(h) | Annualized. |
18 Invesco International Allocation Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco International Allocation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 International Allocation Fund (formerly known as AIM International Allocation Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
19 Invesco International Allocation Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010, through December 31, 2010.
In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the underlying funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund’s total return.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,246.30 | $ | 2.43 | $ | 1,023.04 | $ | 2.19 | 0.43 | % | ||||||||||||||||||
B | 1,000.00 | 1,241.60 | 6.67 | 1,019.26 | 6.01 | 1.18 | ||||||||||||||||||||||||
C | 1,000.00 | 1,241.60 | 6.67 | 1,019.26 | 6.01 | 1.18 | ||||||||||||||||||||||||
R | 1,000.00 | 1,244.70 | 3.85 | 1,021.78 | 3.47 | 0.68 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,247.70 | 1.02 | 1,024.30 | 0.92 | 0.18 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,246.60 | 1.02 | 1,024.30 | 0.92 | 0.18 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
20 Invesco International Allocation Fund
Tax Information |
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 100% |
* | The above percentage is based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
21 Invesco International Allocation Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(IMAGE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886408.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.![(INVESCO AIM LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886409.gif)
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
![(INVESCO AIM LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886409.gif)
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
INTAL-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Mid Cap Core Equity Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
12 | Financial Statements | |
14 | Notes to Financial Statements | |
22 | Financial Highlights | |
23 | Auditor’s Report | |
24 | Fund Expenses | |
25 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886502.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886503.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2Invesco Mid Cap Core Equity Fund
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886504.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886505.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 Invesco Mid Cap Core Equity Fund
Management’s Discussion of Fund Performance
Performance summary
For the 12 months ended December 31, 2010, all share classes of Invesco Mid Cap Core Equity Fund, at net asset value, posted positive returns but lagged the Fund’s broad market and style-specific indexes, as measured by the S&P 500 Index and the Russell Midcap Index, respectively. The Fund’s significant underweight to the consumer discretionary sector, as well as to real estate investment trusts (REITs) in the financials sector, accounted for much of the Fund’s performance versus its style-specific benchmark. The Fund’s large allocation to cash detracted from relative returns in a rising market environment. Although the Fund’s overweight in the health care sector detracted from results relative to the benchmark, it was a positive contributor to the Fund’s absolute returns. The industrials and energy sectors also were strong contributors to the Fund’s absolute returns.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 12.52 | % | ||
Class B Shares | 11.65 | |||
Class C Shares | 11.68 | |||
Class R Shares | 12.21 | |||
Class Y Shares | 12.80 | |||
Institutional Class Shares | 12.94 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Russell Midcap Index▼ (Style-Specific Index) | 25.48 | |||
Lipper Mid-Cap Core Funds Index▼ (Peer Group Index) | 24.01 | |||
▼ | Lipper Inc. |
How we invest
We seek to manage your Fund using a conservative approach to mid-cap investing. We look to provide attractive upside participation during buoyant equity markets and a measure of downside protection during weak equity markets. As part of a well-diversified asset allocation
strategy, the Fund may complement more aggressive or cyclical investment strategies.
We conduct thorough fundamental research of companies and their businesses to gain a deeper
understanding of their prospects, growth potential and return on invested capital (ROIC)
understanding of their prospects, growth potential and return on invested capital (ROIC)
Portfolio Composition
By sector
Industrials | 17.5 | % | ||
Health Care | 16.7 | |||
Information Technology | 11.0 | |||
Financials | 10.9 | |||
Energy | 7.4 | |||
Materials | 5.7 | |||
Consumer Staples | 5.3 | |||
Consumer Discretionary | 5.2 | |||
Telecommunication Services | 1.0 | |||
Utilities | 0.9 | |||
Money Market Funds Plus Other Assets | ||||
Less Liabilities | 18.4 |
Total Net Assets | $2.9 billion | |||
Total Number of Holdings* | 87 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
Top 10 Equity Holdings*
1. | Symantec Corp. | 2.8 | % | |||||
2. | ITT Corp. | 2.6 | ||||||
3. | Safeway, Inc. | 2.4 | ||||||
4. | Northern Trust Corp. | 2.2 | ||||||
5. | Boston Scientific Corp. | 2.1 | ||||||
6. | Hologic, Inc. | 1.9 | ||||||
7. | Legg Mason, Inc. | 1.9 | ||||||
8. | Sigma-Aldrich Corp. | 1.6 | ||||||
9. | People’s United Financial, Inc. | 1.6 | ||||||
10. | Marsh & McLennan Cos., Inc. | 1.5 |
Top Five Industries*
1. | Aerospace & Defense | 6.6 | % | |||||
2. | Health Care Equipment | 5.8 | ||||||
3. | Life Sciences Tools & Services | 4.1 | ||||||
4. | Asset Management & Custody Banks | 4.0 | ||||||
5. | Oil & Gas Equipment & Services | 3.8 | ||||||
characteristics. The process we use to identify potential investments for the Fund includes three phases: financial analysis, business analysis and valuation analysis.
Financial analysis provides insights into historical returns on invested capital, a key indicator of business quality, as well as historical capital allocation, a key indicator of management quality. Business analysis, which evaluates the competitive landscape and any structural or cyclical business opportunities or threats, allows us to identify profit, key revenue and return drivers of the company. Both the financial and business analyses serve as a basis to construct valuation models that help us appraise a company’s fair value. In our valuation analysis, we use three primary techniques, including discounted cash flow, traditional valuation multiples and net asset value.
We consider selling a stock when it exceeds our target price, we have not seen a demonstrable improvement in fundamentals or a more compelling investment opportunity exists.
Market conditions and your Fund
Equity markets were choppy during the fiscal year as investors weighed the competing issues of solid corporate profits and soft macroeconomic data. Corporate earnings were largely positive but often were overshadowed by concerns about high unemployment, lack of consumer spending, soft housing data and the possibility of additional U.S. Federal Reserve accommodation. After rising through April, the major equity indexes sold off precipitously in May, as the sovereign debt crisis unfolded in the eurozone. Meanwhile, U.S. economic indicators remained weak, prompting fears of a double dip recession. Uncertainty created by the debt crisis, combined with subdued employment, consumer spending and housing data, added to concerns that the recovery was slowing to a sub-normal growth rate. Just as abruptly, however, the markets reversed course and rallied again during the last four months of the year on better economic news, ending the year with double-digit gains.
All 10 sectors within the S&P 500 Index posted gains for the year. The more economically sensitive sectors such as consumer discretionary, industrials and materials had the highest returns, while the less economically sensitive sectors, such as health care and utilities, had some of the lowest returns.
4 Invesco Mid Cap Core Equity Fund
Commercial-vehicle parts supplier WABCO Holdings was the largest contributor to results for the period, as shares of the company more than doubled during the year. The company’s earnings rose steadily throughout the year as growth in truck and bus production accelerated across the company’s geographic business segments. The company’s operations in Europe, South America, China, India and Brazil all posted double-digit growth. Both new vehicle technology and aftermarket sales increased, while operating margins improved as a result of the company’s prior fiscal year cost-cutting efforts.
Smith International, a diversified oilfield services company, was another contributor to results. The company’s merger with Schlumberger was finalized in the third quarter of 2010. We held onto our shares of the company through the end of the acquisition, and also retained a position in Schlumberger. Before the end of the fiscal year, we sold our holdings in Schlumberger.
H&R Block was the largest detractor from results as the company faced both cyclical and secular pressures. While the high unemployment rate lowered the number of tax filers, H&R Block continued to cede market share to less expensive online tax preparation providers and smaller independent providers. Shares also were negatively affected by the ongoing regulatory uncertainties with regard to mortgage repurchase liability. Before the end of the fiscal year, we sold our position in the company.
Medical device maker Boston Scientific was another key detractor. Early in the year, the company reported disappointing earnings results due to eroding margins. As a result, management reduced its growth outlook for 2010. In addition, sales for one of the firm’s ICD (implantable cardioverter-defibrillator) devices were halted during the period, thus weighing on the company’s shares. We believe, however, that the new management team has made progress turning the company around from its earlier weaknesses, and this has significantly added to our investment.
Maintaining a conservative approach is an enduring part of our investment philosophy. Amid the market’s volatility, we sought judicious long-term investments in high-quality businesses. During the year, we increased our exposure to the consumer discretionary, materials, financials and industrials sectors and reduced exposure to the health care and consumer staples sectors. These moves
increased the number of holdings in the Fund, and at the end of the year, the Fund’s largest sector weightings were in information technology, health care, financials and industrials.
Over the past year, we witnessed significant dissonance in the market between strong corporate earnings and weak or erratic macroeconomic data. At some point during this time, we believe we reached a crossroads in the current market cycle: in our view, we have likely entered a phase in which the economy is transitioning from recovery to possible expansion, or at least economic sustainability. Historically, as part of these transitions, market leadership typically shifts from early cycle to late cycle companies where profit stability, earnings visibility and positive – albeit modest – growth are favored. We believe this transition created good opportunities for investors to upgrade the quality of their equity exposure.
Regardless of market conditions, our goal remains the same: to serve as a conservative cornerstone for your mid-cap investment allocation, seeking to provide upside participation with a measure of downside protection, so that over a full-market cycle, we deliver strong investment results with reduced risk relative to the benchmark. As always, we would like to thank you for your continued investment in Invesco Mid Cap Core Equity Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF RONALD SLOAN)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886506.jpg)
Ronald Sloan
Chartered Financial Analyst, portfolio manager, is lead manager of Invesco Mid Cap Core Equity Fund. Mr. Sloan joined Invesco in 1998. He earned a B.S. in business administration and an M.B.A. from the University of Missouri.
Chartered Financial Analyst, portfolio manager, is lead manager of Invesco Mid Cap Core Equity Fund. Mr. Sloan joined Invesco in 1998. He earned a B.S. in business administration and an M.B.A. from the University of Missouri.
![(PHOTO OF DOUGLAS ASIELLO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886507.jpg)
Douglas Asiello
Chartered Financial Analyst, portfolio manager, is manager of Invesco Mid Cap Core Equity Fund. Mr. Asiello joined Invesco in 2001. He earned a B.A. in international relations and Spanish from Vanderbilt University and an M.B.A. with a concentration in finance from the Wharton School at the University of Pennsylvania. He also earned an M.A. in international management from the Joseph H. Lauder Institute of Management and International Studies.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Mid Cap Core Equity Fund. Mr. Asiello joined Invesco in 2001. He earned a B.A. in international relations and Spanish from Vanderbilt University and an M.B.A. with a concentration in finance from the Wharton School at the University of Pennsylvania. He also earned an M.A. in international management from the Joseph H. Lauder Institute of Management and International Studies.
![(PHOTO OF BRIAN NELSON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886508.jpg)
Brian Nelson
Chartered Financial Analyst, portfolio manager, is manager of Invesco Mid Cap Core Equity Fund. Mr. Nelson joined Invesco in 2004. He earned a B.A. from the University of California-Santa Barbara.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Mid Cap Core Equity Fund. Mr. Nelson joined Invesco in 2004. He earned a B.A. from the University of California-Santa Barbara.
5 Invesco Mid Cap Core Equity Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class since Inception
Index data from 5/31/87, Fund data from 6/9/87
Index data from 5/31/87, Fund data from 6/9/87
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886509.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if applicable, reflects Fund expenses and management fees; performance of a market index does not.
Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating changes in value during the early years shown in the chart. The vertical axis, the
one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on.
6 Invesco Mid Cap Core Equity Fund
Average Annual Total Returns
As of 12/31/10, including maximum applicable
sales charges
As of 12/31/10, including maximum applicable
sales charges
Class A Shares | ||||
Inception (6/9/87) | 10.94 | % | ||
10 Years | 5.47 | |||
5 Years | 4.16 | |||
1 Year | 6.33 | |||
Class B Shares | ||||
Inception (4/1/93) | 10.43 | % | ||
10 Years | 5.46 | |||
5 Years | 4.31 | |||
1 Year | 6.65 | |||
Class C Shares | ||||
Inception (5/3/99) | 8.44 | % | ||
10 Years | 5.30 | |||
5 Years | 4.56 | |||
1 Year | 10.68 | |||
Class R Shares | ||||
10 Years | 5.85 | % | ||
5 Years | 5.08 | |||
1 Year | 12.21 | |||
Class Y Shares | ||||
10 Years | 6.13 | % | ||
5 Years | 5.47 | |||
1 Year | 12.80 | |||
Institutional Class Shares | ||||
Inception (3/15/02) | 6.78 | % | ||
5 Years | 5.79 | |||
1 Year | 12.94 | |||
Class R shares incepted on June 3, 2002. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class R shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated.
Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares was 1.30%, 2.05%, 2.05%, 1.55%, 1.05% and 0.86%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses
7 Invesco Mid Cap Core Equity Fund
Invesco Mid Cap Core Equity Fund’s investment objective is long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class Y shares are available only to certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information |
Principal risks of investing in the Fund
n | Holding cash or cash equivalents may negatively affect performance. | |
n | The issuer of instruments in which the Fund invests may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating. | |
n | An investment by the Fund in ETFs generally presents the same primary risks as an investment in a mutual fund. In addition, ETFs may be subject to the following: a discount of the ETF’s shares to its net asset value; failure to develop an active trading market for the ETF’s shares; the listing exchange halting trading of the ETF’s shares; failure of the ETF’s shares to track the referenced index; and holding troubled securities in the referenced index. ETFs may involve duplication of management fees and certain other expenses, as the Fund indirectly bears its proportionate share of any expenses paid by the ETFs in which it invests. Further, certain of the ETFs in which each Fund may invest are leveraged. The more a Fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. |
n | The Fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
n | Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. | |
n | The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results. | |
n | Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments in the above factors and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller volumes, all of which may cause difficulty when establishing or closing a position at a desirable price. | |
n | The Fund may invest in obligations issued by U.S. government agencies and instrumentalities that may receive varying levels of support from the government, which could affect the fund’s ability to recover should they default. | |
n | The prices of and the income generated by the Fund’s securities may decline in response to, among other things, investor sentiment; general economic and market conditions; regional or global instability; and currency and interest rate fluctuations. |
About indexes used in this report
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. |
n | The Russell Midcap® Index is an unmanaged index considered representative of mid-cap stocks. The Russell Midcap Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | |
n | The Lipper Mid-Cap Core Funds Index is an unmanaged index considered representative of mid-cap core funds tracked by Lipper. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. | |
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally organized according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | GTAGX | |||
Class B Shares | GTABX | |||
Class C Shares | GTACX | |||
Class R Shares | GTARX | |||
Class Y Shares | GTAYX | |||
Institutional Class Shares | GTAVX |
8 Invesco Mid Cap Core Equity Fund
Schedule of Investments(a)
December 31, 2010
Shares | Value | |||||||
Common Stocks & Other Equity Interests–81.60% | ||||||||
Aerospace & Defense–6.56% | ||||||||
Alliant Techsystems Inc. | 564,507 | $ | 42,016,256 | |||||
Goodrich Corp. | 250,657 | 22,075,362 | ||||||
ITT Corp. | 1,434,341 | 74,743,509 | ||||||
Moog Inc.–Class A(b) | 660,849 | 26,301,790 | ||||||
Precision Castparts Corp. | 178,212 | 24,808,893 | ||||||
189,945,810 | ||||||||
Air Freight & Logistics–0.91% | ||||||||
Expeditors International of Washington, Inc. | 483,297 | 26,388,016 | ||||||
Apparel Retail–1.17% | ||||||||
American Eagle Outfitters, Inc. | 2,318,402 | 33,918,221 | ||||||
Apparel, Accessories & Luxury Goods–1.66% | ||||||||
Carter’s, Inc.(b) | 1,303,518 | 38,466,816 | ||||||
True Religion Apparel, Inc.(b) | 434,208 | 9,665,470 | ||||||
48,132,286 | ||||||||
Application Software–1.22% | ||||||||
Adobe Systems Inc.(b) | 1,152,121 | 35,462,284 | ||||||
Asset Management & Custody Banks–4.03% | ||||||||
Legg Mason, Inc. | 1,499,174 | 54,375,041 | ||||||
Northern Trust Corp. | 1,124,964 | 62,334,255 | ||||||
116,709,296 | ||||||||
Automotive Retail–0.25% | ||||||||
Pep Boys (The)-Manny, Moe & Jack | 533,982 | 7,171,378 | ||||||
Biotechnology–1.87% | ||||||||
Biogen Idec Inc.(b) | 521,467 | 34,964,362 | ||||||
Genzyme Corp.(b) | 269,150 | 19,163,480 | ||||||
54,127,842 | ||||||||
Brewers–0.90% | ||||||||
Molson Coors Brewing Co.–Class B | 521,018 | 26,149,894 | ||||||
Communications Equipment–1.37% | ||||||||
Motorola Solutions, Inc.(b) | 4,385,174 | 39,773,528 | ||||||
Computer & Electronics Retail–0.19% | ||||||||
Best Buy Co., Inc. | 160,308 | 5,496,961 | ||||||
Construction & Engineering–0.97% | ||||||||
Chicago Bridge & Iron Co. N.V.–New York Shares(b) | 854,076 | 28,099,101 | ||||||
Construction Materials–0.70% | ||||||||
CRH PLC (Ireland) | 972,410 | 20,153,246 | ||||||
Construction, Farm Machinery & Heavy Trucks–1.51% | ||||||||
Terex Corp.(b) | 1,169,430 | 36,299,107 | ||||||
WABCO Holdings Inc.(b) | 123,787 | 7,542,342 | ||||||
43,841,449 | ||||||||
Data Processing & Outsourced Services–0.77% | ||||||||
Western Union Co. | 1,207,168 | 22,417,110 | ||||||
Department Stores–0.45% | ||||||||
Macy’s, Inc. | 519,438 | 13,141,781 | ||||||
Electric Utilities–0.88% | ||||||||
Edison International | 663,708 | 25,619,129 | ||||||
Electrical Components & Equipment–1.68% | ||||||||
Cooper Industries PLC (Ireland) | 378,338 | 22,053,322 | ||||||
Thomas & Betts Corp.(b) | 549,277 | 26,530,079 | ||||||
48,583,401 | ||||||||
Electronic Manufacturing Services–0.65% | ||||||||
Molex Inc.(c) | 828,283 | 18,818,590 | ||||||
Environmental & Facilities Services–1.21% | ||||||||
Republic Services, Inc. | 1,172,621 | 35,014,463 | ||||||
Fertilizers & Agricultural Chemicals–0.67% | ||||||||
Scotts Miracle-Gro Co. (The)–Class A | 383,764 | 19,483,698 | ||||||
Food Retail–2.93% | ||||||||
Kroger Co. (The) | 738,934 | 16,522,564 | ||||||
Safeway Inc. | 3,041,836 | 68,410,892 | ||||||
84,933,456 | ||||||||
Health Care Equipment–5.78% | ||||||||
Boston Scientific Corp.(b) | 7,890,871 | 59,733,894 | ||||||
Hologic, Inc.(b) | 2,929,949 | 55,141,640 | ||||||
Teleflex Inc. | 183,282 | 9,862,404 | ||||||
Zimmer Holdings, Inc.(b) | 794,168 | 42,630,938 | ||||||
167,368,876 | ||||||||
Health Care Facilities–0.95% | ||||||||
Rhoen-Klinikum AG (Germany) | 710,567 | 15,648,133 | ||||||
VCA Antech, Inc.(b) | 503,055 | 11,716,151 | ||||||
27,364,284 | ||||||||
Health Care Services–2.88% | ||||||||
DaVita, Inc.(b) | 459,677 | 31,942,955 | ||||||
Laboratory Corp. of America Holdings(b) | 232,805 | 20,468,216 | ||||||
Quest Diagnostics Inc. | 576,093 | 31,091,739 | ||||||
83,502,910 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Mid Cap Core Equity Fund
Shares | Value | |||||||
Hypermarkets & Super Centers–1.51% | ||||||||
BJ’s Wholesale Club, Inc.(b) | 910,851 | $ | 43,629,763 | |||||
Industrial Conglomerates–0.52% | ||||||||
Tyco International Ltd. | 362,202 | 15,009,651 | ||||||
Industrial Machinery–1.71% | ||||||||
Actuant Corp.–Class A | 520,000 | 13,842,400 | ||||||
Parker Hannifin Corp. | 262,060 | 22,615,778 | ||||||
SPX Corp. | 183,191 | 13,096,325 | ||||||
49,554,503 | ||||||||
Insurance Brokers–1.53% | ||||||||
Marsh & McLennan Cos., Inc. | 1,617,276 | 44,216,326 | ||||||
Investment Banking & Brokerage–0.68% | ||||||||
Charles Schwab Corp. (The) | 1,145,841 | 19,605,340 | ||||||
Leisure Products–0.50% | ||||||||
Hasbro, Inc. | 306,166 | 14,444,912 | ||||||
Life & Health Insurance–0.71% | ||||||||
Torchmark Corp. | 344,161 | 20,560,178 | ||||||
Life Sciences Tools & Services–4.08% | ||||||||
Agilent Technologies, Inc.(b) | 996,160 | 41,270,909 | ||||||
Pharmaceutical Product Development, Inc. | 1,351,956 | 36,692,086 | ||||||
Techne Corp. | 217,106 | 14,257,351 | ||||||
Waters Corp.(b) | 332,190 | 25,814,485 | ||||||
118,034,831 | ||||||||
Managed Health Care–1.41% | ||||||||
Aetna Inc. | 1,334,503 | 40,715,687 | ||||||
Marine–0.64% | ||||||||
Kirby Corp.(b) | 423,807 | 18,668,698 | ||||||
Metal & Glass Containers–0.38% | ||||||||
Owens-Illinois, Inc.(b) | 354,768 | 10,891,378 | ||||||
Mortgage REIT’s–0.20% | ||||||||
Annaly Capital Management Inc. | 316,700 | 5,675,264 | ||||||
Multi-Sector Holdings–0.16% | ||||||||
PICO Holdings, Inc.(b) | 149,488 | 4,753,718 | ||||||
Office Services & Supplies–0.77% | ||||||||
Pitney Bowes Inc.(c) | 925,090 | 22,368,676 | ||||||
Oil & Gas Equipment & Services–3.75% | ||||||||
Baker Hughes Inc. | 712,861 | 40,754,263 | ||||||
Cameron International Corp.(b) | 472,347 | 23,962,163 | ||||||
Dresser-Rand Group, Inc.(b) | 745,925 | 31,768,946 | ||||||
National Oilwell Varco Inc. | 177,723 | 11,951,872 | ||||||
108,437,244 | ||||||||
Oil & Gas Exploration & Production–1.68% | ||||||||
Newfield Exploration Co.(b) | 319,145 | 23,013,546 | ||||||
PetroQuest Energy, Inc.(b) | 110,242 | 830,123 | ||||||
Southwestern Energy Co.(b) | 661,747 | 24,769,190 | ||||||
48,612,859 | ||||||||
Oil & Gas Refining & Marketing–0.63% | ||||||||
Valero Energy Corp. | 783,628 | 18,117,479 | ||||||
Oil & Gas Storage & Transportation–1.36% | ||||||||
Williams Cos., Inc. (The) | 1,588,471 | 39,267,003 | ||||||
Paper Packaging–0.86% | ||||||||
Sealed Air Corp. | 979,349 | 24,924,432 | ||||||
Pharmaceuticals–1.19% | ||||||||
Hospira, Inc.(b) | 315,220 | 17,554,602 | ||||||
Teva Pharmaceutical Industries Ltd.–ADR (Israel) | 325,439 | 16,965,135 | ||||||
34,519,737 | ||||||||
Property & Casualty Insurance–1.51% | ||||||||
Progressive Corp. (The) | 2,193,344 | 43,581,745 | ||||||
Research & Consulting Services–0.51% | ||||||||
Dun & Bradstreet Corp. (The) | 178,504 | 14,653,393 | ||||||
Restaurants–0.68% | ||||||||
Darden Restaurants, Inc. | 426,799 | 19,820,546 | ||||||
Semiconductor Equipment–0.35% | ||||||||
FormFactor Inc.(b) | 1,140,737 | 10,129,745 | ||||||
Semiconductors–2.38% | ||||||||
Linear Technology Corp. | 1,191,423 | 41,211,321 | ||||||
Microchip Technology Inc.(c) | 425,723 | 14,563,984 | ||||||
Xilinx, Inc. | 449,061 | 13,013,788 | ||||||
68,789,093 | ||||||||
Specialized Finance–0.50% | ||||||||
Moody’s Corp. | 546,201 | 14,496,175 | ||||||
Specialty Chemicals–3.08% | ||||||||
International Flavors & Fragrances Inc. | 775,881 | 43,131,225 | ||||||
Sigma-Aldrich Corp. | 691,935 | 46,055,193 | ||||||
89,186,418 | ||||||||
Systems Software–2.86% | ||||||||
CA, Inc. | 126,137 | 3,082,788 | ||||||
Symantec Corp.(b) | 4,769,015 | 79,833,311 | ||||||
82,916,099 | ||||||||
Thrifts & Mortgage Finance–1.57% | ||||||||
People’s United Financial Inc. | 3,242,867 | 45,432,567 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Mid Cap Core Equity Fund
Shares | Value | |||||||
Trucking–0.79% | ||||||||
Con-way Inc. | 624,026 | $ | 22,820,631 | |||||
Wireless Telecommunication Services–0.94% | ||||||||
MetroPCS Communications, Inc.(b) | 2,164,472 | 27,337,281 | ||||||
Total Common Stocks & Other Equity Interests (Cost $1,937,512,430) | 2,362,788,382 | |||||||
Money Market Funds–18.77% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 271,693,062 | 271,693,062 | ||||||
Premier Portfolio–Institutional Class(d) | 271,693,062 | 271,693,062 | ||||||
Total Money Market Funds (Cost $543,386,124) | 543,386,124 | |||||||
TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)–100.37% (Cost $2,480,898,554) | 2,906,174,506 | |||||||
Investments Purchased with Cash Collateral from Securities on Loan | ||||||||
Money Market Funds–0.78% | ||||||||
Liquid Assets Portfolio–Institutional Class (Cost $22,560,205)(d)(e) | 22,560,205 | 22,560,205 | ||||||
TOTAL INVESTMENTS–101.15% (Cost $2,503,458,759) | 2,928,734,711 | |||||||
OTHER ASSETS LESS LIABILITIES–(1.15)% | (33,360,068 | ) | ||||||
NET ASSETS–100.00% | 2,895,374,643 | |||||||
Investment Abbreviations:
ADR | – American Depositary Receipt |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |
(b) | Non-income producing security. | |
(c) | All or a portion of this security was out on loan at December 31, 2010. | |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. | |
(e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Mid Cap Core Equity Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments, at value (Cost $1,937,512,430)* | $ | 2,362,788,382 | ||
Investments in affiliated money market funds, at value and cost | 565,946,329 | |||
Total investments, at value (Cost $2,503,458,759) | 2,928,734,711 | |||
Receivable for: | ||||
Fund shares sold | 7,818,217 | |||
Dividends | 2,291,432 | |||
Investment for trustee deferred compensation and retirement plans | 50,384 | |||
Other assets | 65,395 | |||
Total assets | 2,938,960,139 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 18,280,930 | |||
Collateral upon return of securities loaned | 22,560,205 | |||
Accrued fees to affiliates | 2,243,481 | |||
Accrued other operating expenses | 216,361 | |||
Trustee deferred compensation and retirement plans | 284,519 | |||
Total liabilities | 43,585,496 | |||
Net assets applicable to shares outstanding | $ | 2,895,374,643 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 2,462,053,442 | ||
Undistributed net investment income (loss) | (279,974 | ) | ||
Undistributed net realized gain | 8,324,384 | |||
Unrealized appreciation | 425,276,791 | |||
$ | 2,895,374,643 | |||
Net Assets: | ||||
Class A | $ | 1,838,718,833 | ||
Class B | $ | 114,279,288 | ||
Class C | $ | 249,882,721 | ||
Class R | $ | 188,802,828 | ||
Class Y | $ | 192,236,030 | ||
Institutional Class | $ | 311,454,943 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 79,357,256 | |||
Class B | 6,123,726 | |||
Class C | 13,418,891 | |||
Class R | 8,262,755 | |||
Class Y | 8,269,623 | |||
Institutional Class | 12,894,255 | |||
Class A: | ||||
Net asset value per share | $ | 23.17 | ||
Maximum offering price per share | ||||
(Net asset value of $23.17 divided by 94.50%) | $ | 24.52 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 18.66 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 18.62 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 22.85 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 23.25 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 24.15 | ||
* | At December 31, 2010, securities with an aggregate value of $21,597,870 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Mid Cap Core Equity Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends (net of foreign withholding taxes of $240,370) | $ | 31,042,305 | ||
Dividends from affiliated money market funds (includes securities lending income of $134,056) | 812,169 | |||
Total investment income | 31,854,474 | |||
Expenses: | ||||
Advisory fees | 17,447,329 | |||
Administrative services fees | 533,946 | |||
Custodian fees | 80,296 | |||
Distribution fees: | ||||
Class A | 4,153,945 | |||
Class B | 1,434,176 | |||
Class C | 2,224,377 | |||
Class R | 712,274 | |||
Transfer agent fees — A, B, C, R and Y | 5,335,041 | |||
Transfer agent fees — Institutional | 167,309 | |||
Trustees’ and officers’ fees and benefits | 83,273 | |||
Other | 512,561 | |||
Total expenses | 32,684,527 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (806,013 | ) | ||
Net expenses | 31,878,514 | |||
Net investment income (loss) | (24,040 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities (includes net gains from securities sold to affiliates of $8,274,774) | 143,683,655 | |||
Foreign currencies | (202,653 | ) | ||
Foreign currency contracts | 1,120,810 | |||
144,601,812 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 169,354,066 | |||
Foreign currencies | 7,519 | |||
Foreign currency contracts | (490,728 | ) | ||
168,870,857 | ||||
Net realized and unrealized gain | 313,472,669 | |||
Net increase in net assets resulting from operations | $ | 313,448,629 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Mid Cap Core Equity Fund
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (24,040 | ) | $ | 2,292,579 | |||
Net realized gain (loss) | 144,601,812 | (72,390,255 | ) | |||||
Change in net unrealized appreciation | 168,870,857 | 540,279,723 | ||||||
Net increase in net assets resulting from operations | 313,448,629 | 470,182,047 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (1,156,083 | ) | (1,350,865 | ) | ||||
Class B | — | (208,771 | ) | |||||
Class C | — | (222,490 | ) | |||||
Class R | — | (91,403 | ) | |||||
Class Y | (119,701 | ) | (213,012 | ) | ||||
Institutional Class | (185,147 | ) | (548,291 | ) | ||||
Total distributions from net investment income | (1,460,931 | ) | (2,634,832 | ) | ||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (30,160,395 | ) | — | |||||
Class B | (2,400,651 | ) | — | |||||
Class C | (5,024,614 | ) | — | |||||
Class R | (3,027,442 | ) | — | |||||
Class Y | (3,122,798 | ) | — | |||||
Institutional Class | (4,830,181 | ) | — | |||||
Total distributions from net realized gains | (48,566,081 | ) | — | |||||
Share transactions–net: | ||||||||
Class A | 152,208,784 | 319,084,883 | ||||||
Class B | (80,340,647 | ) | (59,879,320 | ) | ||||
Class C | 26,473,070 | 46,797,827 | ||||||
Class R | 71,542,924 | 32,108,350 | ||||||
Class Y | 89,270,903 | 69,594,737 | ||||||
Institutional Class | 82,711,536 | 102,784,568 | ||||||
Net increase in net assets resulting from share transactions | 341,866,570 | 510,491,045 | ||||||
Net increase in net assets | 605,288,187 | 978,038,260 | ||||||
Net assets: | ||||||||
Beginning of year | 2,290,086,456 | 1,312,048,196 | ||||||
End of year (includes undistributed net investment income (loss) of $(279,974) and $1,105,122, respectively) | $ | 2,895,374,643 | $ | 2,290,086,456 | ||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Mid Cap Core Equity Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
14 Invesco Mid Cap Core Equity Fund
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they |
15 Invesco Mid Cap Core Equity Fund
reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | |
D. | Distributions — Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. | |
J. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. | |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. |
16 Invesco Mid Cap Core Equity Fund
K. | Foreign Currency Contracts — The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $500 million | 0 | .725% | ||
Next $500 million | 0 | .70% | ||
Next $500 million | 0 | .675% | ||
Over $1.5 billion | 0 | .65% | ||
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 1.75%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses after fee waivers, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary items or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2010, the Adviser waived advisory fees of $794,962.
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of the Fund in the amount of $3,142.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Class R shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
17 Invesco Mid Cap Core Equity Fund
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $202,236 in front-end sales commissions from the sale of Class A shares and $5,061, $86,948 and $27,312 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 2,928,734,711 | $ | — | $ | — | $ | 2,928,734,711 | ||||||||
NOTE 4—Derivative Investments
The Fund has implemented the required disclosures about derivative instruments and hedging activities in accordance with GAAP. This disclosure is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position and financial performance. The enhanced disclosure has no impact on the results of operations reported in the financial statements.
Effect of Derivative Instruments for the year ended December 31, 2010
The table below summarizes the gains (losses) on derivative instruments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on | ||||
Statement of Operations | ||||
Foreign Currency Contracts* | ||||
Realized Gain | ||||
Currency risk | $ | 1,120,810 | ||
Change in Unrealized Appreciation (Depreciation) | ||||
Currency risk | (490,728 | ) | ||
Total | $ | 630,082 | ||
* | The average value of foreign currency contracts outstanding during the period was $1,265,090. |
NOTE 5—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2010, the Fund engaged in securities purchases of $88,038,169 and securities sales of $36,858,158, which resulted in net realized gains of $8,274,774.
18 Invesco Mid Cap Core Equity Fund
NOTE 6—Expense Offset Arrangement(s)
The expense offset arrangements are comprised of (1) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (2) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended December 31, 2010, the Fund received credits from these arrangements, which resulted in the reduction of the Fund’s total expenses of $7,909.
NOTE 7—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended December 31, 2010, the Fund paid legal fees of $8,500 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 8—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 9—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 1,445,350 | $ | 2,634,832 | ||||
Long-term capital gain | 48,581,662 | — | ||||||
Total distributions | $ | 50,027,012 | $ | 2,634,832 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 2,435,120 | ||
Undistributed long-term gain | 9,450,713 | |||
Net unrealized appreciation — investments | 421,714,503 | |||
Net unrealized appreciation — other investments | 839 | |||
Temporary book/tax differences | (279,974 | ) | ||
Shares of beneficial interest | 2,462,053,442 | |||
Total net assets | $ | 2,895,374,643 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $82,524,578 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund does not have a capital loss carryforward as of December 31, 2010.
19 Invesco Mid Cap Core Equity Fund
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $1,475,082,447 and $1,270,167,809, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 443,982,847 | ||
Aggregate unrealized (depreciation) of investment securities | (22,268,344 | ) | ||
Net unrealized appreciation of investment securities | $ | 421,714,503 | ||
Cost of investments for tax purposes is $2,507,020,208. |
NOTE 11—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and net operating losses, on December 31, 2010, undistributed net investment income (loss) was increased by $99,875, undistributed net realized gain (loss) was decreased by $15,243 and shares of beneficial interest decreased by $84,632. This reclassification had no effect on the net assets of the Fund.
20 Invesco Mid Cap Core Equity Fund
NOTE 12—Share Information
Summary of Share Activity | ||||||||||||||||
Year ended | Year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 24,338,270 | $ | 522,802,715 | 33,487,895 | $ | 593,088,212 | ||||||||||
Class B | 688,858 | 12,028,879 | 1,128,353 | 16,064,595 | ||||||||||||
Class C | 3,950,329 | 68,898,504 | 5,320,713 | 77,498,225 | ||||||||||||
Class R | 5,517,316 | 117,334,687 | 3,166,721 | 55,547,791 | ||||||||||||
Class Y | 6,938,371 | 149,474,981 | 4,609,320 | 81,197,060 | ||||||||||||
Institutional Class | 6,816,174 | 153,333,075 | 8,279,952 | 162,330,169 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 1,291,593 | 29,564,567 | 62,115 | 1,275,553 | ||||||||||||
Class B | 125,307 | 2,310,646 | 11,982 | 200,471 | ||||||||||||
Class C | 256,137 | 4,712,924 | 12,557 | 209,673 | ||||||||||||
Class R | 133,867 | 3,022,710 | 4,493 | 91,209 | ||||||||||||
Class Y | 102,179 | 2,346,035 | 7,244 | 148,867 | ||||||||||||
Institutional Class | 209,221 | 4,992,021 | 26,755 | 548,291 | ||||||||||||
Issued in connection with acquisition: | ||||||||||||||||
Class Y(b) | — | — | 2,224,674 | 44,471,209 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 2,896,502 | 62,373,269 | 1,911,290 | 34,057,805 | ||||||||||||
Class B | (3,571,264 | ) | (62,373,269 | ) | (2,334,335 | ) | (34,057,805 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (21,476,270 | ) | (462,531,767 | ) | (17,760,781 | ) | (309,336,687 | ) | ||||||||
Class B | (1,858,438 | ) | (32,306,903 | ) | (3,015,945 | ) | (42,086,581 | ) | ||||||||
Class C | (2,703,112 | ) | (47,138,358 | ) | (2,192,865 | ) | (30,910,071 | ) | ||||||||
Class R | (2,305,947 | ) | (48,814,473 | ) | (1,352,761 | ) | (23,530,650 | ) | ||||||||
Class Y | (2,910,860 | ) | (62,550,113 | ) | (2,847,147 | ) | (56,222,399 | ) | ||||||||
Institutional Class | (3,345,381 | ) | (75,613,560 | ) | (3,133,303 | ) | (60,093,892 | ) | ||||||||
Net increase in share activity | 15,092,852 | $ | 341,866,570 | 27,616,927 | $ | 510,491,045 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 20% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. | |
(b) | As of the opening of business on September 21, 2009, the Fund acquired all the net asset of Atlantic Whitehall Mid Cap Growth Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on June 17, 2009 and by the shareholders of Atlantic Whitehall Mid Cap Growth Fund on April 14, 2009. The acquisition was accomplished by a tax-free exchange of 2,224,674 shares of the Fund for 6,205,604 shares outstanding of Atlantic Whitehall Mid Cap Growth Fund as of the close of business on September 18, 2009. Institutional Class shares of Atlantic Whitehall Mid Cap Growth Fund were exchanged for the Class Y shares of the Fund, based on the relative net asset value of Atlantic Whitehall Mid Cap Growth Fund to the net asset value of the Fund on the close of business, September 18, 2009. Atlantic Whitehall Mid Cap Growth Fund’s net assets at that date of $44,471,209 including $9,555,080 of unrealized appreciation, was combined with those of the Fund. The net assets of the Fund immediately before the acquisition was $66,744,397. |
21 Invesco Mid Cap Core Equity Fund
NOTE 13—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | �� | (losses) on | Dividends | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | securities (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | fee waivers | income (loss) | ||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | Distributions | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 20.95 | $ | 0.01 | $ | 2.61 | $ | 2.62 | $ | (0.01 | ) | $ | (0.39 | ) | $ | (0.40 | ) | $ | 23.17 | 12.52 | % | $ | 1,838,719 | 1.18 | %(d) | 1.21 | %(d) | 0.06 | %(d) | 61 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 16.11 | 0.05 | 4.81 | 4.86 | (0.02 | ) | — | (0.02 | ) | 20.95 | 30.16 | 1,515,079 | 1.24 | 1.27 | 0.26 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 23.63 | 0.17 | (6.69 | ) | (6.52 | ) | (0.18 | ) | (0.82 | ) | (1.00 | ) | 16.11 | (27.45 | ) | 879,531 | 1.25 | 1.28 | 0.79 | 60 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 26.08 | 0.32 | 2.23 | 2.55 | (0.36 | ) | (4.64 | ) | (5.00 | ) | 23.63 | 9.90 | 1,280,918 | 1.21 | 1.22 | 0.97 | 49 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 28.57 | 0.25 | 2.97 | 3.22 | (0.22 | ) | (5.49 | ) | (5.71 | ) | 26.08 | 11.11 | 1,556,658 | 1.28 | 1.28 | 0.65 | 51 | |||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 17.06 | (0.12 | ) | 2.10 | 1.98 | — | (0.38 | ) | (0.38 | ) | 18.66 | 11.65 | 114,279 | 1.93 | (d) | 1.96 | (d) | (0.69 | )(d) | 61 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 13.22 | (0.07 | ) | 3.93 | 3.86 | (0.02 | ) | — | (0.02 | ) | 17.06 | 29.19 | 183,219 | 1.99 | 2.02 | (0.49 | ) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 19.59 | 0.01 | (5.52 | ) | (5.51 | ) | (0.04 | ) | (0.82 | ) | (0.86 | ) | 13.22 | (27.97 | ) | 197,599 | 2.00 | 2.03 | 0.04 | 60 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 22.39 | 0.08 | 1.91 | 1.99 | (0.15 | ) | (4.64 | ) | (4.79 | ) | 19.59 | 9.03 | 394,916 | 1.96 | 1.97 | 0.22 | 49 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 25.23 | (0.02 | ) | 2.67 | 2.65 | — | (5.49 | ) | (5.49 | ) | 22.39 | 10.32 | 492,311 | 2.03 | 2.03 | (0.10 | ) | 51 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 17.02 | (0.12 | ) | 2.10 | 1.98 | — | (0.38 | ) | (0.38 | ) | 18.62 | 11.68 | 249,883 | 1.93 | (d) | 1.96 | (d) | (0.69 | )(d) | 61 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 13.19 | (0.07 | ) | 3.92 | 3.85 | (0.02 | ) | — | (0.02 | ) | 17.02 | 29.18 | 202,853 | 1.99 | 2.02 | (0.49 | ) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 19.55 | 0.01 | (5.51 | ) | (5.50 | ) | (0.04 | ) | (0.82 | ) | (0.86 | ) | 13.19 | (27.98 | ) | 115,735 | 2.00 | 2.03 | 0.04 | 60 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 22.35 | 0.08 | 1.91 | 1.99 | (0.15 | ) | (4.64 | ) | (4.79 | ) | 19.55 | 9.05 | 182,444 | 1.96 | 1.97 | 0.22 | 49 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 25.20 | (0.02 | ) | 2.66 | 2.64 | — | (5.49 | ) | (5.49 | ) | 22.35 | 10.29 | 219,435 | 2.03 | 2.03 | (0.10 | ) | 51 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 20.71 | (0.04 | ) | 2.56 | 2.52 | — | (0.38 | ) | (0.38 | ) | 22.85 | 12.21 | 188,803 | 1.43 | (d) | 1.46 | (d) | (0.19 | )(d) | 61 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 15.96 | — | 4.77 | 4.77 | (0.02 | ) | — | (0.02 | ) | 20.71 | 29.88 | 101,828 | 1.49 | 1.52 | 0.01 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 23.40 | 0.11 | (6.61 | ) | (6.50 | ) | (0.12 | ) | (0.82 | ) | (0.94 | ) | 15.96 | (27.63 | ) | 49,456 | 1.50 | 1.53 | 0.54 | 60 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 25.88 | 0.22 | 2.23 | 2.45 | (0.29 | ) | (4.64 | ) | (4.93 | ) | 23.40 | 9.59 | 70,940 | 1.46 | 1.47 | 0.71 | 49 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 28.38 | 0.14 | 2.98 | 3.12 | (0.13 | ) | (5.49 | ) | (5.62 | ) | 25.88 | 10.83 | 72,308 | 1.53 | 1.53 | 0.40 | 51 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 20.97 | 0.07 | 2.60 | 2.67 | (0.01 | ) | (0.38 | ) | (0.39 | ) | 23.25 | 12.80 | 192,236 | 0.93 | (d) | 0.96 | (d) | 0.31 | (d) | 61 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 16.10 | 0.10 | 4.82 | 4.92 | (0.05 | ) | — | (0.05 | ) | 20.97 | 30.59 | 86,803 | 0.99 | 1.02 | 0.51 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(e) | 20.44 | 0.04 | (3.37 | ) | (3.33 | ) | (0.19 | ) | (0.82 | ) | (1.01 | ) | 16.10 | (16.12 | ) | 2,349 | 1.06 | (f) | 1.09 | (f) | 0.98 | (f) | 60 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 21.74 | 0.11 | 2.70 | 2.81 | (0.01 | ) | (0.39 | ) | (0.40 | ) | 24.15 | 12.94 | 311,455 | 0.76 | (d) | 0.79 | (d) | 0.48 | (d) | 61 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 16.67 | 0.13 | 5.01 | 5.14 | (0.07 | ) | — | (0.07 | ) | 21.74 | 30.84 | 200,303 | 0.80 | 0.83 | 0.70 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 24.44 | 0.26 | (6.95 | ) | (6.69 | ) | (0.26 | ) | (0.82 | ) | (1.08 | ) | 16.67 | (27.19 | ) | 67,379 | 0.85 | 0.88 | 1.19 | 60 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 26.82 | 0.43 | 2.30 | 2.73 | (0.47 | ) | (4.64 | ) | (5.11 | ) | 24.44 | 10.33 | 67,180 | 0.82 | 0.83 | 1.35 | 49 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 29.26 | 0.38 | 3.06 | 3.44 | (0.40 | ) | (5.48 | ) | (5.88 | ) | 26.82 | 11.62 | 75,000 | 0.82 | 0.82 | 1.10 | 51 | |||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ending December 31, 2009, the portfolio turnover calculation excludes the value of securities purchased of $36,332,046 and sold of $40,409,014 in the effort to realign the Fund’s portfolio holdings after the reorganization of Atlantic Whitehall Mid Cap Growth Fund into the Fund. | |
(d) | Ratios are based on average daily net assets (000’s) of $1,661,578, $143,418, $222,438, $142,455, $143,493 and $255,439 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively | |
(e) | Commencement date of October 3, 2008. | |
(f) | Annualized. |
22 Invesco Mid Cap Core Equity Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Mid Cap Core Equity Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Mid Cap Core Equity Fund (formerly known as AIM Mid Cap Core Equity Fund); one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
23 Invesco Mid Cap Core Equity Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,176.90 | $ | 6.47 | $ | 1,019.26 | $ | 6.01 | 1.18 | % | ||||||||||||||||||
Class B | 1,000.00 | 1,172.20 | 10.57 | 1,015.48 | 9.80 | 1.93 | ||||||||||||||||||||||||
Class C | 1,000.00 | 1,171.90 | 10.57 | 1,015.48 | 9.80 | 1.93 | ||||||||||||||||||||||||
Class R | 1,000.00 | 1,175.40 | 7.84 | 1,018.00 | 7.27 | 1.43 | ||||||||||||||||||||||||
Class Y | 1,000.00 | 1,178.50 | 5.11 | 1,020.52 | 4.74 | 0.93 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,178.80 | 4.17 | 1,021.37 | 3.87 | 0.76 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
24 Invesco Mid Cap Core Equity Fund
Tax Information |
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Long-Term Capital Gain Dividends | $ | 48,581,662 | ||
Qualified Dividend Income* | 100% | |||
Corporate Dividends Received Deduction* | 100% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
25 Invesco Mid Cap Core Equity Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886510.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886511.gif)
Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2010, is available at our website, invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
MCCE-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders n December 31, 2010
Annual Report to Shareholders | December 31, 2010 | ||
Invesco Small Cap Growth Fund |
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
12 | Financial Statements | |
14 | Notes to Financial Statements | |
20 | Financial Highlights | |
21 | Auditor's Report | |
22 | Fund Expenses | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885302.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website — invesco.com/us — offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus — investment management — Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best — manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change — investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885303.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885303.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
2 | Invesco Small Cap Growth Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885304.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885305.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885305.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Small Cap Growth Fund |
Management’s Discussion of Fund Performance
Performance summary
For the fiscal year ended December 31, 2010, all share classes of Invesco Small Cap Growth Fund, at net asset value (NAV), posted positive returns, but underperformed the Fund’s style-specific index, the Russell 2000 Growth Index. This underperformance was driven by stock selection across a number of sectors.
