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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 811-05426
AIM Investment Funds (Invesco Investment Funds)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Philip A. Taylor 11 Greenway Plaza, Suite 1000 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: 10/31
Date of reporting period: 4/30/12
Item 1. Reports to Stockholders.
Invesco Balanced-Risk Allocation Fund
Semiannual Report to Shareholders § April 30, 2012
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: ABRZX § B: ABRBX § C: ABRCX § R: ABRRX § Y: ABRYX § Institutional: ABRIX
A: ABRZX § B: ABRBX § C: ABRCX § R: ABRRX § Y: ABRYX § Institutional: ABRIX
2 | Fund Performance | |
4 | Letters to Shareholders | |
5 | Consolidated Schedule of Investments | |
7 | Consolidated Financial Statements | |
9 | Notes to Consolidated Financial Statements | |
17 | Consolidated Financial Highlights | |
18 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 8.54 | % | ||
Class B Shares | 8.14 | |||
Class C Shares | 8.24 | |||
Class R Shares | 8.51 | |||
Class Y Shares | 8.67 | |||
Institutional Class Shares | 8.67 | |||
S&P 500 Index▼ (Broad Market Index) | 12.77 | |||
Custom Balanced-Risk Allocation Broad Index■ (Style-Specific Index) | 8.58 | |||
Custom Balanced-Risk Allocation Style Index■ (Style-Specific Index) | 5.54 | |||
Lipper Global Flexible Portfolio Funds Index▼ (Peer Group Index) | 5.90 | |||
Source(s): ▼Lipper Inc.; ■Invesco, Lipper Inc.
The S&P 500® Index is an unmanaged index considered representative of the US stock market.
The Custom Balanced-Risk Allocation Broad Index consists of 60% of the S&P 500 Index and 40% of the Barclays U.S. Aggregate Index.
The Custom Balanced-Risk Allocation Broad Index consists of 60% of the S&P 500 Index and 40% of the Barclays U.S. Aggregate Index.
The Custom Balanced Risk-Allocation Style Index consists of 60% of the MSCI World Index and 40% of the Barclays U.S. Aggregate Index. Effective December 1, 2009, the fixed income component of the Custom Balanced-Risk Allocation Style Index changed from the JP Morgan GBI Global (Traded) Index to the Barclays U.S. Aggregate Index.
The Lipper Global Flexible Portfolio Funds Index is an equally weighted representation of the largest funds in the Lipper Global Flexible Portfolio Funds category. These funds allocate their investments across various asset classes, including both domestic and foreign stocks, bonds and money market instruments, with a focus on total return.
The Barclays U.S. Aggregate Index is an unmanaged index considered representative of the US investment grade, fixed-rate bond market.
The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries.
The JP Morgan GBI Global (Traded) Index is a total return, market capitalization weighted index, rebalanced monthly, consisting of the following countries: Australia, Germany, Spain, Belgium, Italy, Sweden, Canada, Japan, the United Kingdom, Denmark, the Netherlands and the United States.
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.
2 | Invesco Balanced-Risk Allocation Fund |
Average Annual Total Returns
As of 4/30/12, including maximum applicable
sales charges
sales charges
Class A Shares | ||||||||
Inception (6/2/09) | 11.63 | % | ||||||
1 Year | 7.20 | |||||||
Class B Shares | ||||||||
Inception (6/2/09) | 12.13 | % | ||||||
1 Year | 7.63 | |||||||
Class C Shares | ||||||||
Inception (6/2/09) | 12.96 | % | ||||||
1 Year | 11.63 | |||||||
Class R Shares | ||||||||
Inception (6/2/09) | 13.52 | % | ||||||
1 Year | 13.25 | |||||||
Class Y Shares | ||||||||
Inception (6/2/09) | 14.09 | % | ||||||
1 Year | 13.77 | |||||||
Institutional Class Shares | ||||||||
Inception (6/2/09) | 14.09 | % | ||||||
1 Year | 13.77 |
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 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 1.33%, 2.08%, 2.08%, 1.58%, 1.08% and 0.99%, respectively.1 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.
Average Annual Total Returns
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (6/2/09) | 11.77 | % | ||||||
1 Year | 9.30 | |||||||
Class B Shares | ||||||||
Inception (6/2/09) | 12.27 | % | ||||||
1 Year | 9.72 | |||||||
Class C Shares | ||||||||
Inception (6/2/09) | 13.13 | % | ||||||
1 Year | 13.72 | |||||||
Class R Shares | ||||||||
Inception (6/2/09) | 13.68 | % | ||||||
1 Year | 15.35 | |||||||
Class Y Shares | ||||||||
Inception (6/2/09) | 14.30 | % | ||||||
1 Year | 15.95 | |||||||
Institutional Class Shares | ||||||||
Inception (6/2/09) | 14.30 | % | ||||||
1 Year | 15.95 |
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 in the past, performance would have been lower.
1 | The expense ratio includes acquired fund fees and expenses of 0.02% for the underlying funds in which the Fund invests. |
3 | Invesco Balanced-Risk Allocation Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
4 | Invesco Balanced-Risk Allocation Fund |
Consolidated Schedule of Investments
April 30, 2012
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
U.S. Treasury Bills–10.09%(a)(b) | ||||||||
0.06%, 07/19/12 | $ | 346,000,000 | $ | 345,935,637 | ||||
0.11%, 08/09/12 | 45,000,000 | 44,987,534 | ||||||
0.08%, 08/23/12 | 100,000,000 | 99,963,683 | ||||||
0.10%, 08/23/12 | 100,000,000 | 99,959,192 | ||||||
Total U.S. Treasury Securities (Cost $590,879,124) | 590,846,046 | |||||||
Shares | Value | |||||||
Money Market Funds–83.39% | ||||||||
Liquid Assets Portfolio–Institutional Class(c) | 1,122,284,793 | $ | 1,122,284,793 | |||||
Premier Portfolio–Institutional Class(c) | 1,122,284,793 | 1,122,284,793 | ||||||
STIC (Global Series) PLC–U.S. Dollar Liquidity Portfolio–Institutional Class(c) | 1,041,194,710 | 1,041,194,710 | ||||||
Treasury Portfolio–Institutional Class(c) | 1,600,001,010 | 1,600,001,010 | ||||||
Total Money Market Funds (Cost $4,885,765,306) | 4,885,765,306 | |||||||
TOTAL INVESTMENTS–93.48% (Cost $5,476,644,430) | 5,476,611,352 | |||||||
OTHER ASSETS LESS LIABILITIES–6.52% | 382,145,521 | |||||||
NET ASSETS–100.00% | $ | 5,858,756,873 | ||||||
Notes to Schedule of Investments:
(a) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. | |
(b) | All or a portion of the value was pledged as collateral for open swap agreements. See Note 1J. | |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Open Futures Contracts and Swap Agreements at Period-End | ||||||||||||||||||
Unrealized | ||||||||||||||||||
Number of | Expiration | Notional | Appreciation | |||||||||||||||
Long Futures Contracts | Contracts | Month | Value | (Depreciation) | ||||||||||||||
Australian 10 Year Bonds | 8,310 | June-2012 | $ | 1,037,620,749 | $ | 30,277,668 | ||||||||||||
Brent Crude | 507 | October-2012 | 59,689,110 | (2,185,041 | ) | |||||||||||||
Canada 10 Year Bonds | 6,370 | June-2012 | 851,547,378 | 318,863 | ||||||||||||||
Dow Jones Eurostoxx 50 | 11,400 | June-2012 | 340,938,671 | (27,290,546 | ) | |||||||||||||
E-Mini S&P 500 Index | 5,300 | June-2012 | 369,304,000 | 6,085,525 | ||||||||||||||
Euro Bonds | 4,605 | June-2012 | 860,163,580 | 15,189,993 | ||||||||||||||
FTSE 100 Index | 3,860 | June-2012 | 358,076,297 | (9,335,529 | ) | |||||||||||||
Gas Oil | 652 | June-2012 | 65,395,600 | (1,893,131 | ) | |||||||||||||
Reformulated Blendstock Oxygenate Blending Gasoline | 475 | June-2012 | 62,335,770 | (4,139,954 | ) | |||||||||||||
Hang Seng Index | 1500 | May-2012 | 202,420,540 | 3,287,421 | ||||||||||||||
Heating Oil | 315 | June-2012 | 42,126,966 | (916,278 | ) | |||||||||||||
Japan 10 Year Bonds | 515 | June-2012 | 923,297,006 | 4,718,052 | ||||||||||||||
LME Copper | 1,661 | May-2012 | 351,280,738 | (4,578,975 | ) | |||||||||||||
LME Primary Aluminum | 1,110 | May-2012 | 57,886,500 | 456,321 | ||||||||||||||
Long Gilt | 4,960 | June-2012 | 930,784,434 | 6,281,807 | ||||||||||||||
Russell 2000 Index Mini | 3,600 | June-2012 | 293,364,000 | 614,729 | ||||||||||||||
Silver | 1,114 | July-2012 | 172,759,120 | (4,639,331 | ) | |||||||||||||
Soybean | 2,405 | July-2012 | 181,036,375 | 9,680,617 | ||||||||||||||
Topix Tokyo Price Index | 3,970 | June-2012 | 399,088,688 | (11,009,917 | ) | |||||||||||||
U.S. Treasury Long Bonds | 3,305 | June-2012 | 472,201,875 | 5,056,595 | ||||||||||||||
WTI Light Sweet Crude Oil | 1,045 | October-2012 | 110,550,550 | (922,035 | ) | |||||||||||||
Total Futures Contracts | $ | 8,141,867,947 | $ | 15,056,854 | ||||||||||||||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
5 Invesco Balanced-Risk Allocation Fund
Unrealized | ||||||||||||||||||
Number of | Expiration | Notional | Appreciation | |||||||||||||||
Swap Agreements | Counterparty | Contracts | Month | Value | (Depreciation) | |||||||||||||
Receive a return equal to Barclays Capital Soybean Meal S2 Nearby Excess Return Index and pay the product of (i) 0.30% of the Notional Value multiplied by (ii) days in the period divided by 365 | Barclays Bank PLC | 269,000 | December-2012 | $ | 172,253,020 | $ | 18,191,744 | |||||||||||
Receive a return equal to Barclays Commodity Strategy 1606 and pay the product of (i) 0.41% of the Notional Value multiplied by (ii) days in the period divided by 365 | Barclays Bank PLC | 78,100 | April-2013 | 45,419,023 | (2,128,708 | ) | ||||||||||||
Receive a return equal to Barclays Gold Excess Return Index and pay the product of (i) 0.22% of the Notional Value multiplied by (ii) days in the period divided by 365 | Barclays Bank PLC | 408,500 | April-2013 | 158,316,830 | 1,391,556 | |||||||||||||
Receive a return equal to Barclays Live Cattle Roll Yield Excess Return Index and pay the product of (i) 0.47% of the Notional Value multiplied by (ii) days in the period divided by 365 | Barclays Bank PLC | 77,000 | April-2013 | 10,595,931 | (182,451 | ) | ||||||||||||
Receive a return equal to Dow Jones-UBS Gold Index and pay the product of (i) 0.15% of the Notional Value multiplied by (ii) days in the period divided by 365 | Merrill Lynch | 895,500 | November-2012 | 190,406,493 | (888,246 | ) | ||||||||||||
Receive a return equal to S&P GSCI Sugar Excess Return A141 Strategy and pay the product of (i) 0.37% of the Notional Value multiplied by (ii) days in the period divided by 365 | Goldman Sachs | 195,000 | April-2013 | 95,318,554 | (8,159,014 | ) | ||||||||||||
Receive a return equal to LIFFE Long Gilt Futures Contract multiplied by 0.01% of the Notional Value | Goldman Sachs | 498 | May-2012 | 90,321,174 | 383,013 | |||||||||||||
Total Swap Agreements | $ | 762,631,025 | $ | 8,607,894 | ||||||||||||||
Risk Allocation
By asset class
% of | ||||||||
Net Assets | ||||||||
Asset Class | Risk Contribution | as of 04/30/12* | ||||||
Equities | 35.3 | % | 34.0 | % | ||||
Fixed Income | 33.7 | 92.4 | ||||||
Commodities | 31.0 | 31.1 | ||||||
* | Due to the use of leverage, the percentages may not equal 100%. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
6 Invesco Balanced-Risk Allocation Fund
Consolidated Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $590,879,124) | $ | 590,846,046 | ||
Investments in affiliated money market funds, at value and cost | 4,885,765,306 | |||
Total investments, at value (Cost $5,476,644,430) | 5,476,611,352 | |||
Receivable for: | ||||
Deposits with brokers for open futures contracts | 300,460,320 | |||
Fund shares sold | 87,105,198 | |||
Dividends | 363,168 | |||
Unrealized appreciation on swap agreements | 8,607,894 | |||
Investment for trustee deferred compensation and retirement plans | 14,203 | |||
Other assets | 96,897 | |||
Total assets | 5,873,259,032 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 7,979,377 | |||
Variation margin | 4,128,994 | |||
Accrued fees to affiliates | 1,695,146 | |||
Accrued other operating expenses | 629,379 | |||
Trustee deferred compensation and retirement plans | 68,748 | |||
Premiums received on swap agreements | 515 | |||
Total liabilities | 14,502,159 | |||
Net assets applicable to shares outstanding | $ | 5,858,756,873 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 5,538,819,831 | ||
Undistributed net investment income (loss) | (32,309,650 | ) | ||
Undistributed net realized gain | 328,615,023 | |||
Unrealized appreciation | 23,631,669 | |||
$ | 5,858,756,873 | |||
Net Assets: | ||||
Class A | $ | 2,201,514,862 | ||
Class B | $ | 26,172,099 | ||
Class C | $ | 1,085,475,705 | ||
Class R | $ | 7,020,593 | ||
Class Y | $ | 1,925,239,854 | ||
Institutional Class | $ | 613,333,760 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 175,395,305 | |||
Class B | 2,124,509 | |||
Class C | 88,128,049 | |||
Class R | 563,192 | |||
Class Y | 152,504,882 | |||