All share classes of the Fund, at NAV, outperformed the Fund’s broad market index, the S&P 500 Index, as small-cap stocks generally outperformed large-cap stocks during the period.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 26.28 | % | ||
Class B Shares | 25.33 | |||
Class C Shares | 25.37 | |||
Class R Shares | 25.98 | |||
Class Y Shares | 26.56 | |||
Investor Class Shares | 26.27 | |||
Institutional Class Shares | 26.82 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
Russell 2000 Growth Index▼ (Style-Specific Index) | 29.09 | |||
Lipper Small-Cap Growth Funds Index▼ (Peer Group Index) | 26.08 | |||
▼ Lipper Inc.
How we invest
We believe a growth investment strategy is an essential component of a diversified portfolio.
Our investment process seeks to identify attractively valued small-cap companies with high-growth potential, demonstrated by consistent and accelerating revenue and earnings growth.
We begin with a quantitative model that ranks companies based on a set of growth, quality and timeliness factors. This proprietary model provides an objective approach to identifying new investment opportunities, as the highest ranked stocks become the primary focus of our research efforts.
Our stock selection process is based on a rigorous three-step process.
n | Fundamental analysis: Building financial models and conducting in-depth interviews with company management. | |
n | Valuation analysis: Identifying attractively valued stocks given their growth potential over a one- to two-year horizon. | |
n | Timeliness analysis: Identifying the “timeliness” of a stock purchase. We review trading volume characteristics and trend analysis to make sure there are no signs of stock deterioration. This also serves as a risk management measure that helps us confirm our high-conviction candidates. |
Portfolio construction plays an important role in risk management. We align the Fund with the Russell 2000 Growth Index, the benchmark we believe represents the small-cap growth asset class. We seek to manage risk by keeping the Fund’s sector weightings in line with the benchmark by staying fully diversified in all those sectors. We also seek to limit stock-specific risk by investing in typically 130 to 140 holdings.
We consider selling a stock when it no longer meets our investment criteria, for the following reasons:
n | Our original investment thesis is not valid because the fundamentals are no longer intact. | |
n | The price target set at purchase is exceeded. | |
n | The company’s timeliness profile deteriorates. |
Market conditions and your Fund
During the Fund’s fiscal year, the U.S. economy showed signs of improvement indicating that potentially it has transitioned from a contraction phase economy to an expansionary one. Nevertheless, the pace of recovery remained modest, and the transition from government stimulus-induced growth to private economic recovery was uncertain.
The U.S. Federal Reserve’s (the Fed) federal funds target rate remained low, ranging from zero to 0.25%.1 Real gross domestic product (GDP) registered positive growth during the reporting period, with quarterly increases of 3.7%, 1.7% and 2.6% for the first, second and third quarters of 2010, respectively.2 Inflation, measured by the seasonally-adjusted Consumer Price Index, remained relatively benign. Labor markets improved as layoffs moderated; however, new hiring remained quite
Portfolio Composition
By sector
Information Technology | 28.7 | % | ||
Consumer Discretionary | 17.8 | |||
Health Care | 15.2 | |||
Industrials | 14.6 | |||
Energy | 8.5 | |||
Financials | 6.1 | |||
Materials | 4.4 | |||
Consumer Staples | 2.0 | |||
Telecommunication Services | 1.1 | |||
Utilities | 0.7 | |||
Money Market Funds Plus | ||||
Other Assets Less Liabilities | 0.9 |
Top 10 Equity Holdings*
1. TransDigm Group, Inc. | 1.7 | % | ||
2. TRW Automotive Holdings Corp. | 1.5 | |||
3. Informatica Corp. | 1.4 | |||
4. Polycom, Inc. | 1.3 | |||
5. Ciena Corp. | 1.2 | |||
6. Regal-Beloit Corp. | 1.1 | |||
7. Finisar Corp. | 1.1 | |||
8. SBA Communications Corp.-Class A | 1.1 | |||
9. Williams-Sonoma, Inc. | 1.0 | |||
10. Microsemi Corp. | 1.0 |
Total Net Assets | $1.70 billion | |||
Total Number of Holdings* | 128 |
Top 10 Industries*
1. Application Software | 8.0 | % | ||
2. Communications Equipment | 5.9 | |||
3. Semiconductors | 5.5 | |||
4. Restaurants | 3.8 | |||
5. Oil & Gas Equipment & Services | 3.2 | |||
6. Oil & Gas Exploration & Production | 2.9 | |||
7. Biotechnology | 2.7 | |||
8. Regional Banks | 2.4 | |||
9. Aerospace & Defense | 2.4 | |||
10. Auto Parts & Equipment | 2.4 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
4 | Invesco Small Cap Growth Fund |
weak. Unemployment, after climbing steadily throughout 2009, fell slightly during 2010 to a rate of 9.4% nationwide as of December 2010.3
While stock market volatility increased significantly during the fiscal year, indexes measuring the performance of large-, mid- and small-cap stocks finished the period with positive, double-digit returns. In terms of investment style, growth stocks generally outperformed value stocks. The sectors with the highest returns in the Russell 2000 Growth Index included more economically sensitive sectors, such as information technology (IT), consumer discretionary and industrials, as well as the energy and materials sectors. Conversely, more defensive sectors such as utilities, health care and telecommunication services had the lowest returns but were still in positive territory.
The Fund, at NAV, had double-digit absolute returns but underperformed versus the Russell 2000 Growth Index, primarily due to stock selection in several sectors, including IT, energy and industrials. The Fund underperformed by the widest margin in the IT sector, primarily driven by stock selection in the software and semiconductor industry groups. Much of the underperformance was a result of not owning several strong-performing stocks. Despite underperforming in this sector, two holdings, F5 Networks, a network services provider, and Informatica, an enterprise data integration software maker, were among the leading contributors to performance during the period. Underperformance in the energy sector was due to stock selection. Two companies in this sector that had weak performance were exploration and production holdings Arena Resources and Goodrich Petroleum. Both companies have high natural gas exposure, and therefore, generally had weak performance as natural gas prices continued to fall during much of the period. While we sold our position in Arena Resources, we continue to own Goodrich Petroleum.
Underperformance in the industrials sector also was due to stock selection. One area of weakness was the commercial and professional services industry group. Within this group, environmental services provider EnergySolutions was among the leading detractors to performance. This holding was sold due to deteriorating fundamentals. Underperformance also resulted from not owning several transportation holdings that had strong performances but did not meet our strict investment criteria.
Some of this underperformance was offset by outperformance in other sectors, including the consumer discretionary sector and the health care sector. The Fund outperformed by the widest margin in the consumer discretionary sector, driven by stock selection in the retail, automobile and components industry groups. Key contributors to performance included movie and television subscription service provider Netflix.com and automotive components supplier TRW Automotive Holdings. Both companies benefited from strong growth in revenues and earnings during the period. While we continue to own TRW Automotive Holdings, we sold Netflix.com due to concerns about high valuation levels.
Outperformance in the health care sector was driven primarily by stock selection in the pharmaceuticals/ biotechnology/ life sciences industry group. Within this group, several holdings, including Biovail and OSI Pharmaceuticals, benefited from strong price appreciation following the announcement that they would be acquired by competitors at a premium. We sold our position in OSI Pharmaceuticals, locking in gains for shareholders. Another holding that made a positive contribution to performance was generic and private label over-the-counter pharmaceutical maker Perrigo.
The most significant changes to portfolio positioning included reductions in the health care and financials sectors where we sold a number of holdings. Proceeds from the sale of these holdings were used to purchase holdings in more economically sensitive sectors, such as consumer discretionary, materials and energy. Additionally, within the IT sector, we added exposure to more economically sensitive holdings in the semiconductor and hardware industry groups, while we sold several software holdings.
At the close of the reporting period, the largest industry group overweights versus the Russell 2000 Growth Index included energy, semiconductors, banks and consumer services. The largest industry group underweights, in general, included pharmaceuticals/ biotechnology/ life sciences, consumer durables & apparel, health care equipment & services, and commercial & professional services.
The stock market experienced significant volatility during the fiscal year. We would like to caution investors against making investment decisions based on short-term performance. As always, we recommend that you consult your financial adviser to discuss your individual
financial program. We thank you for your commitment to Invesco Small Cap Growth Fund.
1 | U.S. Federal Reserve | |
2 | Bureau of Economic Analysis | |
3 | Bureau of Labor Statistics |
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF JULIET ELLIS)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885306.jpg)
Juliet Ellis
Chartered Financial Analyst, portfolio manager, is lead manager of Invesco Small Cap Growth Fund. Ms. Ellis joined Invesco in 2004. She earned a B.A. in economics and political science from Indiana University.
Chartered Financial Analyst, portfolio manager, is lead manager of Invesco Small Cap Growth Fund. Ms. Ellis joined Invesco in 2004. She earned a B.A. in economics and political science from Indiana University.
![(PHOTO OF JUAN HARTSFIELD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885307.jpg)
Juan Hartsfield
Chartered Financial Analyst, portfolio manager, is manager of Invesco Small Cap Growth Fund. Mr. Hartsfield joined Invesco in 2004. He earned a B.S. in petroleum engineering from The University of Texas. He also earned an M.B.A. from the University of Michigan.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Small Cap Growth Fund. Mr. Hartsfield joined Invesco in 2004. He earned a B.S. in petroleum engineering from The University of Texas. He also earned an M.B.A. from the University of Michigan.
![(PHOTO OF CLAY MANLEY)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885308.jpg)
Clay Manley
Chartered Financial Analyst, portfolio manager, is manager of Invesco Small Cap Growth Fund. He joined Invesco in 2001. Mr. Manley earned a B.A. in history and geology at Vanderbilt University. He also earned an M.B.A. with concentrations in finance and accounting from the Goizueta Business School at Emory University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Small Cap Growth Fund. He joined Invesco in 2001. Mr. Manley earned a B.A. in history and geology at Vanderbilt University. He also earned an M.B.A. with concentrations in finance and accounting from the Goizueta Business School at Emory University.
5 | Invesco Small Cap Growth Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment — Oldest Share Classes since Inception
Fund data from 10/18/95, index data from 10/31/95
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885309.gif)
1 | Lipper Inc. |
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects Fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on.
6 | Invesco Small Cap Growth Fund |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (10/18/95) | 9.51 | % | ||||||
10 | Years | 2.26 | ||||||
5 | Years | 4.59 | ||||||
1 | Year | 19.32 | ||||||
Class B Shares | ||||||||
Inception (10/18/95) | 9.51 | % | ||||||
10 | Years | 2.22 | ||||||
5 | Years | 4.65 | ||||||
1 | Year | 20.33 | ||||||
Class C Shares | ||||||||
Inception (5/3/99) | 6.12 | % | ||||||
10 | Years | 2.06 | ||||||
5 | Years | 4.97 | ||||||
1 | Year | 24.37 | ||||||
Class R Shares | ||||||||
10 | Years | 2.59 | % | |||||
5 | Years | 5.51 | ||||||
1 | Year | 25.98 | ||||||
Class Y Shares | ||||||||
10 | Years | 2.89 | % | |||||
5 | Years | 5.88 | ||||||
1 | Year | 26.56 | ||||||
Investor Class Shares | ||||||||
10 | Years | 2.83 | % | |||||
5 | Years | 5.76 | ||||||
1 | Year | 26.27 | ||||||
Institutional Class Shares | ||||||||
Inception (3/15/02) | 5.97 | % | ||||||
5 | Years | 6.22 | ||||||
1 | Year | 26.82 |
Class R shares incepted on June 3, 2002. Performance shown prior to that date is that of Class A shares, restated to reflect the higher 12b-1 fees applicable to Class R shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
Investor Class shares incepted on April 7, 2006. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class shares was 1.31%, 2.06%, 2.06%, 1.56%, 1.06%, 1.31% and 0.85%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class B shares declines from 5% beginning at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Investor Class and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
continued from page 8
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for |
financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights.
n | Industry classifications used in this report are generally organized according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
7 | Invesco Small Cap Growth Fund |
Invesco Small Cap Growth Fund’s investment objective is long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class R shares are available only to certain retirement plans. Please see the prospectus for more information. | |
n | Class Y shares are available only to certain investors. Please see the prospectus for more information. | |
n | All Investor Class shares are closed to new investors. Contact your financial adviser about purchasing our other share classes. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | The issuer of instruments in which the Fund invests may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating. | |
n | An investment by an underlying fund in exchange-traded funds (ETFs) generally presents the same primary risks as an investment in a mutual fund. In addition, ETFs may be subject to the following: (1) a discount of the ETF’s shares to its net asset value; (2) failure to develop an active trading market for the ETF’s shares; (3) the listing exchange halting trading of the ETF’s shares; (4) failure of the ETF’s shares to track the referenced index; and (5) holding troubled securities in the referenced index. ETFs may involve duplication of management fees and certain other expenses, as the Fund indirectly bears its proportionate share of any expenses paid by the ETFs in |
which it invests. Further, certain of the ETFs in which the Fund may invest are leveraged. The more a Fund invests in such leveraged ETFs, the more this leverage will magnify any losses on those investments. | ||
n | The Fund’s foreign investments may be affected by changes in the foreign country’s exchange rates; political and social instability; changes in economic or taxation policies; difficulties when enforcing obligations; decreased liquidity; and increased volatility. Foreign companies may be subject to less regulation resulting in less publicly available information about the companies. | |
n | Growth stocks tend to be more expensive relative to their earnings or assets compared with other types of stock. As a result, they tend to be more sensitive to changes in their earnings and can be more volatile. | |
n | Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on their individual characteristics, including duration. | |
n | The investment techniques and risk analysis used by the Fund’s portfolio managers may not produce the desired results. | |
n | Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments in the above factors and may have little or no operating history or track record of success, and limited product lines, markets, management and financial resources. The securities of small and mid-sized companies may be more volatile due to less market interest and less publicly available information about the issuer. They also may be illiquid or restricted as to resale, or may trade less frequently and in smaller |
volumes, all of which may cause difficulty when establishing or closing a position at a desirable price. | ||
n | The Fund may invest in obligations issued by U.S. government agencies and instrumentalities that may receive varying levels of support from the government, which could affect the Fund’s ability to recover should they default. |
About indexes used in this report
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Russell 2000® Growth Index is an unmanaged index considered representative of small-cap growth stocks. The Russell 2000 Growth Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | |
n | The Lipper Small-Cap Growth Funds Index is an unmanaged index considered representative of small-cap growth funds tracked by Lipper. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. |
continued on page 7
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | | | MAY LOSE VALUE | | | NO BANK GUARANTEE |
Fund Nasdaq Symbols
Class A Shares | GTSAX | |
Class B Shares | GTSBX | |
Class C Shares | GTSDX | |
Class R Shares | GTSRX | |
Class Y Shares | GTSYX | |
Investor Class Shares | GTSIX | |
Institutional Class Shares | GTSVX |
8 | Invesco Small Cap Growth Fund |
Schedule of Investments(a)
December 31, 2010
Shares | Value | |||||||
Common Stocks & Other Equity Interests–99.06% | ||||||||
Advertising–0.71% | ||||||||
National CineMedia, Inc. | 607,146 | $ | 12,088,277 | |||||
Aerospace & Defense–2.39% | ||||||||
Hexcel Corp.(b) | 657,877 | 11,900,995 | ||||||
TransDigm Group, Inc.(b) | 399,668 | 28,780,093 | ||||||
40,681,088 | ||||||||
Air Freight & Logistics–1.57% | ||||||||
Forward Air Corp. | 398,758 | 11,316,752 | ||||||
Hub Group, Inc.–Class A(b) | 439,625 | 15,448,423 | ||||||
26,765,175 | ||||||||
Apparel Retail–1.60% | ||||||||
DSW Inc.–Class A(b)(c) | 340,216 | 13,302,445 | ||||||
Foot Locker, Inc. | 709,940 | 13,929,023 | ||||||
27,231,468 | ||||||||
Apparel, Accessories & Luxury Goods–1.32% | ||||||||
Maidenform Brands, Inc.(b) | 409,311 | 9,729,322 | ||||||
Warnaco Group, Inc. (The)(b) | 230,098 | 12,671,497 | ||||||
22,400,819 | ||||||||
Application Software–8.02% | ||||||||
ANSYS, Inc.(b) | 253,071 | 13,177,407 | ||||||
Aspen Technology, Inc.(b) | 911,458 | 11,575,517 | ||||||
Fair Isaac Corp. | 431,936 | 10,094,344 | ||||||
Informatica Corp.(b) | 559,005 | 24,612,990 | ||||||
Lawson Software, Inc.(b) | 1,719,473 | 15,905,125 | ||||||
NICE Systems Ltd.–ADR (Israel)(b) | 413,752 | 14,439,945 | ||||||
Parametric Technology Corp.(b) | 530,365 | 11,949,124 | ||||||
Quest Software, Inc.(b) | 622,654 | 17,272,422 | ||||||
SuccessFactors, Inc.(b) | 596,414 | 17,272,149 | ||||||
136,299,023 | ||||||||
Asset Management & Custody Banks–1.00% | ||||||||
Affiliated Managers Group, Inc.(b) | 171,636 | 17,029,724 | ||||||
Auto Parts & Equipment–2.36% | ||||||||
Tenneco Inc.(b) | 345,705 | 14,229,218 | ||||||
TRW Automotive Holdings Corp.(b) | 491,444 | 25,899,099 | ||||||
40,128,317 | ||||||||
Automotive Retail–0.91% | ||||||||
Group 1 Automotive, Inc. | 369,532 | 15,431,656 | ||||||
Biotechnology–2.67% | ||||||||
Acorda Therapeutics, Inc.(b) | 370,486 | 10,099,448 | ||||||
BioMarin Pharmaceutical Inc.(b) | 545,365 | 14,686,680 | ||||||
Martek Biosciences Corp.(b) | 270,380 | 8,462,894 | ||||||
United Therapeutics Corp.(b) | 191,060 | 12,078,813 | ||||||
45,327,835 | ||||||||
Casinos & Gaming–1.68% | ||||||||
Penn National Gaming, Inc.(b) | 454,267 | 15,967,485 | ||||||
WMS Industries Inc.(b) | 276,709 | 12,518,315 | ||||||
28,485,800 | ||||||||
Coal & Consumable Fuels–0.78% | ||||||||
James River Coal Co.(b) | 520,233 | 13,177,502 | ||||||
Commodity Chemicals–0.46% | ||||||||
Calgon Carbon Corp.(b) | 515,478 | 7,794,027 | ||||||
Communications Equipment–5.88% | ||||||||
Ciena Corp.(b) | 942,647 | 19,842,719 | ||||||
F5 Networks, Inc.(b) | 110,724 | 14,411,836 | ||||||
Finisar Corp.(b) | 613,044 | 18,201,276 | ||||||
Harmonic Inc.(b) | 1,384,251 | 11,863,031 | ||||||
Netgear Inc.(b) | 404,092 | 13,609,819 | ||||||
Polycom, Inc.(b) | 563,928 | 21,981,914 | ||||||
99,910,595 | ||||||||
Construction, Farm Machinery & Heavy Trucks–1.53% | ||||||||
Lindsay Corp.(c) | 170,377 | 10,125,505 | ||||||
Wabtec Corp. | 300,434 | 15,889,954 | ||||||
26,015,459 | ||||||||
Data Processing & Outsourced Services–1.32% | ||||||||
Alliance Data Systems Corp.(b)(c) | 160,481 | 11,398,965 | ||||||
Global Payments Inc. | 237,569 | 10,978,064 | ||||||
22,377,029 | ||||||||
Distributors–0.60% | ||||||||
Pool Corp. | 448,711 | 10,113,946 | ||||||
Diversified Chemicals–0.77% | ||||||||
Olin Corp. | 637,624 | 13,084,045 | ||||||
Electric Utilities–0.74% | ||||||||
ITC Holdings Corp. | 202,081 | 12,524,980 | ||||||
Electrical Components & Equipment–1.80% | ||||||||
Regal-Beloit Corp. | 274,682 | 18,337,770 | ||||||
Thomas & Betts Corp.(b) | 254,068 | 12,271,485 | ||||||
30,609,255 | ||||||||
Electronic Components–0.74% | ||||||||
Littelfuse, Inc. | 267,176 | 12,573,303 | ||||||
Electronic Equipment & Instruments–0.78% | ||||||||
Coherent, Inc.(b) | 291,874 | 13,175,192 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Small Cap Growth Fund
Shares | Value | |||||||
Environmental & Facilities Services–1.09% | ||||||||
Fuel Tech, Inc.(b) | 599,440 | $ | 5,820,562 | |||||
Tetra Tech, Inc.(b) | 504,251 | 12,636,530 | ||||||
18,457,092 | ||||||||
Fertilizers & Agricultural Chemicals–0.84% | ||||||||
Intrepid Potash, Inc.(b) | 381,291 | 14,218,341 | ||||||
Footwear–0.76% | ||||||||
Steven Madden, Ltd.(b) | 309,887 | 12,928,486 | ||||||
Health Care Distributors–0.65% | ||||||||
PSS World Medical, Inc.(b) | 488,132 | 11,031,783 | ||||||
Health Care Equipment–1.98% | ||||||||
Insulet Corp.(b)(c) | 490,359 | 7,600,564 | ||||||
Sirona Dental Systems, Inc.(b) | 311,684 | 13,022,158 | ||||||
Zoll Medical Corp.(b) | 350,426 | 13,046,360 | ||||||
33,669,082 | ||||||||
Health Care Facilities–1.30% | ||||||||
Health Management Associates, Inc.–Class A(b) | 1,259,658 | 12,017,137 | ||||||
VCA Antech, Inc.(b) | 432,046 | 10,062,352 | ||||||
22,079,489 | ||||||||
Health Care Services–1.68% | ||||||||
Chemed Corp. | 251,144 | 15,950,155 | ||||||
MEDNAX, Inc.(b) | 186,574 | 12,554,565 | ||||||
28,504,720 | ||||||||
Health Care Supplies–0.58% | ||||||||
Meridian Bioscience, Inc. | 423,814 | 9,815,532 | ||||||
Health Care Technology–1.59% | ||||||||
Allscripts Healthcare Solutions, Inc.(b) | 762,263 | 14,688,808 | ||||||
Quality Systems, Inc.(c) | 176,798 | 12,344,036 | ||||||
27,032,844 | ||||||||
Homefurnishing Retail–1.05% | ||||||||
Williams-Sonoma, Inc. | 502,372 | 17,929,657 | ||||||
Hotels, Resorts & Cruise Lines–0.69% | ||||||||
Choice Hotels International, Inc. | 306,430 | 11,727,076 | ||||||
Industrial Machinery–2.09% | ||||||||
Kaydon Corp. | 283,664 | 11,550,798 | ||||||
Kennametal Inc. | 289,701 | 11,431,601 | ||||||
Lincoln Electric Holdings, Inc. | 192,676 | 12,575,963 | ||||||
35,558,362 | ||||||||
Insurance Brokers–0.52% | ||||||||
Brown & Brown, Inc. | 368,584 | 8,823,901 | ||||||
Internet Software & Services–2.23% | ||||||||
Open Text Corp. (Canada)(b)(c) | 250,868 | 11,554,980 | ||||||
ValueClick, Inc.(b) | 290,116 | 4,650,560 | ||||||
VistaPrint N.V. (Netherlands)(b)(c) | 223,973 | 10,302,758 | ||||||
WebMD Health Corp.(b) | 223,932 | 11,433,968 | ||||||
37,942,266 | ||||||||
Investment Banking & Brokerage–1.36% | ||||||||
Greenhill & Co., Inc.(c) | 155,979 | 12,740,365 | ||||||
Stifel Financial Corp.(b) | 166,534 | 10,331,769 | ||||||
23,072,134 | ||||||||
Life Sciences Tools & Services–1.97% | ||||||||
PAREXEL International Corp.(b) | 479,862 | 10,187,470 | ||||||
PerkinElmer, Inc. | 491,282 | 12,684,901 | ||||||
Techne Corp. | 162,265 | 10,655,943 | ||||||
33,528,314 | ||||||||
Metal & Glass Containers–0.98% | ||||||||
Greif, Inc.–Class A | 270,284 | 16,730,580 | ||||||
Movies & Entertainment–0.50% | ||||||||
DreamWorks Animation SKG, Inc.–Class A(b) | 290,957 | 8,574,503 | ||||||
Oil & Gas Drilling–0.83% | ||||||||
Patterson-UTI Energy, Inc. | 654,906 | 14,113,224 | ||||||
Oil & Gas Equipment & Services–3.16% | ||||||||
Dresser-Rand Group, Inc.(b) | 315,160 | 13,422,665 | ||||||
Dril-Quip, Inc.(b) | 192,204 | 14,938,095 | ||||||
FMC Technologies, Inc.(b) | 185,664 | 16,507,386 | ||||||
Lufkin Industries, Inc. | 141,711 | 8,841,349 | ||||||
53,709,495 | ||||||||
Oil & Gas Exploration & Production–2.87% | ||||||||
Bill Barrett Corp.(b) | 294,508 | 12,113,114 | ||||||
Carrizo Oil & Gas, Inc.(b) | 437,439 | 15,087,271 | ||||||
Goodrich Petroleum Corp.(b)(c) | 365,493 | 6,447,297 | ||||||
SandRidge Energy Inc.(b) | 2,073,697 | 15,179,462 | ||||||
48,827,144 | ||||||||
Oil & Gas Refining & Marketing–0.81% | ||||||||
Frontier Oil Corp.(b) | 763,900 | 13,757,839 | ||||||
Packaged Foods & Meats–1.26% | ||||||||
Diamond Foods, Inc.(c) | 235,537 | 12,525,858 | ||||||
Ralcorp Holdings, Inc.(b) | 137,491 | 8,938,290 | ||||||
21,464,148 | ||||||||
Personal Products–0.73% | ||||||||
Nu Skin Enterprises, Inc.–Class A | 412,079 | 12,469,511 | ||||||
Pharmaceuticals–2.13% | ||||||||
Medicis Pharmaceutical Corp.–Class A | 442,534 | 11,855,486 | ||||||
Perrigo Co. | 196,369 | 12,436,049 | ||||||
Valeant Pharmaceuticals International, Inc. | 418,301 | 11,833,735 | ||||||
36,125,270 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Small Cap Growth Fund
Shares | Value | |||||||
Property & Casualty Insurance–0.77% | ||||||||
ProAssurance Corp.(b) | 215,170 | $ | 13,039,302 | |||||
Regional Banks–2.43% | ||||||||
City National Corp. | 205,889 | 12,633,349 | ||||||
Huntington Bancshares Inc. | 1,804,455 | 12,396,606 | ||||||
SVB Financial Group(b) | 307,197 | 16,296,801 | ||||||
41,326,756 | ||||||||
Research & Consulting Services–1.02% | ||||||||
CoStar Group Inc.(b) | 301,302 | 17,342,943 | ||||||
Restaurants–3.76% | ||||||||
Brinker International, Inc. | 606,944 | 12,672,991 | ||||||
Buffalo Wild Wings, Inc.(b) | 235,280 | 10,317,028 | ||||||
Darden Restaurants, Inc. | 259,215 | 12,037,945 | ||||||
Jack in the Box Inc.(b) | 549,543 | 11,611,843 | ||||||
P.F. Chang’s China Bistro, Inc.(c) | 355,027 | 17,204,608 | ||||||
63,844,415 | ||||||||
Security & Alarm Services–0.82% | ||||||||
Corrections Corp. of America(b) | 556,231 | 13,939,149 | ||||||
Semiconductor Equipment–1.96% | ||||||||
Advanced Energy Industries, Inc.(b) | 794,008 | 10,830,269 | ||||||
Cymer, Inc.(b) | 190,456 | 8,583,852 | ||||||
Teradyne, Inc.(b) | 990,460 | 13,906,058 | ||||||
33,320,179 | ||||||||
Semiconductors–5.52% | ||||||||
Hittite Microwave Corp.(b) | 251,348 | 15,342,282 | ||||||
Microsemi Corp.(b) | 761,312 | 17,434,045 | ||||||
ON Semiconductor Corp.(b) | 1,231,270 | 12,164,947 | ||||||
Power Integrations, Inc. | 276,315 | 11,091,284 | ||||||
RF Micro Devices, Inc.(b) | 1,790,642 | 13,161,219 | ||||||
Semtech Corp.(b) | 561,064 | 12,702,489 | ||||||
Volterra Semiconductor Corp.(b) | 515,555 | 11,940,254 | ||||||
93,836,520 | ||||||||
Specialty Chemicals–0.78% | ||||||||
Rockwood Holdings, Inc.(b) | 340,984 | 13,339,294 | ||||||
Specialty Stores–1.87% | ||||||||
Dick’s Sporting Goods, Inc.(b) | 385,487 | 14,455,762 | ||||||
Tractor Supply Co. | 356,859 | 17,304,093 | ||||||
31,759,855 | ||||||||
Steel–0.59% | ||||||||
Carpenter Technology Corp. | 247,575 | 9,962,418 | ||||||
Systems Software–2.30% | ||||||||
CommVault Systems, Inc.(b) | 471,984 | 13,508,182 | ||||||
MICROS Systems, Inc.(b) | 327,240 | 14,352,746 | ||||||
Websense, Inc.(b) | 553,615 | 11,210,704 | ||||||
39,071,632 | ||||||||
Technology Distributors–0.62% | ||||||||
Tech Data Corp.(b) | 239,154 | 10,527,559 | ||||||
Trading Companies & Distributors–1.38% | ||||||||
Watsco, Inc. | 156,791 | 9,890,376 | ||||||
WESCO International, Inc.(b) | 256,150 | 13,524,720 | ||||||
23,415,096 | ||||||||
Trucking–0.90% | ||||||||
Knight Transportation, Inc. | 801,720 | 15,232,680 | ||||||
Wireless Telecommunication Services–1.06% | ||||||||
SBA Communications Corp.–Class A(b) | 438,410 | 17,948,505 | ||||||
Total Common Stocks & Other Equity Interests (Cost $1,257,289,419) | 1,683,221,611 | |||||||
Money Market Funds–0.26% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 2,211,524 | 2,211,524 | ||||||
Premier Portfolio–Institutional Class(d) | 2,211,524 | 2,211,524 | ||||||
Total Money Market Funds (Cost $4,423,048) | 4,423,048 | |||||||
TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)–99.32% (Cost $1,261,712,467) | 1,687,644,659 | |||||||
Investments Purchased with Cash Collateral from Securities on Loan | ||||||||
Money Market Funds–2.28% | ||||||||
Liquid Assets Portfolio–Institutional Class (Cost $38,693,919)(d)(e) | 38,693,919 | 38,693,919 | ||||||
TOTAL INVESTMENTS–101.60% (Cost $1,300,406,386) | 1,726,338,578 | |||||||
OTHER ASSETS LESS LIABILITIES–(1.60)% | (27,164,470 | ) | ||||||
NET ASSETS–100.00% | $ | 1,699,174,108 | ||||||
Investment Abbreviations:
ADR | – American Depositary Receipt |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |
(b) | Non-income producing security. | |
(c) | All or a portion of this security was out on loan at December 31, 2010. | |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. | |
(e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Small Cap Growth Fund
Statement of Assets and Liabilities
For the year ended December 31, 2010
Assets: | ||||
Investments, at value (Cost $1,257,289,419)* | $ | 1,683,221,611 | ||
Investments in affiliated money market funds, at value and cost | 43,116,967 | |||
Total investments, at value (Cost $1,300,406,386) | 1,726,338,578 | |||
Receivable for: | ||||
Investments sold | 24,665,778 | |||
Investments sold to affiliates | 228,816 | |||
Fund shares sold | 2,271,107 | |||
Dividends | 434,164 | |||
Investment for trustee deferred compensation and retirement plans | 72,874 | |||
Other assets | 26,249 | |||
Total assets | 1,754,037,566 | |||
Liabilities: | ||||
Payables for: | ||||
Investments purchased | 7,263,560 | |||
Fund shares reacquired | 7,632,599 | |||
Amount due custodian | 15,841 | |||
Collateral upon return of securities loaned | 38,693,919 | |||
Accrued fees to affiliates | 926,566 | |||
Accrued other operating expenses | 93,700 | |||
Trustee deferred compensation and retirement plans | 237,273 | |||
Total liabilities | 54,863,458 | |||
Net assets applicable to shares outstanding | $ | 1,699,174,108 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,337,428,604 | ||
Undistributed net investment income (loss) | (218,864 | ) | ||
Undistributed net realized gain (loss) | (63,967,824 | ) | ||
Unrealized appreciation | 425,932,192 | |||
$ | 1,699,174,108 | |||
Net Assets: | ||||
Class A | $ | 933,268,221 | ||
Class B | $ | 12,194,674 | ||
Class C | $ | 21,200,771 | ||
Class R | $ | 67,464,021 | ||
Class Y | $ | 6,244,922 | ||
Investor Class | $ | 230,908,628 | ||
Institutional Class | $ | 427,892,871 | ||
Shares outstanding, $0.01 par value per share, unlimited number of shares authorized: | ||||
Class A | 32,647,883 | |||
Class B | 496,012 | |||
Class C | 863,357 | |||
Class R | 2,424,172 | |||
Class Y | 217,329 | |||
Investor Class | 7,860,966 | |||
Institutional Class | 14,251,042 | |||
Class A: | ||||
Net asset value per share | $ | 28.59 | ||
Maximum offering price per share (Net asset value of $28.59 divided by 94.50%) | $ | 30.25 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 24.59 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 24.56 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 27.83 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 28.73 | ||
Investor Class: | ||||
Net asset value and offering price per share | $ | 29.37 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 30.03 | ||
* | At December 31, 2010, securities with an aggregate value of $37,431,287 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Small Cap Growth Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends (net of foreign withholding taxes of $91,705) | $ | 8,687,257 | ||
Dividends from affiliated money market funds (includes securities lending income of $403,369) | 455,182 | |||
Total investment income | 9,142,439 | |||
Expenses: | ||||
Advisory fees | 10,143,137 | |||
Administrative services fees | 392,840 | |||
Custodian fees | 31,539 | |||
Distribution fees: | ||||
Class A | 2,060,568 | |||
Class B | 140,466 | |||
Class C | 188,243 | |||
Class R | 260,116 | |||
Investor Class | 491,177 | |||
Transfer agent fees — A, B, C, R, Y and Investor | 2,764,523 | |||
Transfer agent fees — Institutional | 251,568 | |||
Trustees’ and officers’ fees and benefits | 54,089 | |||
Other | 198,898 | |||
Total expenses | 16,977,164 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (66,600 | ) | ||
Net expenses | 16,910,564 | |||
Net investment income (loss) | (7,768,125 | ) | ||
Realized and unrealized gain from: | ||||
Net realized gain from investment securities (includes net gains from securities sold to affiliates of $22,812) | 67,341,840 | |||
Change in net unrealized appreciation of investment securities | 290,238,831 | |||
Net realized and unrealized gain | 357,580,671 | |||
Net increase in net assets resulting from operations | $ | 349,812,546 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Small Cap Growth Fund
Statement of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (7,768,125 | ) | $ | (2,185,372 | ) | ||
Net realized gain (loss) | 67,341,840 | (6,632,037 | ) | |||||
Change in net unrealized appreciation | 290,238,831 | 330,101,395 | ||||||
Net increase in net assets resulting from operations | 349,812,546 | 321,283,986 | ||||||
Share transactions–net: | ||||||||
Class A | (42,514,825 | ) | (50,634,035 | ) | ||||
Class B | (12,571,395 | ) | (10,377,557 | ) | ||||
Class C | (1,703,502 | ) | (1,055,668 | ) | ||||
Class R | 10,628,639 | 6,131,743 | ||||||
Class Y | 217,640 | 2,040,249 | ||||||
Investor Class | 9,336,590 | (18,454,610 | ) | |||||
Institutional Class | 102,003,843 | 51,532,301 | ||||||
Net increase (decrease) in net assets resulting from share transactions | 65,396,990 | (20,817,577 | ) | |||||
Net increase in net assets | 415,209,536 | 300,466,409 | ||||||
Net assets: | ||||||||
Beginning of year | 1,283,964,572 | 983,498,163 | ||||||
End of year (includes undistributed net investment income (loss) of $(218,864) and $(210,482), respectively) | $ | 1,699,174,108 | $ | 1,283,964,572 | ||||
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Small Cap Growth Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Investor Class and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
Effective as of the close of business on March 18, 2002, the Fund’s shares were offered on a limited basis to certain investors.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an |
14 Invesco Small Cap Growth Fund
independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | |
D. | Distributions — Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to |
15 Invesco Small Cap Growth Fund
federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | ||
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $500 million | 0 | .725% | ||
Next $500 million | 0 | .70% | ||
Next $500 million | 0 | .675% | ||
Over $1.5 billion | 0 | .65% | ||
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 2.00% and 1.75%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on April 30, 2012. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended December 31, 2010, the Adviser waived advisory fees of $62,506.
16 Invesco Small Cap Growth Fund
At the request of the Trustees of the Trust, Invesco Ltd. agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the Invesco Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2010, Invesco Ltd. reimbursed expenses of the Fund in the amount of $1,112.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the year ended December 31, 2010, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C, Class R and Investor Class shares (collectively the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares, 0.50% of the average daily net assets of Class R shares and 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2010, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2010, IDI advised the Fund that IDI retained $8,596 in front-end sales commissions from the sale of Class A shares and $0, $14,591 and $359 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 1,726,338,578 | $ | — | $ | — | $ | 1,726,338,578 | ||||||||
NOTE 4—Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended December 31, 2010, the Fund engaged in securities purchases of $797,585 and securities sales of $228,816, which resulted in net realized gains of $22,812.
17 Invesco Small Cap Growth Fund
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended December 31, 2010, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,982.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
During the year ended December 31, 2010, the Fund paid legal fees of $5,874 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
There were no ordinary income or long-term capital gain distributions paid during the years ended December 31, 2010 and 2009.
Tax Components of Net Assets at Period-End:
2010 | ||||
Net unrealized appreciation — investments | $ | 425,472,200 | ||
Temporary book/tax differences | (218,864 | ) | ||
Capital loss carryforward | (63,507,832 | ) | ||
Shares of beneficial interest | 1,337,428,604 | |||
Total net assets | $ | 1,699,174,108 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $67,365,830 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 9,282,592 | ||
December 31, 2017 | 54,225,240 | |||
Total capital loss carryforward | $ | 63,507,832 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
18 Invesco Small Cap Growth Fund
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $597,159,513 and $533,412,170, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 453,897,855 | ||
Aggregate unrealized (depreciation) of investment securities | (28,425,655 | ) | ||
Net unrealized appreciation of investment securities | $ | 425,472,200 | ||
Cost of investments for tax purposes is $1,300,866,378. |
NOTE 10—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses and expired capital loss carryovers, on December 31, 2010, undistributed net investment income (loss) was increased by $7,759,743, undistributed net realized gain (loss) was increased by $8,883,004 and shares of beneficial interest decreased by $16,642,747. This reclassification had no effect on the net assets of the Fund.
NOTE 11—Share Information
Summary of Share Activity | ||||||||||||||||
Years ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 7,664,845 | $ | 185,862,128 | 10,854,719 | $ | 205,933,372 | ||||||||||
Class B | 44,008 | 929,552 | 58,492 | 929,565 | ||||||||||||
Class C | 160,748 | 3,382,951 | 189,449 | 3,113,339 | ||||||||||||
Class R | 1,076,426 | 25,642,447 | 957,426 | 17,669,049 | ||||||||||||
Class Y | 70,987 | 1,710,418 | 1,241,366 | 23,232,896 | ||||||||||||
Investor Class | 2,342,935 | 59,444,924 | 1,248,325 | 24,340,098 | ||||||||||||
Institutional Class | 7,573,297 | 191,585,629 | 5,164,343 | 102,855,317 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 443,494 | 10,381,020 | 309,682 | 6,391,839 | ||||||||||||
Class B | (512,694 | ) | (10,381,020 | ) | (356,393 | ) | (6,391,839 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (9,818,260 | ) | (238,757,973 | ) | (14,275,665 | ) | (262,959,246 | ) | ||||||||
Class B | (149,235 | ) | (3,119,927 | ) | (312,875 | ) | (4,915,283 | ) | ||||||||
Class C | (243,728 | ) | (5,086,453 | ) | (256,816 | ) | (4,169,007 | ) | ||||||||
Class R | (634,065 | ) | (15,013,808 | ) | (628,196 | ) | (11,537,306 | ) | ||||||||
Class Y | (62,663 | ) | (1,492,778 | ) | (1,159,236 | ) | (21,192,647 | ) | ||||||||
Investor Class | (2,034,001 | ) | (50,108,334 | ) | (2,345,250 | ) | (42,794,708 | ) | ||||||||
Institutional Class | (3,525,594 | ) | (89,581,786 | ) | (2,584,075 | ) | (51,323,016 | ) | ||||||||
Net increase (decrease) in share activity | 2,396,500 | $ | 65,396,990 | (1,894,704 | ) | $ | (20,817,577 | ) | ||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and owns 15% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
19 Invesco Small Cap Growth Fund
NOTE 12—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | (losses) on | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | securities (both | Total from | from net | Net asset | Net assets, | with fee waivers | fee waivers | income (loss) | |||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | realized | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | ||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | gains | Distributions | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | ||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | $ | 22.64 | $ | (0.15 | ) | $ | 6.10 | $ | 5.95 | $ | — | $ | — | $ | 28.59 | 26.28 | % | $ | 933,268 | 1.25 | %(d) | 1.25 | %(d) | (0.62 | )%(d) | 38 | % | |||||||||||||||||||||||||
Year ended 12/31/09 | 16.83 | (0.05 | ) | 5.86 | 5.81 | — | — | 22.64 | 34.52 | 777,780 | 1.31 | 1.31 | (0.25 | ) | 36 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 29.00 | (0.13 | ) | (11.16 | ) | (11.29 | ) | (0.88 | ) | (0.88 | ) | 16.83 | (38.77 | ) | 630,729 | 1.28 | 1.28 | (0.56 | ) | 29 | ||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 29.23 | (0.25 | ) | 3.54 | 3.29 | (3.52 | ) | (3.52 | ) | 29.00 | 11.38 | 1,056,349 | 1.23 | 1.23 | (0.78 | ) | 29 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 27.51 | (0.25 | ) | 4.21 | 3.96 | (2.24 | ) | (2.24 | ) | 29.23 | 14.30 | 1,071,753 | 1.25 | 1.25 | (0.84 | ) | 49 | |||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 19.62 | (0.28 | ) | 5.25 | 4.97 | — | — | 24.59 | 25.33 | 12,195 | 2.00 | (d) | 2.00 | (d) | (1.37 | )(d) | 38 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 14.70 | (0.16 | ) | 5.08 | 4.92 | — | — | 19.62 | 33.47 | 21,853 | 2.06 | 2.06 | (1.00 | ) | 36 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 25.71 | (0.28 | ) | (9.85 | ) | (10.13 | ) | (0.88 | ) | (0.88 | ) | 14.70 | (39.22 | ) | 25,347 | 2.03 | 2.03 | (1.31 | ) | 29 | ||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 26.47 | (0.44 | ) | 3.20 | 2.76 | (3.52 | ) | (3.52 | ) | 25.71 | 10.55 | 60,227 | 1.98 | 1.98 | (1.53 | ) | 29 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 25.29 | (0.43 | ) | 3.85 | 3.42 | (2.24 | ) | (2.24 | ) | 26.47 | 13.42 | 101,394 | 2.00 | 2.00 | (1.59 | ) | 49 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 19.59 | (0.28 | ) | 5.25 | 4.97 | — | — | 24.56 | 25.37 | 21,201 | 2.00 | (d) | 2.00 | (d) | (1.37 | )(d) | 38 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 14.69 | (0.16 | ) | 5.06 | 4.90 | — | — | 19.59 | 33.36 | 18,541 | 2.06 | 2.06 | (1.00 | ) | 36 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 25.69 | (0.28 | ) | (9.84 | ) | (10.12 | ) | (0.88 | ) | (0.88 | ) | 14.69 | (39.21 | ) | 14,889 | 2.03 | 2.03 | (1.31 | ) | 29 | ||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 26.46 | (0.44 | ) | 3.19 | 2.75 | (3.52 | ) | (3.52 | ) | 25.69 | 10.52 | 28,722 | 1.98 | 1.98 | (1.53 | ) | 29 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 25.27 | (0.43 | ) | 3.86 | 3.43 | (2.24 | ) | (2.24 | ) | 26.46 | 13.47 | 30,521 | 2.00 | 2.00 | (1.59 | ) | 49 | |||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 22.09 | (0.20 | ) | 5.94 | 5.74 | — | — | 27.83 | 25.98 | 67,464 | 1.50 | (d) | 1.50 | (d) | (0.87 | )(d) | 38 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 16.47 | (0.09 | ) | 5.71 | 5.62 | — | — | 22.09 | 34.12 | 43,786 | 1.56 | 1.56 | (0.50 | ) | 36 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 28.48 | (0.19 | ) | (10.94 | ) | (11.13 | ) | (0.88 | ) | (0.88 | ) | 16.47 | (38.91 | ) | 27,218 | 1.53 | 1.53 | (0.81 | ) | 29 | ||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 28.84 | (0.33 | ) | 3.49 | 3.16 | (3.52 | ) | (3.52 | ) | 28.48 | 11.07 | 36,591 | 1.48 | 1.48 | (1.03 | ) | 29 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 27.23 | (0.32 | ) | 4.17 | 3.85 | (2.24 | ) | (2.24 | ) | 28.84 | 14.04 | 23,988 | 1.50 | 1.50 | (1.09 | ) | 49 | |||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 22.70 | (0.09 | ) | 6.12 | 6.03 | — | — | 28.73 | 26.56 | 6,245 | 1.00 | (d) | 1.00 | (d) | (0.37 | )(d) | 38 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 16.84 | 0.00 | 5.86 | 5.86 | — | — | 22.70 | 34.80 | 4,744 | 1.06 | 1.06 | 0.00 | 36 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08(e) | 21.87 | (0.02 | ) | (4.13 | ) | (4.15 | ) | (0.88 | ) | (0.88 | ) | 16.84 | (18.76 | ) | 2,136 | 1.10 | (f) | 1.11 | (f) | (0.38 | )(f) | 29 | ||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 23.26 | (0.15 | ) | 6.26 | 6.11 | — | — | 29.37 | 26.27 | 230,909 | 1.25 | (d) | 1.25 | (d) | (0.62 | )(d) | 38 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 17.30 | (0.05 | ) | 6.01 | 5.96 | — | — | 23.26 | 34.45 | 175,672 | 1.31 | 1.31 | (0.25 | ) | 36 | |||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 29.76 | (0.14 | ) | (11.44 | ) | (11.58 | ) | (0.88 | ) | (0.88 | ) | 17.30 | (38.75 | ) | 149,594 | 1.28 | 1.28 | (0.56 | ) | 29 | ||||||||||||||||||||||||||||||||
Year ended 12/31/07 | 29.91 | (0.26 | ) | 3.63 | 3.37 | (3.52 | ) | (3.52 | ) | 29.76 | 11.39 | 273,506 | 1.23 | 1.23 | (0.78 | ) | 29 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/06(e) | 31.20 | (0.19 | ) | 1.14 | 0.95 | (2.24 | ) | (2.24 | ) | 29.91 | 2.96 | 281,479 | 1.26 | (f) | 1.26 | (f) | (0.85 | )(f) | 49 | |||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/10 | 23.68 | (0.05 | ) | 6.40 | 6.35 | — | — | 30.03 | 26.82 | 427,893 | 0.82 | (d) | 0.82 | (d) | (0.19 | )(d) | 38 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/09 | 17.52 | 0.04 | 6.12 | 6.16 | — | — | 23.68 | 35.16 | 241,589 | 0.85 | 0.85 | 0.21 | 36 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 | 30.01 | (0.03 | ) | (11.58 | ) | (11.61 | ) | (0.88 | ) | (0.88 | ) | 17.52 | (38.53 | ) | 133,585 | 0.86 | 0.86 | �� | (0.14 | ) | 29 | |||||||||||||||||||||||||||||||
Year ended 12/31/07 | 30.01 | (0.12 | ) | 3.64 | 3.52 | (3.52 | ) | (3.52 | ) | 30.01 | 11.85 | 241,992 | 0.81 | 0.81 | (0.36 | ) | 29 | |||||||||||||||||||||||||||||||||||
Year ended 12/31/06 | 28.08 | (0.13 | ) | 4.30 | 4.17 | (2.24 | ) | (2.24 | ) | 30.01 | 14.76 | 179,414 | 0.84 | 0.84 | (0.43 | ) | 49 | |||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(d) | Ratios are based on average daily net assets (000’s) of $824,227, $14,047, $18,824, $52,023, $5,261, $196,471 and $336,278 for Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class shares, respectively. | |
(e) | Commencement date of October 3, 2008, and April 7, 2006 for Class Y and Investor Class shares, respectively. | |
(f) | Annualized. |
20 Invesco Small Cap Growth Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Small Cap Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Small Cap Growth Fund (formerly known as AIM Small Cap Growth Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
21 Invesco Small Cap Growth Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,289.00 | $ | 7.10 | $ | 1,019.00 | $ | 6.26 | 1.23 | % | ||||||||||||||||||
B | 1,000.00 | 1,284.10 | 11.40 | 1,015.22 | 10.06 | 1.98 | ||||||||||||||||||||||||
C | 1,000.00 | 1,284.50 | 11.40 | 1,015.22 | 10.06 | 1.98 | ||||||||||||||||||||||||
R | 1,000.00 | 1,290.10 | 8.54 | 1,017.74 | 7.53 | 1.48 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,290.10 | 5.66 | 1,020.27 | 4.99 | 0.98 | ||||||||||||||||||||||||
Investor | 1,000.00 | 1,291.60 | 7.10 | 1,019.00 | 6.26 | 1.23 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,288.70 | 4.71 | 1,021.09 | 4.16 | 0.82 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
22 Invesco Small Cap Growth Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(GRAPHIC)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885310.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
![(INVESCO AIM LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885311.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
SCG-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Van Kampen Harbor Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
15 | Financial Statements | |
18 | Financial Highlights | |
20 | Notes to Financial Statements | |
27 | Auditor’s Report | |
28 | Fund Expenses | |
29 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885602.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- PHILIP TAYLOR](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885603.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 | Invesco Van Kampen Harbor Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885604.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885605.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Van Kampen Harbor Fund |
Management’s Discussion of Fund Performance
Performance summary
For the 12-month reporting period ended December 31, 2010, all share classes of Invesco Van Kampen Harbor Fund, at net asset value, posted positive returns and outperformed the Fund’s broad market/style-specific benchmark, the Bank of America Merrill Lynch All Convertibles/All Qualities Index. The Fund’s overweight exposure to consumer discretionary, as well as security selection in health care, industrials and financials, were the main contributors to outperformance.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 18.81 | % | ||
Class B Shares | 17.89 | |||
Class C Shares | 17.94 | |||
Class Y Shares | 19.09 | |||
Institutional Class Shares | 18.99 | |||
Bank of America Merrill Lynch All Convertibles/All Qualities Index▼ | ||||
(Broad Market/Style Specific Index) | 16.77 | |||
Lipper Convertible Securities Funds Index▼ (Peer Group Index) | 18.04 |
▼ | Lipper Inc. |
How we invest
Our investment objective is to provide current income, capital appreciation and conservation of capital.
The Fund seeks to achieve its investment objective by investing principally in a portfolio of debt securities – primarily convertible bonds and convertible preferred stocks. Under normal market conditions, at least 50% of the Fund’s total assets (excluding cash, cash equivalents and government securities) are invested in convertible debt securities. A convertible security is a bond, preferred stock or other security that may be converted into a prescribed amount of common stock at a prestated price. We may retain that common stock to permit its orderly sale or to establish long-term holding periods for tax purposes. The Fund has a policy of investing not more than 45% of its total assets in common stocks. The Fund’s convertible
securities may include lower rated fixed-income securities, commonly known as junk bonds.
Through careful selection of individual securities, diversification of investments and continuous supervision of the investment portfolio, we seek to provide income and capital appreciation while striving to reduce risk and conserve shareholder capital. We emphasize income-producing securities of companies whose common stocks are believed to have good prospects for capital appreciation. We seek to identify companies with improving fundamentals, strong earnings growth, increasing market share and attractive valuations that are likely to provide investors with equity participation through the issuance of convertible securities. We generally sell a security when we believe that it no longer meets the Fund’s investment criteria.
Market conditions and your Fund
Market conditions during the 12-month period covered by this report were influenced by two broad themes: private sector recovery and concerns over sovereign creditworthiness. In the U.S., and across the developed world as a whole, a gradual and somewhat lackluster recovery continued, with central banks keeping interest rates at low levels, and few of them withdrawing their quantitative easing measures. This helped private sector companies improve their balance sheets and earnings following the global financial crisis that began to dissipate in early 2009. Recently, however, investor skepticism of global governments’ abilities to retire huge amounts of debt without affecting economic growth rates caused sovereign debt distress (especially for Greece and other southern eurozone countries) and became a focal point of investor concern throughout 2010.
In the U.S., economic recovery was present, although uneven and possibly slowing, as stubbornly high unemployment and export weakness continued to weigh on the U.S. economy. Real gross domestic product (GDP), the broadest measure of overall U.S. economic activity, increased at an annual rate of 2.6% in the third quarter of 2010.1 In the second quarter, real GDP increased at an annual rate of 1.7% .1 The U.S. Federal Reserve (the Fed) maintained a very accommodative monetary policy throughout the period, with the federal funds target rate unchanged in its range of zero to 0.25%.2 The Fed described its view of the U.S. economy, stating: “Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad.”2 As such, it was widely expected that the Fed would continue to keep rates low for an extended period.
Portfolio Composition
By sector | ||||
Consumer Discretionary | 18.4 | % | ||
Health Care | 18.3 | |||
Information Technology | 18.1 | |||
Financials | 13.1 | |||
Industrials | 11.7 | |||
Energy | 5.2 | |||
Materials | 4.5 | |||
Telecommunication Services | 4.4 | |||
Consumer Staples | 3.0 | |||
Utilities | 2.1 | |||
Money Market Funds | ||||
Plus Other Assets Less Liabilities | 1.2 |
Top 10 Equity Holdings*
1. | General Motors Co. | 1.5 | % | |||||
2. | SBA Communications Corp. | 1.4 | ||||||
3. | Priceline.com, Inc. | 1.4 | ||||||
4. | Virgin Media, Inc. | 1.4 | ||||||
5. | Citigroup, Inc. | 1.3 | ||||||
6. | EMC Corp. | 1.2 | ||||||
7. | Micron Technology, Inc. | 1.2 | ||||||
8. | Endo Pharmaceuticals Holdings, Inc. | 1.2 | ||||||
9. | Swift Mandatory Common exchange Security Trust | 1.2 | ||||||
10. | Molson Coors Brewing Co. | 1.2 |
Total Net Assets | $321.8 million | |||
Total Number of Holdings* | 137 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
4 | Invesco Van Kampen Harbor Fund |
Equity markets were choppy during the fiscal year as investors weighed the competing issues of solid corporate profits and soft macroeconomic data. Corporate earnings were largely positive but often were overshadowed by concerns about high unemployment, lack of consumer spending and soft housing data. After rising through April, major equity indexes sold off precipitously in May, as the sovereign debt crisis unfolded in the eurozone. Meanwhile, U.S. economic indicators remained weak, prompting fears of a double dip recession. Uncertainty created by the debt crisis, combined with subdued employment, consumer spending and housing data, added to concerns that the recovery was slowing to a sub-normal growth rate. Just as abruptly, however, the markets reversed course during the last quarter of the year and rallied on modestly better economic news: inflation was tame, industrial production climbed and third quarter GDP was revised upward. Retail sales – arguably the most influential data point at the end of the calendar year – climbed 5.5% higher this holiday season.3 The rising equity markets ended the year with double-digit gains.
The major equity indexes garnered positive returns for the year, and all 10 sectors within the S&P 500 Index posted gains. All investment styles posted positive returns, with small-cap stocks outperforming large-cap stocks, and growth stocks slightly edging value stocks for the period.
According to Merrill Lynch, of all the asset classes it tracks, from equities to Treasuries and from high yield to high grade corporate bonds, convertibles were the overall winner for the period.4 Speculative-grade convertibles outperformed investment grades, while convertible preferreds and mandatories outperformed convertible bonds. Transportation and consumer discretionary were the top two sectors, both up more than 30% in 2010.4 For the year, the U.S. market recorded $33.8 billion of new issues versus $54.9 billion of redemptions.4 The market value was up approximately $10.9 billion to $231.9 billion, however, due to strong secondary performance.4
We believe the current market reflects a fairly balanced opportunity between credit and equity, and as such, we mainly are focused on total return “traditional” convertibles, rather than “busted” convertibles, where their underlying equity is trading well below their conversion values or equity-sensitive convertibles.
We have found value in information technology (IT), industrials, new issues and consumer discretionary. At the close of the fiscal year, we were underweight financials. It is our view that credit should continue to tighten, but volatility will likely remain elevated as investors try to gauge the recovery speed and as earnings growth becomes more challenging.
The Fund generated positive returns for the reporting period. The Fund’s overweight exposure to consumer discretionary was a positive contributor for the period, but it was offset by security selection. Security selection in IT slightly detracted from returns.
Security selection in health care, industrials and financials were main contributors for the reporting period.
Thank you for investing in Invesco Van Kampen Harbor Fund and for sharing our long-term investment horizon.
1 Bureau of Economic Analysis
2 U.S. Federal Reserve
3 Bloomberg L.P.
4 Bank of America Merrill Lynch
2 U.S. Federal Reserve
3 Bloomberg L.P.
4 Bank of America Merrill Lynch
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF ELLEN GOLD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885606.jpg)
Ellen Gold
Portfolio manager, is lead manager of Invesco Van Kampen Harbor Fund. Ms. Gold joined Invesco in 2010. She earned a B.B.A. from George Washington University and an M.B.A. from New York University.
Portfolio manager, is lead manager of Invesco Van Kampen Harbor Fund. Ms. Gold joined Invesco in 2010. She earned a B.B.A. from George Washington University and an M.B.A. from New York University.
![(PHOTO OF RAMEZ NASHED)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885607.jpg)
Ramez Nashed
Portfolio manager, is manager of Invesco Van Kampen Harbor Fund. Mr. Nashed joined Invesco in 2010. He earned a B.A. in finance from New Jersey City University and an M.B.A. in finance from Seton Hall University.
Portfolio manager, is manager of Invesco Van Kampen Harbor Fund. Mr. Nashed joined Invesco in 2010. He earned a B.A. in finance from New Jersey City University and an M.B.A. in finance from Seton Hall University.
5 | Invesco Van Kampen Harbor Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Class
Fund and index data from 12/31/00
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885608.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if applicable, reflects Fund expenses and management fees; performance of a market index does not.
Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating changes in value during the early years shown in the chart. The vertical axis, the
one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000.
6 | Invesco Van Kampen Harbor Fund |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (11/15/56) | 9.02 | % | ||||||
10 | Years | 3.04 | ||||||
5 | Years | 5.99 | ||||||
1 | Year | 12.26 | ||||||
Class B Shares | ||||||||
Inception (12/20/91) | 7.73 | % | ||||||
10 | Years | 2.99 | ||||||
5 | Years | 6.06 | ||||||
1 | Year | 12.89 | ||||||
Class C Shares | ||||||||
Inception (10/26/93) | 6.60 | % | ||||||
10 | Years | 2.84 | ||||||
5 | Years | 6.38 | ||||||
1 | Year | 16.94 | ||||||
Class Y Shares | ||||||||
Inception (3/23/05) | 7.35 | % | ||||||
5 | Years | 7.44 | ||||||
1 | Year | 19.09 | ||||||
Institutional Class Shares | ||||||||
10 | Years | 3.64 | % | |||||
5 | Years | 7.22 | ||||||
1 | Year | 18.99 |
Effective June 1, 2010, Class A, Class B, Class C and Class I shares of the predecessor fund advised by Van Kampen Asset Management were reorganized into Class A, Class B, Class C and Class Y shares, respectively, of Invesco Van Kampen Harbor Fund. Returns shown above for Class A, Class B, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Van Kampen Harbor Fund. Share class returns will differ from the predecessor fund because of different expenses.
Institutional Class shares incepted on June 1, 2010. Performance shown prior to that date is that of the predecessor fund’s Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Institutional Class shares was 1.11%, 1.86%, 1.86%,
0.86% and 0.80%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Institutional Class shares was 1.12%, 1.87%, 1.87%, 0.87% and 0.80%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. For shares purchased prior to June 1, 2010, the CDSC on Class B shares declines from 5% at the time of purchase to 0% at the beginning of the sixth year. For shares purchased on or after June 1, 2010, the CDSC on Class B shares declines from 5% at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2012. See current prospectus for more information. |
7 | Invesco Van Kampen Harbor Fund |
Invesco Van Kampen Harbor Fund’s investment objective is to seek to provide current income,
capital appreciation and conservation of capital.
capital appreciation and conservation of capital.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class Y shares are available only to certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in financial reporting, differences in securities regulation and trading, and foreign taxation issues. | |
n | Risks of derivatives include the possible imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to the transaction; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the transactions may not be liquid. Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. | |
n | Credit risk refers to an issuer’s ability to make timely payments of interest and principal. Because the Fund may invest in securities with low credit quality, it is subject to a higher level of credit risk than a fund that invests only in investment grade securities. The credit quality of noninvestment-grade securities is considered speculative by recognized rating agencies with respect to the issuer’s continuing ability to pay interest and principal. Lower grade securities (also sometimes known as |
junk bonds) may have less liquidity and a higher incidence of default than investments in higher grade securities. The Fund may incur higher expenses to protect the Fund’s interest in such securities. The credit risks and market prices of lower grade securities generally are more sensitive to negative corporate developments, such as a decline in profits, or adverse economic conditions, such as a recession, than are higher-grade securities. | ||
n | If interest rates fall, it is possible that issuers of callable securities held by the Fund will call or prepay their securities before their maturity dates. In this event, the proceeds from the called securities would most likely be reinvested by the Fund in securities bearing the new, lower interest rates, resulting in a possible decline in the Fund’s income and distributions to shareholders and termination of any conversion option on convertible securities. | |
n | The income you receive from the Fund is based primarily on prevailing interest rates, which can vary widely over the short-and long-term. If interest rates drop, your income from the Fund may drop as well. | |
n | Market risk is the possibility that the market values of securities owned by the Fund will decline. Investments in common stocks and other equity securities generally are affected by changes in the stock markets which fluctuate substantially over time, sometimes suddenly and sharply. |
About indexes used in this report
n | The Bank of America Merrill Lynch All Convertibles/All Qualities Index is an unmanaged index that measures performance of U.S. dollar-denominated convertible securities not currently in bankruptcy with a total market value greater than $500 million at issuance. | |
n | The Lipper Convertible Securities Funds Index represents the average performance of the 10 largest convertible securities mutual funds, as classified by Lipper, Inc. |
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally organized according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | ACHBX | |||
Class B Shares | ACHAX | |||
Class C Shares | ACHCX | |||
Class Y Shares | ACHIX | |||
Institutional Class Shares | ACHJX |
8 | Invesco Van Kampen Harbor Fund |
Schedule of Investments
December 31, 2010
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Convertible Corporate Obligations–80.8% | ||||||||||||||||
Advertising 0.9% | ||||||||||||||||
Interpublic Group of Cos., Inc. | 4.250 | % | 03/15/23 | $ | 2,580 | $ | 2,886,375 | |||||||||
Aerospace & Defense–0.7% | ||||||||||||||||
AAR Corp. | 1.750 | % | 02/01/26 | 2,100 | 2,304,750 | |||||||||||
Alternative Carriers–1.0% | ||||||||||||||||
Globalstar, Inc. | 5.750 | % | 04/01/28 | 730 | 635,100 | |||||||||||
Level 3 Communications, Inc. | 6.500 | % | 10/01/16 | 1,022 | 1,107,593 | |||||||||||
Time Warner Telecom, Inc. | 2.375 | % | 04/01/26 | 1,300 | 1,438,125 | |||||||||||
3,180,818 | ||||||||||||||||
Apparel Retail–0.7% | ||||||||||||||||
Charming Shoppes, Inc. | 1.125 | % | 05/01/14 | 2,733 | 2,295,720 | |||||||||||
Application Software–2.7% | ||||||||||||||||
Cadence Design Systems, Inc.(a) | 2.625 | % | 06/01/15 | 1,692 | 2,146,725 | |||||||||||
Concur Technologies, Inc.(a) | 2.500 | % | 04/15/15 | 1,320 | 1,565,850 | |||||||||||
Nuance Communications, Inc. | 2.750 | % | 08/15/27 | 2,323 | 2,738,236 | |||||||||||
Salesforce.com, Inc.(a) | 0.750 | % | 01/15/15 | 1,335 | 2,207,756 | |||||||||||
8,658,567 | ||||||||||||||||
Asset Management & Custody Banks–1.2% | ||||||||||||||||
Affiliated Managers Group, Inc. | 3.950 | % | 08/15/38 | 1,496 | 1,664,300 | |||||||||||
Janus Capital Group, Inc. | 3.250 | % | 07/15/14 | 1,863 | 2,216,970 | |||||||||||
3,881,270 | ||||||||||||||||
Auto Parts & Equipment–0.6% | ||||||||||||||||
BorgWarner, Inc. | 3.500 | % | 04/15/12 | 934 | 2,093,327 | |||||||||||
Automobile Manufacturers–1.0% | ||||||||||||||||
Ford Motor Co. | 4.250 | % | 11/15/16 | 1,615 | 3,236,056 | |||||||||||
Automotive Retail–1.0% | ||||||||||||||||
Sonic Automotive, Inc. | 5.000 | % | 10/01/29 | 2,503 | 3,122,493 | |||||||||||
Biotechnology–4.9% | ||||||||||||||||
Alexion Pharmaceuticals, Inc. | 1.375 | % | 02/01/12 | 488 | 2,499,780 | |||||||||||
BioMarin Pharmaceuticals, Inc. | 1.875 | % | 04/23/17 | 1,619 | 2,333,384 | |||||||||||
Cephalon, Inc. | 2.500 | % | 05/01/14 | 1,330 | 1,514,538 | |||||||||||
Gilead Sciences, Inc.(a) | 1.625 | % | 05/01/16 | 2,911 | 3,041,995 | |||||||||||
Incyte Corp., Ltd. | 4.750 | % | 10/01/15 | 1,385 | 2,882,531 | |||||||||||
Isis Pharmaceuticals, Inc. | 2.625 | % | 02/15/27 | 817 | 801,681 | |||||||||||
Theravance, Inc. | 3.000 | % | 01/15/15 | 2,440 | 2,766,350 | |||||||||||
15,840,259 | ||||||||||||||||
Brewers–1.2% | ||||||||||||||||
Molson Coors Brewing Co. | 2.500 | % | 07/30/13 | 3,300 | 3,836,250 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Van Kampen Harbor Fund
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Broadcasting–0.8% | ||||||||||||||||
Central European Media Enterprises, Ltd. (Bermuda)(a) | 3.500 | % | 03/15/13 | $ | 3,000 | $ | 2,677,500 | |||||||||
Cable & Satellite–2.0% | ||||||||||||||||
Virgin Media, Inc. | 6.500 | % | 11/15/16 | 2,650 | 4,399,000 | |||||||||||
XM Satellite Radio, Inc.(a) | 7.000 | % | 12/01/14 | 1,610 | 1,984,325 | |||||||||||
6,383,325 | ||||||||||||||||
Casinos & Gaming–1.8% | ||||||||||||||||
International Game Technology | 3.250 | % | 05/01/14 | 2,628 | 3,045,195 | |||||||||||
MGM Resorts International(a) | 4.250 | % | 04/15/15 | 2,425 | 2,667,500 | |||||||||||
5,712,695 | ||||||||||||||||
Coal & Consumable Fuels–1.0% | ||||||||||||||||
Alpha Natural Resources, Inc. | 2.375 | % | 04/15/15 | 1,400 | 1,879,500 | |||||||||||
Peabody Energy Corp. | 4.750 | % | 12/15/66 | 1,075 | 1,396,156 | |||||||||||
3,275,656 | ||||||||||||||||
Communications Equipment–2.4% | ||||||||||||||||
Arris Group, Inc. | 2.000 | % | 11/15/26 | 3,010 | 3,081,487 | |||||||||||
Ciena Corp.(a) | 4.000 | % | 03/15/15 | 2,450 | 3,080,875 | |||||||||||
Ixia(a) | 3.000 | % | 12/15/15 | 640 | 714,400 | |||||||||||
Powerwave Technologies, Inc. | 3.875 | % | 10/01/27 | 1,100 | 973,500 | |||||||||||
7,850,262 | ||||||||||||||||
Computer Storage & Peripherals–3.4% | ||||||||||||||||
EMC Corp. | 1.750 | % | 12/01/11 | 2,750 | 3,990,938 | |||||||||||
EMC Corp. | 1.750 | % | 12/01/13 | 1,180 | 1,783,275 | |||||||||||
NetApp, Inc. | 1.750 | % | 06/01/13 | 1,500 | 2,681,250 | |||||||||||
SanDisk Corp. | 1.000 | % | 05/15/13 | 2,560 | 2,476,800 | |||||||||||
10,932,263 | ||||||||||||||||
Construction & Farm Machinery & Heavy Trucks–2.7% | ||||||||||||||||
ArvinMeritor, Inc.(b) | 4.625/0.000 | % | 03/01/26 | 2,150 | 2,727,812 | |||||||||||
Terex Corp. | 4.000 | % | 06/01/15 | 1,100 | 2,250,875 | |||||||||||
Titan International, Inc.(a) | 5.625 | % | 01/15/17 | 1,790 | 3,767,950 | |||||||||||
8,746,637 | ||||||||||||||||
Construction Materials–1.0% | ||||||||||||||||
Cemex SAB de CV (Mexico)(a) | 4.875 | % | 03/15/15 | 2,960 | 3,248,600 | |||||||||||
Data Processing & Outsourced Services–0.6% | ||||||||||||||||
Alliance Data Systems Corp. | 1.750 | % | 08/01/13 | 1,815 | 1,955,662 | |||||||||||
Department Stores–0.9% | ||||||||||||||||
Saks, Inc. | 2.000 | % | 03/15/24 | 2,895 | 3,014,419 | |||||||||||
Electrical Components & Equipment–0.6% | ||||||||||||||||
EnerSys(b) | 3.375/0.000 | % | 06/01/38 | 1,700 | 1,914,625 | |||||||||||
Electronic Manufacturing Services–0.5% | ||||||||||||||||
TTM Technologies, Inc. | 3.250 | % | 05/15/15 | 1,250 | 1,501,563 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Van Kampen Harbor Fund
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Footwear–0.5% | ||||||||||||||||
Iconix Brand Group, Inc. | 1.875 | % | 06/30/12 | $ | 1,600 | $ | 1,616,000 | |||||||||
Gold–0.9% | ||||||||||||||||
Newmont Mining Corp. | 3.000 | % | 02/15/12 | 1,970 | 2,750,613 | |||||||||||
Health Care Equipment–6.2% | ||||||||||||||||
HeartWare International, Inc. | 3.500 | % | 12/15/17 | 1,400 | 1,552,250 | |||||||||||
Hologic, Inc.(b) | 2.000/0.000 | % | 12/15/37 | 2,400 | 2,520,000 | |||||||||||
Insulet Corp. | 5.375 | % | 06/15/13 | 1,365 | 1,452,019 | |||||||||||
Kinetic Concepts, Inc.(a) | 3.250 | % | 04/15/15 | 1,111 | 1,173,494 | |||||||||||
Medtronic, Inc. | 1.625 | % | 04/15/13 | 2,430 | 2,457,337 | |||||||||||
NuVasive, Inc. | 2.250 | % | 03/15/13 | 2,800 | 2,744,000 | |||||||||||
Teleflex, Inc. | 3.875 | % | 08/01/17 | 2,220 | 2,342,100 | |||||||||||
Volcano Corp. | 2.875 | % | 09/01/15 | 2,080 | 2,412,800 | |||||||||||
Wright Medical Group, Inc. | 2.625 | % | 12/01/14 | 3,350 | 3,169,938 | |||||||||||
19,823,938 | ||||||||||||||||
Health Care Facilities–1.3% | ||||||||||||||||
LifePoint Hospitals, Inc. | 3.500 | % | 05/15/14 | 3,100 | 3,142,625 | |||||||||||
NovaMed, Inc. | 1.000 | % | 06/15/12 | 1,050 | 958,125 | |||||||||||
4,100,750 | ||||||||||||||||
Health Care Services–1.7% | ||||||||||||||||
Chemed Corp. | 1.875 | % | 05/15/14 | 3,350 | 3,362,563 | |||||||||||
Omnicare, Inc. | 3.750 | % | 12/15/25 | 1,850 | 2,072,000 | |||||||||||
5,434,563 | ||||||||||||||||
Homebuilding–0.9% | ||||||||||||||||
Lennar Corp.(a) | 2.750 | % | 12/15/20 | 2,560 | 2,809,600 | |||||||||||
Hotels, Resorts & Cruise Lines–0.9% | ||||||||||||||||
Gaylord Entertainment Co.(a) | 3.750 | % | 10/01/14 | 640 | 936,000 | |||||||||||
Home Inns & Hotels Management, Inc. (Cayman Islands)(a) | 2.000 | % | 12/15/15 | 2,000 | 2,010,000 | |||||||||||
2,946,000 | ||||||||||||||||
Industrial REIT’s–1.0% | ||||||||||||||||
ProLogis | 3.250 | % | 03/15/15 | 2,800 | 3,115,000 | |||||||||||
Internet Retail–1.4% | ||||||||||||||||
Priceline.com, Inc.(a) | 1.250 | % | 03/15/15 | 3,080 | 4,535,300 | |||||||||||
Internet Software & Services–3.2% | ||||||||||||||||
Digital River, Inc.(a) | 2.000 | % | 11/01/30 | 2,100 | 2,063,250 | |||||||||||
Equinix, Inc. | 2.500 | % | 04/15/12 | 2,300 | 2,357,500 | |||||||||||
GSI Commerce, Inc. | 2.500 | % | 06/01/27 | 1,650 | 1,800,562 | |||||||||||
RightNow Technologies, Inc.(a) | 2.500 | % | 11/15/30 | 1,706 | 1,703,868 | |||||||||||
VeriSign, Inc. | 3.250 | % | 08/15/37 | 2,000 | 2,252,500 | |||||||||||
10,177,680 | ||||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Van Kampen Harbor Fund
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Investment Banking & Brokerage–1.7% | ||||||||||||||||
Jefferies Group, Inc. | 3.875 | % | 11/01/29 | $ | 1,311 | $ | 1,381,466 | |||||||||
Knight Capital Group, Inc.(a) | 3.500 | % | 03/15/15 | 1,500 | 1,432,500 | |||||||||||
MF Global Holdings, Ltd. | 9.000 | % | 06/20/38 | 2,200 | 2,645,500 | |||||||||||
5,459,466 | ||||||||||||||||
IT Consulting & Other Services–0.6% | ||||||||||||||||
CACI International, Inc. | 2.125 | % | 05/01/14 | 1,750 | 2,005,937 | |||||||||||
Life & Health Insurance–0.4% | ||||||||||||||||
American Equity Investment Life Holding Co.(a) | 3.500 | % | 09/15/15 | 1,095 | 1,296,206 | |||||||||||
Life Sciences Tools & Services–0.5% | ||||||||||||||||
Invitrogen Corp. | 1.500 | % | 02/15/24 | 1,330 | 1,612,625 | |||||||||||
Managed Health Care–0.2% | ||||||||||||||||
AMERIGROUP Corp. | 2.000 | % | 05/15/12 | 660 | 770,550 | |||||||||||
Marine–0.5% | ||||||||||||||||
DryShips, Inc. (Marshall Islands) | 5.000 | % | 12/01/14 | 1,450 | 1,493,500 | |||||||||||
Metal & Glass Containers–0.7% | ||||||||||||||||
Owens-Brockway Glass Container, Inc.(a) | 3.000 | % | 06/01/15 | 2,240 | 2,265,200 | |||||||||||
Movies & Entertainment–0.5% | ||||||||||||||||
Liberty Media LLC | 3.125 | % | 03/30/23 | 1,400 | 1,576,750 | |||||||||||
Oil & Gas Equipment & Services–1.0% | ||||||||||||||||
SESI LLC(b) | 1.500/1.250 | % | 12/15/26 | 3,105 | 3,178,744 | |||||||||||
Oil & Gas Exploration & Production–1.2% | ||||||||||||||||
Chesapeake Energy Corp. | 2.500 | % | 05/15/37 | 2,700 | 2,423,250 | |||||||||||
St Mary Land & Exploration Co. | 3.500 | % | 04/01/27 | 1,100 | 1,344,750 | |||||||||||
3,768,000 | ||||||||||||||||
Packaged Foods & Meats–0.8% | ||||||||||||||||
Smithfield Foods, Inc. | 4.000 | % | 06/30/13 | 2,200 | 2,576,750 | |||||||||||
Pharmaceuticals–3.4% | ||||||||||||||||
Endo Pharmaceuticals Holdings, Inc. | 1.750 | % | 04/15/15 | 2,900 | 3,871,500 | |||||||||||
Mylan Labs, Inc. | 1.250 | % | 03/15/12 | 1,400 | 1,489,250 | |||||||||||
Nektar Therapeutics | 3.250 | % | 09/28/12 | 2,800 | 2,828,000 | |||||||||||
Viropharma, Inc. | 2.000 | % | 03/15/17 | 2,450 | 2,756,250 | |||||||||||
10,945,000 | ||||||||||||||||
Semiconductors–5.1% | ||||||||||||||||
Advanced Micro Devices, Inc. | 5.750 | % | 08/15/12 | 1,085 | 1,117,550 | |||||||||||
Advanced Micro Devices, Inc. | 6.000 | % | 05/01/15 | 1,521 | 1,540,012 | |||||||||||
Intel Corp. | 2.950 | % | 12/15/35 | 2,300 | 2,302,875 | |||||||||||
Intel Corp.(a) | 2.950 | % | 12/15/35 | 750 | 750,938 | |||||||||||
Micron Technology, Inc. | 1.875 | % | 06/01/14 | 4,100 | 3,895,000 | |||||||||||
ON Semiconductor Corp.(a) | 2.625 | % | 12/15/26 | 2,600 | 3,058,250 | |||||||||||
SunPower Corp. | 4.750 | % | 04/15/14 | 1,385 | 1,282,856 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Van Kampen Harbor Fund
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Semiconductors–(continued) | ||||||||||||||||
Suntech Power Holdings Co., Ltd. (Cayman Islands) | 3.000 | % | 03/15/13 | $ | 1,000 | $ | 881,250 | |||||||||
Xilinx, Inc.(a) | 2.625 | % | 06/15/17 | 1,330 | 1,566,075 | |||||||||||
16,394,806 | ||||||||||||||||
Specialized Consumer Services–0.3% | ||||||||||||||||
Sotheby’s | 3.125 | % | 06/15/13 | 700 | 1,015,875 | |||||||||||
Specialized Finance–0.8% | ||||||||||||||||
PHH Corp. | 4.000 | % | 09/01/14 | 2,380 | 2,683,450 | |||||||||||
Specialized REIT’s–0.3% | ||||||||||||||||
Rayonier TRS Holdings, Inc. | 3.750 | % | 10/15/12 | 750 | 832,500 | |||||||||||
Steel–1.9% | ||||||||||||||||
Allegheny Technologies, Inc. | 4.250 | % | 06/01/14 | 1,448 | 2,191,910 | |||||||||||
ArcelorMittal (Luxembourg) | 5.000 | % | 05/15/14 | 1,050 | 1,522,500 | |||||||||||
Steel Dynamics, Inc. | 5.125 | % | 06/15/14 | 1,900 | 2,417,750 | |||||||||||
6,132,160 | ||||||||||||||||
Systems Software–2.7% | ||||||||||||||||
Microsoft Corp.(a) | * | 06/15/13 | 1,400 | 1,510,250 | ||||||||||||
Rovi Corp.(a) | 2.625 | % | 02/15/40 | 2,100 | 3,039,750 | |||||||||||
Symantec Corp. | 1.000 | % | 06/15/13 | 2,100 | 2,396,625 | |||||||||||
TeleCommunication Systems, Inc.(a) | 4.500 | % | 11/01/14 | 1,831 | 1,746,316 | |||||||||||
8,692,941 | ||||||||||||||||
Technology Distributors–1.2% | ||||||||||||||||
Anixter International, Inc. | 1.000 | % | 02/15/13 | 1,950 | 2,191,312 | |||||||||||
SYNNEX Corp.(a) | 4.000 | % | 05/15/18 | 1,440 | 1,776,600 | |||||||||||
3,967,912 | ||||||||||||||||
Thrifts & Mortgage Finance–0.8% | ||||||||||||||||
MGIC Investment Corp. | 5.000 | % | 05/01/17 | 740 | 853,775 | |||||||||||
PMI Group, Inc. | 4.500 | % | 04/15/20 | 1,980 | 1,643,400 | |||||||||||
2,497,175 | ||||||||||||||||
Trading Companies & Distributors–1.1% | ||||||||||||||||
United Rentals, Inc. | 4.000 | % | 11/15/15 | 1,650 | 3,632,063 | |||||||||||
Trucking–1.0% | ||||||||||||||||
Avis Budget Group, Inc. | 3.500 | % | 10/01/14 | 2,720 | 3,264,000 | |||||||||||
Wireless Telecommunication Services–2.5% | ||||||||||||||||
Clearwire Communications LLC/ Clearwire Finance, Inc.(a) | 8.250 | % | 12/01/40 | 2,100 | 2,142,000 | |||||||||||
Leap Wireless International, Inc. | 4.500 | % | 07/15/14 | 1,400 | 1,260,000 | |||||||||||
SBA Communications Corp. | 1.875 | % | 05/01/13 | 4,045 | 4,555,681 | |||||||||||
7,957,681 | ||||||||||||||||
Total Convertible Corporate Obligations–80.8% | 259,877,827 | |||||||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Van Kampen Harbor Fund
Description | Shares | Value | ||||||
Convertible Preferred Stocks–17.3% | ||||||||
Asset Management & Custody Banks–0.5% | ||||||||
AMG Capital Trust II, 5.150% | 41,000 | $ | 1,652,812 | |||||
Automobile Manufacturers–1.5% | ||||||||
General Motors Co., 4.750% | 89,550 | 4,845,550 | ||||||
Diversified Banks–0.7% | ||||||||
Wells Fargo & Co., Class A, 7.500% | 2,375 | 2,376,306 | ||||||
Diversified Capital Markets–0.8% | ||||||||
UBS AG (Switzerland), 9.375% | 95,200 | 2,627,234 | ||||||
Electric Utilities–2.1% | ||||||||
NextEra Energy, Inc., 8.375% | 69,700 | 3,457,817 | ||||||
PPL Corp., 9.500% | 60,000 | 3,298,200 | ||||||
6,756,017 | ||||||||
Health Care Facilities–0.5% | ||||||||
HealthSouth Corp., Ser A, 6.500% | 1,830 | 1,780,133 | ||||||
Health Care Services–0.7% | ||||||||
Omnicare Capital Trust II, 4.000% | 57,833 | 2,238,137 | ||||||
Household Appliances–1.0% | ||||||||
Stanley Black & Decker, Inc., 4.750% | 29,500 | 3,185,410 | ||||||
Multi-Line Insurance–0.5% | ||||||||
Hartford Financial Services Group, Inc., 7.250% | 58,160 | 1,489,478 | ||||||
Oil & Gas Exploration & Production–1.1% | ||||||||
Apache Corp., 6.000% | 52,500 | 3,478,650 | ||||||
Oil & Gas Storage & Transportation–0.9% | ||||||||
El Paso Corp., 4.990% | 2,550 | 3,000,075 | ||||||
Other Diversified Financial Services–1.3% | ||||||||
Citigroup, Inc., 7.500% | 29,600 | 4,046,024 | ||||||
Packaged Foods & Meats–1.0% | ||||||||
Dole Food Co., Inc., 7.000%(a)(c) | 252,600 | 3,291,681 | ||||||
Railroads–0.6% | ||||||||
Kansas City Southern, Inc., 5.125% | 1,290 | 2,064,323 | ||||||
Regional Banks–1.9% | ||||||||
Synovus Financial Corp., 8.250% | 103,400 | 2,576,728 | ||||||
Wintrust Financial Corp., 7.500% | 60,800 | 3,392,762 | ||||||
5,969,490 | ||||||||
Trucking–1.2% | ||||||||
Swift Mandatory Common Exchange Security Trust, 6.000%(a) | 304,700 | 3,838,611 | ||||||
Wireless Telecommunication Services–1.0% | ||||||||
Crown Castle International Corp., 6.250% | 50,000 | 3,096,875 | ||||||
Total Convertible Preferred Stocks–17.3% | 55,736,806 | |||||||
Common Stock–0.7% | ||||||||
Pharmaceuticals–0.7% | ||||||||
Merck & Co., Inc. | 62,438 | 2,250,266 | ||||||
Total Long-Term Investments–98.8% (Cost $271,586,894) | 317,864,899 | |||||||
Money Market Funds–0.7% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 1,128,976 | 1,128,976 | ||||||
Premier Portfolio–Institutional Class(d) | 1,128,976 | 1,128,976 | ||||||
Total Money Market Funds–0.7% (Cost $2,257,952) | 2,257,952 | |||||||
TOTAL INVESTMENTS–99.5% (Cost $273,844,846) | 320,122,851 | |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES–0.5% | 1,635,907 | |||||||
NET ASSETS–100.0% | $ | 321,758,758 | ||||||
Percentages are calculated as a percentage of net assets.