Institutional Class | 48,586,809 | |||
Class A: | ||||
Net asset value per share | $ | 12.55 | ||
Maximum offering price per share | ||||
(Net asset value of $12.55 divided by 94.50%) | $ | 13.28 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 12.32 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 12.32 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 12.47 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 12.62 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 12.62 | ||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
7 Invesco Balanced-Risk Allocation Fund
Consolidated Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends from affiliated money market funds | $ | 1,930,744 | ||
Interest | 96,608 | |||
Total investment income | 2,027,352 | |||
Expenses: | ||||
Advisory fees | 17,556,366 | |||
Administrative services fees | 308,733 | |||
Custodian fees | 107,761 | |||
Distribution fees: | ||||
Class A | 1,971,184 | |||
Class B | 110,014 | |||
Class C | 3,460,025 | |||
Class R | 11,250 | |||
Transfer agent fees — A, B, C, R and Y | 1,168,621 | |||
Transfer agent fees — Institutional | 2,681 | |||
Trustees’ and officers’ fees and benefits | 79,963 | |||
Other | 717,378 | |||
Total expenses | 25,493,976 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (3,327,838 | ) | ||
Net expenses | 22,166,138 | |||
Net investment income (loss) | (20,138,786 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 4,721,777 | |||
Foreign currencies | (400,615 | ) | ||
Futures contracts | 306,805,672 | |||
Swap agreements | 74,785,581 | |||
385,912,415 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (8,974,655 | ) | ||
Futures contracts | (58,849,817 | ) | ||
Swap agreements | 13,011,165 | |||
(54,813,307 | ) | |||
Net realized and unrealized gain | 331,099,108 | |||
Net increase in net assets resulting from operations | $ | 310,960,322 | ||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
8 Invesco Balanced-Risk Allocation Fund
Consolidated Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (20,138,786 | ) | $ | (11,313,819 | ) | ||
Net realized gain | 385,912,415 | 67,562,925 | ||||||
Change in net unrealized appreciation (depreciation) | (54,813,307 | ) | 44,170,046 | |||||
Net increase in net assets resulting from operations | 310,960,322 | 100,419,152 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (33,813,257 | ) | (10,326,464 | ) | ||||
Class B | (486,350 | ) | (439,288 | ) | ||||
Class C | (12,557,382 | ) | (2,924,319 | ) | ||||
Class R | (86,502 | ) | (25,578 | ) | ||||
Class Y | (20,769,515 | ) | (3,108,815 | ) | ||||
Institutional Class | (13,200,573 | ) | (17,683,480 | ) | ||||
Total distributions from net investment income | (80,913,579 | ) | (34,507,944 | ) | ||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (12,192,134 | ) | (4,488,032 | ) | ||||
Class B | (192,786 | ) | (199,892 | ) | ||||
Class C | (4,977,664 | ) | (1,330,671 | ) | ||||
Class R | (32,159 | ) | (11,286 | ) | ||||
Class Y | (7,259,423 | ) | (1,328,598 | ) | ||||
Institutional Class | (4,613,904 | ) | (7,557,298 | ) | ||||
Total distributions from net realized gains | (29,268,070 | ) | (14,915,777 | ) | ||||
Share transactions–net: | ||||||||
Class A | 1,121,452,565 | 772,897,074 | ||||||
Class B | 7,434,504 | 7,594,067 | ||||||
Class C | 668,796,734 | 317,328,870 | ||||||
Class R | 3,835,156 | 2,256,817 | ||||||
Class Y | 1,311,103,328 | 481,151,077 | ||||||
Institutional Class | 137,423,210 | (32,440,466 | ) | |||||
Net increase in net assets resulting from share transactions | 3,250,045,497 | 1,548,787,439 | ||||||
Net increase in net assets | 3,450,824,170 | 1,599,782,870 | ||||||
Net assets: | ||||||||
Beginning of period | 2,407,932,703 | 808,149,833 | ||||||
End of period (includes undistributed net investment income (loss) of $(32,309,650) and $68,742,715, respectively) | $ | 5,858,756,873 | $ | 2,407,932,703 | ||||
Notes to Consolidated Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Balanced-Risk Allocation Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen separate series portfolios, each authorized to issue an unlimited number of shares of beneficial interest.
9 Invesco Balanced-Risk Allocation Fund
The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these consolidated 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 will seek to gain exposure to the commodity markets primarily through investments in the Invesco Cayman Commodity Fund I Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund to invest in commodity-linked derivatives. The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is to provide total return with a low to moderate correlation to traditional financial market indices.
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 consolidated 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. 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 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 economic 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 consolidated 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. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
10 Invesco Balanced-Risk 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 Consolidated 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 Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated 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 Consolidated Statement of Operations and Consolidated Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Consolidated 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 Consolidated 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 declared and 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 consolidated financial statements. | |
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods. | ||
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. | ||
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 financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation. | |
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 consolidated financial statements are released to print. | ||
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of performance of their duties to the Fund and/or the Subsidiary, respectively. 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. | 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 Consolidated 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. |
11 Invesco Balanced-Risk Allocation Fund
The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Consolidated 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 Consolidated Statement of Assets and Liabilities. | ||
J. | 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. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. | ||
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 Consolidated 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 Consolidated 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 Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated 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 Consolidated 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. | ||
K. | Other Risks — The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in exchange traded funds. The Subsidiary, unlike the Fund, may invest without limitation in commodities, commodity-linked derivatives and other securities, such as exchange traded notes, that may provide leverage and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. | |
The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly. | ||
L. | 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. |
12 Invesco Balanced-Risk Allocation 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .95% | ||
Next $250 million | 0 | .925% | ||
Next $500 million | 0 | .90% | ||
Next $1.5 billion | 0 | .875% | ||
Next $2.5 billion | 0 | .85% | ||
Next $2.5 billion | 0 | .825% | ||
Next $2.5 billion | 0 | .80% | ||
Over $10 billion | 0 | .775% | ||
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 Canada 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 Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s average daily net assets as set forth in the table above.
The Adviser had contractually agreed to February 28, 2012 to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual 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 1.04%, 1.79%, 1.79%, 1.29%, 0.79% and 0.79% 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 operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; 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 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 invest. As a result, total annual fund operating expenses after expense reimbursement 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 Acquired Fund Fees and Expenses are included in the total return of the Fund.
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 six months ended April 30, 2012, the Adviser waived advisory fees of $2,811,420 and reimbursed class level expenses of $233,274, $3,255, $102,367, $666, $174,174 and $1,673 of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively.
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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Consolidated 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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Consolidated 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 six months ended April 30, 2012, expenses incurred under the Plans are shown in the Consolidated 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $1,062,141 in front-end sales commissions from the sale of Class A shares and $7,801, $3,402 and $74,993 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 the Adviser, IIS and/or IDI.
13 Invesco Balanced-Risk Allocation 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 April 30, 2012. 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 consolidated financial statements may materially differ from the value received upon actual sale of those investments.
During the six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Money Market Funds | $ | 4,885,765,306 | $ | — | $ | — | $ | 4,885,765,306 | ||||||||
U.S. Treasury Debt Securities | — | 590,846,046 | — | 590,846,046 | ||||||||||||
$ | 4,885,765,306 | $ | 590,846,046 | $ | — | $ | 5,476,611,352 | |||||||||
Futures* | 15,056,854 | — | — | 15,056,854 | ||||||||||||
Swap Agreements* | 383,013 | 8,224,881 | — | 8,607,894 | ||||||||||||
Total Investments | $ | 4,901,205,173 | $ | 599,070,927 | $ | — | $ | 5,500,276,100 | ||||||||
* | Unrealized appreciation. |
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Commodity risk | ||||||||
Future contracts(a) | $ | 10,136,938 | $ | (19,274,745 | ) | |||
Swap agreements(b) | 19,583,300 | (11,358,419 | ) | |||||
Interest rate risk | ||||||||
Future contracts(a) | 61,842,978 | — | ||||||
Swap agreements(b) | 383,013 | — | ||||||
Market risk | ||||||||
Future contracts(a) | 9,987,675 | (47,635,992 | ) | |||||
$ | 101,933,904 | $ | (78,269,156 | ) | ||||
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Consolidated Statement of Assets & Liabilities. | |
(b) | Values are disclosed on the Consolidated Statement of Assets and Liabilities under Unrealized appreciation on swap agreements. |
14 Invesco Balanced-Risk Allocation Fund
Effect of Derivative Instruments for the six months ended April 30, 2012
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 | ||||||||
Consolidated | ||||||||
Statement of Operations | ||||||||
Swap | ||||||||
Futures* | Agreements* | |||||||
Realized Gain | ||||||||
Commodity risk | $ | 74,266,485 | $ | 74,785,581 | ||||
Interest rate risk | 56,617,122 | — | ||||||
Market risk | 175,922,065 | — | ||||||
Change in Unrealized Appreciation (Depreciation) | ||||||||
Commodity risk | $ | (50,719,275 | ) | $ | 10,430,300 | |||
Interest rate risk | 70,559,930 | 2,580,865 | ||||||
Market risk | (78,690,472 | ) | — | |||||
Total | $ | 247,955,855 | $ | 87,796,746 | ||||
* | The average notional value of futures and swap agreements outstanding during the period was $6,178,360,771 and $754,145,684, respectively. |
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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,009.
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 six months ended April 30, 2012, the Fund paid legal fees of $180 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A partner 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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 did not have a capital loss carryforward as of October 31, 2011.