Investment Abbreviation:
REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
* | Zero coupon bond. | |
(a) | 144A-Private Placement security which is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. | |
(b) | Security is a “step-down” bond where the coupon decreases or steps down at a predetermined date. | |
(c) | Non-income producing security. | |
(d) | The money market and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Van Kampen Harbor Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments, at value (Cost $271,586,894) | $ | 317,864,899 | ||
Investments in affiliated money market funds, at value and cost | 2,257,952 | |||
Cash | 174,578 | |||
Receivables: | ||||
Interest | 1,377,944 | |||
Fund shares sold | 424,215 | |||
Dividends | 183,127 | |||
Other | 3,696 | |||
Total assets | 322,286,411 | |||
Liabilities: | ||||
Payables: | ||||
Distributor and affiliates | 137,905 | |||
Investments purchased | 132,458 | |||
Fund shares repurchased | 121,265 | |||
Trustees’ deferred compensation and retirement plans | 2,629 | |||
Accrued expenses | 133,396 | |||
Total liabilities | 527,653 | |||
Net assets | $ | 321,758,758 | ||
Net assets consist of: | ||||
Capital (par value of $0.01 per share with an unlimited number of shares authorized) | $ | 272,426,336 | ||
Net unrealized appreciation | 46,278,005 | |||
Accumulated net realized gain | 3,175,649 | |||
Accumulated undistributed net investment income (loss) | (121,232 | ) | ||
Net assets | $ | 321,758,758 | ||
Maximum offering price per share: | ||||
Class A shares: | ||||
Net asset value and redemption price per share (based on net assets of $276,478,019 and 15,831,879 shares of beneficial interest issued and outstanding) | $ | 17.46 | ||
Maximum sales charge (5.50% of offering price) | 1.02 | |||
Maximum offering price to public | $ | 18.48 | ||
Class B shares: | ||||
Net asset value and offering price per share (based on net assets of $7,783,485 and 446,967 shares of beneficial interest issued and outstanding) | $ | 17.41 | ||
Class C shares: | ||||
Net asset value and offering price per share (based on net assets of $21,528,964 and 1,224,242 shares of beneficial interest issued and outstanding) | $ | 17.59 | ||
Class Y shares: | ||||
Net asset value and offering price per share (based on net assets of $15,956,608 and 913,140 shares of beneficial interest issued and outstanding) | $ | 17.47 | ||
Institutional shares: | ||||
Net asset value and offering price per share (based on net assets of $11,682 and 669 shares of beneficial interest issued and outstanding) | $ | 17.47 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Van Kampen Harbor Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends | $ | 3,560,124 | ||
Dividends from affiliated money market funds | 4,681 | |||
Interest | 8,041,136 | |||
Total income | 11,605,941 | |||
Expenses: | ||||
Investment advisory fee | 1,657,909 | |||
Distribution fees | ||||
Class A | 641,870 | |||
Class B | 80,918 | |||
Class C | 187,641 | |||
Transfer agent fees – A, B, C and Y | 365,027 | |||
Transfer agent fees – Institutional | 42 | |||
Administrative service fees | 100,478 | |||
Reports to shareholders | 89,497 | |||
Registration fees | 59,258 | |||
Custody | 47,774 | |||
Professional fees | 44,145 | |||
Trustees’ and officers’ fees and benefits | 24,811 | |||
Other | 22,029 | |||
Total expenses | 3,321,399 | |||
Expense reduction | 3,929 | |||
Net expenses | 3,317,470 | |||
Net investment income | 8,288,471 | |||
Realized and unrealized gain (loss): | ||||
Net realized gain | 27,778,209 | |||
Unrealized appreciation: | ||||
Beginning of the period | 30,633,760 | |||
End of the period | 46,278,005 | |||
Net unrealized appreciation during the period | 15,644,245 | |||
Net realized and unrealized gain | 43,422,454 | |||
Net increase in net assets from operations | $ | 51,710,925 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Van Kampen Harbor Fund
Statements of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
From investment activities: | ||||||||
Operations: | ||||||||
Net investment income | $ | 8,288,471 | $ | 8,113,118 | ||||
Net realized gain (loss) | 27,778,209 | (3,430,187 | ) | |||||
Net unrealized appreciation during the period | 15,644,245 | 82,068,190 | ||||||
Change in net assets from operations | 51,710,925 | 86,751,121 | ||||||
Distributions from net investment income: | ||||||||
Class A shares | (9,744,542 | ) | (6,146,337 | ) | ||||
Class B shares | (238,619 | ) | (163,278 | ) | ||||
Class C shares | (569,961 | ) | (254,722 | ) | ||||
Class Y shares | (550,383 | ) | (183,037 | ) | ||||
Institutional shares | (37,615 | ) | -0- | |||||
Total distributions | (11,141,120 | ) | (6,747,374 | ) | ||||
Net change in net assets from investment activities | 40,569,805 | 80,003,747 | ||||||
From capital transactions: | ||||||||
Proceeds from shares sold | 45,298,216 | 67,433,870 | ||||||
Net asset value of shares issued through dividend reinvestment | 9,425,829 | 5,761,708 | ||||||
Cost of shares repurchased | (73,727,838 | ) | (44,927,907 | ) | ||||
Net change in net assets from capital transactions | (19,003,793 | ) | 28,267,671 | |||||
Total increase in net assets | 21,566,012 | 108,271,418 | ||||||
Net Assets: | ||||||||
Beginning of the period | 300,192,746 | 191,921,328 | ||||||
End of the period (including accumulated undistributed net investment income (loss) of $(121,232) and $1,474,032, respectively) | $ | 321,758,758 | $ | 300,192,746 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Van Kampen Harbor Fund
Financial Highlights
The following schedules present financial highlights for one share of the Fund outstanding throughout the periods indicated.
Class A Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 15.27 | $ | 11.03 | $ | 16.22 | $ | 15.58 | $ | 14.50 | ||||||||||
Net investment income(a) | 0.45 | 0.44 | 0.32 | 0.34 | 0.40 | |||||||||||||||
Net realized and unrealized gain (loss) | 2.34 | 4.16 | (5.09 | ) | 0.81 | 1.19 | ||||||||||||||
Total from investment operations | 2.79 | 4.60 | (4.77 | ) | 1.15 | 1.59 | ||||||||||||||
Less distributions from net investment income | 0.60 | 0.36 | 0.42 | 0.51 | 0.51 | |||||||||||||||
Net asset value, end of the period | $ | 17.46 | $ | 15.27 | $ | 11.03 | $ | 16.22 | $ | 15.58 | ||||||||||
Total return | 18.73 | %(b) | 42.17 | %(c) | (29.90 | )%(c) | 7.51 | %(c) | 11.15 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 276.5 | $ | 260.1 | $ | 177.7 | $ | 284.2 | $ | 300.2 | ||||||||||
Ratio of expenses to average net assets(d) | 1.05 | %(e) | 1.11 | % | 1.05 | % | 1.05 | % | 1.05 | % | ||||||||||
Ratio of net investment income to average net assets | 2.80 | %(e) | 3.36 | % | 2.23 | % | 2.12 | % | 2.68 | % | ||||||||||
Portfolio turnover(f) | 91 | % | 127 | % | 92 | % | 120 | % | 87 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by 0.01% for the years ended December 31, 2007 and 2006. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $260,560. | |
(f) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
Class B Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 15.22 | $ | 11.00 | $ | 16.18 | $ | 15.54 | $ | 14.46 | ||||||||||
Net investment income(a) | 0.34 | 0.33 | 0.21 | 0.22 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) | 2.33 | 4.15 | (5.08 | ) | 0.81 | 1.19 | ||||||||||||||
Total from investment operations | 2.67 | 4.48 | (4.87 | ) | 1.03 | 1.48 | ||||||||||||||
Less distributions from net investment income | 0.48 | 0.26 | 0.31 | 0.39 | 0.40 | |||||||||||||||
Net asset value, end of the period | $ | 17.41 | $ | 15.22 | $ | 11.00 | $ | 16.18 | $ | 15.54 | ||||||||||
Total return | 17.89 | %(b) | 41.14 | %(c) | (30.44 | )%(c) | 6.73 | %(c) | 10.28 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 7.8 | $ | 8.8 | $ | 7.8 | $ | 20.1 | $ | 25.1 | ||||||||||
Ratio of expenses to average net assets(d) | 1.80 | %(e) | 1.86 | % | 1.81 | % | 1.81 | % | 1.82 | % | ||||||||||
Ratio of net investment income to average net assets | 2.13 | %(e) | 2.57 | % | 1.46 | % | 1.36 | % | 1.91 | % | ||||||||||
Portfolio turnover(f) | 91 | % | 127 | % | 92 | % | 120 | % | 87 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and services fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by 0.01% for the years ended December 31, 2007 and 2006. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $8,092. | |
(f) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Van Kampen Harbor Fund
Financial Highlights—(continued)
Class C Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 15.37 | $ | 11.10 | $ | 16.33 | $ | 15.68 | $ | 14.59 | ||||||||||
Net investment income(a) | 0.32 | 0.36 | 0.21 | 0.22 | 0.29 | |||||||||||||||
Net realized and unrealized gain (loss) | 2.38 | 4.17 | (5.13 | ) | 0.82 | 1.20 | ||||||||||||||
Total from investment operations | 2.70 | 4.53 | (4.92 | ) | 1.04 | 1.49 | ||||||||||||||
Less distributions from net investment income | 0.48 | 0.26 | 0.31 | 0.39 | 0.40 | |||||||||||||||
Net asset value, end of the period | $ | 17.59 | $ | 15.37 | $ | 11.10 | $ | 16.33 | $ | 15.68 | ||||||||||
Total return | 17.94 | %(b) | 41.20 | %(c) | (30.47 | )%(c) | 6.72 | %(c) | 10.25 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 21.5 | $ | 17.7 | $ | 5.7 | $ | 8.4 | $ | 9.2 | ||||||||||
Ratio of expenses to average net assets(d) | 1.80 | %(e) | 1.86 | % | 1.81 | % | 1.81 | % | 1.82 | % | ||||||||||
Ratio of net investment income to average net assets | 1.98 | %(e) | 2.66 | % | 1.46 | % | 1.36 | % | 1.91 | % | ||||||||||
Portfolio turnover(f) | 91 | % | 127 | % | 92 | % | 120 | % | 87 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by 0.01% for the years ended December 31, 2007 and 2006. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $18,764. | |
(f) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
Class Y Sharesˆ | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 15.27 | $ | 11.03 | $ | 16.23 | $ | 15.58 | $ | 14.50 | ||||||||||
Net investment income(a) | 0.48 | 0.51 | 0.35 | 0.38 | 0.44 | |||||||||||||||
Net realized and unrealized gain (loss) | 2.36 | 4.13 | (5.10 | ) | 0.82 | 1.18 | ||||||||||||||
Total from investment operations | 2.84 | 4.64 | (4.75 | ) | 1.20 | 1.62 | ||||||||||||||
Less distributions from net investment income | 0.64 | 0.40 | 0.45 | 0.55 | 0.54 | |||||||||||||||
Net asset value, end of the period | $ | 17.47 | $ | 15.27 | $ | 11.03 | $ | 16.23 | $ | 15.58 | ||||||||||
Total return | 19.09 | %(b) | 42.61 | %(c) | (29.77 | )%(c) | 7.83 | %(c) | 11.33 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 16.0 | $ | 13.6 | $ | 0.7 | $ | 0.9 | $ | 0.5 | ||||||||||
Ratio of expenses to average net assets(d) | 0.80 | %(e) | 0.86 | % | 0.81 | % | 0.81 | % | 0.81 | % | ||||||||||
Ratio of net investment income to average net assets | 3.01 | %(e) | 3.68 | % | 2.46 | % | 2.36 | % | 2.93 | % | ||||||||||
Portfolio turnover(f) | 91 | % | 127 | % | 92 | % | 120 | % | 87 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by 0.01% for the years ended December 31, 2007 and 2006. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $13,332. | |
(f) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
ˆ | On June 1, 2010, the Class I shares of the predecessor fund were reorganized into Class Y shares of the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Van Kampen Harbor Fund
Financial Highlights—(continued)
Institutional | ||||
Class Shares | ||||
June 1, 2010 | ||||
(Commencement of | ||||
Operations) to | ||||
December 31, 2010 | ||||
Net asset value, beginning of the period | $ | 15.26 | ||
Net investment income(a) | 0.37 | |||
Net realized and unrealized gain | 2.33 | |||
Total from investment operations | 2.70 | |||
Less distributions from net investment income | 0.49 | |||
Net asset value, end of the period | $ | 17.47 | ||
Total return(b) | 18.04 | % | ||
Net assets at end of the period (in thousands) | $ | 11.7 | ||
Ratio of expenses to average net assets | 0.68 | %(c) | ||
Ratio of net investment income to average net assets | 4.12 | %(c) | ||
Portfolio turnover(d) | 91 | % | ||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Ratios are annualized and based on average daily net assets (000’s omitted) of $1,394. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Van Kampen Harbor Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
Prior to June 1, 2010, the Fund operated as Van Kampen Harbor Fund (the “Acquired Fund”). The Acquired Fund was reorganized on June 1, 2010 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”).
Upon closing of the Reorganization, holders of the Acquired Fund’s Fund’s Class A, Class B and Class C shares received the corresponding class of shares of the Fund and holders of the Acquired Fund’s Class I shares received Class Y shares of the Fund. Information for the Acquired Fund’s — Class I shares prior to the Reorganization is included with Class Y shares of the Fund throughout this report.
The Fund’s principal investment objective is to seek to provide current income, capital appreciation and conservation of capital by investing principally in a portfolio of debt securities, primarily convertible bonds and convertible preferred stocks.
The Fund currently consists of five different classes of shares: Class A, Class B, Class C, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity |
20 Invesco Van Kampen Harbor Fund
are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
C. | Distributions — Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
D. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
21 Invesco Van Kampen Harbor Fund
Each Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
E. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. Prior to the Reorganization, incremental transfer agency fees which are unique to each class of shares of the Acquired Fund were charged to the operations of such class. | |
F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
H. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. | |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. | ||
I. | Foreign Currency Contracts — The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser at the annual rate of the Fund’s average daily net assets. The Fund also indirectly bears the investment advisory fees of the underlying funds.
Average Net Assets | Rate | |||
First $350 million | 0 | .55% | ||
Next $350 million | 0 | .50% | ||
Next $350 million | 0 | .45% | ||
Over $1.05 billion | 0 | .40% | ||
Prior to the Reorganization, the Acquired Fund paid an advisory fee of $695,620 to Van Kampen Asset Management (“Van Kampen”) based on the annual rates above of the Acquired Fund’s average daily net assets.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
22 Invesco Van Kampen Harbor Fund
Effective on the Reorganization date, the Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y and Institutional Class shares to 1.11%, 1.86%, 1.86%, 0.86% and 0.86%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012. The Adviser did not waive fees and/or reimburse expenses during the period under the expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds. For the year ended December 31, 2010, the Adviser waived advisory fees of $3,929 under this agreement.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. Prior to the Reorganization, under separate accounting services and chief compliance officer (“CCO”) employment agreements, Van Kampen Investments Inc. (“VKII”) provided accounting services and the CCO provided compliance services to the Acquired Fund. Pursuant to such agreements, the Acquired Fund paid $15,015 to VKII. For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as administrative services fees. Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (“SSB”) serves as the custodian and fund accountant and provides certain administrative services to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. Pursuant to such agreement, for the period ended December 31, 2010, IIS was paid $226,774 for providing such services. Prior to the Reorganization, the Acquired Fund paid $102,226 to Van Kampen Investor Services Inc., which served as the Acquired Fund’s transfer agent. For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
Prior to the Reorganization, the Acquired Fund had entered into master distribution agreements with Van Kampen Funds Inc. (��VKFI”) to serve as the distributor for the Class A, Class B and Class C shares. Pursuant to such agreements, the Acquired Fund paid $380,049 to VKFI.
For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. For the period June 1, 2010 to December 31, 2010, IDI advised the Fund that IDI retained $9,667 in front-end sales commissions from the sale of Class A shares and $100, $8,030 and $2,802 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Prior to the Reorganization, VKFI retained $12,333 in front-end sales commissions from the sale of Class A shares and $6,393 for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
23 Invesco Van Kampen Harbor Fund
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Convertible Corporate Obligations | $ | — | $ | 259,877,827 | $ | — | $ | 259,877,827 | ||||||||
Equity Securities | 32,042,701 | 28,202,323 | — | 60,245,024 | ||||||||||||
Total Investments | $ | 32,042,701 | $ | 288,080,150 | $ | — | $ | 320,122,851 | ||||||||
NOTE 4—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
For the period ended December 31, 2010, the Fund paid legal fees of $785 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. Prior to the Reorganization, the Acquired Fund recognized expense of $3,394 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a director of the Acquired Fund was a partner of such firm and he and his law firm provided legal services as legal counsel to the Acquired Fund.
NOTE 5—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 11,141,120 | $ | 6,747,374 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 1,194,618 | ||
Undistributed long-term gain | 3,101,251 | |||
Net unrealized appreciation — investments | 45,039,181 | |||
Temporary book/tax differences | (2,628 | ) | ||
Shares of beneficial interest | 272,426,336 | |||
Total net assets | $ | 321,758,758 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to book to tax accretion and amortization difference and preferred convertible stocks adjustments.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $22,914,734 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes.
24 Invesco Van Kampen Harbor Fund
NOTE 7—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $264,839,383 and $284,722,604, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 46,920,562 | ||
Aggregate unrealized (depreciation) of investment securities | (1,881,381 | ) | ||
Net unrealized appreciation of investment securities | $ | 45,039,181 | ||
Cost of investments for tax purposes is $275,083,670. |
NOTE 8—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of tax accretion and amortization difference and real estate investment trusts (REIT) dividends, on December 31, 2010, accumulated undistributed net investment income (loss) was increased by $1,257,385 and accumulated undistributed net realized gain was decreased by $1,257,385. This reclassification had no effect on the net assets of the Fund.
NOTE 9—Share Information
For the years ended December 31, | ||||||||||||||||
2010 (a) | 2009 | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Sales: | ||||||||||||||||
Class A | 1,469,319 | (b) | $ | 23,635,889 | (b) | 3,294,085 | $ | 41,897,975 | ||||||||
Class B | 92,962 | 1,455,271 | 241,647 | 3,078,975 | ||||||||||||
Class C | 244,213 | 3,963,053 | 796,907 | 10,108,744 | ||||||||||||
Class Y | 784,886 | 12,585,050 | 895,249 | 12,348,176 | ||||||||||||
Institutional Class | 242,741 | 3,658,953 | -0- | -0- | ||||||||||||
Total sales | 2,834,121 | $ | 45,298,216 | 5,227,888 | $ | 67,433,870 | ||||||||||
Dividend reinvestment: | ||||||||||||||||
Class A | 535,729 | $ | 8,480,129 | 398,698 | $ | 5,315,367 | ||||||||||
Class B | 14,208 | 223,913 | 11,768 | 155,274 | ||||||||||||
Class C | 29,186 | 466,375 | 15,734 | 216,204 | ||||||||||||
Class Y | 13,640 | 217,913 | 5,387 | 74,863 | ||||||||||||
Institutional Class | 2,357 | 37,499 | -0- | -0- | ||||||||||||
Total dividend reinvestment | 595,120 | $ | 9,425,829 | 431,587 | $ | 5,761,708 | ||||||||||
Repurchases: | ||||||||||||||||
Class A | (3,212,739 | ) | $ | (51,024,591 | ) | (2,769,872 | ) | (36,631,797 | ) | |||||||
Class B | (237,721 | )(b) | (3,760,673 | )(b) | (381,800 | ) | (4,885,195 | ) | ||||||||
Class C | (199,668 | ) | (3,203,117 | ) | (179,623 | ) | (2,321,881 | ) | ||||||||
Class Y | (775,299 | ) | (11,846,912 | ) | (76,345 | ) | (1,089,034 | ) | ||||||||
Institutional Class | (244,429 | ) | (3,892,545 | ) | -0- | -0- | ||||||||||
Total repurchases | (4,669,856 | ) | $ | (73,727,838 | ) | (3,407,640 | ) | (44,927,907 | ) | |||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 6% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. In addition, less than 1% of the outstanding shares of the Fund are owned by Invesco or an investment adviser under common control with Invesco. | |
(b) | Includes automatic conversion of 76,929 Class B shares into 76,674 Class A shares at a value of $1,231,883. |
25 Invesco Van Kampen Harbor Fund
NOTE 10—Significant Event
Following a number of meetings in September and October, 2010, the Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco Convertible Securities Fund (the “Acquiring Fund”) in exchange for shares of the Acquiring Fund. The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2011.
NOTE 11—Change in Independent Registered Public Accounting Firm (Unaudited)
In connection with the Reorganization of the Fund, the Audit Committee of the Board of Trustees of the Trust appointed, and the Board of Trustees ratified and approved, PricewaterhouseCoopers LLP (“PWC”) as the independent registered public accounting firm of the Fund for the fiscal year following May 31, 2010. The predecessor fund’s financial statements were audited by a different independent registered public accounting firm (the “Prior Auditor”). Concurrent with the closing of the Reorganization, the Prior Auditor resigned as the independent registered public accounting firm of the predecessor fund. The Prior Auditor’s report on the financial statements of the Fund for the past two years did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period the Prior Auditor was engaged, there were no disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its report.
26 Invesco Van Kampen Harbor Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Van Kampen Harbor Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Van Kampen Harbor Fund (formerly known as Van Kampen Harbor Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations, the changes in its net assets and the financial highlights for the period then ended, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statement of changes in net assets and the financial highlights of the Fund for the periods ended December 31, 2009 and prior were audited by other independent auditors whose report dated February 19, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
27 Invesco Van Kampen Harbor Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
ACTUAL | (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,196.86 | $ | 5.70 | $ | 1,020.01 | $ | 5.24 | 1.03 | % | ||||||||||||||||||
B | 1,000.00 | 1,192.22 | 9.84 | 1,016.23 | 9.05 | 1.78 | ||||||||||||||||||||||||
C | 1,000.00 | 1,193.28 | 9.84 | 1,016.23 | 9.05 | 1.78 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,198.19 | 4.38 | 1,021.22 | 4.02 | 0.79 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,198.70 | 3.77 | 1,021.78 | 3.47 | 0.68 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
28 Invesco Van Kampen Harbor Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 33.51% | |||
Corporate Dividends Received Deduction* | 31.65% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
29 Invesco Van Kampen Harbor Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(IMAGE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885609.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the period between June 1, 2010, and June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website, sec.gov. Proxy voting information for the predecessor fund prior to its reorganization with the Fund on June 1, 2010, is not available on the Invesco website but is or will be available on the SEC website under the predecessor fund.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885610.gif)
VK-HAR-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Van Kampen Leaders Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
10 | Financial Statements | |
13 | Financial Highlights | |
16 | Notes to Financial Statements | |
23 | Auditor’s Report | |
24 | Fund Expenses | |
25 | Approval of Investment Advisory and Sub-Advisory Agreements | |
27 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884952.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884953.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 | Invesco Van Kampen Leaders Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884954.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884955.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Van Kampen Leaders Fund |
Management’s Discussion of Fund Performance
Performance summary
For the nine months ended December 31, 2010, Class A shares of Invesco Van Kampen Leaders Fund, at net asset value (NAV), returned 6.70%. The components of the Fund delivered mixed results, however, against their respective benchmarks.
Invesco Van Kampen Comstock Fund’s Class A shares, at NAV, slightly outperformed the fund’s style-specific index, the Russell 1000 Value Index.
Invesco Van Kampen Equity and Income Fund’s Class A shares, at NAV, underperformed the fund’s broad market index, the Russell 1000 Value Index, but outperformed its style-specific index, the Barclays Capital U.S. Government/ Credit Index.
In addition, Invesco Van Kampen International Growth Fund’s Class A shares, at NAV, underperformed the fund’s broad market index, the MSCI EAFE Index.
Strength in equity markets, particularly during the second half of 2010, helped drive Invesco Van Kampen Leaders Fund’s performance. The Fund’s fixed income exposure, as measured by the Barclays Capital U.S. Government/Credit Index, helped mitigate your Fund’s losses during the volatile second quarter.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 3/31/10 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 6.70 | % | ||
Class B Shares | 5.99 | |||
Class C Shares | 6.12 | |||
Class Y Shares | 6.78 | |||
S&P 500 Index▼ (Broad Market Index) | 9.20 | |||
Russell 1000 Value Index▼ (Style-Specific Index) | 8.17 | |||
Barclays Capital U.S. Government/Credit Index▼ (Style-Specific Index) | 4.97 | |||
MSCI EAFE Index▼ (Style-Specific Index) | 6.83 | |||
▼ | Lipper Inc. |
How we invest
The Fund’s principal investment objective is capital appreciation. The Fund’s secondary investment objective is income.
The Fund seeks to achieve its investment objectives by investing primarily in a combination of certain Invesco Van Kampen funds (the underlying funds) on a fixed percentage allocation basis. The underlying funds invest in U.S. and foreign equities, fixed income securities and money market securities. Your Fund also invests in derivatives, specifically
U.S. Treasury futures, for managing the portfolio’s duration. The Fund makes equal allocations of its assets to the following three underlying funds: Invesco Van Kampen Comstock Fund, Invesco Van Kampen Equity and Income Fund and Invesco Van Kampen International Growth Fund. The investment results of the underlying funds will vary. As a result, the percentage allocations to the underlying funds is monitored daily. The Fund’s allocations to the underlying funds is rebalanced whenever the actual allocations exceed plus or minus 5% of
the pre-determined fixed percentage allocation basis.
Market conditions and your Fund
At the onset of the second quarter of 2010, Chinese officials began to tighten monetary policy in response to fears about inflation, creating concerns about the pace of growth for the Chinese economy and its impact on demand for commodities. Furthermore, concerns about a “double dip” recession in the U.S. and concerns about the economies of Greece, Ireland, Portugal and Spain ignited fears of a renewed global economic slowdown. These developments caused investors to seek out safety and drove government bond yields of the world’s largest industrial countries downward.
The third quarter witnessed the rare event of increases in virtually all asset prices. Two events and related policy responses drove returns: the peripheral European debt crisis and the marked slowdown in the U.S. economy. In the case of Europe, the creation of a facility to support the troubled economies removed the worst of the uncertainty. Risky assets such as equities rose in response. In the U.S., the Federal Reserve set expectations for a second round of quantitative easing. Government bonds benefited from both the economic events and the U.S. policy response, resulting in yields across the yield curve hovering at or near multi-decade lows. The policy response also proved to be a boon for equities which rebounded strongly in the second half of the quarter. Commodities also had a very eventful quarter, with all of the major complexes (agriculture, precious metals, industrial metals and energy) posting positive returns.
Portfolio Composition
By sector
Primarily Domestic Equity | 34.2 | % | ||
Domestic Blend | 33.5 | |||
Primarily Foreign Equity | 32.5 | |||
Money Market Funds | ||||
Plus Other Assets Less Liabilities | -0.2 |
Total Net Assets | $209.5 million |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
4 | Invesco Van Kampen Leaders Fund |
Global equity markets resumed their advance in the fourth quarter. Equities were supported by very loose monetary policies and the belief that the seven largest developed (G7) economies had strengthened since the summer months. For emerging markets, the economic landscape was even brighter, with rising asset values, strengthening business activity and even a hint of inflationary pressures. The rise in government bond yields that occurred in the fourth quarter took their valuations much closer to our estimate of fair value. Within commodities, the various complexes all enjoyed price advances during the quarter, propelled by tightening supply-demand balances and positive economic prospects among commodity-intensive emerging markets.
Within the Fund, fears of an economic downturn in the U.S. and global monetary concerns resulted in deep losses for the underlying funds in the second quarter and dramatic underperformance by the Fund. However, exposure to both U.S. and global equities proved beneficial for the Fund over the entirety of the nine-month reporting period. The performance of the equity portion of the underlying funds was particularly strong in the third and fourth quarters of 2010. Though outpaced by the equity rally, falling bond yields helped the fixed income allocation contribute positively to overall Fund performance for the reporting period.
Thank you for your continued commitment to Invesco Van Kampen Leaders Fund and for sharing our long-term investment horizon.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF MARK AHNRUD)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884956.jpg)
Mark Ahnrud
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1985 and joined Invesco in 2000. Mr. Ahnrud earned a B.S. in finance and investments from Babson College and an M.B.A. from the Fuqua School of Business at Duke University with a concentration in finance and real estate.
![(PHOTO OF CHRIS DEVINE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884957.jpg)
Chris Devine
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1996 and joined Invesco in 1998. Mr. Devine earned a B.A. from Wake Forest University and an M.B.A. from the University of Georgia.
![(PHOTO OF SCOTT HIXON)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884958.jpg)
Scott Hixon
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1992 and joined Invesco in 1994. Mr. Hixon earned a B.B.A. in finance and graduated magna cum laude from Georgia Southern University. He earned an M.B.A. in finance from Georgia State University.
![(PHOTO OF CHRISTIAN ULRICH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884959.jpg)
Christian Ulrich
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He began his investment career in 1987 and joined Invesco in 2000. Mr. Ulrich earned a business degree from the KV Zurich Business School in Zurich, Switzerland.
![(PHOTO OF SCOTT WOLLE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884960.jpg)
Scott Wolle
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Leaders Fund. He is chief investment officer of Invesco Global Asset Allocation. Mr. Wolle began his investment career in 1991 and joined Invesco in 1999. Mr. Wolle earned a B.S. from Virginia Polytechnic Institute and State University, graduating magna cum laude. He earned an M.B.A. from the Fuqua School of Business at Duke University, where he earned the distinction of Fuqua Scholar.
5 | Invesco Van Kampen Leaders Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Fund data from 2/27/06, index data from 2/28/06
![(LINE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884961.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical
shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if
applicable, reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
continued from page 8
n | A growth style of investing (used by Invesco International Growth Fund) emphasizes companies with growth characteristics. The market values of growth securities may be more volatile than those of other types of investments. The returns on growth securities may or may not move in tandem with the returns on other styles of investing or the overall stock markets. |
About indexes used in this report
n | The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. | |
n | The Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | |
n | The Barclays Capital U.S. Government/ Credit Index includes Treasuries and agencies that represent the government portion of the index, and includes publicly issued U.S. corporate and foreign |
debentures and secured notes that meet specified maturity, liquidity, and quality requirements to represent the credit interests. | ||
n | The MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a |
rigorous and comprehensive study program in the field of investment management and research analysis. | ||
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
6 | Invesco Van Kampen Leaders Fund |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (2/27/06) | 0.17 | % | ||||||
1 | Year | 5.10 | ||||||
Class B Shares | ||||||||
Inception (2/27/06) | 0.22 | % | ||||||
1 | Year | 5.39 | ||||||
Class C Shares | ||||||||
Inception (2/27/06) | 0.60 | % | ||||||
1 | Year | 9.40 | ||||||
Class Y Shares | ||||||||
Inception (2/27/06) | 1.59 | % | ||||||
1 | Year | 11.48 |
Effective June 1, 2010, Class A, Class B, Class C and Class I shares of the predecessor fund advised by Van Kampen Asset Management were reorganized into Class A, Class B, Class C and Class Y shares, respectively, of Invesco Van Kampen Leaders Fund. Returns shown above for Class A, Class B, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Van Kampen Leaders Fund. Share class returns will differ from the predecessor fund because of different expenses.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C and Class Y shares was 1.25%, 2.00%, 2.00%, and 1.00%, respectively.1,2 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C and Class Y shares was 1.53%, 2.28%, 2.28% and 1.28%, respectively.2 The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. For shares purchased prior to June 1, 2010, the CDSC on Class B shares declines from 5% at the time of purchase to 0% at the beginning of the sixth year. For shares purchased on or after June 1, 2010, the CDSC on Class B shares declines from 5% at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Had the adviser not waived fees and/or reimbursed expenses in the past, performance would have been lower.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2012. See current prospectus for more information. | |
2 | The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.75% for Invesco Van Kampen Leaders Fund. |
7 | Invesco Van Kampen Leaders Fund |
Invesco Van Kampen Leaders Fund’s principal investment objective is capital appreciation. The Fund’s secondary investment objective is income.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | Each of the underlying funds in which the Fund invests has its own investment risks, and those risks can affect the value of the underlying funds’ shares and therefore the value of the Fund’s investments. In addition, there is no guarantee that the underlying funds will achieve each of their investment objectives or that the underlying funds will not change their investment objectives without the approval of the Fund. In addition, the Fund will bear its pro rata portion of the expenses of the underlying funds. In selecting among the underlying funds (which also are advised by the Adviser), the Adviser is subject to the potential conflict of interest presented because the fees paid by some underlying funds to the Adviser are higher than the fees paid by other underlying funds. | |
n | A non-diversified fund generally is subject to greater risk than a diversified fund because changes in the financial condition or market assessment of a single issuer may cause greater fluctuations in the value of such non-diversified funds’ shares. | |
n | Market risk is the possibility that the market values of securities owned by the underlying fund will decline. Investment in common stocks and other equity securities generally are affected by changes in the stock markets, which fluctuate substantially over time, sometimes suddenly and sharply. Investments in debt securities generally are affected by changes in |
interest rates and the creditworthiness of the issuer. The prices of such securities tend to fall as interest rates rise, and such declines tend to be greater among securities with longer maturities. The value of a convertible security tends to decline as interest rates rise and, because of the conversion feature, tends to vary with fluctuations in the market value of the underlying equity security. | ||
n | During an overall stock market decline, stock prices of small- or medium-sized companies (in which the underlying funds may invest) often fluctuate more than stock prices of larger companies. | |
n | The ability of the underlying funds’ equity securities to generate income generally depends on the earnings and the continuing declaration of dividends by the issuers of such securities. The interest income on the underlying funds’ debt securities generally is affected by prevailing interest rates, which can vary widely over the short- and long-term. | |
n | If interest rates fall, it is possible that issuers of callable securities held by the underlying funds will call or prepay their securities before their maturity dates. In this event, the proceeds from the called securities would most likely be reinvested by the underlying funds in securities bearing the new, lower interest rates, resulting in a possible decline in the Fund’s income and distributions to shareholders. | |
n | Credit risk refers to an issuer’s ability to make timely payments of interest and principal. Because an underlying fund generally invests only in investment grade-quality debt securities, it is subject to a lower level of credit risk than a fund investing in lower-quality securities. Securities rated BBB by Standard & Poor’s (S&P) or Baa by Moody’s Investor Service, Inc. (Moody’s) are in the lowest of the four investment grades and are considered by the rating agencies to be medium- |
grade obligations, which possess speculative characteristics so that changes in economic conditions or other circumstances are more likely to lead to a weakened capacity of the issuer to make principal and interest payments than in the case of higher-rated securities. | ||
n | The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in securities regulation and trading, and foreign taxation issues. | |
n | Investing in real estate investment trusts (REITs) makes the underlying funds more susceptible to risks associated with the ownership of real estate and with the real estate industry in general and may involve duplication of management fees and other expenses. REITs may be less diversified than other pools of securities, may have lower trading volumes and may be subject to more abrupt or erratic price movements than the overall securities markets. | |
n | Risks of derivatives include the possible imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to the transaction; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the instruments may not be liquid. | |
n | A value style of investing (used by Invesco Comstock Fund and Invesco Equity and Income Fund) emphasizes undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on value securities are less than returns on other styles of investing or the overall market. |
continued on page 6
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols | ||
Class A Shares | VLFAX | |
Class B Shares | VLFBX | |
Class C Shares | VLFCX | |
Class Y Shares | VLFIX |
8 | Invesco Van Kampen Leaders Fund |
Schedule of Investments
December 31, 2010
Description | Shares | Value | ||||||
Investment Companies(a)–100.2% | ||||||||
Invesco Van Kampen Comstock Fund, Institutional Class | 4,559,487 | $ | 71,675,136 | |||||
Invesco Van Kampen Equity and Income Fund, Institutional Class | 8,157,898 | 70,076,342 | ||||||
Invesco Van Kampen International Growth Fund, Institutional Class(b) | 4,040,787 | 68,168,076 | ||||||
Total Long-Term Investments–100.2% (Cost $202,240,813) | 209,919,554 | |||||||
Money Market Funds(a)–0.0% | ||||||||
Liquid Assets Portfolio–Institutional Class | 35,035 | 35,035 | ||||||
Premier Portfolio–Institutional Class | 35,035 | 35,035 | ||||||
Total Money Market Funds–0.0% (Cost $70,070) | 70,070 | |||||||
TOTAL INVESTMENTS–100.2% (Cost $202,310,883) | 209,989,624 | |||||||
LIABILITIES IN EXCESS OF OTHER ASSETS–(0.2%) | (477,303 | ) | ||||||
NET ASSETS 100.0% | $ | 209,512,321 | ||||||
Percentages are calculated as a percentage of net assets.
Notes to Schedule of Investments:
(a) | Each underlying fund and the Fund are affiliated by having the same investment adviser. | |
(b) | The Fund does not invest in affiliated underlying funds for the purpose of exercising management or control. At December 31, 2010, the Fund held the following position, which exceeded 5% of the affiliated underlying fund’s shares outstanding: |
Percent of | ||||
Affiliated Underlying Fund | Shares Held | |||
Invesco Van Kampen International Growth Fund, Institutional Class | 8.03 | % | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Van Kampen Leaders Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments in affiliated underlying funds, at value (Cost $202,310,883) | $ | 209,989,624 | ||
Receivables: | ||||
Fund shares sold | 88,787 | |||
Dividends | 60 | |||
Other | 894 | |||
Total assets | 210,079,365 | |||
Liabilities: | ||||
Payables: | ||||
Fund shares repurchased | 177,919 | |||
Distributor and affiliates | 143,232 | |||
Accrued expenses | 243,790 | |||
Trustees’ deferred compensation and retirement plans | 2,103 | |||
Total liabilities | 567,044 | |||
Net assets | $ | 209,512,321 | ||
Net assets consist of: | ||||
Capital (Par value of $0.01 per share with an unlimited number of shares authorized) | $ | 270,724,228 | ||
Net unrealized appreciation | 7,678,741 | |||
Accumulated undistributed net investment income | 788,775 | |||
Accumulated net realized loss | (69,679,423 | ) | ||
Net assets | $ | 209,512,321 | ||
Maximum Offering Price Per Share: | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (Based on net assets of $137,607,394 and 14,912,248 shares of beneficial interest issued and outstanding) | $ | 9.23 | ||
Maximum sales charge (5.50% of offering price) | 0.54 | |||
Maximum offering price to public | $ | 9.77 | ||
Class B Shares: | ||||
Net asset value and offering price per share (Based on net assets of $51,494,598 and 5,585,021 shares of beneficial interest issued and outstanding) | $ | 9.22 | ||
Class C Shares: | ||||
Net asset value and offering price per share (Based on net assets of $20,210,947 and 2,201,087 shares of beneficial interest issued and outstanding) | $ | 9.18 | ||
Class Y Shares: | ||||
Net asset value and offering price per share (Based on net assets of $199,382 and 21,607 shares of beneficial interest issued and outstanding) | $ | 9.23 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Van Kampen Leaders Fund
Statements of Operations
For the period April 1, 2010 through December 31, 2010 and the year ended March 31, 2010
For the nine months ended | For the year ended | |||||||
December 31, | March 31, | |||||||
2010 | 2010 | |||||||
Investment income: | ||||||||
Dividends from affiliated underlying funds | $ | 2,906,934 | $ | 3,931,359 | ||||
Interest | 457 | 3,931 | ||||||
Total income | 2,907,391 | 3,935,290 | ||||||
Expenses: | ||||||||
Distribution Fees | ||||||||
Class A | 255,820 | 347,066 | ||||||
Class B | 372,564 | 474,431 | ||||||
Class C | 141,262 | 227,269 | ||||||
Transfer agent fees | 505,639 | 772,296 | ||||||
Reports to shareholders | 79,934 | 69,797 | ||||||
Administrative service fees | 45,514 | 52,924 | ||||||
Registration fees | 37,767 | 54,392 | ||||||
Professional fees | 34,599 | 47,160 | ||||||
Trustees’ and officers’ fees and benefits | 15,024 | 39,628 | ||||||
Custody | 4,815 | 8,611 | ||||||
Pension expense (See Note 5) | (40,974 | ) | -0- | |||||
Other | 10,614 | 21,803 | ||||||
Total expenses | 1,462,578 | 2,115,377 | ||||||
Expense reduction | 305,043 | 543,592 | ||||||
Net expenses | 1,157,535 | 1,571,785 | ||||||
Net investment income | 1,749,856 | 2,363,505 | ||||||
Realized and unrealized gain (loss): | ||||||||
Realized gain (loss): | ||||||||
Realized loss on sales of affiliated underlying funds | (8,466,798 | ) | (15,584,650 | ) | ||||
Unrealized appreciation (depreciation): | ||||||||
Beginning of the period | (11,014,646 | ) | (105,866,521 | ) | ||||
End of the period | 7,678,741 | (11,014,646 | ) | |||||
Net unrealized appreciation during the period | 18,693,387 | 94,851,875 | ||||||
Net realized and unrealized gain | 10,226,589 | 79,267,225 | ||||||
Net increase in net assets from operations | $ | 11,976,445 | $ | 81,630,730 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Van Kampen Leaders Fund
Statements of Changes in Net Assets
For the period April 1, 2010 through December 31, 2010 and the years ended March 31, 2010 and 2009
For the nine months ended | For the year ended | For the year ended | ||||||||||
December 31, | March 31, | March 31, | ||||||||||
2010 | 2010 | 2009 | ||||||||||
From investment activities: | ||||||||||||
Operations: | ||||||||||||
Net investment income | $ | 1,749,856 | $ | 2,363,505 | $ | 4,787,497 | ||||||
Net realized loss | (8,466,798 | ) | (15,584,650 | ) | (45,143,505 | ) | ||||||
Net unrealized appreciation (depreciation) during the period | 18,693,387 | 94,851,875 | (80,078,095 | ) | ||||||||
Change in net assets from operations | 11,976,445 | 81,630,730 | (120,434,103 | ) | ||||||||
Distributions from net investment income: | ||||||||||||
Class A shares | (1,680,646 | ) | (2,529,549 | ) | (2,988,076 | ) | ||||||
Class B shares | (341,484 | ) | (505,066 | ) | (597,703 | ) | ||||||
Class C shares | (227,598 | ) | (244,114 | ) | (358,308 | ) | ||||||
Class Y shares | (2,699 | ) | (4,437 | ) | (4,943 | ) | ||||||
(2,252,427 | ) | (3,283,166 | ) | (3,949,030 | ) | |||||||
Distributions from net realized gain: | ||||||||||||
Class A shares | -0- | -0- | (6,660,766 | ) | ||||||||
Class B shares | -0- | -0- | (2,169,362 | ) | ||||||||
Class C shares | -0- | -0- | (1,268,280 | ) | ||||||||
Class Y shares | -0- | -0- | (9,603 | ) | ||||||||
-0- | -0- | (10,108,011 | ) | |||||||||
Total distributions | (2,252,427 | ) | (3,283,166 | ) | (14,057,041 | ) | ||||||
Net change in net assets from investment activities | 9,724,018 | 78,347,564 | (134,491,144 | ) | ||||||||
From capital transactions: | ||||||||||||
Proceeds from shares sold | 15,074,780 | 28,506,685 | 60,691,006 | |||||||||
Net asset value of shares issued through dividend reinvestment | 2,210,841 | 3,226,303 | 13,746,757 | |||||||||
Cost of shares repurchased | (42,903,693 | ) | (50,094,052 | ) | (82,868,644 | ) | ||||||
Net change in net assets from capital transactions | (25,618,072 | ) | (18,361,064 | ) | (8,430,881 | ) | ||||||
Total increase (decrease) in net assets | (15,894,054 | ) | 59,986,500 | (142,922,025 | ) | |||||||
Net assets: | ||||||||||||
Beginning of the period | 225,406,375 | 165,419,875 | 308,341,900 | |||||||||
End of the period (including accumulated undistributed net investment income of $788,775, $1,291,347 and $2,210,051, respectively) | $ | 209,512,321 | $ | 225,406,375 | $ | 165,419,875 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Van Kampen Leaders Fund
Financial Highlights
The following schedules present financial highlights for one share of the Fund outstanding throughout the periods indicated.
Class A Shares | ||||||||||||||||||||||||
February 27, 2006 | ||||||||||||||||||||||||
(Commencement of | ||||||||||||||||||||||||
Nine months ended | operations) to | |||||||||||||||||||||||
December 31, | Year ended March 31, | March 31, | ||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of the period | $ | 8.76 | $ | 5.90 | $ | 10.49 | $ | 11.26 | $ | 10.08 | $ | 10.00 | ||||||||||||
Net investment income(a) | 0.09 | 0.11 | 0.19 | 0.16 | 0.16 | 0.01 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.49 | 2.89 | (4.25 | ) | (0.68 | ) | 1.18 | 0.07 | ||||||||||||||||
Total from investment operations | 0.58 | 3.00 | (4.06 | ) | (0.52 | ) | 1.34 | 0.08 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Distributions from net investment income | 0.11 | 0.14 | 0.16 | 0.15 | 0.16 | -0- | ||||||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.37 | 0.10 | 0.00 | (f) | -0- | |||||||||||||||||
Total distributions | 0.11 | 0.14 | 0.53 | 0.25 | 0.16 | -0- | ||||||||||||||||||
Net asset value, end of the period | $ | 9.23 | $ | 8.76 | $ | 5.90 | $ | 10.49 | $ | 11.26 | $ | 10.08 | ||||||||||||
Total return* | 6.70 | %(b) | 51.13 | %(c) | (39.27 | )%(c) | (4.77 | )%(c) | 13.47 | %(c) | 0.80 | %(c)** | ||||||||||||
Net assets at end of the period (in millions) | $ | 137.6 | $ | 149.3 | $ | 109.9 | $ | 201.4 | $ | 130.9 | $ | 5.0 | ||||||||||||
Ratio of expenses to average net assets*(d) | 0.50 | %(g) | 0.50 | % | 0.50 | % | 0.50 | % | 0.51 | %(e) | 0.50 | % | ||||||||||||
Ratio of net investment income to average net assets*(d) | 1.37 | %(g) | 1.38 | % | 2.21 | % | 1.42 | % | 1.51 | % | 2.50 | % | ||||||||||||
Portfolio turnover(h) | 4 | % | 9 | % | 21 | % | 3 | % | 0 | % | 0 | % | ||||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||||||
Ratio of expenses to average net assets(d) | 0.70 | %(g) | 0.76 | % | 0.73 | % | 0.57 | % | 0.89 | %(e) | 24.16 | % | ||||||||||||
Ratio of net investment income to average net assets(d) | 1.17 | %(g) | 1.12 | % | 1.98 | % | 1.35 | % | 1.13 | % | (21.16 | )% | ||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.63%, 0.75%, 0.76%, 0.69%, 0.84% and 0.54% for the nine months ended December 31, 2010, the years ended March 31, 2010, 2009, 2008 and 2007 and the period ended March 31, 2006, respectively. | |
(e) | The ratio of expenses to average net assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratios would decrease by 0.01% for the year ended March 31, 2007. | |
(f) | Amount is less than $0.01. | |
(g) | Ratios are annualized and based on average daily net assets (000’s omitted) of $135,819. | |
(h) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. | |
** | Non-Annualized |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Van Kampen Leaders Fund
Financial Highlights—(continued)
Class B Shares | ||||||||||||||||||||||||
February 27, 2006 | ||||||||||||||||||||||||
(Commencement of | ||||||||||||||||||||||||
Nine months ended | operations) to | |||||||||||||||||||||||
December 31, | Year ended March 31, | March 31, | ||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of the period | $ | 8.76 | $ | 5.90 | $ | 10.48 | $ | 11.25 | $ | 10.08 | $ | 10.00 | ||||||||||||
Net investment income(a) | 0.04 | 0.05 | 0.12 | 0.08 | 0.08 | 0.01 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.48 | 2.89 | (4.23 | ) | (0.69 | ) | 1.18 | 0.07 | ||||||||||||||||
Total from investment operations | 0.52 | 2.94 | (4.11 | ) | (0.61 | ) | 1.26 | 0.08 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Distributions from net investment income | 0.06 | 0.08 | 0.10 | 0.06 | 0.09 | -0- | ||||||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.37 | 0.10 | 0.00 | (f) | -0- | |||||||||||||||||
Total distributions | 0.06 | 0.08 | 0.47 | 0.16 | 0.09 | -0- | ||||||||||||||||||
Net asset value, end of the period | $ | 9.22 | $ | 8.76 | $ | 5.90 | $ | 10.48 | $ | 11.25 | $ | 10.08 | ||||||||||||
Total return* | 5.99 | %(b) | 50.02 | %(c) | (39.65 | )%(c) | (5.49 | )%(c) | 12.56 | %(c) | 0.80 | %(c)** | ||||||||||||
Net assets at end of the period (in millions) | $ | 51.5 | $ | 52.8 | $ | 36.3 | $ | 62.6 | $ | 37.8 | $ | 1.6 | ||||||||||||
Ratio of expenses to average net assets*(d) | 1.25 | %(g) | 1.25 | % | 1.25 | % | 1.25 | % | 1.26 | %(e) | 1.25 | % | ||||||||||||
Ratio of net investment income to average net assets*(d) | 0.64 | %(g) | 0.64 | % | 1.49 | % | 0.66 | % | 0.74 | % | 2.54 | % | ||||||||||||
Portfolio turnover(h) | 4 | % | 9 | % | 21 | % | 3 | % | 0 | % | 0 | % | ||||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||||||
Ratio of expenses to average net assets(d) | 1.45 | %(g) | 1.51 | % | 1.49 | % | 1.32 | % | 1.64 | %(e) | 27.15 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets(d) | 0.44 | %(g) | 0.38 | % | 1.25 | % | 0.59 | % | 0.37 | % | (23.37 | )% | ||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.63%, 0.75%, 0.76%, 0.69%, 0.84% and 0.54% for the nine months ended December 31, 2010, the years ended March 31, 2010, 2009, 2008 and 2007 and the period ended March 31, 2006, respectively. | |
(e) | The ratio of expenses to average net assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratios would decrease by 0.01% for the year ended March 31, 2007. | |
(f) | Amount is less than $0.01. | |
(g) | Ratios are annualized and based on average daily net assets (000’s omitted) of $49,450. | |
(h) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. | |
** | Non-Annualized |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Van Kampen Leaders Fund
Financial Highlights—(continued)
Class C Shares | ||||||||||||||||||||||||
February 27, 2006 | ||||||||||||||||||||||||
(Commencement of | ||||||||||||||||||||||||
Nine months ended | operations) to | |||||||||||||||||||||||
December 31, | Year ended March 31, | March 31, | ||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of the period | $ | 8.75 | $ | 5.90 | $ | 10.48 | $ | 11.25 | $ | 10.08 | $ | 10.00 | ||||||||||||
Net investment income(a) | 0.04 | 0.05 | 0.12 | 0.07 | 0.08 | 0.01 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.49 | 2.88 | (4.23 | ) | (0.68 | ) | 1.18 | 0.07 | ||||||||||||||||
Total from investment operations | 0.53 | 2.93 | (4.11 | ) | (0.61 | ) | 1.26 | 0.08 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Distributions from net investment income | 0.10 | 0.08 | 0.10 | 0.06 | 0.09 | -0- | ||||||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.37 | 0.10 | 0.00 | (g) | -0- | |||||||||||||||||
Total distributions | 0.10 | 0.08 | 0.47 | 0.16 | 0.09 | -0- | ||||||||||||||||||
Net asset value, end of the period | $ | 9.18 | $ | 8.75 | $ | 5.90 | $ | 10.48 | $ | 11.25 | $ | 10.08 | ||||||||||||
Total return* | 6.12 | %(b)(f) | 49.88 | %(c) | (39.65 | )%(c) | (5.49 | )%(c) | 12.56 | %(c) | 0.80 | %(c)** | ||||||||||||
Net assets at end of the period (in millions) | $ | 20.2 | $ | 23.2 | $ | 19.1 | $ | 44.0 | $ | 31.3 | $ | 1.3 | ||||||||||||
Ratio of expenses to average net assets*(d) | 1.16 | %(f)(h) | 1.25 | % | 1.25 | % | 1.25 | % | 1.26 | %(e) | 1.25 | % | ||||||||||||
Ratio of net investment income to average net assets*(d) | 0.70 | %(f)(h) | 0.61 | % | 1.37 | % | 0.65 | % | 0.75 | % | 2.27 | % | ||||||||||||
Portfolio turnover(i) | 4 | % | 9 | % | 21 | % | 3 | % | 0 | % | 0 | % | ||||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||||||
Ratio of expenses to average net assets(d) | 1.36 | %(f)(h) | 1.51 | % | 1.47 | % | 1.32 | % | 1.64 | %(e) | 27.74 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets(d) | 0.50 | %(f)(h) | 0.35 | % | 1.15 | % | 0.58 | % | 0.38 | % | (24.22 | )% | ||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.63%, 0.75%, 0.76%, 0.69%, 0.84% and 0.54% for the nine months ended December 31, 2010, the years ended March 31, 2010, 2009, 2008 and 2007 and the period ended March 31, 2006, respectively. | |
(e) | The ratio of expenses to average net assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratios would decrease by 0.01% for the year ended March 31, 2007. | |
(f) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.91%. | |
(g) | Amount is less than $0.01. | |
(h) | Ratios are annualized and based on average daily net assets (000’s omitted) of $20,490. | |
(i) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. | |
** | Non-Annualized |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Van Kampen Leaders Fund
Financial Highlights—(continued)
Class Y Sharesˆ | ||||||||||||||||||||||||
February 27, 2006 | ||||||||||||||||||||||||
(Commencement of | ||||||||||||||||||||||||
Nine months ended | operations) to | |||||||||||||||||||||||
December 31, | Year ended March 31, | March 31, | ||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Net asset value, beginning of the period | $ | 8.77 | $ | 5.90 | $ | 10.49 | $ | 11.27 | $ | 10.09 | $ | 10.00 | ||||||||||||
Net investment income(a) | 0.11 | 0.13 | 0.21 | 0.19 | 0.17 | 0.02 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.47 | 2.90 | (4.25 | ) | (0.69 | ) | 1.20 | 0.07 | ||||||||||||||||
Total from investment operations | 0.58 | 3.03 | (4.04 | ) | (0.50 | ) | 1.37 | 0.09 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Distributions from net investment income | 0.12 | 0.16 | 0.18 | 0.18 | 0.19 | -0- | ||||||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.37 | 0.10 | 0.00 | (f) | -0- | |||||||||||||||||
Total distributions | 0.12 | 0.16 | 0.55 | 0.28 | 0.19 | -0- | ||||||||||||||||||
Net asset value, end of the period | $ | 9.23 | $ | 8.77 | $ | 5.90 | $ | 10.49 | $ | 11.27 | $ | 10.09 | ||||||||||||
Total return* | 6.78 | %(b) | 51.68 | %(c) | (39.12 | )%(c) | (4.62 | )%(c) | 13.73 | %(c) | 0.90 | %(c)** | ||||||||||||
Net assets at end of the period (in millions) | $ | 0.2 | $ | 0.2 | $ | 0.2 | $ | 0.3 | $ | 0.3 | $ | 0.2 | ||||||||||||
Ratio of expenses to average net assets*(d) | 0.25 | %(g) | 0.25 | % | 0.25 | % | 0.25 | % | 0.26 | %(e) | 0.25 | % | ||||||||||||
Ratio of net investment income to average net assets*(d) | 1.76 | %(g) | 1.68 | % | 2.45 | % | 1.66 | % | 1.57 | % | 2.43 | % | ||||||||||||
Portfolio turnover(h) | 4 | % | 9 | % | 21 | % | 3 | % | 0 | % | 0 | % | ||||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||||||
Ratio of expenses to average net assets(d) | 0.45 | %(g) | 0.51 | % | 0.47 | % | 0.32 | % | 1.14 | %(e) | 39.58 | % | ||||||||||||
Ratio of net investment income to average net assets(d) | 1.56 | %(g) | 1.42 | % | 2.23 | % | 1.59 | % | 0.69 | % | (36.91 | )% | ||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund’s total return. Estimated acquired fund fees from underlying funds were 0.63%, 0.75%, 0.76%, 0.69%, 0.84% and 0.54% for the nine months ended December 31, 2010, the years ended March 31, 2010, 2009, 2008 and 2007 and the period ended March 31, 2006, respectively. | |
(e) | The ratio of expenses to average net assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratios would decrease by 0.01% for the year ended March 31, 2007. | |
(f) | Amount is less than $0.01. | |
(g) | Ratios are annualized and based on average daily net assets (000’s omitted) of $177. | |
(h) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. | |
ˆ | On June 1, 2010, the Class I shares of the predecessor fund were reorganized into Class Y shares of the Fund. | |
** | Non-Annualized |
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Van Kampen Leaders Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series), (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
16 Invesco Van Kampen Leaders Fund
On December 31, 2010, the Fund’s fiscal year end changed from March 31 to December 31.
Prior to June 1, 2010, the Fund operated as Van Kampen Leaders Fund (the “Acquired Fund”), an investment portfolio of Van Kampen Equity Trust. The Acquired Fund was reorganized on June 1, 2010 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”).
Upon closing of the Reorganization, holders of the Acquired Fund’s Class A, Class B, Class C and Class I shares received Class A, Class B, Class C and Class Y shares, respectively, of the Fund.
Information for the Acquired Fund’s Class I shares prior to the Reorganization is included with Class Y shares of the Fund throughout this report.
The Fund’s principal investment objective is capital appreciation. The Fund’s secondary investment objective is income.
The Fund primarily invests in affiliated mutual funds (“underlying funds”) advised by Invesco Advisers (the “Adviser” or “Invesco”). The Adviser may change the Fund’s asset class allocations, the underlying funds or the target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund’s accounting policies are outlined in the underlying fund’s financial statements and are available upon request.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements.
A. | Security Valuations — Securities of investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Investments in shares of funds that are not traded on an exchange are valued at the end of day net asset value per share of such fund. Securities in the underlying funds, including restricted securities are valued in accordance with valuation policy of such fund. The policies of underlying funds affiliated with the funds as a result of having the same investment advisor are set forth below. | |
Securities in the underlying funds, including restricted securities, are valued according to the following policy. | ||
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Senior secured floating rate loans and senior secured floating rate debt securities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. |
17 Invesco Van Kampen Leaders Fund
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from ordinary income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
C. | Distributions — Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
D. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
E. | Expenses — Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain (loss) on the investments in the underlying funds. | |
Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. Prior to the Reorganization, incremental transfer agency fees which are unique to each class of shares of the Acquired Fund were charged to the operations of such class. | ||
F. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
G. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. Under the terms of the investment advisory agreement, the Fund does not pay an advisory fee. However, the fund pays advisory fees to Invesco indirectly as a shareholder of the underlying funds. Prior to the Reorganization, the Acquired Fund did not pay an advisory fee to Van Kampen Asset Management (“Van Kampen”).
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
Effective on the Reorganization date, the Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 0.50%, 1.25%, 1.25% and 0.25%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Underlying fund fees and expenses are also excluded in determining such obligation. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012.
18 Invesco Van Kampen Leaders Fund
Underlying fund fees and expenses are not fees and expenses incurred by the Fund directly but are fees and expenses, including management fees, of the investment companies in which the Fund invests. As a result, total annual fund operating expenses may exceed the expense limits above. You incur these expenses indirectly through the valuation of the Fund’s investment in those investment companies. The impact of the underlying fund fees and expenses are included in the total return of the Fund.
From June 1, 2010 to December 31, 2010, the Adviser reimbursed expenses of $252,181.
Prior to the Reorganization, Van Kampen voluntarily reimbursed $52,862 of fees and/or reimbursed expenses of the Acquired Fund.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. Prior to the Reorganization, under separate accounting services and chief compliance officer (“CCO”) employment agreements, Van Kampen Investments Inc. (“VKII”) provided accounting services and the CCO provided compliance services to the Acquired Fund. Pursuant to such agreements, the Acquired Fund paid $6,621 to VKII. For the nine months ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as administrative services fees. Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (“SSB”) serves as the custodian and fund accountant and provides certain administrative services to the Fund.
Prior to the Reorganization, under a legal services agreement, VKII provided legal services to the Acquired Fund. Pursuant to such agreement, the Acquired Fund paid $3,651 to VKII.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. Pursuant to such agreement, for the period ended December 31, 2010, IIS was paid $365,001 for providing such services. Prior to the Reorganization, the Acquired Fund paid $62,192 to Van Kampen Investor Services Inc., which served as the Acquired Fund’s transfer agent. For the nine months ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
Prior to the Reorganization, the Acquired Fund had entered into master distribution agreements with Van Kampen Funds Inc. (“VKFI”) to serve as the distributor for the Class A, Class B and Class C shares. Pursuant to such agreements, the Acquired Fund paid $182,908 to VKFI.
For the nine months ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. For the period June 1, 2010 to December 31, 2010, IDI advised the Fund that IDI retained $29,414 in front-end sales commissions from the sale of Class A shares and $0, $88,732 and $1,013 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Prior to the Reorganization, VKFI retained $21,037 in front-end sales commissions from the sale of Class A shares and $28,857, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
19 Invesco Van Kampen Leaders Fund
During the nine months ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 209,989,624 | $ | — | $ | — | $ | 209,989,624 | ||||||||
NOTE 4—Investments in Other Affiliates
The Fund and the mutual funds below have the same investment adviser and therefore are considered to be affiliated. On June 1, 2010, Class I shares of the former Van Kampen funds were reorganized into Class Y shares of their respective Invesco Van Kampen fund. On July 1, 2010, the Fund transferred its investment in each Invesco fund Class Y shares into the Institutional Class shares of the respective fund. The amount transferred out of each Class Y shares investments is included in Proceeds from Sales. The amount transferred into each Institutional Class is included in Purchases at Cost. The following is a summary of the transactions in and earnings from investments in affiliated mutual funds for the nine months ended December 31, 2010 and year ended March 31, 2010.
Change in | ||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||
Value | Purchases | Proceeds | Appreciation | Realized | Value | Dividend | ||||||||||||||||||||||
3/31/2010 | at Cost | from Sales | (Depreciation) | Gain (Loss) | 12/31/2010 | Income | ||||||||||||||||||||||
Invesco Van Kampen Comstock Fund, Class Y | $ | 74,689,092 | $ | 576,655 | $ | 80,846,508 | $ | 6,922,703 | $ | (1,341,942 | ) | $ | 0 | $ | 299,555 | |||||||||||||
Invesco Van Kampen Comstock Fund, Institutional Class | 0 | 78,847,939 | 6,324,872 | 1,176,312 | (2,024,243 | ) | 71,675,136 | 599,657 | ||||||||||||||||||||
Invesco Van Kampen Equity and Income Fund, Class Y | 74,700,632 | 1,215,840 | 76,051,993 | 855,278 | (719,757 | ) | 0 | 341,080 | ||||||||||||||||||||
Invesco Van Kampen Equity and Income Fund, Institutional Class | 0 | 73,233,569 | 6,082,588 | 3,715,058 | (789,697 | ) | 70,076,342 | 721,065 | ||||||||||||||||||||
Invesco Van Kampen International Growth Fund, Class Y | 74,515,048 | 2,289,173 | 78,856,937 | 3,236,665 | (1,183,949 | ) | 0 | -0- | ||||||||||||||||||||
Invesco Van Kampen International Growth Fund, Institutional Class | 0 | 77,362,356 | 9,574,441 | 2,787,371 | (2,407,210 | ) | 68,168,076 | 944,692 | ||||||||||||||||||||
Liquid Assets Portfolio, Institutional Class | 0 | 10,256,883 | 10,221,848 | 0 | 0 | 35,035 | 548 | |||||||||||||||||||||
Premier Portfolio, Institutional Class | 0 | 10,256,883 | 10,221,848 | 0 | 0 | 35,035 | 337 | |||||||||||||||||||||
Total | $ | 223,904,772 | $ | 254,039,298 | $ | 278,181,035 | $ | 18,693,387 | $ | (8,466,798 | ) | $ | 209,989,624 | $ | 2,906,934 | |||||||||||||
Change in | ||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||
Value | Purchases | Proceeds | Appreciation | Realized | Value | Dividend | ||||||||||||||||||||||
3/31/2009 | at Cost | from Sales | (Depreciation) | Gain (Loss) | 3/31/2010 | Income | ||||||||||||||||||||||
Invesco Van Kampen Comstock Fund, Class I | $ | 53,559,621 | $ | 3,687,743 | $ | 11,508,084 | $ | 34,701,011 | $ | (5,751,199 | ) | $ | 74,689,092 | $ | 1,088,285 | |||||||||||||
Invesco Van Kampen Equity and Income Fund, Class I | 54,204,238 | 7,839,046 | 8,725,674 | 23,321,956 | (1,938,934 | ) | 74,700,632 | 1,560,158 | ||||||||||||||||||||
Invesco Van Kampen International Growth Fund, Class I | 53,633,824 | 7,224,659 | 15,277,826 | 36,828,908 | (7,894,517 | ) | 74,515,048 | 1,282,916 | ||||||||||||||||||||
Total | $ | 161,397,683 | $ | 18,751,448 | $ | 35,511,584 | $ | 94,851,875 | $ | (15,584,650 | ) | $ | 223,904,772 | $ | 3,931,359 | |||||||||||||
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
Prior to the Reorganization, the Acquired Fund provided deferred compensation and retirement plans for its trustees who were not officers of Van Kampen. Benefits under the retirement plan were to be payable upon retirement for a ten-year period and were to be based upon each trustee’s years of service to the Acquired Fund. However, the Acquired Fund did not meet the minimum number of years of operations required for the trustees to become fully vested in the plan. Therefore, the previously recognized pension expense of $40,974 was reversed during the current period to recognize the actual pension liability as of the plan termination date.
For the period ended December 31, 2010, the Fund paid legal fees of $720 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. Prior to the Reorganization, the Acquired Fund recognized expense of $809 representing
20 Invesco Van Kampen Leaders Fund
legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a director of the Acquired Fund was a partner of such firm and he and his law firm provided legal services as legal counsel to the Acquired Fund.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Nine Months Ended December 31, 2010 and the Year Ended March 31, 2010:
December 31, 2010 | March 31, 2010 | |||||||
Ordinary income | $ | 2,252,427 | $ | 3,283,166 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 790,879 | ||
Net unrealized appreciation — investments | 6,119,667 | |||
Temporary book/tax differences | (2,103 | ) | ||
Post-October deferrals | (886,039 | ) | ||
Capital loss carryforward | (67,234,311 | ) | ||
Shares of beneficial interest | 270,724,228 | |||
Total net assets | $ | 209,512,321 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2016 | $ | 9,220,402 | ||
December 31, 2017 | 19,944,094 | |||
December 31, 2018 | 38,069,815 | |||
Total capital loss carryforward | $ | 67,234,311 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the nine months ended December 31, 2010 was $9,186,210 and $33,398,017, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 6,119,667 | ||
Aggregate unrealized (depreciation) of investment securities | -0- | |||
Net unrealized appreciation of investment securities | $ | 6,119,667 | ||
Cost of investments for tax purposes is $203,869,957. |
21 Invesco Van Kampen Leaders Fund
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and net operating losses, on December 31, 2010, undistributed net investment income (loss) was decreased by $1, undistributed net realized gain (loss) was increased by $2 and shares of beneficial interest decreased by $1. This reclassification had no effect on the net assets of the Fund.
NOTE 10—Share Information
For the nine months ended | For the year ended | For the year ended | ||||||||||||||||||||||
December 31, 2010(a) | March 31, 2010 | March 31, 2009 | ||||||||||||||||||||||
Shares | Value | Shares | Value | Shares | Value | |||||||||||||||||||
Sales: | ||||||||||||||||||||||||
Class A | 1,302,554(b | ) | $ | 11,052,922(b | ) | 2,543,995 | $ | 19,459,505 | 4,997,969 | $ | 43,060,268 | |||||||||||||
Class B | 392,444 | 3,299,804 | 1,028,082 | 7,844,502 | 1,574,266 | 13,667,390 | ||||||||||||||||||
Class C | 74,410 | 626,264 | 155,941 | 1,189,676 | 420,631 | 3,930,410 | ||||||||||||||||||
Class Y | 10,781 | 95,790 | 1,593 | 13,002 | 4,002 | 32,938 | ||||||||||||||||||
Total sales | 1,780,189 | $ | 15,074,780 | 3,729,611 | $ | 28,506,685 | 6,996,868 | $ | 60,691,006 | |||||||||||||||
Dividend reinvestment: | ||||||||||||||||||||||||
Class A | 196,677 | $ | 1,659,957 | 313,211 | $ | 2,496,398 | 1,425,827 | $ | 9,489,200 | |||||||||||||||
Class B | 39,704 | 334,451 | 62,708 | 498,164 | 419,741 | 2,726,864 | ||||||||||||||||||
Class C | 25,241 | 214,532 | 29,064 | 229,472 | 233,517 | 1,523,046 | ||||||||||||||||||
Class Y | 222 | 1,901 | 285 | 2,269 | 1,136 | 7,647 | ||||||||||||||||||
Total dividend reinvestment | 261,844 | $ | 2,210,841 | 405,268 | $ | 3,226,303 | 2,080,221 | $ | 13,746,757 | |||||||||||||||
Repurchases: | ||||||||||||||||||||||||
Class A | (3,622,116 | ) | $ | (30,808,161 | ) | (4,443,821 | ) | $ | (34,582,600 | ) | (7,008,250 | ) | $ | (55,708,171 | ) | |||||||||
Class B | (872,112 | )(b) | (7,339,144 | )(b) | (1,216,622 | ) | (9,456,874 | ) | (1,815,367 | ) | (14,543,490 | ) | ||||||||||||
Class C | (546,026 | ) | (4,651,504 | ) | (779,631 | ) | (6,001,462 | ) | (1,608,937 | ) | (12,522,955 | ) | ||||||||||||
Class Y | (12,330 | ) | (104,884 | ) | (6,221 | ) | (53,116 | ) | (9,778 | ) | (94,028 | ) | ||||||||||||
Total repurchases | (5,052,584 | ) | $ | (42,903,693 | ) | (6,446,295 | ) | $ | (50,094,052 | ) | (10,442,332 | ) | $ | (82,868,644 | ) | |||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 58% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. In addition, less than 1% of the shares outstanding of the Fund are owned by Invesco or an investment adviser under common control. | |
(b) | Includes automatic conversion of 97,092 Class B Shares into 96,977 Class A Shares at a value of $815,881. |
NOTE 11—Change in Independent Registered Public Accounting Firm (Unaudited)
In connection with the Reorganization of the Fund, the Audit Committee of the Board of Trustees of the Trust appointed, and the Board of Trustees ratified and approved, PricewaterhouseCoopers LLP (“PWC”) as the independent registered public accounting firm of the Fund for the fiscal year following May 31, 2010. The predecessor fund’s financial statements were audited by a different independent registered public accounting firm (the “Prior Auditor”). Concurrent with the closing of the Reorganization, the Prior Auditor resigned as the independent registered public accounting firm of the predecessor fund. The Prior Auditor’s report on the financial statements of the Fund for the past two years did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period the Prior Auditor was engaged, there were no disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its report.
22 Invesco Van Kampen Leaders Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Van Kampen Leaders Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Van Kampen Leaders Fund (formerly known as Van Kampen Leaders Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations, the changes in its net assets and the financial highlights for the period then ended, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statement of operations, the statement of changes in net assets and the financial highlights of the Fund for the periods ended March 31, 2010 and prior were audited by other independent auditors whose report dated May 18, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
23 Invesco Van Kampen Leaders Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio3 | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,211.67 | $ | 2.79 | $ | 1,022.68 | $ | 2.55 | 0.50 | % | ||||||||||||||||||
B | 1,000.00 | 1,205.80 | 6.95 | 1018.90 | 6.36 | 1.25 | ||||||||||||||||||||||||
C | 1,000.00 | 1,207.45 | 6.23 | 1,019.56 | 5.70 | 1.12 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,211.61 | 1.39 | 1,023.95 | 1.28 | 0.25 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
3 | The expense ratio for Class C Shares reflects actual 12b-1 fees of less than 1%. |
24 Invesco Van Kampen Leaders Fund
Approval of Investment Advisory and Sub-advisory Agreements
The Board of Trustees (the Board) of AIM Growth Series (Invesco Growth Series) (the Company) is required under the Investment Company Act of 1940 to approve the Invesco Van Kampen Leaders Fund (the Fund) investment advisory agreements. During meetings held on December 1-2, 2009, the Board as a whole and the disinterested or “independent” Trustees, voting separately approved (i) an amendment to the Company’s investment advisory agreement with Invesco Advisers, Inc. (Invesco Advisers) to add the Fund and (ii) an amendment to the Master Intergroup Sub-Advisory Contract for Mutual Funds (the sub-advisory contracts) with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the Affiliated Sub-Advisers) to add the Fund. In doing so, the Board determined that the investment advisory agreements are in the best interests of the Fund and its shareholders and that the compensation to Invesco Advisers and the Affiliated Sub-Advisers under the Fund’s investment advisory agreements is fair and reasonable.
The Board’s Fund Evaluation Process
The Fund was formed to acquire the assets and liabilities of a Van Kampen retail fund (the Acquired Fund) with substantially similar investment objectives, strategies and risks. At the time of approval of the investment advisory agreements, the Fund had no assets and no performance history.
In determining to approve the Fund’s investment advisory agreements, the Board considered among other things, the factors discussed below in evaluating the fairness and reasonableness of the Fund’s investment advisory agreements. The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreements. The Board considered the information provided to them and did not identify any information that was controlling. One Trustee may have weighed a particular piece of information differently than another.
Factors and Conclusions and Summary of Evaluation of Investment Advisory Agreements
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the advisory services to be provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement. The Board’s review of the qualifications of Invesco Advisers to provide these services included the Board’s consideration of Invesco Advisers’ portfolio and product review process, various back office support functions provided by Invesco Advisers and its affiliates, and Invesco Adviser’s global trading operations. In determining whether to approve the Fund’s investment advisory agreement, the Board considered the prior relationship between Invesco Advisers and the series portfolios of funds advised by Invesco Advisers (the Invesco Funds), as well as the Board’s knowledge of Invesco Advisers’ operations. The Board concluded that the nature, extent and quality of the advisory services to be provided to the Fund support the Board’s approval of the investment advisory agreements.
The Board reviewed the services to be provided by the Affiliated Sub-Advisers under the sub-advisory contracts. The Board noted that the Affiliated Sub-Advisers, which have offices and personnel that are located in financial centers around the world, can provide research and investment analysis on the markets and economies of various countries in which the Fund invests and make recommendations on securities of companies located in such countries. The Board concluded that the sub-advisory contracts will benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services to be provided by the Affiliated Sub-Advisers are appropriate.
B. | Fund Performance |
The Fund will retain the performance track record of the Acquired Fund. The Board considered the performance of the Acquired Fund. The Board did not view Fund performance as a relevant factor in considering whether to approve the sub-advisory contracts, as no Affiliated Sub-Adviser currently manages assets of the Fund.
C. | Advisory and Sub-Advisory Fees and Fee Waivers |
The Board considered that the contractual advisory fee rate of the Fund is the same as that of the Acquired Fund, that the board of the Acquired Fund had approved such fee, and that Invesco Advisers has contractually agreed to limit expenses of the Fund through June 30, 2012. The Board was provided with a comparison of the contractual advisory fee of the Fund to the uniform fee schedule applicable to other Invesco Funds and with materials prepared by Lipper, Inc. for the board of the Acquired Fund.
The Board also considered the services to be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts and the services to be provided by Invesco Advisers pursuant to the Fund’s investment advisory agreement, as well as the allocation of fees between Invesco Advisers and the Affiliated Sub-Advisers pursuant to the sub-advisory contracts. The Board noted that the sub-advisory fees have no direct effect on the Fund or its shareholders, as they are paid by Invesco Advisers to the Affiliated Sub-Advisers, and that Invesco Advisers and the Affiliated Sub-Advisers are affiliates.
After taking account of the Fund’s contractual advisory fee rate, the contractual sub-advisory fee rate, the expense limits and other relevant factors, the Board concluded that the Fund’s advisory and sub-advisory fees were fair and reasonable.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there are economies of scale in the provision of advisory services to the Fund. The Board also considered whether the Fund benefits from such economies of scale through contractual breakpoints in the Fund’s advisory fee schedule. The Board noted that the Fund’s contractual advisory fee schedule provides for breakpoints. The Board also noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of all of the Invesco Funds and other clients advised by Invesco Advisers.
E. | Profitability and Financial Resources |
The Board considered information from the 2009 contract renewal process provided by Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services. The Board noted that Invesco Advisers continues to operate at a net profit. The Board concluded that the Fund’s fees were fair and reasonable, and that the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund are not anticipated to be excessive in light of the nature, quality and extent of the services provided. The Board considered
25 Invesco Van Kampen Leaders Fund
whether Invesco Advisers is financially sound and has the resources necessary to perform its obligations under the Fund’s investment advisory agreement, and concluded that Invesco Advisers has the financial resources necessary to fulfill these obligations. The Board also considered whether each Affiliated Sub-Adviser is financially sound and has the resources necessary to perform its obligations under its respective sub-advisory contract, and concluded that each Affiliated Sub-Adviser has the financial resources necessary to fulfill these obligations.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits to be received by Invesco Advisers and its affiliates resulting from Invesco Advisers’ relationship with the Fund, including the fees to be received by Invesco Advisers and its affiliates for their provision of administrative, transfer agency and distribution services to the Fund. The Board considered the performance of Invesco Advisers and its affiliates in providing these services to other Invesco Funds and the organizational structure employed by Invesco Advisers and its affiliates to provide these services. The Board also considered that these services will be provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board. The Board concluded that Invesco Advisers and its affiliates were providing these services to Invesco Funds in accordance with the terms of their contracts, and were qualified to provide these services to the Fund.
The Board considered the benefits realized by Invesco Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements shift the payment obligation for research and execution services from Invesco Advisers and the Affiliated Sub-Advisers to the funds and therefore may reduce Invesco Advisers’ and the Affiliated Sub-Advisers’ expenses. The Board concluded that Invesco Advisers’ and the Affiliated Sub-Advisers’ soft dollar arrangements are appropriate. The Board also concluded that, based on its review and representations made by the Chief Compliance Officer of Invesco Advisers, these arrangements are consistent with regulatory requirements.
The Board considered the fact that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers will receive advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through at least June 30, 2011, the advisory fees payable by the Fund in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the Fund’s investment of uninvested cash and cash collateral from any securities lending arrangements in the affiliated money market funds is in the best interests of the Fund and its shareholders.
26 Invesco Van Kampen Leaders Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Long-Term Capital Gain Dividends | $ | 0 | ||
Qualified Dividend Income* | 100% | |||
Corporate Dividends Received Deduction* | 88.57% | |||
U.S. Treasury Obligations* | 3.23% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
27 Invesco Van Kampen Leaders Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(GRAPHIC)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884962.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the period between June 1, 2010, and June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website, sec.gov. Proxy voting information for the predecessor fund prior to its reorganization with the Fund on June 1, 2010, is not available on the Invesco website but is or will be available on the SEC website under the predecessor fund.![(INVESCO AIM LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884963.gif)
Information regarding how the Fund voted proxies related to its portfolio securities during the period between June 1, 2010, and June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website, sec.gov. Proxy voting information for the predecessor fund prior to its reorganization with the Fund on June 1, 2010, is not available on the Invesco website but is or will be available on the SEC website under the predecessor fund.
![(INVESCO AIM LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7884963.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
VK-LEA-AR-1 Invesco Distributors, Inc.
![]() |
Annual Report to Shareholders | December 31, 2010 |
Invesco Van Kampen Real Estate Securities Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
11 | Financial Statements | |
14 | Financial Highlights | |
18 | Notes to Financial Statements | |
25 | Auditor’s Report | |
26 | Fund Expenses | |
27 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885902.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885903.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 Invesco Van Kampen Real Estate Securities Fund
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885904.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds. As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885905.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 Invesco Van Kampen Real Estate Securities Fund
Management’s Discussion of Fund Performance
Performance summary
Returns from listed real estate were positive during the year ended December 31, 2010, reflecting the current sentiment toward asset classes and equity sectors capable of delivering attractive yields. As a result, all share classes of Invesco Van Kampen Real Estate Securities Fund, at net asset value, posted positive returns for the period, outperforming the Fund’s broad market index, the S&P 500 Index, by a wide margin. The Fund’s underperformance relative to its style-specific benchmark, the FTSE NAREIT All Equity REITs Index, was primarily the result of security selection in the specialty, industrial and shopping center REIT sectors.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 24.75 | % | ||
Class B Shares | 24.71 | |||
Class C Shares | 23.78 | |||
Class Y Shares | 24.95 | |||
Institutional Class Shares | 24.98 | |||
S&P 500 Index▼ (Broad Market Index) | 15.08 | |||
FTSE NAREIT All Equity REITs Indexn (Style-Specific Index) | 27.95 | |||
▼Lipper Inc.;nInvesco, Bloomberg L.P. |
How we invest
Effective June 1, 2010, the management team changed for Invesco Van Kampen Real Estate Securities Fund. The investment process under the new team is described below.
The Fund primarily holds real estate-oriented securities. We focus on public companies whose value is driven by tangible assets. Our goal is to create a Fund focused on total return that will perform at or above index levels with comparable levels of risk. We use a fundamentals-driven investment process, including property market cycle analysis, property evaluation, and management and structure review to identify securities with:
n | Quality underlying properties. | |
n | Solid management teams and flexible balance sheets. | |
n | Attractive valuations relative to peer investment alternatives. |
We attempt to manage risk by diversifying property types and geographic location, as well as limiting the size of any one holding.
We will consider selling a holding when:
n | Relative valuation falls below desired levels. | |
n | Risk/return relationships change significantly. | |
n | Company fundamentals change (property type, geography or management changes). | |
n | A more attractive investment opportunity is identified. |
Market conditions and your Fund
Equity markets were choppy during the fiscal year as investors weighed the competing issues of solid corporate profits and soft macroeconomic data. Corporate earnings were largely positive but often were overshadowed by concerns of high
unemployment, lack of consumer spending, soft housing data and the possibility of additional U.S. Federal Reserve accommodation. After rising through April, major equity indexes sold off precipitously in May, as the sovereign debt crisis unfolded in the eurozone. Meanwhile, U.S. economic indicators remained weak, prompting fears of a double dip recession. Uncertainty created by the debt crisis combined with subdued employment, consumer spending and housing data, added to concerns that the recovery was slowing to a sub-normal growth rate. Just as abruptly, however, the markets reversed course and rallied in September and October on modestly better economic news, ending the year with double-digit gains.
Major equity indexes garnered positive returns for the fiscal year, and all 10 sectors within the S&P posted gains. More economically sensitive sectors, such as consumer discretionary, industrials and materials, had the highest returns, while less economically sensitive sectors, such as health care, had some of the lowest returns.
Given this environment, the U.S. real estate investment trust (REIT) market, as measured by the FTSE NAREIT All Equity REITs Index, produced a gain for the period and outperformed the Fund’s broad market index, the S&P 500 Index, by a wide margin. The Fund, however, underperformed its style-specific benchmark during the fiscal year. In addition to stock selection in the industrial, specialty and shopping center REIT sectors, the Fund’s underweight in health care REITs and underweight in shopping center REITs detracted from relative performance. Conversely, security selection and an overweight exposure in lodging/resorts and apartment REITs, positively affected relative Fund performance. Security selection in office REITs was also a relative contributor.
Portfolio Composition
By property type
Retail | 27.2 | % | ||
Residential | 15.8 | |||
Office | 14.1 | |||
Health Care | 9.9 | |||
Lodging/Resorts | 9.8 | |||
Diversified | 9.7 | |||
Industial | 7.5 | |||
Industial/Office Mixed | 2.7 | |||
Properties each less than 1.0% of portfolio | 2.1 | |||
Money Market Fund Plus Other Assets Less Liabilities | 1.2 |
Top 10 Equity Holdings*
1. | Simon Property Group, Inc. | 10.3 | % | |||||
2. | Host Hotels & Resorts, Inc. | 5.3 | ||||||
3. | Kimco Realty Corp. | 4.6 | ||||||
4. | ProLogis | 4.6 | ||||||
5. | Vornado Realty Trust | 4.6 | ||||||
6. | Health Care REIT, Inc. | 4.2 | ||||||
7. | Camden Property Trust | 3.7 | ||||||
8. | Regency Centers Corp. | 3.6 | ||||||
9. | Macerich Co. (The) | 3.5 | ||||||
10. | Essex Property Trust, Inc. | 3.4 |
Total Net Assets | $350.0 million | |||
Total Number of Holdings* | 72 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
*Excluding money market fund holdings.
4 Invesco Van Kampen Real Estate Securities Fund
Top contributors during the fiscal year included Equity Residential and Simon Property Group. Equity Residential owns and manages one of the largest, most diversified apartment portfolios in the U.S. and has been a beneficiary of positive fundamentals and strong outperformance within the apartment REIT sector this year. Recent equity offerings and debt refinancing by Simon Property Group, a REIT which offered an attractive portfolio of top-tier U.S. regional malls, covered near-term debt maturities and provided necessary capital for future acquisition opportunities.
Keystone Industrial Fund and Exeter Industrial Value Fund were top detractors from Fund performance during the fiscal year. These particular holdings, which focus on industrial real estate investments, are legacy holdings from prior management. Underlying industrial fundamentals appear to be improving, and therefore, the Fund continues to maintain these holdings.
At the end of the year and relative to our style-specific benchmark, we held an overweight exposure in lodging/resorts, retail shopping centers and office REITs. Conversely, we were underweight in self-storage facilities and specialty properties, given our belief they hold less favorable relative value compared to other REIT sectors.
While we generally maintained our bias toward companies with higher quality assets, tenant rosters and flexible balance sheets with longer-term debt maturities, key changes to portfolio structure during the latter half of the fiscal year reflected the expected improvement in commercial real estate fundamentals as the economy continued to recover. Companies with attractive relative valuations, with above-average prospects for cash flow growth, were increasingly favored. We continued to maintain a well-diversified portfolio across all property types and regions, based on a combination of relative fundamentals and stock valuations.
We thank you for your continued investment in Invesco Van Kampen Real Estate Securities Fund.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
![(PHOTO OF JOE RODRIGUEZ)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885906.jpg)
Joe Rodriguez, Jr.
Chief Operating Officer of Real Estate Investment Trusts for Invesco Real Estate, is lead manager of Invesco Van Kampen Real Estate Securities Fund. Mr. Rodriguez joined Invesco in 1990. He earned a B.B.A. in economics and finance, as well as an M.B.A. in finance from Baylor University.
Chief Operating Officer of Real Estate Investment Trusts for Invesco Real Estate, is lead manager of Invesco Van Kampen Real Estate Securities Fund. Mr. Rodriguez joined Invesco in 1990. He earned a B.B.A. in economics and finance, as well as an M.B.A. in finance from Baylor University.
![(PHOTO OF MARK BLACKBURN)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885907.jpg)
Mark Blackburn
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 1998. Mr. Blackburn earned a B.S. in accounting from Louisiana State University and an M.B.A. from Southern Methodist University. He is also a Certified Public Accountant.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 1998. Mr. Blackburn earned a B.S. in accounting from Louisiana State University and an M.B.A. from Southern Methodist University. He is also a Certified Public Accountant.