15 Invesco Balanced-Risk Allocation 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 six months ended April 30, 2012 was $70,755,422 and $153,058,642, 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 | $ | 722 | ||
Aggregate unrealized (depreciation) of investment securities | (16,099,045 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (16,098,323 | ) | |
Cost of investments for tax purposes is $5,492,709,675. |
NOTE 10—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 114,230,275 | $ | 1,395,135,131 | 77,006,398 | $ | 905,075,428 | ||||||||||
Class B | 838,095 | 10,042,072 | 970,373 | 11,143,264 | ||||||||||||
Class C | 56,870,767 | 684,440,656 | 28,895,408 | 333,944,506 | ||||||||||||
Class R | 348,286 | 4,229,997 | 202,476 | 2,329,459 | ||||||||||||
Class Y | 118,800,963 | 1,460,663,903 | 46,866,632 | 557,052,969 | ||||||||||||
Institutional Class | 11,830,809 | 143,668,625 | 5,536,932 | 64,421,922 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 3,420,622 | 40,329,128 | 1,061,138 | 11,555,797 | ||||||||||||
Class B | 54,807 | 636,304 | 55,081 | 593,775 | ||||||||||||
Class C | 1,372,900 | 15,925,637 | 341,362 | 3,676,476 | ||||||||||||
Class R | 10,084 | 118,190 | 3,336 | 36,167 | ||||||||||||
Class Y | 1,921,535 | 22,770,187 | 270,713 | 2,956,189 | ||||||||||||
Institutional Class | 1,501,849 | 17,796,917 | 2,311,242 | 25,238,765 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 167,714 | 2,052,405 | 190,907 | 2,199,780 | ||||||||||||
Class B | (170,657 | ) | (2,052,405 | ) | (193,459 | ) | (2,199,780 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (25,802,082 | ) | (316,064,099 | ) | (12,654,336 | ) | (145,933,931 | ) | ||||||||
Class B | (98,846 | ) | (1,191,467 | ) | (170,815 | ) | (1,943,192 | ) | ||||||||
Class C | (2,627,793 | ) | (31,569,559 | ) | (1,776,699 | ) | (20,292,112 | ) | ||||||||
Class R | (42,858 | ) | (513,031 | ) | (9,440 | ) | (108,809 | ) | ||||||||
Class Y | (14,037,306 | ) | (172,330,762 | ) | (6,817,430 | ) | (78,858,081 | ) | ||||||||
Institutional Class | (1,984,133 | ) | (24,042,332 | ) | (10,504,779 | ) | (122,101,153 | ) | ||||||||
Net increase in share activity | 266,605,031 | $ | 3,250,045,497 | 131,585,040 | $ | 1,548,787,439 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 55% 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 Fund 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, 7% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by Invesco. |
16 Invesco Balanced-Risk Allocation Fund
NOTE 11—Consolidated 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)(a) | unrealized) | operations | income | gains | distributions | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 12.01 | $ | (0.06 | ) | $ | 1.06 | $ | 1.00 | $ | (0.34 | ) | $ | (0.12 | ) | $ | (0.46 | ) | $ | 12.55 | 8.54 | % | $ | 2,201,515 | 1.09 | %(d) | 1.26 | %(d) | (0.99 | )%(d) | 79 | % | ||||||||||||||||||||||||
Year ended 10/31/11 | 11.68 | (0.11 | ) | 1.11 | 1.00 | (0.47 | ) | (0.20 | ) | (0.67 | ) | 12.01 | 9.13 | 1,001,088 | 1.04 | 1.31 | (0.95 | ) | 163 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 10.72 | (0.10 | ) | 1.61 | 1.51 | (0.21 | ) | (0.34 | ) | (0.55 | ) | 11.68 | 14.76 | 207,600 | 1.04 | 1.42 | (0.93 | ) | 33 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/09(e) | 10.00 | (0.05 | ) | 0.77 | 0.72 | — | — | — | 10.72 | 7.20 | 17,667 | 1.24 | (f) | 1.64 | (f) | (1.02 | )(f) | 116 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.81 | (0.10 | ) | 1.04 | 0.94 | (0.31 | ) | (0.12 | ) | (0.43 | ) | 12.32 | 8.14 | 26,172 | 1.84 | (d) | 2.01 | (d) | (1.74 | )(d) | 79 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.56 | (0.19 | ) | 1.09 | 0.90 | (0.45 | ) | (0.20 | ) | (0.65 | ) | 11.81 | 8.30 | 17,722 | 1.79 | 2.06 | (1.70 | ) | 163 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 10.68 | (0.19 | ) | 1.61 | 1.42 | (0.20 | ) | (0.34 | ) | (0.54 | ) | 11.56 | 13.95 | 9,707 | 1.79 | 2.17 | (1.68 | ) | 33 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/09(e) | 10.00 | (0.08 | ) | 0.76 | 0.68 | — | — | — | 10.68 | 6.80 | 930 | 1.99 | (f) | 2.39 | (f) | (1.77 | )(f) | 116 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.80 | (0.10 | ) | 1.05 | 0.95 | (0.31 | ) | (0.12 | ) | (0.43 | ) | 12.32 | 8.24 | 1,085,476 | 1.84 | (d) | 2.01 | (d) | (1.74 | )(d) | 79 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.56 | (0.19 | ) | 1.08 | 0.89 | (0.45 | ) | (0.20 | ) | (0.65 | ) | 11.80 | 8.21 | 383,786 | 1.79 | 2.06 | (1.70 | ) | 163 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 10.68 | (0.19 | ) | 1.61 | 1.42 | (0.20 | ) | (0.34 | ) | (0.54 | ) | 11.56 | 13.95 | 58,377 | 1.79 | 2.17 | (1.68 | ) | 33 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/09(e) | 10.00 | (0.08 | ) | 0.76 | 0.68 | — | — | — | 10.68 | 6.80 | 3,542 | 1.99 | (f) | 2.39 | (f) | (1.77 | )(f) | 116 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.93 | (0.07 | ) | 1.06 | 0.99 | (0.33 | ) | (0.12 | ) | (0.45 | ) | 12.47 | 8.51 | 7,021 | 1.34 | (d) | 1.51 | (d) | (1.24 | )(d) | 79 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.63 | (0.14 | ) | 1.10 | 0.96 | (0.46 | ) | (0.20 | ) | (0.66 | ) | 11.93 | 8.84 | 2,956 | 1.29 | 1.56 | (1.20 | ) | 163 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 10.71 | (0.13 | ) | 1.60 | 1.47 | (0.21 | ) | (0.34 | ) | (0.55 | ) | 11.63 | 14.36 | 597 | 1.29 | 1.67 | (1.18 | ) | 33 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/09(e) | 10.00 | (0.06 | ) | 0.77 | 0.71 | — | — | — | 10.71 | 7.10 | 72 | 1.49 | (f) | 1.89 | (f) | (1.27 | )(f) | 116 | ||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 12.07 | (0.05 | ) | 1.07 | 1.02 | (0.35 | ) | (0.12 | ) | (0.47 | ) | 12.62 | 8.67 | 1,925,240 | 0.84 | (d) | 1.01 | (d) | (0.74 | )(d) | 79 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.71 | (0.08 | ) | 1.11 | 1.03 | (0.47 | ) | (0.20 | ) | (0.67 | ) | 12.07 | 9.45 | 553,001 | 0.79 | 1.06 | (0.70 | ) | 163 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 10.73 | (0.08 | ) | 1.61 | 1.53 | (0.21 | ) | (0.34 | ) | (0.55 | ) | 11.71 | 14.97 | 64,428 | 0.79 | 1.17 | (0.68 | ) | 33 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/09(e) | 10.00 | (0.03 | ) | 0.76 | 0.73 | — | — | — | 10.73 | 7.30 | 3,558 | 0.99 | (f) | 1.39 | (f) | (0.77 | )(f) | 116 | ||||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 12.07 | (0.04 | ) | 1.06 | 1.02 | (0.35 | ) | (0.12 | ) | (0.47 | ) | 12.62 | 8.67 | 613,334 | 0.80 | (d) | 0.94 | (d) | (0.70 | )(d) | 79 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.72 | (0.08 | ) | 1.11 | 1.03 | (0.48 | ) | (0.20 | ) | (0.68 | ) | 12.07 | 9.36 | 449,380 | 0.79 | 0.97 | (0.70 | ) | 163 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 10.73 | (0.08 | ) | 1.62 | 1.54 | (0.21 | ) | (0.34 | ) | (0.55 | ) | 11.72 | 15.06 | 467,441 | 0.79 | 1.04 | (0.68 | ) | 33 | (g) | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/09(e) | 10.00 | (0.03 | ) | 0.76 | 0.73 | — | — | — | 10.73 | 7.30 | 218,565 | 0.99 | (f) | 1.17 | (f) | (0.77 | )(f) | 116 | ||||||||||||||||||||||||||||||||||||||
(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 annualized and based on average daily net assets (000’s omitted) of $1,585,612, $22,124, $695,807, $4,525, $1,183,896 and $536,644 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(e) | Commencement date of June 2, 2009. | |
(f) | Annualized. | |
(g) | Subsequent to issuance of its October 31, 2011 financial statements, the Fund revised the calculation of portfolio turnover as reflected in the financial highlights above. |
17 Invesco Balanced-Risk 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 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2,4 | (04/30/12) | Period2,5 | Ratio3 | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,085.40 | $ | 5.62 | $ | 1,019.47 | $ | 5.44 | 1.12 | % | ||||||||||||||||||
B | 1,000.00 | 1,081.40 | 9.49 | 1,015.74 | 9.19 | 1.87 | ||||||||||||||||||||||||
C | 1,000.00 | 1,082.40 | 9.50 | 1,015.74 | 9.19 | 1.87 | ||||||||||||||||||||||||
R | 1,000.00 | 1,085.10 | 6.92 | 1,018.23 | 6.70 | 1.37 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,086.70 | 4.33 | 1,020.71 | 4.19 | 0.87 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,086.70 | 4.14 | 1,020.90 | 4.00 | 0.81 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
3 | The Adviser had contractually agreed through February 28, 2012 to waive advisory fees and/or reimburse expenses to the extent necessary to limit Total Annual Fund Operating Expense of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares to 1.04%, 1.79%, 1.79%, 1.29%, 0.79% and 0.79% of average daily net assets, respectively. The annualized expense ratios restated as if these agreements had not been in effect throughout the entire most recent fiscal half year are 1.12%, 1.87%, 1.87%, 1.37%, 0.87% and 0.81% for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. |
4 | The actual expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent fiscal half year are $5.82, $9.69, $9.70, $7.12, $4.53 and $4.18 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. |
5 | The hypothetical expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent fiscal half year are $5.64, $9.39, $9.39, $6.89, $4.39 and $4.05 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. |
18 Invesco Balanced-Risk Allocation Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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.
IBRA-SAR-1 | Invesco Distributors, Inc. |
Invesco Balanced-Risk Commodity Strategy Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: BRCAX § B: BRCBX § C: BRCCX § R: BRCRX § Y: BRCYX § Institutional: BRCNX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Consolidated Schedule of Investments | |
7 | Consolidated Financial Statements | |
9 | Notes to Consolidated Financial Statements | |
16 | Consolidated Financial Highlights | |
17 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 6.26 | |||
Class C Shares | 6.36 | |||
Class R Shares | 6.61 | |||
Class Y Shares | 6.86 | |||
Institutional Class Shares | 6.86 | |||
Dow Jones-UBS Commodity Total Return Index▼ (Broad Market/Style-Specific Index) | -5.45 | |||
Source(s): ▼Lipper Inc. |
The Dow Jones-UBS Commodity Total Return Index is an unmanaged index designed to be a highly liquid and diversified benchmark for the commodity futures market.
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.
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (11/30/10) | 3.16 | % | ||
1 Year | -10.45 | |||
Class B Shares | ||||
Inception (11/30/10) | 3.88 | % | ||
1 Year | -10.67 | |||
Class C Shares | ||||
Inception (11/30/10) | 6.65 | % | ||
1 Year | -6.91 | |||
Class R Shares | ||||
Inception (11/30/10) | 7.34 | % | ||
1 Year | -5.36 | |||
Class Y Shares | ||||
Inception (11/30/10) | 7.88 | % | ||
1 Year | -4.84 | |||
Institutional Class Shares | ||||
Inception (11/30/10) | 7.88 | % | ||
1 Year | -4.84 | |||
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
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (11/30/10) | 3.50 | % | ||
1 Year | -7.15 | |||
Class B Shares | ||||
Inception (11/30/10) | 4.27 | % | ||
1 Year | -7.35 | |||
Class C Shares | ||||
Inception (11/30/10) | 7.15 | % | ||
1 Year | -3.53 | |||
Class R Shares | ||||
Inception (11/30/10) | 7.95 | % | ||
1 Year | -1.76 | |||
Class Y Shares | ||||
Inception (11/30/10) | 8.46 | % | ||
1 Year | -1.32 | |||
Institutional Class Shares | ||||
Inception (11/30/10) | 8.39 | % | ||
1 Year | -1.41 | |||
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 1.23%, 1.98%, 1.98%, 1.48%, 0.98% and 0.98%, 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 R, Class Y and Institutional Class shares was 1.55%, 2.30%, 2.30%, 1.80%, 1.30% and 1.22%, 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.