![(PHOTO OF PAUL CURBO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885908.jpg)
Paul Curbo
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 1998. Mr. Curbo earned a B.B.A. in finance from The University of Texas.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 1998. Mr. Curbo earned a B.B.A. in finance from The University of Texas.
![(PHOTO OF JAMES TROWBRIDGE)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885909.jpg)
James Trowbridge
Portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 1989. Mr.Trowbridge earned a B.A. in finance from Indiana University.
Portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 1989. Mr.Trowbridge earned a B.A. in finance from Indiana University.
![(PHOTO OF DARIN TURNER)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885910.jpg)
Darin Turner
Portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 2005. Mr.Turner earned a B.B.A. in finance from The University of Texas at Arlington. He also earned an M.B.A. specializing in investments from Southern Methodist University.
Portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. He joined Invesco in 2005. Mr.Turner earned a B.B.A. in finance from The University of Texas at Arlington. He also earned an M.B.A. specializing in investments from Southern Methodist University.
![(PHOTO OF PING YING WANG)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885911.jpg)
Ping Ying Wang
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. Ms.Wang earned a B.S. in international finance from the People’s University of China. She also earned a Ph.D. in finance from The University of Texas at Dallas.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen Real Estate Securities Fund. Ms.Wang earned a B.S. in international finance from the People’s University of China. She also earned a Ph.D. in finance from The University of Texas at Dallas.
5 Invesco Van Kampen Real Estate Securities Fund
Your Fund’s Long-Term Performance
Results of a $10,000 Investment – Oldest Share Classes since Inception
Index data from 5/31/94, Fund data from 6/9/94
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885912.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges.
Performance of the peer group, if applicable, reflects Fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating
changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on.
6 Invesco Van Kampen Real Estate Securities Fund
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (6/9/94) | 10.40 | % | ||||||
10 | Years | 9.45 | ||||||
5 | Years | 1.10 | ||||||
1 | Year | 17.93 | ||||||
Class B Shares | ||||||||
Inception (6/9/94) | 10.37 | % | ||||||
10 | Years | 9.54 | ||||||
5 | Years | 1.74 | ||||||
1 | Year | 19.71 | ||||||
Class C Shares | ||||||||
Inception (6/9/94) | 9.99 | % | ||||||
10 | Years | 9.30 | ||||||
5 | Years | 1.52 | ||||||
1 | Year | 22.78 | ||||||
Class Y Shares | ||||||||
Inception (7/21/05) | 3.08 | % | ||||||
5 | Years | 2.50 | ||||||
1 | Year | 24.95 | ||||||
Institutional Class Shares | ||||||||
10 | Years | 10.10 | % | |||||
5 | Years | 2.29 | ||||||
1 | Year | 24.98 |
Effective June 1, 2010, Class A, Class B, Class C and Class I shares of the predecessor fund advised by Van Kampen Asset Management were reorganized into Class A, Class B, Class C and Class Y shares, respectively, of Invesco Van Kampen Real Estate Securities Fund. Returns shown above for Class A, Class B, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Van Kampen Real Estate Securities Fund. Share class returns will differ from the predecessor fund because of different expenses.
Institutional Class shares incepted on June 1, 2010. Performance shown prior to that date is that of the predecessor fund’s Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Institutional Class shares was 1.57%, 2.32%, 2.32%,
1.32% and 1.07%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Institutional Class shares was 1.63%, 2.38%, 2.38%, 1.38% and 1.07%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. For shares purchased prior to June 1, 2010, the CDSC on Class B shares declines from 4% at the time of purchase to 0% at the beginning of the sixth year. For shares purchased on or after June 1, 2010, the CDSC on Class B shares declines from 5% at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2012. See current prospectus for more information. |
7 | Invesco Van Kampen Real Estate Securities Fund |
Invesco Van Kampen Real Estate Securities Fund’s investment objective is to seek long-term growth of capital. Current income is the secondary investment objective.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class Y shares are available only to certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | The Fund is non-diversified and invests a greater portion of its assets in a more limited number of issuers than a diversified fund and, as a result, is subject to a greater risk than a diversified fund because changes in the financial condition or market assessment of a single issuer may cause greater fluctuations in the value of the Fund’s shares | |
n | Risks of derivatives include the possible imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to the transaction; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the transactions may not be liquid. Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. | |
n | The risks of investing in real estate can include fluctuations in the value of underlying properties; defaults by borrowers or tenants; market saturation; changes in general and local economic conditions; decreases in market rates for rents; increases in competition, property taxes, capital |
expenditures, or operating expenses; and other economic, political or regulatory occurrences affecting the real estate industry. In addition, real estate investment trusts (REITs) depend upon specialized management skills, may not be diversified, may have less trading volume, and may be subject to more abrupt or erratic price movements than the overall securities markets. REITs must comply with certain requirements of the federal income tax law to maintain their federal income tax status. Some REITs (especially mortgage REITs) are affected by risks similar to those associated with investments in debt securities including changes in interest rates and the quality of credit extended. Investments in REITs may involve duplication of management fees and certain other expenses | ||
n | Because the Fund concentrates in investments in the real estate industry, the value of your shares may rise and fall more than the value of share of a fund that invests in companies in a broader range of industries. | |
n | The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in financial reporting, differences in securities regulation and trading, and foreign taxation issues. | |
n | Market risk is the possibility that the market values of securities owned by the Fund will decline. Investments in common stocks and other equity securities generally are affected by changes in the stock markets which fluctuate substantially over time, sometimes suddenly and sharply. |
About indexes used in this report
n | The S&P® 500 Index is an unmanaged index considered representative of the U.S. stock market. |
n | The FTSE NAREIT All Equity REITs Index is an unmanaged index considered representative of U.S. REITs. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. | |
n | CPA® and Certified Public Accountant® are trademarks owned by the American Institute of Certified Public Accountants. | |
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. | |
n | Industry classifications used in this report are generally classified according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | ACREX | |
Class B Shares | ACRBX | |
Class C Shares | ACRCX | |
Class Y Shares | ACRDX | |
Institutional Class Shares | ACRJX |
8 | Invesco Van Kampen Real Estate Securities Fund |
Schedule of Investments
December 31, 2010
Description | Shares | Value | ||||||
Real Estate Investment Trusts, Common Stocks & Other Equity Interests–97.8% | ||||||||
Apartments–15.8% | ||||||||
Advance Residence Investment Corp.–REIT (Japan) | 94 | $ | 210,484 | |||||
AvalonBay Communities, Inc.–REIT | 59,242 | 6,667,687 | ||||||
Camden Property Trust–REIT | 236,523 | 12,767,512 | ||||||
Equity Residential–REIT | 180,627 | 9,383,573 | ||||||
Essex Property Trust, Inc.–REIT | 103,620 | 11,835,476 | ||||||
Home Properties, Inc.–REIT | 91,700 | 5,088,433 | ||||||
Mid-America Apartment Communities, Inc.–REIT | 47,800 | 3,034,822 | ||||||
UDR, Inc.–REIT | 262,400 | 6,171,648 | ||||||
55,159,635 | ||||||||
Developers–0.2% | ||||||||
Multiplan Empreendimentos Imobiliarios SA (Brazil) | 29,400 | 653,530 | ||||||
PDG Realty SA Empreendimentos e Participacoes (Brazil) | 33,700 | 206,260 | ||||||
859,790 | ||||||||
Diversified–9.6% | ||||||||
Broadreach Capital Partners Realty I, L.P. (Acquired 05/29/03 to 05/29/08, Cost $1,045,351)(a)(b)(f) | — | 396,345 | ||||||
Digital Realty Trust, Inc.–REIT | 221,177 | 11,399,463 | ||||||
Hysan Development Co., Ltd. (Hong Kong) | 38,000 | 178,932 | ||||||
Kenedix Realty Investment Corp.–REIT (Japan) | 41 | 192,653 | ||||||
Kerry Properties Ltd. (Bermuda) | 41,000 | 213,630 | ||||||
Vornado Realty Trust–REIT | 192,422 | 16,034,525 | ||||||
Washington Real Estate Investment Trust–REIT | 154,000 | 4,772,460 | ||||||
Wharf Holdings, Ltd. (Hong Kong) | 23,000 | 176,950 | ||||||
33,364,958 | ||||||||
Freestanding–1.5% | ||||||||
National Retail Properties, Inc.–REIT | 194,700 | 5,159,550 | ||||||
Healthcare–9.9% | ||||||||
Health Care, Inc.–REIT | 307,100 | 14,630,244 | ||||||
Nationwide Health Properties, Inc.–REIT | 212,550 | 7,732,569 | ||||||
Omega Healthcare Investors, Inc.–REIT | 70,241 | 1,576,208 | ||||||
Senior Housing Property Trust–REIT | 422,802 | 9,276,276 | ||||||
Ventas, Inc.–REIT | 29,170 | 1,530,842 | ||||||
34,746,139 | ||||||||
Industrial/Office: Industrial–7.5% | ||||||||
Cabot Industrial Value Fund II, L.P. (Acquired 11/10/05 to 05/12/09, Cost $3,266,500)(a)(b)(f) | — | 2,102,374 | ||||||
DCT Industrial Trust, Inc.–REIT | 349,130 | 1,853,880 | ||||||
Exeter Industrial Value Fund, L.P. (Acquired 11/06/07 to 07/22/10, Cost $3,375,000)(b)(f) | — | 1,788,267 | ||||||
Global Logistic Properties, Ltd. (Singapore)(a) | 947,000 | 1,593,891 | ||||||
Keystone Industrial Fund, L.P. (Acquired 03/27/06 to 11/11/09 Cost $2,886,718)(b)(f) | — | 1,306,067 | ||||||
KTR Industrial Fund II, L.P. (Acquired 01/08/09 to 12/29/10, Cost $1,518,750)(a)(b)(f) | — | 1,500,000 | ||||||
ProLogis–REIT | 1,116,000 | 16,115,040 | ||||||
26,259,519 | ||||||||
Industrial/Office: Mixed–2.7% | ||||||||
Duke Realty Corp.–REIT | 43,157 | 537,736 | ||||||
Liberty Property Trust–REIT | 284,622 | 9,085,135 | ||||||
9,622,871 | ||||||||
Industrial/Office: Office–14.1% | ||||||||
Alexandria Real Estate Equities, Inc.–REIT | 102,400 | 7,501,824 | ||||||
BioMed Realty Trust, Inc.–REIT | 290,192 | 5,412,081 | ||||||
Boston Properties, Inc.–REIT | 108,851 | 9,372,071 | ||||||
Broadreach Capital Partners Realty II, L.P. (Acquired 10/02/06 to 08/24/10, Cost $4,399,563)(a)(b)(f) | — | 1,069,802 | ||||||
Corporate Office Properties Trust–REIT | 72,399 | 2,530,345 | ||||||
Derwent London PLC–REIT (United Kingdom) | 19,223 | 467,840 | ||||||
Highwoods Properties, Inc.–REIT | 214,600 | 6,835,010 | ||||||
Kilroy Realty Corp.–REIT | 109,770 | 4,003,312 | ||||||
Piedmont Office Realty Trust, Inc., Class A–REIT | 188,700 | 3,800,418 | ||||||
SL Green Realty Corp.–REIT | 123,600 | 8,344,236 | ||||||
49,336,939 | ||||||||
Lodging/Resorts–9.8% | ||||||||
DiamondRock Hospitality Co.–REIT(a) | 348,000 | 4,176,000 | ||||||
Hersha Hospitality Trust, Class A–REIT | 291,300 | 1,922,580 | ||||||
Host Hotels & Resorts, Inc.–REIT | 1,037,842 | 18,546,237 | ||||||
LaSalle Hotel Properties–REIT | 123,700 | 3,265,680 | ||||||
Marriott International, Inc., Class A | 86,863 | 3,608,289 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 44,935 | 2,731,149 | ||||||
34,249,935 | ||||||||
Regional Malls–15.2% | ||||||||
Aeon Mall Co., Ltd. (Japan) | 7,100 | 190,639 | ||||||
CBL & Associates Properties, Inc.–REIT | 237,982 | 4,164,685 | ||||||
CBL & Associates Properties, Inc. | 10,000 | 236,200 | ||||||
CFS Retail Property Trust–REIT (Australia) | 189,232 | 340,642 | ||||||
Macerich Co.–REIT | 259,930 | 12,312,884 | ||||||
Simon Property Group, Inc.–REIT | 363,053 | 36,120,143 | ||||||
53,365,193 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Van Kampen Real Estate Securities Fund
Description | Shares | Value | ||||||
Self Storage Facilities–0.9% | ||||||||
Big Yellow Group PLC–REIT (United Kingdom) | 57,112 | $ | 312,008 | |||||
Sovran Self Storage, Inc.–REIT | 74,482 | 2,741,682 | ||||||
3,053,690 | ||||||||
Shopping Centers–10.5% | ||||||||
Acadia Realty Trust–REIT | 202,601 | 3,695,442 | ||||||
BR Malls Participacoes SA (Brazil) | 21,300 | 219,415 | ||||||
Developers Diversified Realty Corp.–REIT | 87,252 | 1,229,381 | ||||||
Iguatemi Empresa de Shopping Centers SA (Brazil) | 17,100 | 427,500 | ||||||
Kimco Realty Corp.–REIT | 897,000 | 16,181,880 | ||||||
Regency Centers Corp.–REIT | 301,187 | 12,722,139 | ||||||
Renhe Commercial Holdings Co., Ltd. (Cayman Islands) | 2,334,000 | 408,378 | ||||||
Retail Opportunity Investments Corp.–REIT | 197,691 | 1,959,118 | ||||||
36,843,253 | ||||||||
Specialty Properties–0.1% | ||||||||
Unite Group PLC (United Kingdom) | 69,425 | 210,095 | ||||||
Total Real Estate Investment Trusts, Common Stocks & Other Equity Interests–97.8% | 342,231,567 | |||||||
Convertible Preferred Stock–0.1% | ||||||||
Diversified–0.1% | ||||||||
DuPont Fabros Technology, Inc., 7.875% | 14,000 | 349,440 | ||||||
Principal | ||||||||
Amount | ||||||||
Commercial Mortgage Backed Securities–0.9% | ||||||||
Banc of America Large Loan, Inc., Series 2005-MIB1, Class C, Floating Rate Pass Through Ctfs., 0.57%, 03/15/22(c)(d) | $ | 700,000 | 648,642 | |||||
Banc of America Large Loan, Inc., Series 2010-HLTN, Floating Rate Pass Through Ctfs., 2.01%, 11/15/15(c)(d) | 722,892 | 645,491 | ||||||
Bear Stearns Commercial Mortgage Securities, Inc., Series 2005-PWR7, Class AJ, Pass Through Ctfs., 5.17%, 02/11/41(c) | 750,000 | 725,244 | ||||||
Credit Suisse First Boston Mortgage Securities Corp., Series 2004-TF2A, Class J, Floating Rate Pass Through Ctfs., 1.21%, 11/15/19(c)(d) | 700,000 | 663,871 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2006-C4, Class AJ, Floating Rate Pass Through Ctfs., 5.90%, 06/15/38(c) | 422,500 | 401,803 | ||||||
Total Commercial Mortgage Backed Securities–0.9% | 3,085,051 | |||||||
Total Long-Term Investments–98.8% (Cost $270,938,426) | 345,666,058 | |||||||
Shares | ||||||||
Money Market Funds–0.2% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 371,871 | 371,871 | ||||||
Premier Portfolio–Institutional Class(e) | 371,871 | 371,871 | ||||||
Total Money Market Funds–0.2% (Cost $743,742) | 743,742 | |||||||
TOTAL INVESTMENTS–99.0% (Cost $271,682,168) | 346,409,800 | |||||||
OTHER ASSETS IN EXCESS OF LIABILITIES–1.0% | 3,549,167 | |||||||
NET ASSETS–100.0% | $ | 349,958,967 | ||||||
Percentages are calculated as a percentage of net assets.
Investment Abbreviations:
Ctfs. | – Certificates | |
REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
(a) | Non-income producing security. | |
(b) | Security is restricted and may be resold only in transactions exempt from registration which are normally those transactions with qualified institutional buyers. Restricted securities comprise 2.3% of net assets. | |
(c) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2010. | |
(d) | 144A-Private Placement security which is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. | |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. | |
(f) | Security has been deemed illiquid. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Van Kampen Real Estate Securities Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments, at value (Cost $270,938,426) | $ | 345,666,058 | ||
Investments in affiliated money market funds, at value and cost | 743,742 | |||
Receivables: | ||||
Investments sold | 5,255,768 | |||
Dividends | 1,186,738 | |||
Fund shares sold | 154,453 | |||
Interest | 5,892 | |||
Other | 74,469 | |||
Total assets | 353,087,120 | |||
Liabilities: | ||||
Foreign currency overdraft (Cost $21,292) | 21,943 | |||
Payables: | ||||
Fund shares repurchased | 1,999,046 | |||
Investments purchased | 592,574 | |||
Distributor and affiliates | 253,017 | |||
Custodian bank | 707 | |||
Trustees’ deferred compensation and retirement plans | 2,972 | |||
Accrued expenses | 257,894 | |||
Total liabilities | 3,128,153 | |||
Net assets | $ | 349,958,967 | ||
Net assets consist of: | ||||
Capital (par value of $0.01 per share with an unlimited number of shares authorized) | $ | 344,763,929 | ||
Net unrealized appreciation | 74,727,300 | |||
Accumulated undistributed net investment income | 394,415 | |||
Accumulated net realized income (loss) | (69,926,677 | ) | ||
Net assets | $ | 349,958,967 | ||
Maximum Offering Price Per Share: | ||||
Class A shares: | ||||
Net asset value and redemption price per share (based on net assets of $273,556,386 and 15,596,421 shares of beneficial interest issued and outstanding) | $ | 17.54 | ||
Maximum sales charge (5.50% of offering price) | 1.02 | |||
Maximum offering price to public | $ | 18.56 | ||
Class B shares: | ||||
Net asset value and offering price per share (based on net assets of $30,008,630 and 1,713,348 shares of beneficial interest issued and outstanding) | $ | 17.51 | ||
Class C shares: | ||||
Net asset value and offering price per share (based on net assets of $30,704,560 and 1,747,760 shares of beneficial interest issued and outstanding) | $ | 17.57 | ||
Class Y shares: | ||||
Net asset value and offering price per share (based on net assets of $15,677,919 and 893,079 shares of beneficial interest issued and outstanding) | $ | 17.55 | ||
Institutional Class shares: | ||||
Net asset value and offering price per share (based on net assets of $11,472 and 653 shares of beneficial interest issued and outstanding) | $ | 17.57 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Van Kampen Real Estate Securities Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Dividends (net of foreign withholding taxes of $34,205) | $ | 8,274,877 | ||
Dividends from affiliated money market funds | 6,326 | |||
Interest | 23,831 | |||
Total income | 8,305,034 | |||
Expenses: | ||||
Investment advisory fee | 2,809,425 | |||
Distribution fees: | ||||
Class A | 675,953 | |||
Class B | 80,036 | |||
Class C | 298,501 | |||
Transfer agent fees — A, B, C and Y | 941,190 | |||
Transfer agent fees — Institutional | 1,135 | |||
Reports to shareholders | 130,122 | |||
Administrative services fees | 104,229 | |||
Registration fees | 54,653 | |||
Professional fees | 42,712 | |||
Custody | 25,627 | |||
Trustees’ and officers’ fees and benefits | 22,830 | |||
Other | 106,225 | |||
Total expenses | 5,292,638 | |||
Expense reduction | 5,495 | |||
Net expenses | 5,287,143 | |||
Net investment income | 3,017,891 | |||
Realized and unrealized gain (loss): | ||||
Realized gain (loss): | ||||
Investments | 77,001,667 | |||
Foreign currency transactions | 7,739 | |||
Net realized gain | 77,009,406 | |||
Unrealized appreciation (depreciation): | ||||
Beginning of the period | 77,016,144 | |||
End of the period: | ||||
Investments | 74,727,632 | |||
Foreign currency translation | (332 | ) | ||
74,727,300 | ||||
Net unrealized depreciation during the period | (2,288,844 | ) | ||
Net realized and unrealized gain | 74,720,562 | |||
Net increase in net assets from operations | $ | 77,738,453 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Van Kampen Real Estate Securities Fund
Statements of Changes in Net Assets
For the years ended December 31, 2010 and 2009
2010 | 2009 | |||||||
From investment activities: | ||||||||
Operations: | ||||||||
Net investment income | $ | 3,017,891 | $ | 5,307,655 | ||||
Net realized gain (loss) | 77,009,406 | (90,671,208 | ) | |||||
Net unrealized appreciation (depreciation) during the period | (2,288,844 | ) | 155,751,659 | |||||
Change in net assets from operations | 77,738,453 | 70,388,106 | ||||||
Distributions from net investment income: | ||||||||
Class A | (3,008,004 | ) | (3,714,508 | ) | ||||
Class B | (357,600 | ) | (528,287 | ) | ||||
Class C | (112,421 | ) | (253,905 | ) | ||||
Class Y | (236,043 | ) | (356,039 | ) | ||||
Institutional Class | (29,041 | ) | -0- | |||||
Total distributions | (3,743,109 | ) | (4,852,739 | ) | ||||
Net change in net assets from investment activities | 73,995,344 | 65,535,367 | ||||||
From capital transactions: | ||||||||
Proceeds from shares sold | 84,531,676 | 67,563,127 | ||||||
Net asset value of shares issued through dividend reinvestment | 3,462,606 | 4,257,257 | ||||||
Cost of shares repurchased | (147,841,710 | ) | (115,177,109 | ) | ||||
Net change in net assets from capital transactions | (59,847,428 | ) | (43,356,725 | ) | ||||
Total increase in net assets | 14,147,916 | 22,178,642 | ||||||
Net assets: | ||||||||
Beginning of the period | 335,811,051 | 313,632,409 | ||||||
End of the period (including accumulated undistributed net investment income of $394,415 and $253,570, respectively) | $ | 349,958,967 | $ | 335,811,051 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Van Kampen Real Estate Securities Fund
Financial Highlights
The following schedules present financial highlights for one share of the Fund outstanding throughout the periods indicated.
Class A Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 14.17 | $ | 11.22 | $ | 18.95 | $ | 31.25 | $ | 24.71 | ||||||||||
Net investment income(a) | 0.15 | 0.21 | 0.23 | 0.27 | 0.27 | |||||||||||||||
Net realized and unrealized gain (loss) | 3.40 | 2.94 | (7.32 | ) | (5.26 | ) | 8.82 | |||||||||||||
Total from investment operations | 3.55 | 3.15 | (7.09 | ) | (4.99 | ) | 9.09 | �� | ||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.18 | 0.20 | 0.23 | 0.36 | 0.36 | |||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.39 | 6.95 | 2.19 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.02 | -0- | -0- | |||||||||||||||
Total distributions | 0.18 | 0.20 | 0.64 | 7.31 | 2.55 | |||||||||||||||
Net asset value, end of the period | $ | 17.54 | $ | 14.17 | $ | 11.22 | $ | 18.95 | $ | 31.25 | ||||||||||
Total return* | 25.18 | %(b) | 28.51 | %(c) | (38.64 | )%(c) | (17.34 | )%(c) | 37.44 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 273.6 | $ | 250.5 | $ | 230.0 | $ | 492.7 | $ | 872.0 | ||||||||||
Ratio of expenses to average net assets* | 1.46 | %(d) | 1.57 | % | 1.45 | % | 1.31 | % | 1.29 | % | ||||||||||
Ratio of net investment income to average net assets* | 0.92 | %(d) | 1.95 | % | 1.36 | % | 0.91 | % | 0.94 | % | ||||||||||
Portfolio turnover(e) | 86 | % | 25 | % | 29 | % | 32 | % | 24 | % | ||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||
Ratio of expenses to average net assets | 1.46 | %(d) | 1.61 | % | N/A | N/A | N/A | |||||||||||||
Ratio of net investment income to average net assets | 0.92 | %(d) | 1.91 | % | N/A | N/A | N/A | |||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 4.75% or a contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $270,383. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
N/A=Not Applicable
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Van Kampen Real Estate Securities Fund
Financial Highlights—(continued)
Class B Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 14.15 | $ | 11.21 | $ | 18.93 | $ | 31.24 | $ | 24.73 | ||||||||||
Net investment income(a) | 0.14 | 0.21 | 0.22 | 0.12 | 0.04 | |||||||||||||||
Net realized and unrealized gain (loss) | 3.40 | 2.93 | (7.30 | ) | (5.24 | ) | 8.83 | |||||||||||||
Total from investment operations | 3.54 | 3.14 | (7.08 | ) | (5.12 | ) | 8.87 | |||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.18 | 0.20 | 0.23 | 0.24 | 0.17 | |||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.39 | 6.95 | 2.19 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.02 | -0- | -0- | |||||||||||||||
Total distributions | 0.18 | 0.20 | 0.64 | 7.19 | 2.36 | |||||||||||||||
Net asset value, end of the period | $ | 17.51 | $ | 14.15 | $ | 11.21 | $ | 18.93 | $ | 31.24 | ||||||||||
Total return* | 25.14 | %(b)(d) | 28.46 | %(c)(g) | (38.62 | )%(c)(g) | (17.69 | )%(c)(g) | 36.43 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 30.0 | $ | 33.6 | $ | 36.5 | $ | 87.6 | $ | 163.3 | ||||||||||
Ratio of expenses to average net assets* | 1.46 | %(d)(e) | 1.56 | %(g) | 1.48 | %(g) | 1.82 | %(g) | 2.04 | % | ||||||||||
Ratio of net investment income to average net assets* | 0.87 | %(d)(e) | 1.98 | %(g) | 1.31 | %(g) | 0.38 | %(g) | 0.14 | % | ||||||||||
Portfolio turnover(f) | 86 | % | 25 | % | 29 | % | 32 | % | 24 | % | ||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||
Ratio of expenses to average net assets | 1.46 | %(d)(e) | 1.60 | %(g) | N/A | N/A | N/A | |||||||||||||
Ratio of net investment income to average net assets | 0.87 | %(d)(e) | 1.94 | %(g) | N/A | N/A | N/A | |||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 4%, charged on certain redemptions made within the first and second year of purchase declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.25%. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $32,015. | |
(f) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. | |
(g) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of less than 1%. |
N/A=Not Applicable
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Van Kampen Real Estate Securities Fund
Financial Highlights—(continued)
Class C Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 14.20 | $ | 11.24 | $ | 18.99 | $ | 31.30 | $ | 24.77 | ||||||||||
Net investment income(a) | 0.03 | 0.13 | 0.10 | 0.10 | 0.05 | |||||||||||||||
Net realized and unrealized gain (loss) | 3.40 | 2.95 | (7.34 | ) | (5.26 | ) | 8.84 | |||||||||||||
Total from investment operations | 3.43 | 3.08 | (7.24 | ) | (5.16 | ) | 8.89 | |||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.06 | 0.12 | 0.11 | 0.20 | 0.17 | |||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.39 | 6.95 | 2.19 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.01 | -0- | -0- | |||||||||||||||
Total distributions | 0.06 | 0.12 | 0.51 | 7.15 | 2.36 | |||||||||||||||
Net asset value, end of the period | $ | 17.57 | $ | 14.20 | $ | 11.24 | $ | 18.99 | $ | 31.30 | ||||||||||
Total return* | 24.20 | %(b) | 27.63 | %(c)(d) | (39.13 | )%(c) | (17.77 | )%(c)(d) | 36.39 | %(c)(d) | ||||||||||
Net assets at end of the period (in millions) | $ | 30.7 | $ | 28.8 | $ | 28.2 | $ | 65.6 | $ | 122.3 | ||||||||||
Ratio of expenses to average net assets* | 2.21 | %(e) | 2.31 | %(d) | 2.24 | % | 1.90 | %(d) | 2.04 | %(d) | ||||||||||
Ratio of net investment income to average net assets* | 0.17 | %(e) | 1.22 | %(d) | 0.56 | % | 0.33 | %(d) | 0.18 | %(d) | ||||||||||
Portfolio turnover(f) | 86 | % | 25 | % | 29 | % | 32 | % | 24 | % | ||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||
Ratio of expenses to average net assets | 2.21 | %(e) | 2.35 | %(d) | N/A | N/A | N/A | |||||||||||||
Ratio of net investment income to average net assets | 0.17 | %(e) | 1.18 | %(d) | N/A | N/A | N/A | |||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of less than 1%. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $29,850. | |
(f) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
N/A=Not Applicable
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Van Kampen Real Estate Securities Fund
Financial Highlights—(continued)
Class Y Sharesˆ | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 14.19 | $ | 11.24 | $ | 18.97 | $ | 31.27 | $ | 24.72 | ||||||||||
Net investment income(a) | 0.17 | 0.24 | 0.30 | 0.44 | 0.55 | |||||||||||||||
Net realized and unrealized gain (loss) | 3.41 | 2.94 | (7.35 | ) | (5.36 | ) | 8.61 | |||||||||||||
Total from investment operations | 3.58 | 3.18 | (7.05 | ) | (4.92 | ) | 9.16 | |||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.22 | 0.23 | 0.27 | 0.43 | 0.42 | |||||||||||||||
Distributions from net realized gain | -0- | -0- | 0.39 | 6.95 | 2.19 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.02 | -0- | -0- | |||||||||||||||
Total distributions | 0.22 | 0.23 | 0.68 | 7.38 | 2.61 | |||||||||||||||
Net asset value, end of the period | $ | 17.55 | $ | 14.19 | $ | 11.24 | $ | 18.97 | $ | 31.27 | ||||||||||
Total return* | 25.38 | %(b) | 28.78 | %(c) | (38.45 | )%(c) | (17.11 | )%(c) | 37.83 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 15.7 | $ | 22.9 | $ | 19.0 | $ | 11.7 | $ | 1.6 | ||||||||||
Ratio of expenses to average net assets* | 1.21 | %(d) | 1.32 | % | 1.23 | % | 1.12 | % | 1.04 | % | ||||||||||
Ratio of net investment income to average net assets* | 1.09 | %(d) | 2.23 | % | 1.84 | % | 1.55 | % | 1.85 | % | ||||||||||
Portfolio turnover(e) | 86 | % | 25 | % | 29 | % | 32 | % | 24 | % | ||||||||||
* If certain expenses had not been assumed by the adviser, total return would have been lower and the ratios would have been as follows: | ||||||||||||||||||||
Ratio of expenses to average net assets | 1.21 | %(d) | 1.36 | % | N/A | N/A | N/A | |||||||||||||
Ratio of net investment income to average net assets | 1.09 | %(d) | 2.19 | % | N/A | N/A | N/A | |||||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $16,766. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
N/A=Not Applicable
ˆ | On June 1, 2010, the Class I shares of the predecessor fund were reorganized into Class Y shares of the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Van Kampen Real Estate Securities Fund
Financial Highlights—(continued)
Institutional Class Shares | ||||
June 1, 2010 | ||||
(Commencement of Operations) to | ||||
December 31, 2010 | ||||
Net asset value, beginning of the period | $ | 15.40 | ||
Net investment income(a) | 0.07 | |||
Net realized and unrealized gain | 2.24 | |||
Total from investment operations | 2.31 | |||
Less distributions from net investment income | 0.14 | |||
Net asset value, end of the period | $ | 17.57 | ||
Total return | 15.07 | %(b) | ||
Net assets at end of the period (in thousands) | $ | 11.5 | ||
Ratio of expenses to average net assets | 0.87 | %(c) | ||
Ratio of net investment income to average net assets | 0.75 | %(c) | ||
Portfolio turnover(d) | 86 | % | ||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Ratios are annualized and based on average daily net assets (000’s omitted) of $3,891. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Van Kampen Real Estate Securities Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
Prior to June 1, 2010, the Fund operated as Van Kampen Real Estate Securities Fund (the “Acquired Fund”). The Acquired Fund was reorganized on June 1, 2010 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”).
Upon closing of the Reorganization, holders of the Acquired Fund’s Class A, Class B and Class C shares received the corresponding class of shares of the Fund and holders of the Acquired Fund’s Class I shares received Class Y shares of the Fund. Information for the Acquired Fund’s Class I shares prior to the Reorganization is included with Class Y shares of the Fund throughout this report.
The Fund’s principal investment objective is to seek long-term growth of capital. Current income is the secondary investment objective. The Fund’s investment adviser seeks to achieve its objective by investing primarily in a portfolio of securities of companies operating in the real estate industry, including securities of real estate investment trusts (“REIT”).
The Fund currently consists of five different classes of shares: Class A, Class B, Class C, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity |
18 Invesco Van Kampen Real Estate Securities Fund
are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. | ||
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available timely from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital in the Statement of Changes in Net Assets. These recharacterizations are reflected in the accompanying financial statements. |
19 Invesco Van Kampen Real Estate Securities Fund
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | |
D. | Distributions — Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
Each Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. Prior to the Reorganization, incremental transfer agency fees which are unique to each class of shares of the Acquired Fund were charged to the operations of such class. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
I. | Other Risks — The Fund’s investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund’s investments may tend to rise and fall more rapidly. | |
The Fund concentrates its assets in the real estate industry, an investment in the fund will be closely linked to the performance of the real estate markets. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments. | ||
J. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. | |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. | ||
K. | Foreign Currency Contracts — The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
20 Invesco Van Kampen Real Estate Securities Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with the Adviser. Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser at the annual rate of the Fund’s average daily net assets. The Fund also indirectly bears the investment advisory fees of the underlying funds.
Average Net Assets | Rate | |||
First $500 million | 0 | .80% | ||
Next $500 million | 0 | .75% | ||
Over $1 billion | 0 | .70% | ||
Prior to the Reorganization, the Acquired Fund paid an advisory fee of $1,153,076 to Van Kampen Asset Management (“Van Kampen”) based on the annual rates above of the Acquired Fund’s average daily net assets.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
Effective on the Reorganization date, the Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y and Institutional Class shares to 1.55%, 2.30%, 2.30%, 1.30% and 1.30% of average daily net assets, respectively. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012. The Adviser did not waive fees and/or reimburse expenses during the period under the expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2010, the Adviser waived advisory fees of $5,495 under this agreement.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. Prior to the Reorganization, under separate accounting services and chief compliance officer (“CCO”) employment agreements, Van Kampen Investments Inc. (“VKII”) provided accounting services and the CCO provided compliance services to the Acquired Fund. Pursuant to such agreements, the Acquired Fund paid $15,730 to VKII. For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as administrative services fees. Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (“SSB”) serves as the custodian and fund accountant and provides certain administrative services to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. Pursuant to such agreement, for the period ended December 31, 2010, IIS was paid $586,094 for providing such services. Prior to the Reorganization, the Acquired Fund paid $149,689 to Van Kampen Investor Services Inc., which served as the Acquired Fund’s transfer agent. For the year ended December 31, 2010, expenses incurred under these agreements are shown on the Statement of Operations as transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
Prior to the Reorganization, the Acquired Fund had entered into master distribution agreements with Van Kampen Funds Inc. (“VKFI”) to serve as the distributor for the Class A, Class B and Class C shares. Pursuant to such agreements, the Acquired Fund paid $430,222 to VKFI.
For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. For the period June 1, 2010 to December 31, 2010, IDI advised the Fund that IDI retained $12,493 in front-end sales commissions from the sale of Class A shares and $872, $17,351 and $764 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Prior to the Reorganization, VKFI retained $10,979 in front-end sales commissions from the sale of Class A shares and $18,041 for CDSC imposed on redemptions by shareholders.
21 Invesco Van Kampen Real Estate Securities Fund
Prior to the Reorganization, the Acquired Fund paid brokerage commissions to Morgan Stanley & Co., Inc., an affiliate of the Acquired Fund, totaling $360.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity securities | $ | 330,665,752 | $ | 4,496,142 | $ | 8,162,855 | $ | 343,324,749 | ||||||||
Commercial mortgage backed securities | — | 3,085,051 | — | 3,085,051 | ||||||||||||
Total investments | $ | 330,665,752 | $ | 7,581,193 | $ | 8,162,855 | $ | 346,409,800 | ||||||||
During the year ended December 31, 2010, the reconciliation of investment securities at fair value on a recurring basis using unobservable inputs (Level 3) is presented as follows:
Investment | ||||
Securities | ||||
Beginning Balance (1/1/2010) | $ | 9,788,728 | ||
Net Purchases | 3,194,929 | |||
Net Transfers in and/or out Level 3 | — | |||
Realized gain | — | |||
Unrealized appreciation/(depreciation) | (4,820,802 | ) | ||
Ending Balance (12/31/2010) | $ | 8,162,855 | ||
NOTE 4—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
For the period ended December 31, 2010, the Fund paid legal fees of $828 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. Prior to the Reorganization, the Acquired Fund recognized expense of $3,646 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a director of the Acquired Fund was a partner of such firm and he and his law firm provided legal services as legal counsel to the Acquired Fund.
NOTE 5—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
22 Invesco Van Kampen Real Estate Securities Fund
NOTE 6—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 3,743,109 | $ | 4,852,739 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 692,720 | ||
Net unrealized appreciation — investments | 67,745,678 | |||
Net unrealized appreciation (depreciation) — other investments | (332 | ) | ||
Temporary book/tax differences | (2,972 | ) | ||
Post-October deferrals | (132,448 | ) | ||
Capital loss carryforward | (63,107,608 | ) | ||
Shares of beneficial interest | 344,763,929 | |||
Total net assets | $ | 349,958,967 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales, Passive foreign investment companies, partnerships and REIT.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $65,761,943 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2017 | $ | 63,107,608 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 7—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $291,605,730 and $348,244,703, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 77,971,031 | ||
Aggregate unrealized (depreciation) of investment securities | (10,225,353 | ) | ||
Net unrealized appreciation of investment securities | $ | 67,745,678 | ||
Cost of investments for tax purposes is $278,664,122. |
NOTE 8—Unfunded Commitment
As of December 31, 2010, the Fund has entered into the following subscription agreements:
Subscription | Amount Drawn | Percentage of | ||||||||||
Counterparty | Commitment | on Commitment | Commitment | |||||||||
Cabot Industrial Value Fund II, L.P. | $ | 3,500,000 | $ | 3,266,500 | 93.33 | % | ||||||
Broadreach Capital Partners Realty I, L.P. | 3,200,000 | 2,789,210 | 87.16 | % | ||||||||
Broadreach Capital Partners Realty II, L.P. | 5,000,000 | 4,399,563 | 87.99 | % | ||||||||
Keystone Industrial Fund, L.P. | 3,500,000 | 3,500,000 | 100.00 | % | ||||||||
Exeter Industrial Value Fund, L.P. | 4,500,000 | 3,375,000 | 75.00 | % | ||||||||
KTR Industrial Fund II, L.P. | 5,000,000 | 1,518,750 | 30.38 | % | ||||||||
23 Invesco Van Kampen Real Estate Securities Fund
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and net operating losses, on December 31, 2010, accumulated undistributed net investment income was increased by $866,063 and accumulated undistributed net realized gain (loss) was decreased by $866,063. This reclassification had no effect on the net assets of the Fund.
NOTE 10—Share Information
For the years ended December 31, | ||||||||||||||||
2010(a) | 2009 | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Sales: | ||||||||||||||||
Class A | 3,669,014 | (b) | $ | 58,080,226 | (b) | 3,812,933 | $ | 40,807,430 | ||||||||
Class B | 165,123 | 2,613,208 | 184,880 | 1,958,756 | ||||||||||||
Class C | 248,183 | 3,976,163 | 185,508 | 2,089,013 | ||||||||||||
Class Y | 630,765 | 10,050,872 | 2,106,234 | 22,707,928 | ||||||||||||
Institutional Class | 659,828 | 9,811,207 | -0- | -0- | ||||||||||||
Total sales | 5,372,913 | $ | 84,531,676 | 6,289,555 | $ | 67,563,127 | ||||||||||
Dividend reinvestment: | ||||||||||||||||
Class A | 182,185 | $ | 2,853,297 | 307,486 | $ | 3,502,610 | ||||||||||
Class B | 21,943 | 341,829 | 45,068 | 506,977 | ||||||||||||
Class C | 6,401 | 97,502 | 18,673 | 215,728 | ||||||||||||
Class Y | 8,988 | 140,969 | 2,680 | 31,942 | ||||||||||||
Institutional Class | 1,739 | 29,009 | -0- | -0- | ||||||||||||
Total dividend reinvestment | 221,256 | $ | 3,462,606 | 373,907 | $ | 4,257,257 | ||||||||||
Repurchases: | ||||||||||||||||
Class A | (5,934,050 | ) | $ | (94,874,563 | ) | (6,930,597 | ) | $ | (73,912,553 | ) | ||||||
Class B | (851,808 | )(b) | (13,394,035 | )(b) | (1,110,180 | ) | (11,850,853 | ) | ||||||||
Class C | (532,196 | ) | (8,420,839 | ) | (684,398 | ) | (7,184,277 | ) | ||||||||
Class Y | (1,359,619 | ) | (20,097,955 | ) | (2,185,798 | ) | (22,229,426 | ) | ||||||||
Institutional Class | (660,914 | ) | (11,054,318 | ) | -0- | -0- | ||||||||||
Total repurchases | (9,338,587 | ) | $ | (147,841,710 | ) | (10,910,973 | ) | $ | (115,177,109 | ) | ||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 39% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. In addition, less than 1% of the shares outstanding of the Fund are owned by Invesco or an investment adviser under common control. | |
(b) | Includes automatic conversion of 294,948 Class B shares into 294,503 Class A shares at a value of $4,744,948. |
NOTE 11—Significant Event
Following a number of meetings in September and October, 2010, the Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco Real Estate Fund (the “Acquiring Fund”) in exchange for shares of the Acquiring Fund. The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2011.
NOTE 12—Change in Independent Registered Public Accounting Firm (Unaudited)
In connection with the Reorganization of the Fund, the Audit Committee of the Board of Trustees of the Trust appointed, and the Board of Trustees ratified and approved, PricewaterhouseCoopers LLP (“PWC”) as the independent registered public accounting firm of the Fund for the fiscal year following May 31, 2010. The predecessor fund’s financial statements were audited by a different independent registered public accounting firm (the “Prior Auditor”). Concurrent with the closing of the Reorganization, the Prior Auditor resigned as the independent registered public accounting firm of the predecessor fund. The Prior Auditor’s report on the financial statements of the Fund for the past two years did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period the Prior Auditor was engaged, there were no disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its report.
24 Invesco Van Kampen Real Estate Securities Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Van Kampen Real Estate Securities Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Van Kampen Real Estate Securities Fund (formerly known as Van Kampen Real Estate Securities Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations, the changes in its net assets and the financial highlights for the period then ended, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statement of changes in net assets and the financial highlights of the Fund for the periods ended December 31, 2009 and prior were audited by other independent auditors whose report dated February 19, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
25 Invesco Van Kampen Real Estate Securities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio3 | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,192.53 | $ | 7.96 | $ | 1,017.95 | $ | 7.32 | 1.44 | % | ||||||||||||||||||
B | 1,000.00 | 1,192.11 | 7.85 | 1,018.05 | 7.22 | 1.42 | ||||||||||||||||||||||||
C | 1,000.00 | 1,187.79 | 12.02 | 1,014.22 | 11.07 | 2.18 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,193.86 | 6.69 | 1,019.11 | 6.16 | 1.21 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,193.84 | 4.81 | 1,020.82 | 4.43 | 0.87 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
3 | The expense ratio for Class B shares reflects actual 12b-1 fees less than 1%. |
26 Invesco Van Kampen Real Estate Securities Fund
Tax Information |
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Qualified Dividend Income* | 0% | |||
Corporate Dividends Received Deduction* | 0% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
27 Invesco Van Kampen Real Estate Securities Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(GRAPHIC)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885913.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the period between June 1, 2010, and June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website, sec.gov.
Proxy voting information for the predecessor fund prior to its reorganization with the Fund on June 1, 2010, is not available on the Invesco website but is or will be available on the SEC website under the predecessor fund.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7885914.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
VK-RES-AR-1 | Invesco Distributors, Inc. |
![]() |
Annual Report to Shareholders December 31, 2010
Invesco Van Kampen U.S. Mortgage Fund
2 | Letters to Shareholders | |
4 | Performance Summary | |
4 | Management Discussion | |
6 | Long-Term Fund Performance | |
8 | Supplemental Information | |
9 | Schedule of Investments | |
13 | Financial Statements | |
16 | Financial Highlights | |
20 | Notes to Financial Statements | |
29 | Auditor’s Report | |
30 | Fund Expenses | |
31 | Tax Information | |
T-1 | Trustees and Officers |
Letters to Shareholders
![(PHOTO OF PHILIP TAYLOR)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886002.jpg)
Philip Taylor
Dear Shareholders:
Enclosed is important information about your Fund and its performance.