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 February 28, 2013. See current prospectus for more information. |
2 | Invesco Balanced-Risk Commodity Strategy Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth — while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically — and certainly without advance notice — depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 | Invesco Balanced-Risk Commodity Strategy Fund |
Consolidated Schedule of Investments
April 30, 2012
(Unaudited)
Interest | Maturity | Principal | ||||||||||||||
Rate | Date | Amount | Value | |||||||||||||
U.S. Treasury Securities–61.76% | ||||||||||||||||
U.S. Treasury Bills(a) | 0.06 | % | 07/19/12 | $ | 53,500,000 | $ | 53,490,048 | |||||||||
U.S. Treasury Bills(a) | 0.07 | % | 07/19/12 | 15,000,000 | 14,997,210 | |||||||||||
U.S. Treasury Bills(a) | 0.10 | % | 07/19/12 | 10,000,000 | 9,998,140 | |||||||||||
U.S. Treasury Bills(a)(b) | 0.10 | % | 08/23/12 | 8,000,000 | 7,997,095 | |||||||||||
U.S. Treasury Bills(a)(b) | 0.12 | % | 08/23/12 | 20,000,000 | 19,992,736 | |||||||||||
U.S. Treasury Bills(a)(b) | 0.13 | % | 08/23/12 | 100,000,000 | 99,963,683 | |||||||||||
U.S. Treasury Bills(a)(b) | 0.14 | % | 08/23/12 | 80,000,000 | 79,970,946 | |||||||||||
Total U.S. Treasury Securities (Cost $286,403,520) | 286,409,858 | |||||||||||||||
Shares | ||||||||||||||||
Exchange Traded Fund–3.79% | ||||||||||||||||
PowerShares DB Gold Fund(c) (Cost $17,604,578) | 305,000 | 17,595,450 | ||||||||||||||
Commodity-Linked Securities–3.12% | ||||||||||||||||
Barclays Bank PLC Commodity Linked Note, one month U.S. Federal Funds Rate minus 0.06% (linked to Barclays Capital Diversified Energy-Metals Total Return Index, multiplied by 3) | 04/22/13 | 11,650,000 | 10,006,628 | |||||||||||||
Barclays Bank PLC Commodity Linked Note, one month U.S. Federal Funds Rate minus 0.06% (linked to Barclays Capital Diversified Energy-Metals Total Return Index, multiplied by 3) | 06/10/13 | 4,420,000 | 4,477,199 | |||||||||||||
Total Commodity-Linked Securities (Cost $16,070,000) | 14,483,827 | |||||||||||||||
Money Market Funds–26.26% | ||||||||||||||||
Liquid Assets Portfolio–Institutional Class(d) | 50,093,643 | 50,093,643 | ||||||||||||||
Premier Portfolio–Institutional Class(d) | 50,093,643 | 50,093,643 | ||||||||||||||
STIC (Global Series) PLC–U.S. Dollar Liquidity Portfolio–Institutional Class(d) | 21,585,712 | 21,585,712 | ||||||||||||||
Total Money Market Funds (Cost $121,772,998) | 121,772,998 | |||||||||||||||
TOTAL INVESTMENTS–94.93% (Cost $441,851,096) | 440,262,133 | |||||||||||||||
OTHER ASSETS LESS LIABILITIES–5.07% | 23,514,528 | |||||||||||||||
NET ASSETS–100.00% | $ | 463,776,661 | ||||||||||||||
Notes to Schedule of Investments:
(a) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. | |
(b) | All or a portion of the value was pledged as collateral for open swap agreements. See Note 1K and Note 4. | |
(c) | Not an affiliate of the Fund or its investment adviser. | |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
4 Invesco Balanced-Risk Commodity Strategy Fund
Open Futures Contracts and Swap Agreements at Period-End | ||||||||||||||||
Unrealized | ||||||||||||||||
Number of | Expiration | Notional | Appreciation | |||||||||||||
Contracts | Month | Value | (Depreciation) | |||||||||||||
Long Contracts | ||||||||||||||||
European Gasoil (ICE) | 159 | June-2012 | $ | 15,947,700 | $ | (445,480 | ) | |||||||||
New York Harbor (RBOB) Gasoline | 115 | June-2012 | 15,091,818 | (968,215 | ) | |||||||||||
Soybean | 683 | July-2012 | 51,412,825 | 2,749,214 | ||||||||||||
Soybean Oil | 230 | July-2012 | 7,596,900 | (137,386 | ) | |||||||||||
Subtotal | $ | 90,049,243 | $ | 1,198,133 | ||||||||||||
Short Contracts | ||||||||||||||||
Coffee C | 137 | July-2012 | (9,224,381 | ) | 337,209 | |||||||||||
Corn | 250 | July-2012 | (7,928,125 | ) | (10,025 | ) | ||||||||||
Wheat | 257 | July-2012 | (8,410,325 | ) | (294,410 | ) | ||||||||||
Subtotal | $ | (25,562,831 | ) | $ | 32,774 | |||||||||||
Total | $ | 64,486,412 | $ | 1,230,907 | ||||||||||||
Unrealized | ||||||||||||||||
Notional | Termination | Appreciation | ||||||||||||||
Swap Agreements | Counterparty | Amount | Date | (Depreciation) | ||||||||||||
Long Agreements | ||||||||||||||||
Receive a return equal to Goldman Sachs Soybean Meal Excess Return Strategy and pay the product of (i) 0.30% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | $ | 48,164,160 | November-2012 | $ | 5,507,872 | ||||||||||
Receive a return equal to S&P GSCI Sugar Excess Return A141 Strategy and pay the product of (i) 0.37% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 20,935,428 | April-2013 | (1,974,876 | ) | |||||||||||
Receive a return equal to Barclays WTI Crude Roll Yield Excess Return Index and pay the product of (i) 0.35% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | 22,958,954 | April-2013 | 267,399 | ||||||||||||
Receive a return equal to Barclays Brent Crude Roll Yield Excess Return Index and pay the product of (i) 0.35% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | 13,949,580 | April-2013 | 99,045 | ||||||||||||
Receive a return equal to Barclays Heating Oil Roll Yield Excess Return Index and pay the product of (i) 0.37% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | 13,038,129 | April-2013 | 201,934 | ||||||||||||
Receive a return equal to Barclays Capital Live Cattle 3 Month Excess Return Index and pay the product of (i) 0.30% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | 49,493,100 | April-2013 | 2,518,497 | ||||||||||||
Receive a return equal to Barclays Commodity Strategy 1606 and pay the product of (i) 0.41% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | 18,941,070 | April-2013 | (887,734 | ) | |||||||||||
Receive a return equal to Dow Jones-UBS Gold Index and pay the product of (i) 0.20% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Merrill Lynch | 79,368,507 | November-2012 | (365,535 | ) | |||||||||||
Receive a return equal to Dow Jones-UBS Silver Sub-Index SM and pay the product of (i) 0.20% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | 43,735,381 | April-2013 | (588,445 | ) | |||||||||||
Receive a return equal to Merrill Lynch Commodity index eXtra Aluminum Annual Excess Return Index and pay the product of (i) 0.28% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Merrill Lynch | 18,175,161 | May-2013 | 169,074 | ||||||||||||
Receive a return equal to Merrill Lynch Commodity index eXtra XLP Copper Excess Return Index and pay the product of (i) 0.22% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Merrill Lynch | 38,733,492 | November-2012 | 1,695,159 | ||||||||||||
Receive a return equal to S&P GSCI Brent Crude Oil 1 Month Forward Index Excess Return and pay the product of (i) 0.12% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 21,627,827 | April-2013 | (410,643 | ) | |||||||||||
Receive a return equal to S&P GSCI Crude Oil 1 Month Forward Index Excess Return and pay the product of (i) 0.10% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 3,349,969 | April-2013 | 57,489 | ||||||||||||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
5 Invesco Balanced-Risk Commodity Strategy Fund
Unrealized | ||||||||||||||||
Notional | Termination | Appreciation | ||||||||||||||
Swap Agreements | Counterparty | Amount | Date | (Depreciation) | ||||||||||||
Receive a return equal to S&P GSCI Heating Oil 1 Month Forward Index Excess Return and pay the product of (i) 0.15% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 22,515,205 | April-2013 | $ | 153,229 | |||||||||||
Subtotal Long Agreements | $ | 6,442,465 | ||||||||||||||
Short Agreements | ||||||||||||||||
Pay a floating rate equal to Barclays Live Cattle Roll Yield Excess Return Index and receive the product of (i) 0.47% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Barclays Capital | $ | 28,650,297 | April-2013 | 493,329 | |||||||||||
Pay a floating rate equal to S&P GSCI Gasoil 1 Month Forward Index Excess Return and receive the product of (i) 0.10% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 39,506,946 | April-2013 | (232,142 | ) | |||||||||||
Pay a floating rate equal to S&P GSCI Unleaded Gasoline 1 Month Forward Index Excess Return and receive the product of (i) 0.10% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 6,481,101 | April-2013 | 177,772 | ||||||||||||
Pay a floating rate equal to S&P GSCI Natural Gas 1 Month Forward Index Excess Return and receive the product of (i) 0.10% of the Notional Amount multiplied by (ii) days in the period divided by 365. | Goldman Sachs | 1,488,123 | April-2013 | (21,216 | ) | |||||||||||
Subtotal Short Agreements | $ | 417,743 | ||||||||||||||
Total | $ | 6,860,208 | ||||||||||||||
Risk Allocation
By Complex
as of April 30, 2012
Contribution | ||||
Industrial Metals | 30.9 | % | ||
Energy | 27.5 | |||
Precious Metals | 23.3 | |||
Agriculture | 18.3 | |||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
6 Invesco Balanced-Risk Commodity Strategy Fund
Consolidated Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $320,078,098) | $ | 318,489,135 | ||
Investments in affiliated money market funds, at value and cost | 121,772,998 | |||
Total investments, at value (Cost $441,851,096) | 440,262,133 | |||
Receivable for: | ||||
Deposits with brokers for open futures contracts | 12,275,000 | |||
Fund shares sold | 4,739,970 | |||
Dividends | 23,500 | |||
Unrealized appreciation on swap agreements | 6,860,208 | |||
Investment for trustee deferred compensation and retirement plans | 4,900 | |||
Other assets | 17,092 | |||
Total assets | 464,182,803 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 168,019 | |||
Variation margin | 92,351 | |||
Accrued fees to affiliates | 102,335 | |||
Accrued other operating expenses | 34,239 | |||
Trustee deferred compensation and retirement plans | 9,198 | |||
Total liabilities | 406,142 | |||
Net assets applicable to shares outstanding | $ | 463,776,661 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 435,354,810 | ||
Undistributed net investment income (loss) | (7,293,241 | ) | ||
Undistributed net realized gain | 29,212,940 | |||
Unrealized appreciation | 6,502,152 | |||
$ | 463,776,661 | |||
Net Assets: | ||||
Class A | $ | 22,534,461 | ||
Class B | $ | 236,714 | ||
Class C | $ | 2,560,903 | ||
Class R | $ | 183,213 | ||
Class Y | $ | 126,058,866 | ||
Institutional Class | $ | 312,202,504 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 2,022,063 | |||
Class B | 21,456 | |||
Class C | 232,272 | |||
Class R | 16,460 | |||
Class Y | 11,246,078 | |||
Institutional Class | 27,862,519 | |||
Class A: | ||||
Net asset value per share | $ | 11.14 | ||
Maximum offering price per share (Net asset value of $11.14 divided by 94.50%) | $ | 11.79 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 11.03 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 11.03 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 11.13 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 11.21 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 11.21 | ||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
7 Invesco Balanced-Risk Commodity Strategy Fund
Consolidated Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends | $ | 14,506 | ||
Dividends from affiliated money market funds | 76,595 | |||
Interest | 53,260 | |||
Total investment income | 144,361 | |||
Expenses: | ||||
Advisory fees | 1,504,336 | |||
Administrative services fees | 57,922 | |||
Custodian fees | 5,491 | |||
Distribution fees: | ||||
Class A | 18,774 | |||
Class B | 1,306 | |||
Class C | 10,329 | |||
Class R | 319 | |||
Transfer agent fees — A, B, C, R and Y | 24,830 | |||
Transfer agent fees — Institutional | 363 | |||
Trustees’ and officers’ fees and benefits | 15,524 | |||
Other | 112,333 | |||
Total expenses | 1,751,527 | |||
Less: Fees waived and expenses reimbursed | (328,965 | ) | ||
Net expenses | 1,422,562 | |||
Net investment income (loss) | (1,278,201 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from: | ||||
Investment securities | 6,801,956 | |||
Futures contracts | 7,913,160 | |||
Swap agreements | 14,083,643 | |||
28,798,759 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (10,295,850 | ) | ||
Futures contracts | 1,645,088 | |||
Swap agreements | 847,070 | |||
(7,803,692 | ) | |||
Net realized and unrealized gain | 20,995,067 | |||
Net increase in net assets resulting from operations | $ | 19,716,866 | ||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
8 Invesco Balanced-Risk Commodity Strategy Fund
Consolidated Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the period November 30, 2010 (commencement date) to October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (1,278,201 | ) | $ | (1,099,593 | ) | ||
Net realized gain (loss) | 28,798,759 | (10,997,806 | ) | |||||
Change in net unrealized appreciation (depreciation) | (7,803,692 | ) | 14,305,844 | |||||
Net increase in net assets resulting from operations | 19,716,866 | 2,208,445 | ||||||
Share transactions–net: | ||||||||
Class A | 13,959,963 | 8,314,165 | ||||||
Class B | (58,198 | ) | 303,350 | |||||
Class C | 603,254 | 2,020,085 | ||||||
Class R | 63,763 | 119,570 | ||||||
Class Y | 60,330,486 | 63,364,005 | ||||||
Institutional Class | 197,371,917 | 95,458,990 | ||||||
Net increase in net assets resulting from share transactions | 272,271,185 | 169,580,165 | ||||||
Net increase in net assets | 291,988,051 | 171,788,610 | ||||||
Net assets: | ||||||||
Beginning of period | 171,788,610 | — | ||||||
End of period (includes undistributed net investment income (loss) of $(7,293,241) and $(6,015,040), respectively) | $ | 463,776,661 | $ | 171,788,610 | ||||
Notes to Consolidated Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Balanced-Risk Commodity Strategy Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 consolidated 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 will seek to gain exposure to the commodity markets primarily through investments in the Invesco Cayman Commodity Fund III Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund to invest in commodity-linked derivatives. The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is to provide total return.
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 consolidated 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. 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. |
9 Invesco Balanced-Risk Commodity Strategy 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. | ||
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 economic 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 consolidated 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. 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 Consolidated 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 Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated 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 Consolidated Statement of Operations and Consolidated Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Consolidated 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 Consolidated 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. |
10 Invesco Balanced-Risk Commodity Strategy Fund
D. | Distributions — Distributions from income and net realized capital gain, if any, are generally declared and 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 consolidated financial statements. | |
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods. | ||
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 financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation. | |
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 consolidated financial statements are released to print. | ||
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of performance of their duties to the Fund and/or the Subsidiary, respectively. 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. | Structured Securities — The Fund may invest in structured securities. Structured securities are a type of derivative security whose value is determined by reference to changes in the value of underlying securities, currencies, interest rates, commodities, indices or other financial indicators (“reference instruments”). Most structured securities are fixed-income securities that have maturities of three years or less. Structured securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying reference instrument appreciates) and may have return characteristics similar to direct investments in the underlying reference instrument. | |
Structured securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference instruments. In addition to the credit risk of structured securities and the normal risks of price changes in response to changes in interest rates, the principal amount of structured notes or indexed securities may decrease as a result of changes in the value of the underlying reference instruments. Changes in the daily value of structured securities are recorded as unrealized gains (losses) in the Consolidated Statement of Operations. When the structured securities mature or are sold, the Fund recognizes a realized gain (loss) on the Consolidated Statement of Operations. | ||
J. | 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 Consolidated 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 Consolidated 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 Consolidated Statement of Assets and Liabilities. | |
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 |
11 Invesco Balanced-Risk Commodity Strategy Fund
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. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. | ||
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 Consolidated 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 Consolidated 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 Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated 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 Consolidated 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. | Other Risks — The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in exchange traded funds. The Subsidiary, unlike the Fund, may invest without limitation in commodities, commodity-linked derivatives and other securities, such as exchange traded notes, that may provide leverage and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. | |
The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly. | ||
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. |
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 | 1 | .05% | ||
Next $250 million | 1 | .025% | ||
Next $500 million | 1 | .00% | ||
Next $1.5 billion | 0 | .975% | ||
Next $2.5 billion | 0 | .95% | ||
Next $2.5 billion | 0 | .925% | ||
Next $2.5 billion | 0 | .90% | ||
Over $10 billion | 0 | .875% | ||
12 Invesco Balanced-Risk Commodity Strategy 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 Canada 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 Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s average daily net assets as set forth in the table above.
The Adviser has contractually agreed, through at least February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual 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 1.22%, 1.97%, 1.97%, 1.47%, 0.97% and 0.97% 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 total annual 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, including litigation expenses; 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 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 invest. As a result, total annual fund operating expenses after expense reimbursement 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 Acquired Fund Fees and Expenses are included in the total return of the Fund. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on February 28, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
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 six months ended April 30, 2012, the Adviser waived advisory fees of $303,772 and reimbursed class level expenses of $3,639, $63, $501, $30, $20,597 and $363 of Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively.
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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Consolidated 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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Consolidated 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 six months ended April 30, 2012, expenses incurred under the Plans are shown in the Consolidated 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $10,521 in front-end sales commissions from the sale of Class A shares and $0, $134 and $99 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 the Adviser, 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. |
13 Invesco Balanced-Risk Commodity Strategy Fund
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 April 30, 2012. 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 consolidated financial statements may materially differ from the value received upon actual sale of those investments.
During the six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
U.S. Treasury Securities | $ | — | $ | 286,409,858 | $ | — | $ | 286,409,858 | ||||||||
Commodity-Linked Securities | 14,483,827 | — | 14,483,827 | |||||||||||||
Exchange Traded Funds | 17,595,450 | — | — | 17,595,450 | ||||||||||||
Money Market Funds | 121,772,998 | — | — | 121,772,998 | ||||||||||||
139,368,448 | 300,893,685 | — | 440,262,133 | |||||||||||||
Futures* | 1,230,907 | — | — | 1,230,907 | ||||||||||||
Swap Agreements* | — | 6,860,208 | — | 6,860,208 | ||||||||||||
Total Investments | $ | 140,599,355 | $ | 307,753,893 | $ | — | $ | 448,353,248 | ||||||||
* | Unrealized appreciation |
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Commodity risk | ||||||||
Futures Contracts(a) | $ | 3,086,423 | $ | (1,855,516 | ) | |||
Commodity risk | ||||||||
Swap Contracts(b) | 11,340,799 | (4,480,591 | ) | |||||
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Consolidated Statement of Assets & Liabilities. | |
(b) | Values are disclosed on the Consolidated Statement of Assets and Liabilities under the Unrealized appreciation on swap agreements. |
Effect of Derivative Instruments for the six months ended April 30, 2012
The table below summarizes the gains on derivative instruments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain on | ||||||||
Consolidated Statement of Operations | ||||||||
Swap | ||||||||
Futures* | Agreements* | |||||||
Realized Gain | ||||||||
Commodity risk | $ | 7,913,160 | $ | 14,083,643 | ||||
Change in Unrealized Appreciation | ||||||||
Commodity risk | 1,645,088 | 847,070 | ||||||
Total | $ | 9,558,248 | $ | 14,930,713 | ||||
* | The average notional value of futures and swap agreements outstanding during the period was $111,528,643 and $283,695,670, 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.
14 Invesco Balanced-Risk Commodity Strategy Fund
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
The Fund did not have a capital loss carryforward as of October 31, 2011.
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 six months ended April 30, 2012 was $43,142,355 and $27,683,067, 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 | $ | 67,037 | ||
Aggregate unrealized (depreciation) of investment securities | (1,656,000 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (1,588,963 | ) | |
Cost of investments for tax purposes is the same for tax and financial statement purposes. |
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||
November 30, 2010 | ||||||||||||||||
Six months ended | (commencement date) to | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 1,576,596 | $ | 17,074,139 | 956,611 | $ | 10,742,667 | ||||||||||
Class B | 2,739 | 29,418 | 33,165 | 370,460 | ||||||||||||
Class C | 104,585 | 1,120,947 | 229,561 | 2,628,093 | ||||||||||||
Class R | 6,576 | 71,636 | 10,613 | 119,654 | ||||||||||||
Class Y | 7,475,160 | 80,200,938 | 5,968,110 | 66,912,642 | ||||||||||||
Institutional Class | 18,833,418 | 206,078,971 | 12,594,602 | 126,334,880 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 3,201 | 35,606 | 953 | 10,492 | ||||||||||||
Class B | (3,230 | ) | (35,606 | ) | (957 | ) | (10,492 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (292,800 | ) | (3,149,782 | ) | (222,498 | ) | (2,438,994 | ) | ||||||||
Class B | (4,828 | ) | (52,010 | ) | (5,433 | ) | (56,618 | ) | ||||||||
Class C | (48,350 | ) | (517,693 | ) | (53,524 | ) | (608,008 | ) | ||||||||
Class R | (720 | ) | (7,873 | ) | (9 | ) | (84 | ) | ||||||||
Class Y | (1,870,529 | ) | (19,870,452 | ) | (326,663 | ) | (3,548,637 | ) | ||||||||
Institutional Class | (798,965 | ) | (8,707,054 | ) | (2,766,536 | ) | (30,875,890 | ) | ||||||||
Net increase in share activity | 24,982,853 | $ | 272,271,185 | 16,417,995 | $ | 169,580,165 | ||||||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 67% 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 Fund has no knowledge as to whether all or any portion of the shares owned of record by this entity is also owned beneficially. | |
In addition, 20% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are mutual funds that are advised by Invesco. |
15 Invesco Balanced-Risk Commodity Strategy Fund
NOTE 10—Consolidated 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 on | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||
Net asset | Net | securities | net assets | assets without | investment | |||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | Net asset | Net assets, | with fee waivers | fee waivers | income (loss) to | ||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | value, end | Total | end of period | and/or expenses | and/or expenses | average | Portfolio | ||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | ||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 10.42 | $ | (0.06 | ) | $ | 0.78 | $ | 0.72 | $ | 11.14 | 6.91 | % | $ | 22,534 | 1.22 | %(e) | 1.48 | %(e) | (1.12 | )%(e) | 114 | % | |||||||||||||||||||||
Eleven months ended 10/31/11(d) | 10.00 | (0.12 | ) | 0.54 | 0.42 | 10.42 | 4.20 | 7,659 | 1.22 | (f) | 1.54 | (f) | (1.13 | )(f) | 0 | |||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.36 | (0.10 | ) | 0.77 | 0.67 | 11.03 | 6.47 | 237 | 1.97 | (e) | 2.23 | (e) | (1.87 | )(e) | 114 | |||||||||||||||||||||||||||||
Eleven months ended 10/31/11(d) | 10.00 | (0.19 | ) | 0.55 | 0.36 | 10.36 | 3.60 | 277 | 1.97 | (f) | 2.29 | (f) | (1.88 | )(f) | 0 | |||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.35 | (0.10 | ) | 0.78 | 0.68 | 11.03 | 6.57 | 2,561 | 1.97 | (e) | 2.23 | (e) | (1.87 | )(e) | 114 | |||||||||||||||||||||||||||||
Eleven months ended 10/31/11(d) | 10.00 | (0.19 | ) | 0.54 | 0.35 | 10.35 | 3.50 | 1,822 | 1.97 | (f) | 2.29 | (f) | (1.88 | )(f) | 0 | |||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.42 | (0.07 | ) | 0.78 | 0.71 | 11.13 | 6.81 | 183 | 1.47 | (e) | 1.73 | (e) | (1.37 | )(e) | 114 | |||||||||||||||||||||||||||||
Eleven months ended 10/31/11(d) | 10.00 | (0.14 | ) | 0.56 | 0.42 | 10.42 | 4.20 | 111 | 1.47 | (f) | 1.79 | (f) | (1.38 | )(f) | 0 | |||||||||||||||||||||||||||||
Class Y | �� | |||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.47 | (0.05 | ) | 0.79 | 0.74 | 11.21 | 7.07 | 126,059 | 0.97 | (e) | 1.23 | (e) | (0.87 | )(e) | 114 | |||||||||||||||||||||||||||||
Eleven months ended 10/31/11(d) | 10.00 | (0.09 | ) | 0.56 | 0.47 | 10.47 | 4.70 | 59,063 | 0.97 | (f) | 1.29 | (f) | (0.88 | )(f) | 0 | |||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.47 | (0.05 | ) | 0.79 | 0.74 | 11.21 | 7.07 | 312,203 | 0.97 | (e) | 1.18 | (e) | (0.87 | )(e) | 114 | |||||||||||||||||||||||||||||
Eleven months ended 10/31/11(d) | 10.00 | (0.09 | ) | 0.56 | 0.47 | 10.47 | 4.70 | 102,857 | 0.97 | (f) | 1.21 | (f) | (0.88 | )(f) | 0 | |||||||||||||||||||||||||||||
(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) | Commencement date of November 30, 2010. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $15,102, $263, $2,077, $128, $85,477 and $185,998 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(f) | Annualized. |
NOTE 11—Significant Event
The Board of Trustees of the Fund 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 Commodities Strategy Fund (the “Target Fund”) in exchange for shares of the Fund.
The Agreement was approved by the Target Fund’s shareholders on May 25, 2012 and the reorganization was consummated on June 11, 2012. Upon closing of the reorganization, shareholders of the Target Fund received a corresponding class of shares of the Fund in exchange for their shares of the Target Fund and the Target Fund liquidated and ceased operations.
16 Invesco Balanced-Risk Commodity Strategy 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,037.20 | $ | 6.18 | $ | 1,018.80 | $ | 6.12 | 1.22 | % | ||||||||||||||||||
B | 1,000.00 | 1,034.70 | 9.97 | 1,015.07 | 9.87 | 1.97 | ||||||||||||||||||||||||
C | 1,000.00 | 1,035.70 | 9.97 | 1,015.07 | 9.87 | 1.97 | ||||||||||||||||||||||||
R | 1,000.00 | 1,036.30 | 7.44 | 1,017.55 | 7.37 | 1.47 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,038.00 | 4.92 | 1,020.04 | 4.87 | 0.97 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,038.00 | 4.92 | 1,020.04 | 4.87 | 0.97 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
17 Invesco Balanced-Risk Commodity Strategy Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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. |
BRCS-SAR-1 Invesco Distributors, Inc.
Invesco China Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: AACFX § B: ABCFX § C: CACFX § Y: AMCYX § Institutional: IACFX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Schedule of Investments | |
6 | Financial Statements | |
8 | Notes to Financial Statements | |
14 | Financial Highlights | |
15 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 4.16 | % | ||
Class B Shares | 3.81 | |||
Class C Shares | 3.76 | |||
Class Y Shares | 4.34 | |||
Institutional Class Shares | 4.44 | |||
MSCI EAFE Index▼ (Broad Market Index) | 2.44 | |||
MSCI China 10/40 Indexn (Style-Specific Index) | 6.77 | |||
Lipper China Region Funds Index▼ (Peer Group Index) | 4.11 | |||
Source(s): ▼Lipper Inc.; nInvesco, Bloomberg L.P. |
The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East.
The MSCI China 10/40 Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in China, taking into consideration the concentration constraints applicable to funds registered for sale in Europe pursuant to the UCITS III Directive.
The Lipper China Region Funds Index is an unmanaged index considered representative of China region funds tracked by Lipper.
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.