I’ve always believed that companies have an obligation to communicate regularly with their clients, and I believe that obligation is especially critical in the investment industry.
Our website – invesco.com/us – offers timely market updates and commentary from many of our portfolio managers and other investment professionals, as well as quarterly messages from me. At invesco.com/us, you also can obtain information about your account at any hour of the day or night. I invite you to visit and explore the tools and information we offer.
Invesco’s commitment to investment excellence
Invesco’s acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, broadened our range of investment products available to you. As a strong organization with a single focus – investment management – Invesco today offers investment capabilities and products to meet the needs of virtually any investor. In addition to traditional mutual funds, we manage a broad range of other solutions, including single-country, regional and global investments spanning major equity, fixed income and alternative asset classes.
Investment excellence is our goal across our product line. Let me explain what that means. All of our funds are managed by specialized teams of investment professionals. Each team has a discrete investment perspective and philosophy, and all follow disciplined, repeatable processes governed by strong risk oversight. Our investment-centric culture provides an environment that seeks to reduce distractions, allowing our fund managers to concentrate on what they do best – manage your money.
The importance of a broad product line and investment management expertise is obvious given the markets we’ve experienced over the last two to three years. We’ve seen that investment strategies can outperform or underperform their benchmark indexes for a variety of reasons, including where we are in the market cycle, and whether prevailing economic conditions are favorable or unfavorable for that strategy. That’s why no investment strategy can guarantee top-tier performance at all times. What investors can expect, and what Invesco offers, are funds that are managed according to their stated investment objectives and strategies, with robust risk oversight using consistent, repeatable investment processes that don’t change as short-term external conditions change – investments managed for the long term. This disciplined approach can’t guarantee a profit; no investment can do that, since all involve some measure of risk. But it can ensure that your money is managed the way we said it would be.
This adherence to stated investment objectives and strategies allows your financial adviser to build a diversified portfolio that meets your individual risk tolerance and financial goals. It also means that when your goals change, your financial adviser will be able to find an appropriate investment option to meet your needs.
Invesco’s commitment to you
Invesco’s commitment to you remains stronger than ever. It’s one of the reasons we’ve grown to become one of the world’s largest asset managers.
If you have questions about your account, please contact one of our client service representatives at 800 959 4246. If you have a general Invesco-related question or comment for me, I invite you to email me directly at phil@invesco.com.
I want to thank you for placing your trust in us. All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
![-s- Philip Taylor](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886003.gif)
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
2 | Invesco Van Kampen U.S. Mortgage Fund |
![(PHOTO OF BRUCE CROCKETT)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886004.jpg)
Bruce Crockett
Dear Fellow Shareholders:
With 2010 behind us, now is a good time to review our portfolios and ensure that we are adhering to a long-term, diversified investment strategy, which I’ve mentioned in previous letters. The year was notable for a number of reasons, but I’m sure most of us are grateful for a return to more stable markets and growing signs that the worst of the economic crisis is behind us.
Your Board continued to oversee the Invesco Funds with a strong sense of responsibility for your savings and a deep appreciation for your continued trust. As always, we worked throughout 2010 to manage costs and ensure Invesco continued to place investor interests first.
I’m pleased to report that the latest report from Morningstar affirmed the work we’ve done and included a number of positive comments regarding your Board’s oversight of the Invesco Funds.
As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
As background, Morningstar is a leading independent provider of investment research in North America, Europe, Australia and Asia. Morningstar stated, “A fund board’s duty is to represent the interests of fund shareholders, ensuring that the funds that it oversees charge reasonable fees and are run by capable advisers with a sound investment process.”
Morningstar maintained your Fund Board’s “A” grade for Board Quality, praising the Board for taking “meaningful steps in recent years to act in fund shareholders’ interests.”1 These steps included becoming much more proactive and vocal in overseeing how Invesco votes the funds’ shareholders’ proxies and requiring each fund trustee to invest more than one year’s board compensation in Invesco funds, further aligning our interests with those of our shareholders. Morningstar also cited the work I’ve done to make myself more available to fund shareholders via email.
I am also pleased that Morningstar recognized the effort and the Fund Board’s efforts over the past several years to work together with management at Invesco to enhance performance and sharpen the focus on investors.
Let me close by wishing you a happy and prosperous new year. As always, you’re welcome to contact me at bruce@brucecrockett.com with any questions or concerns you have. We look forward to representing you and serving you in the new year.
Sincerely,
![-s- Bruce L. Crockett](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886005.gif)
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
1 | Among the criteria Morningstar considers when evaluating a fund board are the degree to which the board is independent of the fund company; board members’ financial interests are aligned with those of fund shareholders; the board acts in fund shareholders’ interests; and the board works constructively with company management and investment personnel. Morningstar first awarded an “A” rating to the Invesco Funds board on September 13, 2007; that rating has been maintained in subsequent reports, the most recent of which was released December 17, 2010. Ratings are subject to change, usually every 12 to 24 months. Morningstar ratings range from “A” to “F.” |
3 | Invesco Van Kampen U.S. Mortgage Fund |
Management’s Discussion of Fund Performance
Performance summary
As part of Invesco’s June 1, 2010, acquisition of Morgan Stanley’s retail asset management business, including Van Kampen Investments, Van Kampen U.S. Mortgage Fund was reorganized into Invesco Van Kampen U.S. Mortgage Fund. As of June 1, Clint Dudley, Jason Marshall and Brian Norris became the portfolio management team. A detailed listing of your Fund’s managers appears later in this report.
For the fiscal year ended December 31, 2010, Class A shares of Invesco Van Kampen U.S. Mortgage Fund, at net asset value, outperformed the Fund’s style-specific index, the Barclays Capital U.S. Mortgage Backed Securities Index. Sector and security selection decisions were principal contributors to this relative outperformance.
Your Fund’s long-term performance appears later in this report.
Fund vs. Indexes
Total returns, 12/31/09 to 12/31/10, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance.
Class A Shares | 5.41 | % | ||
Class B Shares | 4.64 | |||
Class C Shares | 4.64 | |||
Class Y Shares | 5.65 | |||
Institutional Class Shares | 5.50 | |||
B of A ML 1-10 year Treasury Index▼ (Broad Market Index) | 5.22 | |||
Barclays Capital U.S. Mortgage Backed Securities Index▼ (Style-Specific Index) | 5.37 | |||
▼Lipper Inc. |
How we invest
We seek high current income, with liquidity and safety of principal, by investing primarily in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, including mortgage-backed securities (MBS). Fund shares are neither insured nor guaranteed by the U.S. government. The Fund may invest in derivative instruments, such as interest rate futures contracts, and engage in mortgage dollar roll transactions, a form of repurchase agreement activity in the to-be-announced (TBA) market for agency MBS.
Our security selection is supported by a team of independent specialists. Team members conduct top-down macroeconomic, as well as bottom-up analysis, on individual securities.
Recommendations are communicated to portfolio managers through proprietary technology that allows all investment professionals to communicate in a timely manner.
Portfolio construction begins with a well-defined Fund design that establishes the target investment vehicles for generating the desired “alpha” (the extra return above a specific benchmark), as well as the risk parameters for the Fund. Investment vehicles are evaluated for liquidity and relative value.
Sell decisions are based on:
n | A conscious decision to alter the Fund’s macro-risk exposure (such as duration, yield curve positioning, sector exposure). | |
n | The need to limit or reduce exposure to a particular sector or issuer. |
n | Degradation of an issuer’s credit quality. | |
n | Realignment of a valuation target. | |
n | Presentation of a better relative value opportunity. |
Market conditions and your Fund
In the U.S., and much of the developed world, a gradual and somewhat lackluster recovery continued during 2010, with central banks keeping interest rates at low levels and with few of them withdrawing their quantitative easing measures. This helped private sector companies improve their balance sheets and earnings following the global financial crisis that began to dissipate in early 2009. Investor skepticism of global governments’ abilities to retire huge amounts of debt without affecting economic growth rates, however, caused sovereign debt distress (especially for eurozone countries) and became a focal point of investor concern.
In the U.S., economic recovery was present, although the pace remained modest as stubbornly high unemployment and housing sector weakness continued to weigh on the economy. Real gross domestic product (GDP), the broadest measure of overall U.S. economic activity, increased at annual rates of 3.7%, 1.7% and 2.6% for the first, second and third quarters of 2010, respectively.1 The U.S. Federal Reserve (the Fed) maintained a very accommodative monetary policy throughout the period, with the federal funds target rate unchanged in a range of zero to 0.25%.2 The Fed described its view of the U.S. economy, stating: “The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”2
Portfolio Composition
By asset type
Mortgage Backed Securities | 95.4 | % | ||
Commercial Mortgage Backed Securities | 13.7 | |||
Collateralized Mortgage Obligations | 13.5 | |||
Adjustable Rate Mortgage Backed Securities | 3.8 | |||
U.S. Treasury Obligations | 2.4 | |||
Asset Backed Securities | 0.8 | |||
Money Market Funds Plus Other Assets Less Liabilities | -29.6 |
Top 10 Fixed Income Issuers*
1. | Fannie Mae | 66.9 | % | |||||
2. | Freddie Mac | 39.7 | ||||||
3. | Commercial Mortgage Pass Through Certificates | 2.8 | ||||||
4. | U.S. Treasury Securities | 2.4 | ||||||
5. | Government National Mortgage Association | 2.2 | ||||||
6. | Bear Stearns Commercial Mortgage | 2.2 | ||||||
7. | JP Morgan Chase Commercial Mortgage | 2.0 | ||||||
8. | Merrill Lynch/Countrywide Commercial Mortgage Trust | 1.6 | ||||||
9. | Bank of America Large Loan, Inc. | 1.3 | ||||||
10. | La Hipotecaria SA | 1.1 |
Total Net Assets | $635.7 million | |||
Total Number of Holdings* | 1.035 |
The Fund’s holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security.
*Excluding money market fund holdings.
4 Invesco Van Kampen U.S. Mortgage Fund
U.S. Treasury yields for securities with maturities of two to 30 years, ended the fiscal year lower than at the start, indicative of positive 12-month returns across government bond sectors.3 Treasuries performed well for the period despite a significant rise in yields for intermediate and longer maturity securities during the final three months of the fiscal year, driven by rising inflation expectations and improving economic data. The broader U.S. investment-grade bond market, as measured by the Barclays Capital U.S. Aggregate Index, also generated a positive total return for the period.4 Slow economic growth, avoidance of a double-dip recession, recovery in corporate financial health, strong inflows into credit-related asset classes and low overall interest rates, supported the performance of bonds, especially in non-government sectors.
In this market environment, Class A shares of the Fund, at net asset value, generated positive returns, and outperformed the Fund’s style-specific index, the Barclays Capital U.S. Mortgage Backed Securities Index, for the year. Since we took over management of the Fund, sector allocation decisions, which incorporated the yield advantage and price stability of short average life agency collateralized mortgage obligations (CMOs) and the relative values present in high-quality commercial mortgage-backed securities (CMBS), benefited versus the style-specific index. It also contributed to a higher-than-index average portfolio yield-to-maturity for the period.
Security selection among agency MBS benefited the Fund. We emphasized higher coupon 30-year MBS, and deemphasized 15-year MBS, during a period when the 30-year high coupon MBS were some of the best performing securities within the style-specific index.3 The Fund also benefited from incremental income earned by engaging in dollar (mortgage) roll activity, a type of repurchase transaction in the highly liquid TBA market for agency MBS. A dollar roll involves the Fund selling an MBS to a financial institution, with an agreement to repurchase a substantially similar security at an agreed upon price and date. Cash received by the Fund as a result of this repurchase transaction may be invested in short-term instruments, and the income from these investments, together with any additional fee income received from this activity, generates income for the Fund.
The Fund also uses active duration and yield curve positioning for risk management and for generating alpha versus its benchmark. Duration measures a portfolio’s price sensitivity to interest rate changes, with a shorter duration portfolio tending to be less sensitive to these changes. The contribution to performance from duration positioning versus the style-specific benchmark was negative over the period. A sustained, longer-than-style-specific benchmark duration posture during much of the second half of the year was beneficial to relative returns during the third quarter as rates continued to decline. This was offset, however, by the effects of this same posture during the significant rise in rates during the fourth quarter of 2010. Yield curve positioning during the third quarter, when the Fund held a greater quantity of longer duration securities than the style-specific index, also had a slight negative effect. U.S. Treasury futures contracts were an important tool used in the management of our targeted portfolio duration.
We thank you for your investment in Invesco Van Kampen U.S. Mortgage Fund.
1 Bureau of Economic Analysis
2 U.S. Federal Reserve
3 Barclays Capital
4 Lipper Inc.
2 U.S. Federal Reserve
3 Barclays Capital
4 Lipper Inc.
The views and opinions expressed in management’s discussion of Fund performance are those of Invesco Advisers, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Advisers, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy.
See important Fund and, if applicable, index disclosures later in this report.
Clint Dudley
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen U.S. Mortgage Fund. Mr. Dudley joined Invesco in 1998. He earned a B.B.A. and an M.B.A. from Baylor University.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen U.S. Mortgage Fund. Mr. Dudley joined Invesco in 1998. He earned a B.B.A. and an M.B.A. from Baylor University.
Jason Marshall
Portfolio manager, is manager of Invesco Van Kampen U.S. Mortgage Fund. Mr. Marshall joined Invesco in 2007. He earned a B.S. in finance from Indiana University of Pennsylvania. He also earned an M.B.A. with a concentration in finance from Duquesne University.
Portfolio manager, is manager of Invesco Van Kampen U.S. Mortgage Fund. Mr. Marshall joined Invesco in 2007. He earned a B.S. in finance from Indiana University of Pennsylvania. He also earned an M.B.A. with a concentration in finance from Duquesne University.
Brian Norris
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen U.S. Mortgage Fund. Mr. Norris joined Invesco in 2001. He earned a B.S. in business administration from the University of Louisville.
Chartered Financial Analyst, portfolio manager, is manager of Invesco Van Kampen U.S. Mortgage Fund. Mr. Norris joined Invesco in 2001. He earned a B.S. in business administration from the University of Louisville.
5 | Invesco Van Kampen U.S. Mortgage Fund |
Your Fund’s Long-Term Performance
Results of a $10,000 Investment — Oldest Share Class since Inception
Fund and index data from 5/31/84
Fund and index data from 5/31/84
![(GRAPH)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886006.gif)
Past performance cannot guarantee comparable future results.
The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Index results include reinvested dividends, but they do not reflect sales charges. Performance of the peer group, if applicable, reflects Fund expenses and management fees; performance of a market index does not.
Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares.
This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating changes in value during the early years shown in the chart. The
vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on.
6 | Invesco Van Kampen U.S. Mortgage Fund |
Average Annual Total Returns
As of 12/31/10, including maximum applicable sales charges
Class A Shares | ||||
Inception (5/31/84) | 7.05 | % | ||
10 Years | 3.90 | |||
5 Years | 3.05 | |||
1 Year | 0.37 | |||
Class B Shares | ||||
Inception (8/24/92) | 4.72 | % | ||
10 Years | 3.76 | |||
5 Years | 2.92 | |||
1 Year | -0.36 | |||
Class C Shares | ||||
Inception(8/13/93) | 4.03 | % | ||
10 Years | 3.60 | |||
5 Years | 3.27 | |||
1 Year | 3.64 | |||
Class Y Shares | ||||
Inception (9/25/06) | 4.42 | % | ||
1 Year | 5.65 | |||
Institutional Class Shares | ||||
10 Years | 4.41 | % | ||
5 Years | 4.08 | |||
1 Year | 5.50 |
Effective June 1, 2010, Class A, Class B, Class C and Class I shares of the predecessor fund advised by Van Kampen Asset Management were reorganized into Class A, Class B, Class C and Class Y shares, respectively, of Invesco Van Kampen U.S. Mortgage Fund. Returns shown above for Class A, Class B, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Van Kampen U.S. Mortgage Fund. Share class returns will differ from the predecessor fund because of different expenses.
Institutional Class shares incepted on June 1, 2010. Performance shown prior to that date is that of the predecessor fund’s Class A shares and includes the 12b-1 fees applicable to Class A shares. Class A shares performance reflects any applicable fee waivers or expense reimbursements.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class B, Class C, Class Y and Institutional Class shares was 0.96%, 1.71%, 1.71%, 0.71% and 0.69%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 4.75% sales charge, and Class B and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. For shares purchased prior to June 1, 2010, the CDSC on
Class B shares declines from 4% at the time of purchase to 0% at the beginning of the seventh year. For shares purchased on or after June 1, 2010, the CDSC on Class B shares declines from 5% at the time of purchase to 0% at the beginning of the seventh year. The CDSC on Class C shares is 1% for the first year after purchase. Class Y and Institutional Class shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
n | The returns shown in management’s discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for |
financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. |
n | Industry classifications used in this report are generally classified according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
7 | Invesco Van Kampen U.S. Mortgage Fund |
Invesco Van Kampen U.S. Mortgage Fund’s investment objective is to provide a high level of current income, with liquidity and safety of principal.
n | Unless otherwise stated, information presented in this report is as of December 31, 2010, and is based on total net assets. | |
n | Unless otherwise noted, all data provided by Invesco. | |
n | To access your Fund’s reports/prospectus, visit invesco.com/fundreports. |
About share classes
n | Class B or Class B5 shares may not be purchased or acquired by exchange from share classes other than Class B or Class B5 shares. Please see the prospectus for more information. | |
n | Class Y shares are available to only certain investors. Please see the prospectus for more information. | |
n | Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. Please see the prospectus for more information. |
Principal risks of investing in the Fund
n | Mortgage-backed securities may be more susceptible to further price declines than traditional debt securities in periods of rising interest rates because of extension risk (described below). In addition, mortgage-backed securities may benefit less than traditional debt securities during periods of declining interest rates because of prepayment risk (described below). When-issued and delayed delivery transactions are subject to changes in market conditions from the time of the commitment until settlement. | |
n | Credit risk refers to an issuer’s ability to make timely payments of interest and principal. Credit risk should be low for the Fund because it invests primarily in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. | |
n | The income you receive from the Fund is based primarily on prevailing interest rates, which can vary widely over the short-and long-term. If interest rates drop, your income from the Fund may drop as well. | |
n | If interest rates fall, the principal on debt securities held by the Fund may be paid earlier than expected. If this |
happens, the proceeds from a prepaid security would likely be reinvested by the Fund in securities bearing the new, lower interest rates, resulting in a possible decline in the Fund’s income and distributions to shareholders. | ||
n | The prices of debt securities tend to fall as interest rates rise. For mortgage-backed securities, if interest rates rise, borrowers may prepay mortgages more slowly than originally expected. This may further reduce the market value of the securities and lengthen their durations. | |
n | Risks of derivatives include the possible imperfect correlation between the value of the instruments and the underlying assets; risks of default by the other party to the transaction; risks that the transactions may result in losses that partially or completely offset gains in portfolio positions; and risks that the transactions may not be liquid. Certain derivative transactions may give rise to a form of leverage. Leverage magnifies the potential for gain and the risk of loss. | |
n | The Fund may borrow money for investment purposes, which is known as leverage. The Fund may use leverage to seek to enhance income to shareholders, but the use of leverage creates the likelihood of greater volatility in the net asset value of the Fund’s shares. To the extent that income from investments made with such borrowed money exceeds the interest payable and other expenses of the leverage, the Fund’s net income will be less than if the Fund did not use. The Fund’s use of leverage also may impair the ability of the Fund to maintain its qualification for federal income tax purposes as a regulated investment company. | |
n | Market risk is the possibility that the market values of securities owned by the Fund will decline. The prices of debt securities tend to fall as interest rates rise, and such declines tend to be |
greater among debt securities with longer maturities or longer durations. The yields and market prices of U.S. government securities may move differently and adversely compared to the yields and market prices of the overall debt securities markets. U.S. government securities, while backed by the U.S. government, are not guaranteed against declines in their market prices. |
About indexes used in this report
n | The B of A ML 1-10 year Treasury Index is an unmanaged index tracking U.S. Treasury securities with maturities between 1 and 9.99 years. | |
n | The Barclays Capital U.S. Mortgage Backed Securities Index represents mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). | |
n | The Barclays Capital U.S. Aggregate Index is an unmanaged index considered representative of the U.S. investment-grade, fixed-rate bond market. | |
n | The Fund is not managed to track the performance of any particular index, including the index(es) defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
n | A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. |
Other information
n | The Chartered Financial Analyst® (CFA®) designation is globally recognized and attests to a charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis. |
continued on page 7
This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Fund Nasdaq Symbols
Class A Shares | VKMGX | |
Class B Shares | VUSBX | |
Class C Shares | VUSCX | |
Class Y Shares | VUSIX | |
Institutional Class Shares | VUSJX |
8 | Invesco Van Kampen U.S. Mortgage Fund |
Schedule of Investments
December 31, 2010
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Mortgage Backed Securities–95.4% | ||||||||||||||||
Federal Home Loan Mortgage Corp. | 4.500 | % | 05/01/38 | $ | 10,532 | $ | 10,868,659 | |||||||||
Federal Home Loan Mortgage Corp. | 5.000 | % | 10/01/18 to 06/01/40 | 63,094 | 66,433,718 | |||||||||||
Federal Home Loan Mortgage Corp. | 5.500 | % | 01/01/36 to 05/01/38 | 32,261 | 34,478,372 | |||||||||||
Federal Home Loan Mortgage Corp. | 6.000 | % | 03/01/29 to 09/01/38 | 22,692 | 24,609,195 | |||||||||||
Federal Home Loan Mortgage Corp. | 6.500 | % | 07/01/14 to 08/01/33 | 2,150 | 2,406,703 | |||||||||||
Federal Home Loan Mortgage Corp. | 7.500 | % | 01/01/20 to 05/01/35 | 1,329 | 1,524,607 | |||||||||||
Federal Home Loan Mortgage Corp. | 8.000 | % | 08/01/32 | 689 | 807,538 | |||||||||||
Federal Home Loan Mortgage Corp. | 8.500 | % | 01/01/17 to 08/01/31 | 1,302 | 1,515,566 | |||||||||||
Federal Home Loan Mortgage Corp., January(a) | 4.500 | % | TBA | 14,225 | 14,580,625 | |||||||||||
Federal Home Loan Mortgage Corp., January(a) | 6.000 | % | TBA | 18,625 | 20,176,127 | |||||||||||
Federal Home Loan Mortgage Corp., January(a) | 6.500 | % | TBA | 16,400 | 18,180,942 | |||||||||||
Federal National Mortgage Association(a) | 3.500 | % | TBA | 9,500 | 9,568,286 | |||||||||||
Federal National Mortgage Association(a) | 4.000 | % | TBA | 49,500 | 49,586,482 | |||||||||||
Federal National Mortgage Association | 4.500 | % | 05/01/19 to 01/01/40 | 32,957 | 34,674,984 | |||||||||||
Federal National Mortgage Association(a) | 4.500 | % | TBA | 50,775 | 52,131,657 | |||||||||||
Federal National Mortgage Association | 5.000 | % | 03/01/22 to 03/01/39 | 39,470 | 41,824,644 | |||||||||||
Federal National Mortgage Association | 5.500 | % | 11/01/22 to 11/01/38 | 110,870 | 119,142,149 | |||||||||||
Federal National Mortgage Association | 6.000 | % | 07/01/12 to 05/01/40 | 31,217 | 34,001,641 | |||||||||||
Federal National Mortgage Association(a) | 6.000 | % | TBA | 5,540 | 6,022,157 | |||||||||||
Federal National Mortgage Association | 6.500 | % | 11/01/13 to 11/01/38 | 18,931 | 21,244,808 | |||||||||||
Federal National Mortgage Association | 7.000 | % | 05/01/13 to 07/01/34 | 1,141 | 1,295,877 | |||||||||||
Federal National Mortgage Association | 7.500 | % | 04/01/15 to 08/01/37 | 2,158 | 2,469,496 | |||||||||||
Federal National Mortgage Association | 8.000 | % | 07/01/20 to 04/01/33 | 1,798 | 2,077,916 | |||||||||||
Federal National Mortgage Association | 8.500 | % | 08/01/14 to 10/01/32 | 1,989 | 2,268,197 | |||||||||||
Federal National Mortgage Association | 9.500 | % | 04/01/30 | 339 | 405,993 | |||||||||||
Federal National Mortgage Association | 13.000 | % | 06/01/15 | 77 | 91,030 | |||||||||||
Federal National Mortgage Association, January(a) | 5.000 | % | TBA | 6,800 | 7,149,561 | |||||||||||
Government National Mortgage Association(a) | 4.500 | % | TBA | 14,300 | 14,849,663 | |||||||||||
Government National Mortgage Association | 5.500 | % | 05/15/33 to 10/15/34 | 3,822 | 4,155,030 | |||||||||||
Government National Mortgage Association | 6.000 | % | 01/15/28 to 04/15/29 | 1,494 | 1,649,787 | |||||||||||
Government National Mortgage Association | 6.500 | % | 04/15/26 to 12/15/28 | 431 | 489,831 | |||||||||||
Government National Mortgage Association | 7.000 | % | 08/15/22 to 01/15/29 | 899 | 1,029,445 | |||||||||||
Government National Mortgage Association | 8.000 | % | 05/15/16 to 12/15/21 | 988 | 1,118,582 | |||||||||||
Government National Mortgage Association | 9.000 | % | 11/15/15 to 08/15/24 | 1,654 | 1,891,718 | |||||||||||
Government National Mortgage Association | 9.500 | % | 02/15/16 to 09/15/22 | 975 | 1,093,969 | |||||||||||
Government National Mortgage Association | 12.250 | % | 02/15/15 to 06/15/15 | 17 | 17,045 | |||||||||||
Government National Mortgage Association | 13.000 | % | 09/15/13 to 05/15/15 | 11 | 11,031 | |||||||||||
Government National Mortgage Association II | 6.000 | % | 04/20/29 | 606 | 667,909 | |||||||||||
Government National Mortgage Association II | 8.500 | % | 02/20/17 | 4 | 4,693 | |||||||||||
Total Mortgage Backed Securities–95.4% | 606,515,633 | |||||||||||||||
Collateralized Mortgage Obligations–13.5% | ||||||||||||||||
American Home Mortgage Investment Trust(b) | 2.457 | % | 06/25/45 | 3,464 | 3,300,468 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Van Kampen U.S. Mortgage Fund
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Collateralized Mortgage Obligations–(continued) | ||||||||||||||||
Bear Stearns Mortgage Funding Trust(b) | 0.461 | % | 09/25/46 | $ | 182 | $ | 111,186 | |||||||||
Citigroup Mortgage Loan Trust, Inc.(b) | 2.436 | % | 08/25/34 | 1,553 | 1,562,248 | |||||||||||
Countrywide Home Loan Mortgage Pass Through Trust,(b) | 0.801 | % | 02/25/35 | 1,065 | 901,181 | |||||||||||
Credit Suisse Mortgage Capital Certificates(c) | 5.500 | % | 02/27/37 | 1,280 | 1,295,675 | |||||||||||
Federal Home Loan Mortgage Corp. (REMIC) | 3.750 | % | 10/15/18 | 4,182 | 4,354,774 | |||||||||||
Federal Home Loan Mortgage Corp. (REMIC) | 3.770 | % | 09/15/17 | 10,269 | 10,589,347 | |||||||||||
Federal Home Loan Mortgage Corp. (REMIC) | 3.835 | % | 09/15/17 | 10,011 | 10,327,160 | |||||||||||
Federal Home Loan Mortgage Corp. (REMIC) | 4.160 | % | 07/15/17 | 11,918 | 12,291,436 | |||||||||||
Federal Home Loan Mortgage Corp. (REMIC) | 4.380 | % | 05/15/17 | 10,344 | 10,675,649 | |||||||||||
Federal Home Loan Mortgage Corp. (STRIPS)(d) | 8.000 | % | 06/01/31 | 3,971 | 1,143,735 | |||||||||||
Federal National Mortgage Association (REMIC) | 4.500 | % | 07/25/19 | 4,080 | 4,292,323 | |||||||||||
Federal National Mortgage Association (REMIC)(d) | 4.500 | % | 11/25/23 | 35,442 | 4,118,433 | |||||||||||
Federal National Mortgage Association (REMIC)(d) | 6.000 | % | 08/25/32 | 978 | 98,795 | |||||||||||
Federal National Mortgage Association (REMIC)(d) | 6.000 | % | 05/25/33 | 277 | 58,993 | |||||||||||
Federal National Mortgage Association (STRIPS)(d) | 6.500 | % | 10/01/24 | 958 | 186,539 | |||||||||||
Federal National Mortgage Association (REMIC)(d) | 7.000 | % | 05/25/33 | 3,210 | 677,625 | |||||||||||
Federal National Mortgage Association (REMIC) | 7.000 | % | 09/25/32 | 1,123 | 1,270,184 | |||||||||||
Federal National Mortgage Association (STRIPS)(d) | 7.500 | % | 01/01/32 | 848 | 231,645 | |||||||||||
Federal National Mortgage Association(b) | 7.500 | % | 01/19/39 | 877 | 1,004,513 | |||||||||||
Federal National Mortgage Association (STRIPS)(d) | 8.000 | % | 05/01/30 | 2,558 | 650,304 | |||||||||||
Federal National Mortgage Association (REMIC)(d) | 8.000 | % | 09/18/27 | 2,702 | 638,346 | |||||||||||
Federal National Mortgage Association (REMIC)(d) | 8.000 | % | 08/18/27 | 273 | 65,721 | |||||||||||
Government National Mortgage Association | 4.500 | % | 10/20/33 | 1,861 | 1,977,253 | |||||||||||
La Hipotecaria SA (Panama)(b)(c) | 3.750 | % | 10/15/28 | 6,699 | 6,799,500 | |||||||||||
Luminent Mortgage Trust(b) | 0.501 | % | 04/25/36 | 147 | 84,457 | |||||||||||
MLCC Mortgage Investors, Inc.(b) | 0.713 | % | 04/25/29 | 459 | 427,727 | |||||||||||
Residential Accredit Loans, Inc.(b) | 0.531 | % | 02/25/46 | 102 | 43,880 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust(b) | 0.561 | % | 09/25/34 | 1,100 | 886,778 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust(b) | 2.578 | % | 06/25/34 | 2,210 | 2,054,922 | |||||||||||
Structured Asset Mortgage Investments, Inc.(b) | 0.491 | % | 05/25/45 | 2,988 | 2,004,232 | |||||||||||
Washington Mutual Mortgage Pass-Through Certificates(b) | 0.611 | % | 12/25/45 | 2,074 | 1,312,987 | |||||||||||
Washington Mutual Mortgage Pass-Through Certificates(b) | 2.674 | % | 08/25/33 | 336 | 334,108 | |||||||||||
Total Collateralized Mortgage Obligations–13.5% | 85,772,124 | |||||||||||||||
Commercial Mortgage Backed Securities–13.7% | ||||||||||||||||
Banc of America Large Loan Inc(b)(c) | 0.470 | % | 10/15/19 | 9,084 | 8,211,953 | |||||||||||
Bear Stearns Commercial Mortgage Securities(b) | 5.471 | % | 01/12/45 | 4,500 | 4,809,559 | |||||||||||
Bear Stearns Commercial Mortgage Securities(b) | 5.512 | % | 04/12/38 | 4,000 | 3,948,559 | |||||||||||
Bear Stearns Commercial Mortgage Securities(b) | 5.568 | % | 10/12/41 | 5,000 | 5,103,443 | |||||||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust(b) | 5.222 | % | 07/15/44 | 5,000 | 5,122,402 | |||||||||||
Commercial Mortgage Pass Through Certificates(b)(c) | 0.350 | % | 06/15/22 | 9,439 | 9,205,502 | |||||||||||
Commercial Mortgage Pass Through Certificates(b) | 5.167 | % | 06/10/44 | 5,172 | 5,231,328 | |||||||||||
Commercial Mortgage Pass-Through Certificates(b) | 5.815 | % | 12/10/49 | 2,875 | 3,097,816 | |||||||||||
GE Capital Commercial Mortgage Corp. | 4.893 | % | 03/10/40 | 800 | 846,489 | |||||||||||
GS Mortgage Securities Corp. II(b) | 5.553 | % | 04/10/38 | 1,830 | 1,967,954 | |||||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Van Kampen U.S. Mortgage Fund
Par | ||||||||||||||||
Amount | ||||||||||||||||
Description | Coupon | Maturity | (000) | Value | ||||||||||||
Commercial Mortgage Backed Securities–(continued) | ||||||||||||||||
JP Morgan Chase Commercial Mortgage Securities Corp.(c) | 3.853 | % | 06/15/43 | $ | 9,905 | $ | 10,156,072 | |||||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | 5.336 | % | 05/15/47 | 2,200 | 2,286,614 | |||||||||||
LB-UBS Commercial Mortgage Trust(b) | 5.901 | % | 06/15/38 | 5,000 | 5,202,923 | |||||||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust(b) | 5.465 | % | 02/12/39 | 7,245 | 7,609,152 | |||||||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust(b) | 5.914 | % | 06/12/46 | 2,500 | 2,623,476 | |||||||||||
RBSCF Trust(b)(c) | 4.970 | % | 04/16/40 | 6,000 | 6,362,548 | |||||||||||
Wachovia Bank Commercial Mortgage Trust | 4.790 | % | 04/15/42 | 5,000 | 5,183,992 | |||||||||||
Total Commercial Mortgage Backed Securities–13.7% | 86,969,782 | |||||||||||||||
Adjustable Rate Mortgage Backed Securities–3.8% | ||||||||||||||||
Federal Home Loan Mortgage Corp.(b) | 5.512 | % | 05/01/37 | 3,049 | 3,229,752 | |||||||||||
Federal Home Loan Mortgage Corp.(b) | 5.519 | % | 01/01/38 | 1,738 | 1,844,952 | |||||||||||
Federal Home Loan Mortgage Corp.(b) | 5.711 | % | 03/01/37 | 2,088 | 2,213,156 | |||||||||||
Federal Home Loan Mortgage Corp.(b) | 6.057 | % | 02/01/37 | 1,477 | 1,566,597 | |||||||||||
Federal National Mortgage Association(b) | 3.220 | % | 03/01/36 | 13,462 | 14,116,671 | |||||||||||
Federal National Mortgage Association(b) | 5.736 | % | 03/01/38 | 932 | 988,542 | |||||||||||
Total Adjustable Rate Mortgage Backed Securities–3.8% | 23,959,670 | |||||||||||||||
United States Treasury Obligations–2.4% | ||||||||||||||||
United States Treasury Notes(e) | 3.250 | % | 12/31/16 | 9,400 | 9,840,625 | |||||||||||
United States Treasury Notes | 1.375 | % | 11/30/15 | 5,800 | 5,635,063 | |||||||||||
Total United States Treasury Obligations–2.4% | 15,475,688 | |||||||||||||||
Asset Backed Securities–0.8% | ||||||||||||||||
GE Capital Credit Card Master Note Trust | 2.210 | % | 06/15/16 | 5,000 | 5,087,163 | |||||||||||
Total Long-Term Investments–129.6% (Cost $806,840,838) | 823,780,060 | |||||||||||||||
Money Market Funds–1.0% | ||||||||||||||||
Government & Agency Portfolio, Institutional Class (6,299,999 Common Shares) (Cost $6,299,999)(f) | 6,299,999 | |||||||||||||||
TOTAL INVESTMENTS–130.6% (Cost $813,140,837) | 830,080,059 | |||||||||||||||
LIABILITIES IN EXCESS OF OTHER ASSETS–(30.6%) | (194,369,325 | ) | ||||||||||||||
NET ASSETS–100.0% | $ | 635,710,734 | ||||||||||||||
Percentages are calculated as a percentage of net assets.
Investment Abbreviations:
REMICS | – Real Estate Mortgage Investment Conduits | |
STRIPS | – Separate Trading of Registered Interest and Principal of Securities | |
TBA | – To Be Announced. |
Notes to Schedule of Investments:
The obligations of certain United States Government sponsored entities are neither issued or guaranteed by the Untied States Treasury.
(a) | All or a portion of this security purchased on a when-issued, delayed delivery or forward commitment basis. | |
(b) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on December 31, 2010. | |
(c) | 144A-Private Placement security which is exempt from registration under Rule 144A of the Securities Act of 1933, as amended. This security may only be resold in transactions exempt from registration which are normally those transactions with qualified institutional buyers. | |
(d) | IO – Interest Only | |
(e) | All or a portion of this security has been physically segregated in connection with open futures contracts. | |
(f) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Van Kampen U.S. Mortgage Fund
Futures Contracts Outstanding as of December 31, 2010: | ||||||||
Unrealized | ||||||||
Number of | Appreciation | |||||||
Contracts | (Depreciation) | |||||||
Long Contracts: | ||||||||
U.S. Treasury Bonds 30-Year Futures, March 2011 (Current Notional Value of $122,125 per contract) | 73 | $ | (263,638 | ) | ||||
U.S. Treasury Notes 10-Year Futures, March 2011 (Current Notional Value of $120,438 per contract) | 4 | (17,229 | ) | |||||
Total Long Contracts: | 77 | (280,867 | ) | |||||
Short Contracts: | ||||||||
U.S. Treasury Notes 2-Year Futures, March 2011 (Current Notional Value of $218,906 per contract) | 174 | 67,604 | ||||||
U.S. Treasury Notes 5-Year Futures, March 2011 (Current Notional Value of $117,719 per contract) | 483 | 287,082 | ||||||
Total Short Contracts: | 657 | 354,686 | ||||||
Total Futures Contracts | 734 | $ | 73,819 | |||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Van Kampen U.S. Mortgage Fund
Statement of Assets and Liabilities
December 31, 2010
Assets: | ||||
Investments (Cost $806,840,838) | $ | 823,780,060 | ||
Investments in affiliated money market funds, at value and cost | 6,299,999 | |||
Receivables: | ||||
Interest | 2,721,188 | |||
Fund shares sold | 109,887 | |||
Dividends | 215 | |||
Other | 369,268 | |||
Total assets | 833,280,617 | |||
Liabilities: | ||||
Payables: | ||||
Investments purchased | 194,121,229 | |||
Fund shares repurchased | 1,207,491 | |||
Custodian bank | 708,621 | |||
Income distributions | 645,990 | |||
Distributor and affiliates | 181,302 | |||
Variation margin | 113,219 | |||
Trustees’ deferred compensation and retirement plans | 4,914 | |||
Accrued expenses | 587,117 | |||
Total liabilities | 197,569,883 | |||
Net assets | $ | 635,710,734 | ||
Net assets consist of: | ||||
Capital (Par value of $0.01 per share with an unlimited number of shares authorized) | $ | 743,980,157 | ||
Net unrealized appreciation | 17,013,041 | |||
Accumulated net investment income (loss) | 3,088,774 | |||
Accumulated net realized gain (loss) | (128,371,238 | ) | ||
Net assets | $ | 635,710,734 | ||
Maximum offering price per share: | ||||
Class A shares: | ||||
Net asset value and redemption price per share (Based on net assets of $610,213,943 and 46,955,302 shares of beneficial interest issued and outstanding) | $ | 13.00 | ||
Maximum sales charge (4.75% of offering price) | 0.65 | |||
Maximum offering price to public | $ | 13.65 | ||
Class B shares: | ||||
Net asset value and offering price per share (Based on net assets of $13,574,168 and 1,050,262 shares of beneficial interest issued and outstanding) | $ | 12.92 | ||
Class C shares: | ||||
Net asset value and offering price per share (Based on net assets of $9,559,185 and 740,657 shares of beneficial interest issued and outstanding) | $ | 12.91 | ||
Class Y shares: | ||||
Net asset value and offering price per share (Based on net assets of $2,353,320 and 180,503 shares of beneficial interest issued and outstanding) | $ | 13.04 | ||
Institutional class shares: | ||||
Net asset value and offering price per share (Based on net assets of $10,118 and 776 shares of beneficial interest issued and outstanding) | $ | 13.04 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Van Kampen U.S. Mortgage Fund
Statement of Operations
For the year ended December 31, 2010
Investment income: | ||||
Interest | $ | 28,118,540 | ||
Dividends from affiliated money market funds | 14,992 | |||
Total investment income | 28,133,532 | |||
Expenses: | ||||
Investment advisory fee | 3,310,030 | |||
Distribution Fees | ||||
Class A | 1,580,904 | |||
Class B | 183,886 | |||
Class C | 110,487 | |||
Transfer agent fees — A, B, C and Y | 788,388 | |||
Transfer agent fees — Institutional | 129 | |||
Administrative service fees | 194,708 | |||
Reports to shareholders | 116,760 | |||
Professional fees | 105,990 | |||
Custody | 93,173 | |||
Registration fees | 61,480 | |||
Trustees’ and officers’ fees and benefits | 34,639 | |||
Other | 28,033 | |||
Total expenses | 6,608,607 | |||
Expense reduction | 10,384 | |||
Net expenses | 6,598,223 | |||
Net investment income | $ | 21,535,309 | ||
Realized and unrealized gain (loss): | ||||
Realized gain (loss): | ||||
Investments | $ | 10,878,887 | ||
Futures | 4,238,161 | |||
Swap contracts | (4,863,018 | ) | ||
Net realized gain | 10,254,030 | |||
Unrealized appreciation: | ||||
Beginning of the period | 10,814,085 | |||
End of the period: | ||||
Investments | 16,939,222 | |||
Futures | 73,819 | |||
17,013,041 | ||||
Net unrealized appreciation during the period | 6,198,956 | |||
Net realized and unrealized gain | $ | 16,452,986 | ||
Net increase in net assets from operations | $ | 37,988,295 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Van Kampen U.S. Mortgage Fund
Statement of Changes in Net Assets
For the year ended | For the year ended | |||||||
December 31, 2010 | December 31, 2009 | |||||||
From investment activities: | ||||||||
Operations: | ||||||||
Net investment income | $ | 21,535,309 | $ | 23,246,526 | ||||
Net realized gain | 10,254,030 | 41,871,025 | ||||||
Net unrealized appreciation (depreciation) during the period | 6,198,956 | (11,484,460 | ) | |||||
Change in net assets from operations | 37,988,295 | 53,633,091 | ||||||
Distributions from net investment income: | ||||||||
Class A | (21,770,987 | ) | (19,408,015 | ) | ||||
Class B | (468,648 | ) | (542,444 | ) | ||||
Class C | (284,070 | ) | (261,833 | ) | ||||
Class Y | (449,752 | ) | (529,226 | ) | ||||
Institutional class | (214,663 | ) | -0- | |||||
Total distributions | (23,188,120 | ) | (20,741,518 | ) | ||||
Net change in net assets from investment activities | 14,800,175 | 32,891,573 | ||||||
From capital transactions: | ||||||||
Proceeds from shares sold | 45,308,522 | 52,014,318 | ||||||
Net asset value of shares issued through dividend reinvestment | 17,897,171 | 15,726,004 | ||||||
Cost of shares repurchased | (188,511,880 | ) | (146,029,464 | ) | ||||
Net change in net assets from capital transactions | (125,306,187 | ) | (78,289,142 | ) | ||||
Total increase (decrease) in net assets | (110,506,012 | ) | (45,397,569 | ) | ||||
Net assets: | ||||||||
Beginning of the period | 746,216,746 | 791,614,315 | ||||||
End of the period (Including accumulated undistributed net investment income (loss) of $3,088,774 and $1,147,732, respectively) | $ | 635,710,734 | $ | 746,216,746 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Van Kampen U.S. Mortgage Fund
Financial Highlights
The following schedules present financial highlights for one share of the Fund outstanding throughout the periods indicated.