Average Annual Total Returns
As of 4/30/12, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (3/31/06) | 10.32 | % | ||||||
5 Years | 3.81 | |||||||
1 Year | -22.74 | |||||||
Class B Shares | ||||||||
Inception (3/31/06) | 10.54 | % | ||||||
5 Years | 3.91 | |||||||
1 Year | -22.91 | |||||||
Class C Shares | ||||||||
Inception (3/31/06) | 10.51 | % | ||||||
5 Years | 4.21 | |||||||
1 Year | -19.65 | |||||||
Class Y Shares | ||||||||
Inception | 11.51 | % | ||||||
5 Years | 5.18 | |||||||
1 Year | -18.00 | |||||||
Institutional Class Shares | ||||||||
Inception (3/31/06) | 11.88 | % | ||||||
5 Years | 5.55 | |||||||
1 Year | -17.82 |
Average Annual Total Returns
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (3/31/06) | 10.10 | % | ||||||
5 Years | 4.53 | |||||||
1 Year | -21.65 | |||||||
Class B Shares | ||||||||
Inception (3/31/06) | 10.24 | % | ||||||
5 Years | 4.62 | |||||||
1 Year | -21.81 | |||||||
Class C Shares | ||||||||
Inception (3/31/06) | 10.31 | % | ||||||
5 Years | 4.92 | |||||||
1 Year | -18.50 | |||||||
Class Y Shares | ||||||||
Inception | 11.30 | % | ||||||
5 Years | 5.89 | |||||||
1 Year | -16.85 | |||||||
Institutional Class Shares | ||||||||
Inception (3/31/06) | 11.67 | % | ||||||
5 Years | 6.26 | |||||||
1 Year | -16.62 |
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 share 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 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 1.67%, 2.42%, 2.42%, 1.42% and 1.23%, 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 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.
2 Invesco China Fund
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 Invesco China Fund
Schedule of Investments(a)
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–96.61%(b) | ||||||||
Aerospace & Defense–1.09% | ||||||||
AviChina Industry & Technology Co. Ltd.–Class H | 3,384,000 | $ | 1,555,297 | |||||
Airport Services–0.52% | ||||||||
Beijing Capital International Airport Co. Ltd.–Class H(c) | 1,140,000 | 744,954 | ||||||
Apparel Retail–0.85% | ||||||||
Belle International Holdings Ltd. (Hong Kong) | 618,000 | 1,207,167 | ||||||
Auto Parts & Equipment–0.92% | ||||||||
Minth Group Ltd. | 1,044,000 | 1,318,304 | ||||||
Automobile Manufacturers–2.80% | ||||||||
Brilliance China Automotive Holdings Ltd. (Hong Kong)(c) | 1,584,000 | 1,710,822 | ||||||
Dongfeng Motor Group Co. Ltd.–Class H | 836,000 | 1,633,911 | ||||||
Geely Automobile Holdings Ltd. | 1,765,000 | 653,495 | ||||||
3,998,228 | ||||||||
Automotive Retail–0.68% | ||||||||
Baoxin Auto Group Ltd.(c) | 851,000 | 971,938 | ||||||
Coal & Consumable Fuels–3.94% | ||||||||
China Shenhua Energy Co. Ltd.–Class H | 1,005,500 | 4,464,656 | ||||||
Inner Mongolia Yitai Coal Co., Ltd.–Class B | 201,610 | 1,153,145 | ||||||
5,617,801 | ||||||||
Commodity Chemicals–0.61% | ||||||||
Lee & Man Holding Ltd. (Hong Kong) | 1,100,000 | 874,661 | ||||||
Communications Equipment–0.95% | ||||||||
ZTE Corp.–Class H | 563,600 | 1,360,456 | ||||||
Computer Hardware–0.81% | ||||||||
Lenovo Group Ltd.(c) | 1,204,000 | 1,154,092 | ||||||
Construction & Farm Machinery & Heavy Trucks–1.52% | ||||||||
CSR Corp Ltd.–Class H | 1,233,000 | 989,798 | ||||||
Zoomlion Heavy Industry Science & Technology Co., Ltd.–Class H | 793,800 | 1,176,299 | ||||||
2,166,097 | ||||||||
Construction Materials–2.93% | ||||||||
China National Building Material Co. Ltd.–Class H | 986,000 | 1,321,711 | ||||||
China Resources Cement Holdings Ltd. (Hong Kong) | 2,294,000 | 1,812,582 | ||||||
CSG Holding Co. Ltd.–Class B | 1,362,425 | 1,048,343 | ||||||
4,182,636 | ||||||||
Distillers & Vintners–0.99% | ||||||||
JLF Investment Co. Ltd. (Hong Kong) | 22,336,000 | 1,413,170 | ||||||
Diversified Banks–19.11% | ||||||||
Bank of China Ltd.–Class H | 12,096,600 | 5,042,919 | ||||||
Bank of Communications Co. Ltd.–Class H | 1,892,000 | 1,455,685 | ||||||
China Construction Bank Corp.–Class H | 12,965,290 | 10,047,820 | ||||||
China Merchants Bank Co., Ltd.–Class H | 914,500 | 1,972,907 | ||||||
Industrial & Commercial Bank of China Ltd.–Class H | 13,168,940 | 8,751,898 | ||||||
27,271,229 | ||||||||
Diversified Metals & Mining–2.34% | ||||||||
China Metal Recycling Holdings Ltd. (Hong Kong) | 2,294,400 | 2,619,637 | ||||||
Jiangxi Copper Co. Ltd.–Class H | 299,000 | 719,232 | ||||||
3,338,869 | ||||||||
Environmental & Facilities Services–1.23% | ||||||||
China Everbright International Ltd. (Hong Kong) | 3,726,000 | 1,759,955 | ||||||
Hotels, Resorts & Cruise Lines–1.77% | ||||||||
Ctrip.com International, Ltd.–ADR(c) | 65,820 | 1,426,320 | ||||||
Shanghai Jinjiang International Hotels Development Co., Ltd.–Class B | 790,527 | 1,105,947 | ||||||
2,532,267 | ||||||||
Household Appliances–1.01% | ||||||||
Haier Electronics Group Co. Ltd. (Hong Kong)(c) | 1,386,000 | 1,442,498 | ||||||
Household Products–1.80% | ||||||||
Vinda International Holdings Ltd. | 1,444,000 | 2,566,344 | ||||||
Hypermarkets & Super Centers–0.72% | ||||||||
Lianhua Supermarket Holdings Ltd.–Class H | 976,000 | 1,020,205 | ||||||
Independent Power Producers & Energy Traders–0.69% | ||||||||
Datang International Power Generation Co. Ltd.–Class H | 2,782,000 | 987,193 | ||||||
Integrated Oil & Gas–8.13% | ||||||||
China Petroleum and Chemical Corp. (Sinopec)–Class H | 4,150,000 | 4,402,743 | ||||||
PetroChina Co. Ltd.–Class H | 4,844,000 | 7,204,161 | ||||||
11,606,904 | ||||||||
Integrated Telecommunication Services–1.17% | ||||||||
China Communication Services Corp. Ltd.–Class H | 1,435,600 | 736,404 | ||||||
China Unicom (Hong Kong) Ltd. (Hong Kong) | 532,000 | 927,522 | ||||||
1,663,926 | ||||||||
Internet Software & Services–6.52% | ||||||||
Baidu, Inc.–ADR(c) | 12,126 | 1,609,120 | ||||||
Tencent Holdings Ltd. | 246,100 | 7,702,756 | ||||||
9,311,876 | ||||||||
Life & Health Insurance–6.77% | ||||||||
AIA Group Ltd. (Hong Kong) | 481,200 | 1,703,512 | ||||||
China Life Insurance Co., Ltd.–Class H | 2,294,000 | 6,117,103 | ||||||
Ping An Insurance (Group) Co. of China Ltd.–Class H | 222,000 | 1,845,891 | ||||||
9,666,506 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco China Fund
Shares | Value | |||||||
Marine–1.25% | ||||||||
China Shipping Container Lines Co. Ltd.–Class H(c) | 1,496,000 | $ | 484,547 | |||||
China Shipping Development Co. Ltd.–Class H | 2,012,000 | 1,299,198 | ||||||
1,783,745 | ||||||||
Marine Ports & Services–1.03% | ||||||||
Cosco Pacific Ltd. (Hong Kong) | 1,012,000 | 1,466,124 | ||||||
Oil & Gas Exploration & Production–7.02% | ||||||||
CNOOC Ltd. | 3,404,000 | 7,213,869 | ||||||
Kunlun Energy Co. Ltd. (Hong Kong) | 1,600,000 | 2,806,514 | ||||||
10,020,383 | ||||||||
Packaged Foods & Meats–3.72% | ||||||||
China Foods Ltd. (Hong Kong) | 3,300,000 | 3,572,810 | ||||||
China Mengniu Dairy Co. Ltd. | 562,000 | 1,730,499 | ||||||
5,303,309 | ||||||||
Paper Products–0.33% | ||||||||
Lee & Man Paper Manufacturing Ltd. | 1,000,000 | 466,384 | ||||||
Personal Products–2.93% | ||||||||
Hengan International Group Co. Ltd. | 396,000 | 4,180,616 | ||||||
Real Estate Development–1.71% | ||||||||
Country Garden Holdings Co. | 3,697,000 | 1,596,723 | ||||||
KWG Property Holding Ltd. | 1,287,500 | 844,662 | ||||||
2,441,385 | ||||||||
Restaurants–1.43% | ||||||||
Ajisen (China) Holdings Ltd. (Hong Kong) | 1,826,000 | 2,039,962 | ||||||
Steel–0.67% | ||||||||
China Vanadium Titano-Magnetite Mining Co. Ltd. (Hong Kong) | 4,236,000 | 960,744 | ||||||
Textiles–0.89% | ||||||||
Shenzhou International Group (Hong Kong) | 675,000 | 1,265,944 | ||||||
Wireless Telecommunication Services–5.76% | ||||||||
China Mobile Ltd. (Hong Kong) | 742,500 | 8,225,437 | ||||||
Total Common Stocks & Other Equity Interests (Cost $114,745,209) | 137,886,606 | |||||||
Money Market Funds–3.34% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 2,384,735 | 2,384,735 | ||||||
Premier Portfolio–Institutional Class(d) | 2,384,735 | 2,384,735 | ||||||
Total Money Market Funds (Cost $4,769,470) | 4,769,470 | |||||||
TOTAL INVESTMENTS–99.95% (Cost $119,514,679) | 142,656,076 | |||||||
OTHER ASSETS LESS LIABILITIES–0.05% | 77,962 | |||||||
NET ASSETS–100.00% | $ | 142,734,038 | ||||||
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) | Country of issuer and/or credit risk exposure listed in Common Stocks & Other Equity Interests has been determined to be China unless otherwise noted. | |
(c) | Non-income producing security. | |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets
as of April 30, 2012
Financials | 27.6 | % | ||
Energy | 19.1 | |||
Consumer Discretionary | 10.4 | |||
Consumer Staples | 10.1 | |||
Information Technology | 8.3 | |||
Telecommunication Services | 6.9 | |||
Materials | 6.9 | |||
Industrials | 6.6 | |||
Utilities | 0.7 | |||
Money Market Funds Plus Other Assets Less Liabilities | 3.4 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco China Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $114,745,209) | $ | 137,886,606 | ||
Investments in affiliated money market funds, at value and cost | 4,769,470 | |||
Total investments, at value (Cost $119,514,679) | 142,656,076 | |||
Receivable for: | ||||
Investments sold | 464,416 | |||
Fund shares sold | 233,232 | |||
Dividends | 21,660 | |||
Investment for trustee deferred compensation and retirement plans | 15,328 | |||
Other assets | 38,703 | |||
Total assets | 143,429,415 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 448,399 | |||
Accrued fees to affiliates | 135,987 | |||
Accrued other operating expenses | 78,687 | |||
Trustee deferred compensation and retirement plans | 32,304 | |||
Total liabilities | 695,377 | |||
Net assets applicable to shares outstanding | $ | 142,734,038 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 192,740,209 | ||
Undistributed net investment income (loss) | (1,454,231 | ) | ||
Undistributed net realized gain (loss) | (71,693,457 | ) | ||
Unrealized appreciation | 23,141,517 | |||
$ | 142,734,038 | |||
Net Assets: | ||||
Class A | $ | 94,617,914 | ||
Class B | $ | 12,191,359 | ||
Class C | $ | 29,788,024 | ||
Class Y | $ | 5,313,171 | ||
Institutional Class | $ | 823,570 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 5,214,783 | |||
Class B | 689,031 | |||
Class C | 1,686,323 | |||
Class Y | 292,487 | |||
Institutional Class | 45,332 | |||
Class A: | ||||
Net asset value per share | $ | 18.14 | ||
Maximum offering price per share | ||||
(Net asset value of $18.14 divided by 94.50%) | $ | 19.20 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 17.69 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 17.66 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 18.17 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 18.17 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco China Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $2,297) | $ | 33,012 | ||
Dividends from affiliated money market funds | 2,032 | |||
Total investment income | 35,044 | |||
Expenses: | ||||
Advisory fees | 686,225 | |||
Administrative services fees | 24,863 | |||
Custodian fees | 52,195 | |||
Distribution fees: | ||||
Class A | 120,322 | |||
Class B | 64,903 | |||
Class C | 151,790 | |||
Transfer agent fees — A, B, C and Y | 244,797 | |||
Transfer agent fees — Institutional | 394 | |||
Trustees’ and officers’ fees and benefits | 15,559 | |||
Other | 96,143 | |||
Total expenses | 1,457,191 | |||
Less: Fees waived and expense offset arrangement(s) | (3,573 | ) | ||
Net expenses | 1,453,618 | |||
Net investment income (loss) | (1,418,574 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (4,165,704 | ) | ||
Foreign currencies | (12,474 | ) | ||
(4,178,178 | ) | |||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 10,929,781 | |||
Foreign currencies | (695 | ) | ||
10,929,086 | ||||
Net realized and unrealized gain | 6,750,908 | |||
Net increase in net assets resulting from operations | $ | 5,332,334 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco China Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (1,418,574 | ) | $ | 733,216 | |||
Net realized gain (loss) | (4,178,178 | ) | 10,339,565 | |||||
Change in net unrealized appreciation (depreciation) | 10,929,086 | (54,328,995 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 5,332,334 | (43,256,214 | ) | |||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (587,279 | ) | (296,385 | ) | ||||
Class Y | (55,566 | ) | (51,203 | ) | ||||
Institutional Class | (9,144 | ) | (5,491 | ) | ||||
Total distributions from net investment income | (651,989 | ) | (353,079 | ) | ||||
Share transactions–net: | ||||||||
Class A | (10,665,126 | ) | (36,369,760 | ) | ||||
Class B | (2,250,385 | ) | (5,874,911 | ) | ||||
Class C | (3,585,268 | ) | (18,007,653 | ) | ||||
Class Y | (1,281,414 | ) | (3,341,289 | ) | ||||
Institutional Class | 28,230 | (29,230 | ) | |||||
Net increase (decrease) in net assets resulting from share transactions | (17,753,963 | ) | (63,622,843 | ) | ||||
Net increase (decrease) in net assets | (13,073,618 | ) | (107,232,136 | ) | ||||
Net assets: | ||||||||
Beginning of period | 155,807,656 | 263,039,792 | ||||||
End of period (includes undistributed net investment income (loss) of $(1,454,231) and $616,332, respectively) | $ | 142,734,038 | $ | 155,807,656 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco China Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 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. 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 |
8 Invesco China 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. 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 economic 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 declared and 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. |
9 Invesco China 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. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
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. | |
L. | Other Risks — Investing in a single-country mutual fund involves greater risk than investing in a more diversified fund due to lack of exposure to other countries. The political and economic conditions and changes in regulatory, tax or economic policy in a single country could significantly affect the market in that country and in surrounding or related countries. | |
Investing in developing countries can add additional risk, such as high rates of inflation or sharply devalued currencies against the U.S. dollar. | ||
Transaction costs are often higher and there may be delays in settlement procedures. | ||
Certain securities issued by companies in China may be less liquid, harder to sell or more volatile than may U.S. securities. |
10 Invesco China 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .935% | ||
Next $250 million | 0 | .91% | ||
Next $500 million | 0 | .885% | ||
Next $1.5 billion | 0 | .86% | ||
Next $2.5 billion | 0 | .835% | ||
Next $2.5 billion | 0 | .81% | ||
Next $2.5 billion | 0 | .785% | ||
Over $10 billion | 0 | .76% | ||
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 Canada 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 February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual 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 2.25%, 3.00%, 3.00%, 2.00% and 2.00% 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 operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; 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 February 28, 2013. The Advisor did not waive fees and/or reimburse expenses under this 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 six months ended April 30, 2012, the Adviser waived advisory fees of $2,981.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 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 and Class C 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 and 1.00% of the average daily net assets of Class B and Class C 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $8,636 in front-end sales commissions from the sale of Class A shares and $6, $25,328 and $1,496 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 the Adviser, 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
11 Invesco China Fund
(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 April 30, 2012. 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 | |||||||||||||
Consumer Discretionary | $ | 2,532,267 | $ | 12,244,041 | $ | — | $ | 14,776,308 | ||||||||
Consumer Staples | 4,593,015 | 9,890,629 | — | 14,483,644 | ||||||||||||
Energy | 4,464,656 | 22,780,432 | — | 27,245,088 | ||||||||||||
Financials | — | 39,379,120 | — | 39,379,120 | ||||||||||||
Industrials | 744,954 | 8,731,218 | — | 9,476,172 | ||||||||||||
Information Technology | 1,609,120 | 10,217,304 | — | 11,826,424 | ||||||||||||
Materials | 1,048,343 | 8,774,951 | — | 9,823,294 | ||||||||||||
Telecommunication Services | 8,225,437 | 1,663,926 | — | 9,889,363 | ||||||||||||
Utilities | — | 987,193 | — | 987,193 | ||||||||||||
Money Market Funds | 4,769,470 | — | — | 4,769,470 | ||||||||||||
Total Investments | $ | 27,987,262 | $ | 114,668,814 | $ | — | $ | 142,656,076 | ||||||||
* | Transfers occurred between Level 1 and Level 2 due to foreign fair value adjustments. |
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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $592.
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.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
12 Invesco China Fund
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 had a capital loss carryforward as of October 31, 2011, which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
October 31, 2016 | $ | 52,960,397 | ||
October 31, 2017 | 11,347,858 | |||
Total capital loss carryforward | $ | 64,308,255 | ||
* | 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 six months ended April 30, 2012 was $62,996,992 and $87,450,528, 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 | $ | 24,954,131 | ||
Aggregate unrealized (depreciation) of investment securities | (5,019,758 | ) | ||
Net unrealized appreciation of investment securities | $ | 19,934,373 | ||
Cost of investments for tax purposes is $122,721,703. |
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 370,236 | $ | 6,527,589 | 1,373,489 | $ | 28,760,786 | ||||||||||
Class B | 20,692 | 355,068 | 82,369 | 1,694,208 | ||||||||||||
Class C | 71,031 | 1,238,373 | 226,768 | 4,651,952 | ||||||||||||
Class Y | 210,030 | 3,814,093 | 223,439 | 4,551,312 | ||||||||||||
Institutional Class | 3,027 | 52,828 | 10,493 | 211,702 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 33,901 | 575,633 | 12,898 | 277,433 | ||||||||||||
Class Y | 3,100 | 52,646 | 2,126 | 45,798 | ||||||||||||
Institutional Class | 530 | 8,993 | 245 | 5,271 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 32,527 | 569,955 | 53,341 | 1,096,700 | ||||||||||||
Class B | (33,342 | ) | (569,955 | ) | (54,627 | ) | (1,096,700 | ) | ||||||||
Reacquired:(b) | ||||||||||||||||
Class A | (1,056,509 | ) | (18,338,303 | ) | (3,203,589 | ) | (66,504,679 | ) | ||||||||
Class B | (118,789 | ) | (2,035,498 | ) | (323,017 | ) | (6,472,419 | ) | ||||||||
Class C | (283,364 | ) | (4,823,641 | ) | (1,119,622 | ) | (22,659,605 | ) | ||||||||
Class Y | (289,333 | ) | (5,148,153 | ) | (385,703 | ) | (7,938,399 | ) | ||||||||
Institutional Class | (1,941 | ) | (33,591 | ) | (11,608 | ) | (246,203 | ) | ||||||||
Net increase (decrease) in share activity | (1,038,204 | ) | $ | (17,753,963 | ) | (3,112,998 | ) | $ | (63,622,843 | ) | ||||||
(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 Fund 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 $970 and $7,202 allocated among the classes based on relative net assets of each class for the six months ended April 30, 2012 and the year ended October 31, 2011, respectively. |
13 Invesco China 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) on | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | 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)(a) | unrealized)(b) | operations | income | gains | distributions | of period | return(c) | (000s omitted) | absorbed | absorbed | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 17.52 | $ | (0.15 | ) | $ | 0.87 | $ | 0.72 | $ | (0.10 | ) | $ | — | $ | (0.10 | ) | $ | 18.14 | 4.16 | % | $ | 94,618 | 1.78 | %(e) | 1.78 | %(e) | (1.73 | )%(e) | 44 | % | |||||||||||||||||||||||||
Year ended 10/31/11 | 21.93 | 0.12 | (4.49 | ) | (4.37 | ) | (0.04 | ) | — | (0.04 | ) | 17.52 | (19.96 | ) | 102,248 | 1.67 | 1.67 | 0.57 | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 18.18 | 0.06 | 3.83 | 3.89 | (0.14 | ) | — | (0.14 | ) | 21.93 | 21.49 | 166,662 | 1.67 | 1.67 | 0.30 | 100 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.82 | 0.11 | 8.30 | 8.41 | (0.05 | ) | — | (0.05 | ) | 18.18 | 86.04 | 155,689 | 1.89 | 1.90 | 0.83 | 98 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 28.59 | 0.07 | (18.15 | ) | (18.08 | ) | (0.01 | ) | (0.68 | ) | (0.69 | ) | 9.82 | (64.58 | ) | 69,460 | 1.75 | 1.76 | 0.39 | 94 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.98 | 0.01 | 17.70 | 17.71 | (0.10 | ) | — | (0.10 | ) | 28.59 | 162.36 | 385,401 | 1.85 | 1.86 | 0.04 | 102 | ||||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 17.05 | (0.21 | ) | 0.85 | 0.64 | — | — | — | 17.69 | 3.75 | 12,191 | 2.53 | (e) | 2.53 | (e) | (2.48 | )(e) | 44 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 21.46 | (0.04 | ) | (4.37 | ) | (4.41 | ) | — | — | — | 17.05 | (20.55 | ) | 13,988 | 2.42 | 2.42 | (0.18 | ) | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 17.85 | (0.09 | ) | 3.76 | 3.67 | (0.06 | ) | — | (0.06 | ) | 21.46 | 20.61 | 23,945 | 2.42 | 2.42 | (0.45 | ) | 100 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.66 | 0.01 | 8.18 | 8.19 | — | — | — | 17.85 | 84.78 | 23,468 | 2.64 | 2.65 | 0.08 | 98 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 28.32 | (0.06 | ) | (17.92 | ) | (17.98 | ) | — | (0.68 | ) | (0.68 | ) | 9.66 | (64.84 | ) | 11,625 | 2.50 | 2.51 | (0.36 | ) | 94 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.93 | (0.14 | ) | 17.60 | 17.46 | (0.07 | ) | — | (0.07 | ) | 28.32 | 160.56 | 51,222 | 2.60 | 2.61 | (0.71 | ) | 102 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 17.02 | (0.21 | ) | 0.85 | 0.64 | — | — | — | 17.66 | 3.76 | 29,788 | 2.53 | (e) | 2.53 | (e) | (2.48 | )(e) | 44 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 21.43 | (0.04 | ) | (4.37 | ) | (4.41 | ) | — | — | — | 17.02 | (20.58 | ) | 32,319 | 2.42 | 2.42 | (0.18 | ) | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 17.83 | (0.09 | ) | 3.75 | 3.66 | (0.06 | ) | — | (0.06 | ) | 21.43 | 20.58 | 59,812 | 2.42 | 2.42 | (0.45 | ) | 100 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.65 | 0.01 | 8.17 | 8.18 | — | — | — | 17.83 | 84.77 | 54,780 | 2.64 | 2.65 | 0.08 | 98 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 28.29 | (0.06 | ) | (17.90 | ) | (17.96 | ) | — | (0.68 | ) | (0.68 | ) | 9.65 | (64.83 | ) | 21,548 | 2.50 | 2.51 | (0.36 | ) | 94 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.92 | (0.14 | ) | 17.58 | 17.44 | (0.07 | ) | — | (0.07 | ) | 28.29 | 160.52 | 127,122 | 2.60 | 2.61 | (0.71 | ) | 102 | ||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 17.58 | (0.13 | ) | 0.88 | 0.75 | (0.16 | ) | — | (0.16 | ) | 18.17 | 4.34 | 5,313 | 1.53 | (e) | 1.53 | (e) | (1.48 | )(e) | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 22.01 | 0.17 | (4.51 | ) | (4.34 | ) | (0.09 | ) | — | (0.09 | ) | 17.58 | (19.78 | ) | 6,483 | 1.42 | 1.42 | 0.82 | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 18.23 | 0.10 | 3.85 | 3.95 | (0.17 | ) | — | (0.17 | ) | 22.01 | 21.76 | 11,638 | 1.42 | 1.42 | 0.55 | 100 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.82 | 0.16 | 8.30 | 8.46 | (0.05 | ) | — | (0.05 | ) | 18.23 | 86.55 | 5,637 | 1.64 | 1.65 | 1.08 | 98 | ||||||||||||||||||||||||||||||||||||||||
Period ended 10/31/08(f) | 12.02 | 0.00 | (2.20 | ) | (2.20 | ) | — | — | — | 9.82 | (18.30 | ) | 569 | 1.80 | (g) | 1.81 | (g) | 0.34 | (g) | 94 | ||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 17.61 | (0.11 | ) | 0.88 | 0.77 | (0.21 | ) | — | (0.21 | ) | 18.17 | 4.44 | 824 | 1.29 | (e) | 1.29 | (e) | (1.24 | )(e) | 44 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 22.04 | 0.21 | (4.51 | ) | (4.30 | ) | (0.13 | ) | — | (0.13 | ) | 17.61 | (19.61 | ) | 770 | 1.23 | 1.23 | 1.01 | 97 | |||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 18.25 | 0.14 | 3.86 | 4.00 | (0.21 | ) | — | (0.21 | ) | 22.04 | 22.04 | 982 | 1.25 | 1.25 | 0.72 | 100 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.91 | 0.20 | 8.33 | 8.53 | (0.19 | ) | — | (0.19 | ) | 18.25 | 87.28 | 599 | 1.27 | 1.28 | 1.45 | 98 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 28.72 | 0.17 | (18.25 | ) | (18.08 | ) | (0.05 | ) | (0.68 | ) | (0.73 | ) | 9.91 | (64.37 | ) | 259 | 1.26 | 1.27 | 0.88 | 94 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.99 | 0.09 | 17.74 | 17.83 | (0.10 | ) | — | (0.10 | ) | 28.72 | 163.45 | 3,658 | 1.35 | 1.36 | 0.53 | 102 | ||||||||||||||||||||||||||||||||||||||||
(a) | Calculated using average shares outstanding. | |
(b) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share for the six months ended April 30, 2012 and the years ended October 31, 2011, 2010 and 2009, respectively. Redemption fees added to shares of beneficial interest for Class A, Class B, Class C and Institutional Class shares were $0.02 and $0.03 per share for the years ended October 31, 2008 and 2007, respectively. | |
(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) | 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 $96,787, $13,052, $30,525, $6,437 and $792 for Class A, Class B, Class C, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of October 3, 2008. | |
(g) | Annualized. |
14 Invesco China 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,041.60 | $ | 9.04 | $ | 1,016.01 | $ | 8.92 | 1.78 | % | ||||||||||||||||||
B | 1,000.00 | 1,038.10 | 12.82 | 1,012.28 | 12.66 | 2.53 | ||||||||||||||||||||||||
C | 1,000.00 | 1,037.60 | 12.82 | 1,012.28 | 12.66 | 2.53 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,043.40 | 7.77 | 1,017.26 | 7.67 | 1.53 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,044.40 | 6.56 | 1,018.45 | 6.47 | 1.29 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
15 Invesco China Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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.
CHI-SAR-1 | Invesco Distributors, Inc. |
Invesco Developing Markets Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: GTDDX § B: GTDBX § C: GTDCX § Y: GTDYX § Institutional: GTDIX
2 | Fund Performance | |
4 | Letters to Shareholders | |
5 | Schedule of Investments | |
7 | Financial Statements | |
9 | Notes to Financial Statements | |
16 | Financial Highlights | |
17 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 9.29 | % | ||
Class B Shares | 8.89 | |||
Class C Shares | 8.86 | |||
Class Y Shares | 9.42 | |||
Institutional Class Shares | 9.52 | |||
MSCI EAFE Index▼ (Broad Market Index) | 2.44 | |||
MSCI Emerging Markets Index▼ (Style-Specific Index) | 3.93 | |||
Lipper Emerging Market Funds Index▼ (Peer Group Index) | 5.92 | |||
Source: ▼Lipper Inc. |
The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East.
The MSCI Emerging Markets IndexSM is an unmanaged index considered representative of stocks of developing countries.
The Lipper Emerging Market Funds Index is an unmanaged index considered representative of emerging market funds tracked by Lipper.
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.
2 | Invesco Developing Markets Fund |
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (1/11/94) | 6.09 | % | ||
10 Years | 14.92 | |||
5 Years | 3.71 | |||
1 Year | -9.67 | |||
Class B Shares | ||||
Inception (11/3/97) | 7.88 | % | ||
10 Years | 14.97 | |||
5 Years | 3.76 | |||
1 Year | -9.79 | |||
Class C Shares | ||||
Inception (3/1/99) | 12.48 | % | ||
10 Years | 14.79 | |||
5 Years | 4.11 | |||
1 Year | -6.08 | |||
Class Y Shares | ||||
10 Years | 15.67 | % | ||
5 Years | 5.07 | |||
1 Year | -4.15 | |||
Institutional Class Shares | ||||
10 Years | 15.92 | % | ||
5 Years | 5.36 | |||
1 Year | -3.99 |
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 share performance reflects any applicable fee waivers or expense reimbursements.
Institutional Class shares incepted on October 25, 2005. 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 share 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
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (1/11/94) | 6.11 | % | ||
10 Years | 14.95 | |||
5 Years | 4.56 | |||
1 Year | -6.06 | |||
Class B Shares | ||||
Inception (11/3/97) | 7.92 | % | ||
10 Years | 14.98 | |||
5 Years | 4.64 | |||
1 Year | -6.15 | |||
Class C Shares | ||||
Inception (3/1/99) | 12.56 | % | ||
10 Years | 14.80 | |||
5 Years | 4.97 | |||
1 Year | -2.31 | |||
Class Y Shares | ||||
10 Years | 15.69 | % | ||
5 Years | 5.93 | |||
1 Year | -0.35 | |||
Institutional Class Shares | ||||
10 Years | 15.93 | % | ||
5 Years | 6.23 | |||
1 Year | -0.18 |
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 1.47%, 2.22%, 2.22%, 1.22% and 1.04%, 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 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.
3 | Invesco Developing Markets Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We've continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We've also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we've always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world's wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you'll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco's website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short – and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
4 | Invesco Developing Markets Fund |
Schedule of Investments
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–88.49% | ||||||||
Brazil–16.00% | ||||||||
Banco Bradesco S.A.–ADR | 6,169,492 | $ | 98,896,956 | |||||
BR Malls Participacoes S.A. | 3,254,100 | 40,234,372 | ||||||
CETIP S.A. | 1,050,600 | 16,154,595 | ||||||
Cielo S.A. | 2,888,256 | 86,791,676 | ||||||
Cielo S.A.(a) | 288,000 | 8,654,358 | ||||||
Diagnosticos da America S.A. | 5,521,100 | 39,550,257 | ||||||
Duratex S.A. | 5,911,240 | 34,744,628 | ||||||
MRV Engenharia e Participacoes S.A. | 3,749,900 | 21,922,795 | ||||||
OGX Petroleo e Gas Participacoes S.A.(b) | 2,175,100 | 15,193,168 | ||||||
Petroleo Brasileiro S.A.–ADR | 1,759,231 | 38,984,559 | ||||||
Totvs S.A. | 1,099,100 | 21,341,748 | ||||||
Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao S.A. | 904,330 | 13,900,722 | ||||||
Valid Solucoes e Servicos de Seguranca em Meios de Pagamento e Identificacao S.A.(a) | 246,510 | 3,789,178 | ||||||
Wilson Sons Ltd.–BDR | 434,100 | 6,492,705 | ||||||
Wilson Sons Ltd.–BDR(a) | 528,500 | 7,904,618 | ||||||
454,556,335 | ||||||||
Canada–1.18% | ||||||||
Niko Resources Ltd. | 797,890 | 33,618,325 | ||||||
China–9.38% | ||||||||
Anta Sports Products Ltd. | 27,922,000 | 27,603,142 | ||||||
CNOOC Ltd. | 15,960,000 | 33,822,960 | ||||||
Industrial & Commercial Bank of China Ltd.–Class H | 156,207,000 | 103,813,048 | ||||||
Lee & Man Paper Manufacturing Ltd. | 64,957,000 | 30,294,881 | ||||||
NetEase.com Inc.–ADR(b) | 451,505 | 27,234,782 | ||||||
Stella International Holdings Ltd. | 11,189,000 | 29,708,117 | ||||||
Want Want China Holdings Ltd. | 11,449,000 | 14,048,215 | ||||||
266,525,145 | ||||||||
Czech Republic–0.60% | ||||||||
CEZ A.S. | 423,574 | 17,083,713 | ||||||
Egypt–0.77% | ||||||||
Centamin PLC(b) | 8,609,967 | 9,413,610 | ||||||
Egyptian Financial Group–Hermes Holding(b) | 5,496,735 | 12,329,941 | ||||||
21,743,551 | ||||||||
Hong Kong–2.43% | ||||||||
China Mobile Ltd. | 4,852,500 | 53,756,138 | ||||||
Galaxy Entertainment Group Ltd.(b) | 4,916,000 | 15,283,283 | ||||||
69,039,421 | ||||||||
Indonesia–5.54% | ||||||||
PT Bank Central Asia Tbk | 24,954,000 | 21,725,670 | ||||||
PT Indocement Tunggal Prakarsa Tbk | 8,427,000 | 16,520,893 | ||||||
PT Perusahaan Gas Negara | 115,102,000 | 41,970,545 | ||||||
PT Telekomunikasi Indonesia Tbk | 83,634,000 | 77,319,036 | ||||||
157,536,144 | ||||||||
Israel–1.92% | ||||||||
Israel Chemicals Ltd. | 2,340,143 | 26,777,206 | ||||||
Teva Pharmaceutical Industries Ltd.–ADR | 606,015 | 27,719,126 | ||||||
54,496,332 | ||||||||
Luxembourg–0.33% | ||||||||
Millicom International Cellular S.A.–SDR | 88,216 | 9,372,811 | ||||||
Malaysia–3.20% | ||||||||
Parkson Holdings Berhad | 23,173,008 | 39,736,114 | ||||||
Public Bank Berhad | 11,351,900 | 51,294,465 | ||||||
91,030,579 | ||||||||
Mexico–9.24% | ||||||||
America Movil S.A.B de C.V.–Series L–ADR | 2,502,344 | 66,687,468 | ||||||
Fomento Economico Mexicano, S.A.B. de C.V.–ADR | 1,038,921 | 84,422,720 | ||||||
Grupo Financiero BanCrecer S.A. de C.V.–Series B(b) | 1 | 0 | ||||||
Grupo Televisa S.A.B.–ADR | 2,744,193 | 60,289,920 | ||||||
Kimberly-Clark de Mexico, S.A.B. de C.V.–Class A | 25,088,670 | 51,136,118 | ||||||
262,536,226 | ||||||||
Netherlands–0.58% | ||||||||
VimpelCom Ltd.–ADR | 1,605,246 | 16,357,457 | ||||||
Nigeria–1.16% | ||||||||
Zenith Bank PLC | 365,351,256 | 32,868,730 | ||||||
Peru–2.40% | ||||||||
Credicorp Ltd. | 520,590 | 68,150,437 | ||||||
Philippines–7.42% | ||||||||
Ayala Corp. | 5,806,692 | 59,068,822 | ||||||
Energy Development Corp. | 241,801,150 | 33,763,883 | ||||||
Energy Development Corp.(a) | 4,528,750 | 632,372 | ||||||
Philippine Long Distance Telephone Co. | 1,139,750 | 69,839,711 | ||||||
SM Investments Corp. | 2,878,838 | 47,557,100 | ||||||
210,861,888 | ||||||||
Russia–3.85% | ||||||||
Gazprom OAO–ADR | 2,885,855 | 33,302,767 | ||||||
Mobile TeleSystems–ADR | 900,733 | 17,618,337 | ||||||
Sberbank of Russia | 9,047,559 | 28,967,314 | ||||||
TNK–BP Holding | 9,963,140 | 29,603,478 | ||||||
109,491,896 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Developing Markets Fund
Shares | Value | |||||||
South Africa–3.92% | ||||||||
AngloGold Ashanti Ltd.–ADR | 741,641 | $ | 25,497,617 | |||||
Naspers Ltd.–Class N | 1,095,787 | 66,061,982 | ||||||
Sasol Ltd. | 418,828 | 19,910,541 | ||||||
111,470,140 | ||||||||
South Korea–4.19% | ||||||||
Hyundai Department Store Co., Ltd. | 160,197 | 22,538,374 | ||||||
MegaStudy Co., Ltd. | 177,086 | 16,484,051 | ||||||
NHN Corp. | 267,474 | 60,439,618 | ||||||
S1 Corp. | 392,082 | 19,582,714 | ||||||
119,044,757 | ||||||||
Taiwan–3.71% | ||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 25,703,000 | 76,036,807 | ||||||
Wistron Corp. | 19,658,534 | 29,314,435 | ||||||
105,351,242 | ||||||||
Thailand–5.53% | ||||||||
BEC World PCL | 11,660,500 | 19,535,320 | ||||||
CP ALL PCL | 4,254,100 | 10,552,216 | ||||||
Kasikornbank PCL | 13,619,100 | 72,215,787 | ||||||
Siam Commercial Bank PCL | 11,249,800 | 54,886,678 | ||||||
157,190,001 | ||||||||
Turkey–4.02% | ||||||||
Anadolu Efes Biracilik ve Malt Sanayii A.S. | 1,621,889 | 22,855,863 | ||||||
Eczacibasi Ilac Sanayi ve Ticaret A.S. | 10,175,924 | 12,457,004 | ||||||
Haci Omer Sabanci Holding A.S. | 14,913,764 | 61,988,543 | ||||||
Tupras-Turkiye Petrol Rafinerileri A.S. | 812,408 | 17,000,314 | ||||||
114,301,724 | ||||||||