Class A Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 12.75 | $ | 12.22 | $ | 13.26 | $ | 13.34 | $ | 13.63 | ||||||||||
Net investment income(a) | 0.40 | 0.38 | 0.67 | 0.72 | 0.71 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.28 | 0.49 | (0.93 | ) | 0.07 | (0.21 | ) | |||||||||||||
Total from investment operations | 0.68 | 0.87 | (0.26 | ) | 0.79 | 0.50 | ||||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.43 | 0.34 | 0.75 | 0.87 | 0.79 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.03 | -0- | -0- | |||||||||||||||
Total distributions | 0.43 | 0.34 | 0.78 | 0.87 | 0.79 | |||||||||||||||
Net asset value, end of the period | $ | 13.00 | $ | 12.75 | $ | 12.22 | $ | 13.26 | $ | 13.34 | ||||||||||
Total return | 5.41 | %(b) | 7.19 | %(c) | (1.94 | )%(c) | 6.11 | %(c) | 3.79 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 610.2 | $ | 687.4 | $ | 733.7 | $ | 860.8 | $ | 942.0 | ||||||||||
Ratio of expenses to average net assets | 0.91 | %(d) | 0.96 | % | 0.94 | % | 0.94 | % | 0.93 | % | ||||||||||
Ratio of net investment income to average net assets | 3.07 | %(d) | 3.03 | % | 5.29 | % | 5.44 | % | 5.29 | % | ||||||||||
Portfolio turnover(e) | 370 | % | 589 | % | 821 | % | 438 | % | 503 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 4.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $655,122. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Van Kampen U.S. Mortgage Fund
Financial Highlights—(continued)
Class B Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 12.67 | $ | 12.15 | $ | 13.19 | $ | 13.28 | $ | 13.58 | ||||||||||
Net investment income(a) | 0.31 | 0.28 | 0.58 | 0.62 | 0.60 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.27 | 0.49 | (0.94 | ) | 0.06 | (0.21 | ) | |||||||||||||
Total from investment operations | 0.58 | 0.77 | (0.36 | ) | 0.68 | 0.39 | ||||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.33 | 0.25 | 0.66 | 0.77 | 0.69 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.02 | -0- | -0- | |||||||||||||||
Total distributions | 0.33 | 0.25 | 0.68 | 0.77 | 0.69 | |||||||||||||||
Net asset value, end of the period | $ | 12.92 | $ | 12.67 | $ | 12.15 | $ | 13.19 | $ | 13.28 | ||||||||||
Total return | 4.64 | %(b) | 6.35 | %(c) | (2.70 | )%(c) | 5.33 | %(c) | 2.94 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 13.6 | $ | 22.8 | $ | 30.5 | $ | 44.0 | $ | 59.9 | ||||||||||
Ratio of expenses to average net assets | 1.67 | %(d) | 1.71 | % | 1.71 | % | 1.71 | % | 1.70 | % | ||||||||||
Ratio of net investment income to average net assets | 2.37 | %(d) | 2.24 | % | 4.62 | % | 4.68 | % | 4.50 | % | ||||||||||
Portfolio turnover(e) | 370 | % | 589 | % | 821 | % | 438 | % | 503 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 4%, charged on certain redemptions made within one year of purchase and declining to 0% after the sixth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $18,389. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Van Kampen U.S. Mortgage Fund
Financial Highlights—(continued)
Class C Shares | ||||||||||||||||||||
Year ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 12.66 | $ | 12.14 | $ | 13.18 | $ | 13.26 | $ | 13.56 | ||||||||||
Net investment income(a) | 0.30 | 0.28 | 0.55 | 0.62 | 0.60 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.28 | 0.49 | (0.91 | ) | 0.07 | (0.21 | ) | |||||||||||||
Total from investment operations | 0.58 | 0.77 | (0.36 | ) | 0.69 | 0.39 | ||||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.33 | 0.25 | 0.66 | 0.77 | 0.69 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.02 | -0- | -0- | |||||||||||||||
Total distributions | 0.33 | 0.25 | 0.68 | 0.77 | 0.69 | |||||||||||||||
Net asset value, end of the period | $ | 12.91 | $ | 12.66 | $ | 12.14 | $ | 13.18 | $ | 13.26 | ||||||||||
Total return | 4.64 | %(b) | 6.36 | %(c) | (2.70 | )%(c) | 5.34 | %(c) | 2.94 | %(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 9.6 | $ | 12.2 | $ | 12.7 | $ | 12.2 | $ | 13.1 | ||||||||||
Ratio of expenses to average net assets | 1.67 | %(d) | 1.71 | % | 1.71 | % | 1.71 | % | 1.70 | % | ||||||||||
Ratio of net investment income to average net assets | 2.33 | %(d) | 2.26 | % | 4.44 | % | 4.68 | % | 4.51 | % | ||||||||||
Portfolio turnover(e) | 370 | % | 589 | % | 821 | % | 438 | % | 503 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $11,049. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Van Kampen U.S. Mortgage Fund
Financial Highlights—(continued)
Class Y Sharesˆ | ||||||||||||||||||||
September 25, | ||||||||||||||||||||
2006 | ||||||||||||||||||||
(Commencement | ||||||||||||||||||||
Year ended December 31, | of operations) to | |||||||||||||||||||
2010 | 2009 | 2008 | 2007 | December 31, 2006 | ||||||||||||||||
Net asset value, beginning of the period | $ | 12.79 | $ | 12.26 | $ | 13.26 | $ | 13.34 | $ | 13.48 | ||||||||||
Net investment income(a) | 0.42 | 0.42 | 0.74 | 0.75 | 0.17 | |||||||||||||||
Net realized and unrealized gain (loss) | 0.30 | 0.48 | (0.93 | ) | 0.07 | (0.03 | ) | |||||||||||||
Total from investment operations | 0.72 | 0.90 | (0.19 | ) | 0.82 | 0.14 | ||||||||||||||
Less: | ||||||||||||||||||||
Distributions from net investment income | 0.47 | 0.37 | 0.78 | 0.90 | 0.28 | |||||||||||||||
Return of capital distributions | -0- | -0- | 0.03 | -0- | -0- | |||||||||||||||
Total distributions | 0.47 | 0.37 | 0.81 | 0.90 | 0.28 | |||||||||||||||
Net asset value, end of the period | $ | 13.04 | $ | 12.79 | $ | 12.26 | $ | 13.26 | $ | 13.34 | ||||||||||
Total return | 5.65 | %(b) | 7.42 | %(c) | (1.38 | )%(c) | 6.37 | %(c) | 1.01 | %*(c) | ||||||||||
Net assets at end of the period (in millions) | $ | 2.4 | $ | 23.9 | $ | 14.7 | $ | 15.3 | $ | 1.8 | ||||||||||
Ratio of expenses to average net assets | 0.67 | %(d) | 0.71 | % | 0.71 | % | 0.70 | % | 0.65 | % | ||||||||||
Ratio of net investment income to average net assets | 3.26 | %(d) | 3.35 | % | 5.93 | % | 5.68 | % | 4.73 | % | ||||||||||
Portfolio turnover(e) | 370 | % | 589 | % | 821 | % | 438 | % | 503 | % | ||||||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Assumes reinvestments of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. | |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $12,784. | |
(e) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. | |
* | Non-Annualized | |
ˆ | On June 1, 2010, the Class I shares of the predecessor fund were reorganized to Class Y shares of the Fund. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Van Kampen U.S. Mortgage Fund
Financial Highlights—(continued)
Institutional | ||||||||
Class Shares | ||||||||
June 1, 2010 | ||||||||
(Commencement | ||||||||
of operations) to | ||||||||
December 31, 2010 | ||||||||
Net asset value, beginning of the period | $ | 13.06 | ||||||
Net investment income(a) | 0.35 | |||||||
Net realized and unrealized gain (loss) | (0.09 | ) | ||||||
Total from investment operations | 0.26 | |||||||
Less: | ||||||||
Distributions from net investment income | 0.28 | |||||||
Net asset value, end of the period | $ | 13.04 | ||||||
Total return(b) | 2.00 | % | ||||||
Net assets at end of the period (In thousands) | $ | 10.1 | ||||||
Ratio of expenses to average net assets | 0.59 | %(c) | ||||||
Ratio of net investment income to average net assets | 4.51 | %(c) | ||||||
Portfolio turnover(d) | 370 | % | ||||||
(a) | Based on average shares outstanding. | |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. | |
(c) | Ratios are annualized and based on average daily net assets (000’s omitted) of $12,046. | |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. |
Notes to Financial Statements
December 31, 2010
NOTE 1—Significant Accounting Policies
Invesco Van Kampen U.S. Mortgage Fund (the “Fund”) is a series portfolio of AIM Growth Series (Invesco Growth Series) (the “Trust”). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company consisting of twenty-five separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
Prior to June 1, 2010, the Fund operated as Van Kampen U.S. Mortgage Fund (the “Acquired Fund”). The Acquired Fund was reorganized on June 1, 2010 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”).
Upon closing of the Reorganization, holders of the Acquired Fund’s Class A, Class B, Class C and Class I shares received Class A, Class B, Class C and Class Y shares, respectively, of the Fund. Information for the Acquired Fund’s — Class I shares prior to the Reorganization is included with Class Y shares of the Fund throughout this report.
The Fund’s principal investment objective is to provide a high level of current income, with liquidity and safety of principal.
The Fund currently consists of five different classes of shares: Class A, Class B, Class C, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class B shares and Class C shares are sold with a CDSC. Class Y and Institutional Class shares are sold at net asset value. Effective November 30, 2010, all Invesco funds closed their Class B shares. Shareholders with investments in Class B shares may continue to hold such shares until they convert to Class A shares, but no additional investments will be accepted in Class B shares on or after November 30, 2010. Any dividends or capital gains distributions may continue to be reinvested in Class B shares until conversion. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. | |
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as |
20 Invesco Van Kampen U.S. Mortgage Fund
institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. | ||
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”). | ||
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. | ||
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. | ||
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. | ||
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including Corporate Loans. | ||
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value. | ||
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. | ||
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. | |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held. | ||
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser. | ||
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class. | ||
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be |
21 Invesco Van Kampen U.S. Mortgage Fund
evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. | ||
D. | Distributions — Distributions from income are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. | |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. | |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. | ||
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. Prior to the Reorganization, incremental transfer agency fees which are unique to each class of shares of the Acquired Fund were charged to the operations of such class. | |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. | |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. | |
I. | Other Risks — The Funds may invest in obligations issued by agencies and instrumentalities of the U.S. Government that may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the underlying fund holding securities of such issuer might not be able to recover its investment from the U.S. Government. Many securities purchased by the Fund are not guaranteed by the U.S. Government. | |
J. | Dollar Roll and Forward Commitment Transactions — The Fund may engage in dollar roll and forward commitment transactions with respect to mortgage-backed securities issued by GNMA, FNMA and FHLMC. These transactions are often conducted on a to be announced (“TBA”) basis. In a TBA mortgage-backed transaction, the seller does not specify the particular securities to be delivered. Rather, a Fund agrees to accept any security that meets specified terms, such as an agreed upon issuer, coupon rate and terms of the underlying mortgages. TBA mortgage-backed transactions generally settle once a month on a specific date. | |
In a dollar roll transaction, the Fund sells a mortgage-backed security held in the Fund to a financial institution such as a bank or broker-dealer, and simultaneously agrees to purchase a substantially similar security (same type, coupon and maturity) from the institution at an agreed upon price and future date. The mortgage-backed securities to be purchased will bear the same coupon as those sold, but generally will be collateralized by different pools of mortgages with different prepayment histories. Based on the typical structure of dollar roll transactions by the Fund, the dollar roll transactions are accounted for as financing transactions in which the Fund receives compensation as either a “fee” or a “drop”. “Fee” income which is agreed upon amongst the parties at the commencement of the dollar roll and the “drop” which is the difference between the selling price and the repurchase price of the mortgage-backed securities are amortized to income. During the period between the sale and purchase settlement dates, the Fund will not be entitled to receive interest and principal payments on securities purchased and not yet settled. Proceeds of the sale may be invested in short-term instruments, and the income from these investments, together with any additional fee income received on the sale, could generate income for the Fund exceeding the yield on the security sold. Dollar roll transactions are considered borrowings under the 1940 Act. | ||
Forward commitment transactions involve commitments by the Fund to acquire or sell TBA mortgage-backed securities from/to a financial institution, such as a bank or broker-dealer at a specified future date and amount. The TBA mortgage-backed security is marked to market until settlement and the unrealized appreciation or depreciation is recorded in the statement of operations. | ||
At the time the Fund enters into the dollar roll or forward commitment transaction, mortgage-backed securities or other liquid assets held by the Fund having a dollar value equal to the purchase price or in an amount sufficient to honor the forward commitment will be segregated. | ||
Dollar roll transactions involve the risk that the market value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement. In the event that the buyer of securities in a dollar roll transaction files for bankruptcy or becomes insolvent, the Fund’s use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund’s obligation to purchase the securities. The return earned by the Fund with the proceeds of the dollar roll transaction may not exceed the return on the securities sold. | ||
Forward commitment transactions involve the risk that a counter-party to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Settlement dates of forward commitment transactions may be a month |
22 Invesco Van Kampen U.S. Mortgage Fund
or more after entering into these transactions and as a result the market values of the securities may vary from the purchase or sale prices. Therefore, forward commitment transactions may increase the Fund’s overall interest rate exposure. | ||
K. | Swap Agreements — The Fund may enter into various swap transactions, including interest rate, total return, index, currency exchange rate and credit default swap contracts (“CDS”) for investment purposes or to manage interest rate, currency or credit risk. | |
Interest rate, total return, index, and currency exchange rate swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or “swapped” between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a “basket” of securities representing a particular index. | ||
A CDS is an agreement between two parties (“Counterparties”) to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the “par value”, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer “par value” or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. | ||
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets. | ||
Changes in the value of swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by “marking to market” on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. The Fund’s maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to cover the Fund’s exposure to the counterparty. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. | ||
L. | Futures Contracts — The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Fund’s basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. | |
M. | Collateral — To the extent the Fund has pledged or segregated a security as collateral and that security is subsequently sold, it is the Fund’s practice to replace such collateral no later than the next business day. |
23 Invesco Van Kampen U.S. Mortgage Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser at the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $1 billion | 0 | .470% | ||
Next $500 million | 0 | .445% | ||
Next $500 million | 0 | .420% | ||
Next $500 million | 0 | .395% | ||
Next $2.5 billion | 0 | .370% | ||
Next $2.5 billion | 0 | .345% | ||
Next $2.5 billion | 0 | .320% | ||
Next $2.5 billion | 0 | .295% | ||
Over $12.5 billion | 0 | .270% | ||
Prior to the Reorganization, the Acquired Fund paid an advisory fee of $1,425,736 to Van Kampen Asset Management (“Van Kampen”) based on the annual rates above of the Acquired Fund’s average daily net assets.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
Effective on the Reorganization date, the Adviser has contractually agreed, through at least June 30, 2012, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y and Institutional Class shares to 0.96%, 1.71%, 1.71%, 0.71% and 0.71%, respectively, of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary and non-routine items; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Acquired Fund Fees and Expenses are also excluded in determining such obligation. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2012. The Adviser did not waive fees and/or reimburse expenses during the period under the expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2011, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended December 31, 2010, the Adviser waived advisory fees of $10,384.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. Prior to the Reorganization, under separate accounting services and chief compliance officer (“CCO”) employment agreements, Van Kampen Investments Inc. (“VKII”) provided accounting services and the CCO provided compliance services to the Acquired Fund. Pursuant to such agreements, the Acquired Fund paid $26,048 to VKII. For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as administrative services fees. Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (“SSB”) serves as the custodian and fund accountant and provides certain administrative services to the Fund.
Prior to the Reorganization, under a legal services agreement, VKII provided legal services to the Acquired Fund. Pursuant to such agreement, the Acquired Fund paid $11,869 to VKII.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. Pursuant to such agreement, for the period ended December 31, 2010 IIS was paid $445,740 for providing such services. Prior to the Reorganization, the Acquired Fund paid $231,686 to Van Kampen Investor Services Inc., which served as the Acquired Fund’s transfer agent. For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
24 Invesco Van Kampen U.S. Mortgage Fund
Prior to the Reorganization, the Acquired Fund had entered into master distribution agreements with Van Kampen Funds Inc. (“VKFI”) to serve as the distributor for the Class A, Class B and Class C shares. Pursuant to such agreements, the Acquired Fund paid $810,248 to VKFI.
For the year ended December 31, 2010, expenses incurred under these agreements are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. For the period June 1, 2010 to December 31, 2010, IDI advised the Fund that IDI retained $5,538 in front-end sales commissions from the sale of Class A shares and $2,518, $10,777 and $67 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. Prior to the Reorganization, VKFI, retained $7,978 in front-end sales commissions from the sale of Class A shares and $17,308, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of Invesco, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 — | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of December 31, 2010. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended December 31, 2010, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Mortgaged Backed Securities | $ | — | $ | 606,515,633 | $ | — | $ | 606,515,633 | ||||||||
Commercial Mortgage Backed Securities | — | 86,969,782 | — | 86,969,782 | ||||||||||||
Collateralized Mortgage Obligations | — | 85,772,124 | — | 85,772,124 | ||||||||||||
Adjustable Rate Mortgage Backed Securities | — | 23,959,670 | — | 23,959,670 | ||||||||||||
United States Treasury Obligations | — | 15,475,688 | — | 15,475,688 | ||||||||||||
Asset Backed Securities | — | 5,087,163 | — | 5,087,163 | ||||||||||||
Equity Securities | 6,299,999 | — | — | 6,299,999 | ||||||||||||
Futures | 354,686 | — | — | 354,686 | ||||||||||||
Total Investments in an Asset Position | $ | 6,654,685 | $ | 823,780,060 | $ | — | $ | 830,434,745 | ||||||||
Investments in a Liability Position | ||||||||||||||||
Futures | $ | (280,867 | ) | $ | — | $ | — | $ | (280,867 | ) | ||||||
NOTE 4—Derivative Investments
The Fund has implemented the required disclosures about derivative instruments and hedging activities in accordance with GAAP. This disclosure is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position and financial performance. The enhanced disclosure has no impact on the results of operations reported in the financial statements.
25 Invesco Van Kampen U.S. Mortgage Fund
Value of Derivative Instruments at Period-End
The table below summarizes the value of the Fund’s derivative instruments, detailed by primary risk exposure, held as of December 31, 2010:
Value | ||||||||
Risk Exposure/ Derivative Type | Assets | Liabilities | ||||||
Interest rate risk | ||||||||
Futures contracts(a) | $ | 354,686 | $ | (280,867 | ) | |||
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets & Liabilities. |
Effect of Derivative Instruments for the year ended December 31, 2010
The table below summarizes the gains (losses) on derivative instruments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on | ||||||||
Statement of Operations | ||||||||
Future | Swap | |||||||
Contracts* | Agreements* | |||||||
Realized Gain (Loss) | ||||||||
Interest rate risk | $ | 4,238,161 | $ | (4,863,018 | ) | |||
Change in Unrealized Appreciation (Depreciation) | ||||||||
Interest rate risk | 1,718,368 | (38,641 | ) | |||||
Total | $ | 5,956,529 | $ | (4,901,659 | ) | |||
* | The average notional value of futures and swap agreements outstanding during the period was $215,009,179 and $89,669,000 respectively. |
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. “Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
For the period ended December 31, 2010, the Fund paid legal fees of $1,063 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. Prior to the Reorganization, the Acquired Fund recognized expense of $8,634 representing legal services provided by Skadden, Arps, Slate, Meagher & Flom LLP, of which a director of the Acquired Fund was a partner of such firm and he and his law firm provided legal services as legal counsel to the Acquired Fund.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
26 Invesco Van Kampen U.S. Mortgage Fund
NOTE 7—Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended December 31, 2010 and 2009:
2010 | 2009 | |||||||
Ordinary income | $ | 23,188,121 | $ | 20,907,851 | ||||
Tax Components of Net Assets at Period-End:
2010 | ||||
Undistributed ordinary income | $ | 3,111,626 | ||
Net unrealized appreciation — investments | 16,899,388 | |||
Temporary book/tax differences | (4,914 | ) | ||
Capital loss carryforward | (128,275,523 | ) | ||
Shares of beneficial interest | 743,980,157 | |||
Total net assets | $ | 635,710,734 | ||
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund’s net unrealized appreciation (depreciation) difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund’s temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $8,377,933 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of December 31, 2010 which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
December 31, 2014 | $ | 18,723,292 | ||
December 31, 2015 | 18,400,921 | |||
December 31, 2016 | 91,151,310 | |||
Total capital loss carryforward | $ | 128,275,523 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2010 was $168,572,869 and $76,119,354, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $2,852,777,299 and $2,869,816,710. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 20,159,070 | ||
Aggregate unrealized (depreciation) of investment securities | (3,259,682 | ) | ||
Net unrealized appreciation of investment securities | $ | 16,899,388 | ||
Cost of investments for tax purposes is $813,180,671. |
NOTE 9—Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of paydown gains (losses) and swap gains (losses), on December 31, 2010, undistributed net investment income (loss) was increased by $3,593,853, undistributed net realized gain (loss) was decreased by $3,604,106 and shares of beneficial interest increased by $10,253. This reclassification had no effect on the net assets of the Fund.
27 Invesco Van Kampen U.S. Mortgage Fund
NOTE 10—Share Information
For the year ended | For the year ended | |||||||||||||||
December 31, 2010(a) | December 31, 2009 | |||||||||||||||
Shares | Value | Shares | Value | |||||||||||||
Sales: | ||||||||||||||||
Class A | 1,192,210 | (b) | $ | 15,523,561 | (b) | 2,400,074 | $ | 30,139,319 | ||||||||
Class B | 137,593 | 1,781,312 | 382,031 | 4,734,452 | ||||||||||||
Class C | 57,124 | 737,198 | 363,673 | 4,492,715 | ||||||||||||
Class Y | 433,574 | 5,661,527 | 1,001,842 | 12,647,832 | ||||||||||||
Institutional class | 1,641,833 | 21,604,924 | -0- | -0- | ||||||||||||
Total sales | 3,462,334 | $ | 45,308,522 | 4,147,620 | $ | 52,014,318 | ||||||||||
Dividend reinvestment: | ||||||||||||||||
Class A | 1,309,763 | $ | 17,039,321 | 1,193,541 | $ | 15,007,649 | ||||||||||
Class B | 31,983 | 413,175 | 38,977 | 486,963 | ||||||||||||
Class C | 18,670 | 241,078 | 18,054 | 225,428 | ||||||||||||
Class Y | 1,964 | 25,755 | 474 | 5,964 | ||||||||||||
Institutional class | 13,478 | 177,842 | -0- | -0- | ||||||||||||
Total dividend reinvestment | 1,375,858 | $ | 17,897,171 | 1,251,046 | $ | 15,726,004 | ||||||||||
Repurchases: | ||||||||||||||||
Class A | (9,472,309 | ) | $ | (123,160,143 | ) | (9,708,481 | ) | $ | (121,911,425 | ) | ||||||
Class B | (917,942 | )(b) | (11,862,156 | )(b) | (1,132,735 | ) | (14,139,356 | ) | ||||||||
Class C | (295,626 | ) | (3,809,976 | ) | (468,482 | ) | (5,830,749 | ) | ||||||||
Class Y | (2,123,596 | ) | (27,877,245 | ) | (332,228 | ) | (4,147,934 | ) | ||||||||
Institutional class | (1,654,535 | ) | (21,802,360 | ) | -0- | -0- | ||||||||||
Total repurchases | (14,464,008 | ) | $ | (188,511,880 | ) | (11,641,926 | ) | $ | (146,029,464 | ) | ||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 18% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. In addition, less than 1% of the outstanding shares of the Fund are owned by Invesco or an investment adviser under common control. | |
(b) | Includes automatic conversion of 368,271 Class B shares into 366,295 Class A shares at a value of $4,777,638. |
NOTE 11—Change in Independent Registered Public Accounting Firm (Unaudited)
In connection with the Reorganization of the Fund, the Audit Committee of the Board of Trustees of the Trust appointed, and the Board of Trustees ratified and approved, PricewaterhouseCoopers LLP (“PWC”) as the independent registered public accounting firm of the Fund for the fiscal year following May 31, 2010. The predecessor fund’s financial statements were audited by a different independent registered public accounting firm (the “Prior Auditor”). Concurrent with the closing of the Reorganization, the Prior Auditor resigned as the independent registered public accounting firm of the predecessor fund. The Prior Auditor’s report on the financial statements of the Fund for the past two years did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the period the Prior Auditor was engaged, there were no disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its report.
28 Invesco Van Kampen U.S. Mortgage Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Growth Series (Invesco Growth Series)
and Shareholders of Invesco Van Kampen U.S. Mortgage Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, 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 Van Kampen U.S. Mortgage Fund (formerly known as Van Kampen U.S. Mortgage Fund; one of the funds constituting AIM Growth Series (Invesco Growth Series), hereafter referred to as the “Fund”) at December 31, 2010, the results of its operations, the changes in its net assets and the financial highlights for the period then ended, in conformity with accounting principles generally accepted in the United States of America. 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 audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion. The statement of changes in net assets and the financial highlights of the Fund for the periods ended December 31, 2009 and prior were audited by other independent auditors whose report dated February 19, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
February 22, 2011
Houston, Texas
29 Invesco Van Kampen U.S. Mortgage Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2010 through December 31, 2010.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||||||||||||||||||||
(5% annual return before | ||||||||||||||||||||||||||||||
ACTUAL | expenses) | |||||||||||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||||||||||
Class | (07/01/10) | (12/31/10)1 | Period2 | (12/31/10) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,008.66 | $ | 4.56 | $ | 1,020.67 | $ | 4.58 | 0.90 | % | ||||||||||||||||||
B | 1,000.00 | 1,004.82 | 8.39 | 1,016.84 | 8.44 | 1.66 | ||||||||||||||||||||||||
C | 1,000.00 | 1,004.79 | 8.39 | 1,016.84 | 8.44 | 1.66 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,009.16 | 3.34 | 1,021.88 | 3.36 | 0.66 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,009.36 | 2.99 | 1,022.23 | 3.01 | 0.59 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period July 1, 2010 through December 31, 2010, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
30 Invesco Van Kampen U.S. Mortgage Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state’s requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2010:
Federal and State Income Tax | ||||
Long-Term Capital Gain Dividends | $ | 0 | ||
Qualified Dividend Income* | 0% | |||
Corporate Dividends Received Deduction* | 0% | |||
U.S. Treasury Obligations* | 1.18% |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Fund’s fiscal year. |
31 Invesco Van Kampen U.S. Mortgage Fund
Trustees and Officers
The address of each trustee and officer is AIM Growth Series (Invesco Growth Series) (the “Trust”), 11 Greenway Plaza, Suite 2500, Houston, Texas 77046-1173. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust’s organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Interested Persons | ||||||||||||||
Martin L. Flanagan1 — 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Chairman, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) | 208 | None | ||||||||||
Philip A. Taylor2 — 1954 Trustee, President and Principal Executive Officer | 2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent) and AIM GP Canada Inc. (general partner for limited partnerships); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Trimark Corporate Class Inc. (corporate mutual fund company) and Invesco Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltèe (registered investment adviser and registered transfer agent) and Invesco Trimark Dealer Inc. (registered broker dealer); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only); and Director, Van Kampen Asset Management; Director, Chief Executive Officer and President, Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Director and Chairman, Van Kampen Investor Services Inc. and Director and President, Van Kampen Advisors, Inc. Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. | 208 | None | ||||||||||
Wayne M. Whalen3 — 1939 Trustee | 2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to funds in the Fund Complex | 226 | Director of the Abraham Lincoln Presidential Library Foundation | ||||||||||
Independent Trustees | ||||||||||||||
Bruce L. Crockett — 1944 Trustee and Chair | 2001 | Chairman, Crockett Technology Associates (technology consulting company) Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) | 208 | ACE Limited (insurance company); and Investment Company Institute | ||||||||||
David C. Arch — 1945 Trustee | 2010 | Chairman and Chief Executive Officer of Blistex Inc., a consumer health care products manufacturer. | 226 | Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago. Board member of the Illinois Manufacturers’ Association. Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||||||||
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. | |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. | |
3 | Mr. Whalen is considered an “interested person” (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Fund Complex by reason of he and his firm currently providing legal services as legal counsel to such Funds in the Fund Complex. |
T-1
Trustees and Officers — (continued)
Number of | ||||||||||||||
Trustee | Funds in | Other | ||||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | |||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | ||||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | ||||||||||
Independent Trustees | ||||||||||||||
Bob R. Baker — 1936 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly: President and Chief Executive Officer, AMC Cancer Research Center; and Chairman and Chief Executive Officer, First Columbia Financial Corporation | ||||||||||||||
Frank S. Bayley — 1939 Trustee | 1985 | Retired | 208 | None | ||||||||||
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and Partner, law firm of Baker & McKenzie | ||||||||||||||
James T. Bunch — 1942 Trustee | 2003 | Founder, Green, Manning & Bunch Ltd. (investment banking firm) Formerly: Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation | 208 | Vice Chairman, Board of Governors, Western Golf Association/Evans Scholars Foundation and Director, Denver Film Society | ||||||||||
Rodney Dammeyer — 1940 Trustee | 2010 | President of CAC, LLC, a private company offering capital investment and management advisory services. Formerly: Prior to January 2004, Director of TeleTech Holdings Inc.; Prior to 2002, Director of Arris Group, Inc.; Prior to 2001, Managing Partner at Equity Group Corporate Investments. Prior to 1995, Vice Chairman of Anixter International. Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc, Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co. | 226 | Director of Quidel Corporation and Stericycle, Inc. Prior to May 2008, Trustee of The Scripps Research Institute. Prior to February 2008, Director of Ventana Medical Systems, Inc. Prior to April 2007, Director of GATX Corporation. Prior to April 2004, Director of TheraSense, Inc. | ||||||||||
Albert R. Dowden — 1941 Trustee | 2001 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company) | 208 | Board of Nature’s Sunshine Products, Inc. | ||||||||||
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) | ||||||||||||||
Jack M. Fields — 1952 Trustee | 2001 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment), Discovery Global Education Fund (non-profit) and Cross Timbers Quail Research Ranch (non-profit) | 208 | Administaff | ||||||||||
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company) and member of the U.S. House of Representatives | ||||||||||||||
Carl Frischling — 1937 Trustee | 2001 | Partner, law firm of Kramer Levin Naftalis and Frankel LLP | 208 | Director, Reich & Tang Funds (16 portfolios) | ||||||||||
Prema Mathai-Davis — 1950 Trustee | 2001 | Retired | 208 | None | ||||||||||
Formerly: Chief Executive Officer, YWCA of the U.S.A. | ||||||||||||||
Lewis F. Pennock — 1942 Trustee | 2001 | Partner, law firm of Pennock & Cooper | 208 | None | ||||||||||
Larry Soll — 1942 Trustee | 2003 | Retired | 208 | None | ||||||||||
Formerly, Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) | ||||||||||||||
Hugo F. Sonnenschein — 1940 Trustee | 2010 | President Emeritus and Honorary Trustee of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago. Prior to July 2000, President of the University of Chicago. | 226 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences | ||||||||||
Raymond Stickel, Jr. — 1944 Trustee | 2005 | Retired | 208 | None | ||||||||||
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche | ||||||||||||||
T-2
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Russell C. Burk — 1958 Senior Vice President and Senior Officer | 2005 | Senior Vice President and Senior Officer of Invesco Funds | N/A | N/A | |||||||||
John M. Zerr — 1962 Senior Vice President, Chief Legal Officer and Secretary | 2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp., Senior Vice President, Invesco Advisers, Inc. formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Van Kampen Asset Management; Director and Secretary, Van Kampen Advisors Inc.; Secretary and General Counsel, Van Kampen Funds Inc.; and Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust | N/A | N/A | |||||||||
Formerly: Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Advisers, Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker-dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator) and Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) | |||||||||||||
Lisa O. Brinkley — 1959 Vice President | 2004 | Global Compliance Director, Invesco Ltd.; Chief Compliance Officer, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc.(formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc.; and Vice President, The Invesco Funds | N/A | N/A | |||||||||
Formerly: Senior Vice President, Invesco Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and The Invesco Funds; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Distributors, Inc.; Vice President, Invesco Investment Services, Inc. and Fund Management Company | |||||||||||||
Sheri Morris — 1964 Vice President, Treasurer and Principal Financial Officer | 1999 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; and Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) Formerly: Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | N/A | N/A | |||||||||
Karen Dunn Kelley — 1960 Vice President | 2004 | Head of Invesco’s World Wide Fixed Income and Cash Management Group; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser) and Van Kampen Investments Inc.; Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); and Director, Invesco Mortgage Capital Inc.; Vice President, The Invesco Funds (other than AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust); President and Principal Executive Officer, The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust) and Short-Term Investments Trust only). | N/A | N/A | |||||||||
Formerly: Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurer’s Series Trust (Invesco Treasurer’s Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) | |||||||||||||
T-3
Trustees and Officers — (continued)
Number of | |||||||||||||
Trustee | Funds in | Other | |||||||||||
Name, Year of Birth and | and/or | Fund Complex | Directorship(s) | ||||||||||
Position(s) Held with the | Officer | Principal Occupation(s) | Overseen by | Held by | |||||||||
Trust | Since | During Past 5 Years | Trustee | Trustee | |||||||||
Other Officers | |||||||||||||
Lance A. Rejsek — 1967 Anti-Money Laundering Compliance Officer | 2005 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.), The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange- Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, Van Kampen Asset Management, Van Kampen Investor Services Inc., and Van Kampen Funds Inc. | N/A | N/A | |||||||||
Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. | |||||||||||||
Todd L. Spillane — 1958 Chief Compliance Officer | 2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.), Van Kampen Investments Inc. and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Trust II, PowerShares India Exchange-Traded Fund Trust, PowerShares Actively Managed Exchange-Traded Fund Trust, INVESCO Private Capital Investments, Inc. (holding company), and Invesco Private Capital, Inc. (registered investment adviser); Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.), Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and Van Kampen Investor Services Inc. | N/A | N/A | |||||||||
Formerly: Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, Invesco Global Asset Management (N.A.), Inc. and Invesco Senior Secured Management, Inc. (registered investment adviser); Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company | |||||||||||||
The Statement of Additional Information of the Trust includes additional information about the Fund’s Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund’s prospectus for information on the Fund’s sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 | Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 2500 Houston, TX 77046-1173 | Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103 | Counsel to the Independent Trustees Kramer, Levin, Naftalis & Frankel LLP 1177 Avenue of the Americas New York, NY 10036-2714 | Transfer Agent Invesco Investment Services, Inc. P.O. Box 4739 Houston, TX 77210-4739 | Custodian State Street Bank and Trust Company 225 Franklin Boston, MA 02110-2801 |
T-4
![(GRAPHICS)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886007.gif)
Invesco mailing information
Send general correspondence to Invesco, P.O. Box 4739, Houston, TX 77210-4739.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the period between June 1, 2010, and June 30, 2010, is available at invesco.com/proxysearch. In addition, this information is available on the SEC website, sec.gov. Proxy voting information for the predecessor fund prior to its reorganization with the Fund on
June 1, 2010, is not available on the Invesco website but is or will be available on the SEC website under the predecessor fund.
![(INVESCO LOGO)](https://capedge.com/proxy/N-CSR/0000950123-11-024556/h78850h7886008.gif)
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd.
VK-USM-AR-1 | Invesco Distributors, Inc. |
ITEM 2. | CODE OF ETHICS. |
As of the end of the period covered by this report, the Registrant had adopted a code of ethics (the “Code”) that applies to the Registrant’s principal executive officer (“PEO”) and principal financial officer (“PFO”). The Code was amended in June, 2010, to (i) add an individual to Exhibit A and (ii) update the names of certain legal entities. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report. |
.ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial expert is Raymond Stickel, Jr. Mr. Stickel is “independent” within the meaning of that term as used in Form N-CSR. |
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Fees Billed by PWC Related to the Registrant
PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:
Percentage of Fees | Percentage of Fees | |||||||||||||||
Billed Applicable to | Billed Applicable to | |||||||||||||||
Non-Audit Services | Non-Audit Services | |||||||||||||||
Provided for fiscal | Provided for fiscal | |||||||||||||||
Fees Billed for | year end 2010 | Fees Billed for | year end 2009 | |||||||||||||
Services Rendered to | Pursuant to Waiver of | Services Rendered to | Pursuant to Waiver of | |||||||||||||
the Registrant for | Pre-Approval | the Registrant for | Pre-Approval | |||||||||||||
fiscal year end 2010 | Requirement(1) | fiscal year end 2009 | Requirement(1) | |||||||||||||
Audit Fees | $ | 502,965 | N/A | $ | 432,922 | N/A | ||||||||||
Audit-Related Fees | $ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
Tax Fees(2) | $ | 132,600 | 0 | % | $ | 125,847 | 0 | % | ||||||||
All Other Fees | $ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
Total Fees | $ | 635,565 | 0 | % | $ | 558,769 | 0 | % |
PWC billed the Registrant aggregate non-audit fees of $132,600 for the fiscal year ended 2010, and $125,847 for the fiscal year ended 2009, for non-audit services rendered to the Registrant.
(1) | With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit. | |
(2) | Tax fees for the fiscal year end December 31, 2010 includes fees billed for reviewing tax returns. Tax fees for fiscal year end December 31, 2009 includes fees billed for reviewing tax returns and consultation services. |
Fees Billed by PWC Related to Invesco and Invesco Affiliates
PWC billed Invesco Advisers, Inc. (“Invesco”), the Registrant’s adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (“Invesco Affiliates”) aggregate fees for pre-approved non-audit services rendered to Invesco and Invesco Affiliates for the last two fiscal years as follows:
Fees Billed for Non- | Fees Billed for Non- | |||||||||||||||
Audit Services | Audit Services | |||||||||||||||
Rendered to Invesco | Percentage of Fees | Rendered to Invesco | Percentage of Fees | |||||||||||||
and Invesco Affiliates | Billed Applicable to | and Invesco Affiliates | Billed Applicable to | |||||||||||||
for fiscal year end | Non-Audit Services | for fiscal year end | Non-Audit Services | |||||||||||||
2010 That Were | Provided for fiscal year | 2009 That Were | Provided for fiscal year | |||||||||||||
Required | end 2010 Pursuant to | Required | end 2009 Pursuant to | |||||||||||||
to be Pre-Approved | Waiver of Pre- | to be Pre-Approved | Waiver of Pre- | |||||||||||||
by the Registrant’s | Approval | by the Registrant’s | Approval | |||||||||||||
Audit Committee | Requirement(1) | Audit Committee | Requirement(1) | |||||||||||||
Audit-Related Fees | $ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
Tax Fees | $ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
All Other Fees | $ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
Total Fees(2) | $ | 0 | 0 | % | $ | 0 | 0 | % |
(1) | With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant, Invesco and Invesco Affiliates to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant’s Audit Committee and approved by the Registrant’s Audit Committee prior to the completion of the audit. | |
(2) | Including the fees for services not required to be pre-approved by the registrant’s audit committee, PWC billed Invesco and Invesco Affiliates aggregate non-audit fees of $0 for the fiscal year ended 2010, and $0 for the fiscal year ended 2009, for non-audit services rendered to Invesco and Invesco Affiliates. | |
The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PWC’s independence. |
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the Invesco Funds (the “Funds”)
Last Amended May 4, 2010
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the Invesco Funds (the “Funds”)
Last Amended May 4, 2010
Statement of Principles
Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission (“SEC”) (“Rules”), the Audit Committees of the Funds’ (the “Audit Committees”) Board of Trustees (the “Board”) are responsible for the appointment, compensation and oversight of the work of independent accountants (an “Auditor”). As part of this responsibility and to assure that the Auditor’s independence is not impaired, the Audit Committees pre-approve the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds’ investment adviser and to affiliates of the adviser that provide ongoing services to the Funds (“Service Affiliates”) if the services directly impact the Funds’ operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations.
Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committees (“general pre-approval”) or require the specific pre-approval of the Audit Committees (“specific pre-approval”). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committees. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committees before payment is made. The Audit Committees will also consider the impact of additional fees on the Auditor’s independence when determining whether to approve any additional fees for previously pre-approved services.
The Audit Committees will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee generally on an annual basis. The term of any general pre-approval runs from the date of such pre-approval through September 30th of the following year, unless the Audit Committees consider a different period and state otherwise. The Audit Committees will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations.
The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committees in fulfilling their responsibilities.
Delegation
The Audit Committees may from time to time delegate pre-approval authority to one or more of its members who are Independent Trustees. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committees at the next quarterly meeting.
Audit Services
The annual audit services engagement terms will be subject to specific pre-approval of the Audit Committees. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. The Audit Committees will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor’s qualifications and independence.
In addition to the annual Audit services engagement, the Audit Committees may grant either general or specific pre-approval of other audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the
inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings.
Non-Audit Services
The Audit Committees may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committees believe that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC’s Rules on auditor independence, and otherwise conforms to the Audit Committees’ general principles and policies as set forth herein.
Audit-Related Services
“Audit-related services” are assurance and related services that are reasonably related to the performance of the audit or review of the Fund’s financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; and agreed-upon procedures related to mergers, compliance with ratings agency requirements and interfund lending activities.
Tax Services
“Tax services” include, but are not limited to, the review and signing of the Funds’ federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committees will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committees will consult with the Funds’ Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy.
No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims.
Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committees’ pre-approval of permissible Tax services, the Auditor shall:
1. | Describe in writing to the Audit Committees, which writing may be in the form of the proposed engagement letter: |
a. | The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and | ||
b. | Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service; |
2. | Discuss with the Audit Committees the potential effects of the services on the independence of the Auditor; and | ||
3. | Document the substance of its discussion with the Audit Committees. |
All Other Auditor Services
The Audit Committees may pre-approve non-audit services classified as “All other services” that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy.
Pre-Approval Fee Levels or Established Amounts
Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committees. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committees at the quarterly Audit Committees meeting and will require specific approval by the Audit Committees before payment is made. The Audit Committees will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services.
Procedures
Generally on an annual basis, Invesco Advisers, Inc. (“Invesco”) will submit to the Audit Committees for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request.
Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committees will be submitted to the Funds’ Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committees. The Audit Committees will be informed at the next quarterly scheduled Audit Committees meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means.
Each request to provide services that require specific approval by the Audit Committees shall be submitted to the Audit Committees jointly by the Fund’s Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the policies and procedures and the SEC Rules.
Each request to provide tax services under either the general or specific pre-approval of the Audit Committees will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committees the potential effects of the services on the Auditor’s independence and will document the substance of the discussion.
Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committees for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied.
On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services.
The Audit Committees have designated the Funds’ Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds’ Treasurer will report to the Audit Committees on a periodic basis as to the results of such monitoring. Both the Funds’ Treasurer and management of Invesco will immediately report to the chairman of the Audit Committees any breach of these policies and procedures that comes to the attention of the Funds’ Treasurer or senior management of Invesco.
Exhibit 1 to Pre-Approval of Audit and Non-Audit Services Policies and Procedures
Conditionally Prohibited Non-Audit Services (not prohibited if the Fund can reasonably conclude that the results of the service would not be subject to audit procedures in connection with the audit of the Fund’s financial statements)
• | Bookkeeping or other services related to the accounting records or financial statements of the audit client | ||
• | Financial information systems design and implementation | ||
• | Appraisal or valuation services, fairness opinions, or contribution-in-kind reports | ||
• | Actuarial services | ||
• | Internal audit outsourcing services |
Categorically Prohibited Non-Audit Services
• | Management functions | ||
• | Human resources | ||
• | Broker-dealer, investment adviser, or investment banking services | ||
• | Legal services | ||
• | Expert services unrelated to the audit | ||
• | Any service or product provided for a contingent fee or a commission | ||
• | Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance | ||
• | Tax services for persons in financial reporting oversight roles at the Fund | ||
• | Any other service that the Public Company Oversight Board determines by regulation is impermissible. |
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable. |
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form. |
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable. |
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. |
Not applicable. |
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable. |
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None |
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) | As of December 14, 2010, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of December 14, 2010, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. |
(b) | There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. | EXHIBITS. |
12(a)(1) | Code of Ethics. | |
12(a)(2) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
12(a)(3) | Not applicable. | |
12(b) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Growth Series (Invesco Growth Series)
By: | /s/ PHILIP A. TAYLOR | |||
Philip A. Taylor | ||||
Principal Executive Officer |
Date: March 11, 2011
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ PHILIP A. TAYLOR | |||
Philip A. Taylor | ||||
Principal Executive Officer |
Date: March 11, 2011
By: | /s/ Sheri Morris | |||
Sheri Morris | ||||
Principal Financial Officer |
Date: March 11, 2011
EXHIBIT INDEX
12(a)(1) | Code of Ethics. | |
12(a)(2) | Certifications of principal executive officer and principal Financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
12(a)(3) | Not applicable. | |
12(b) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |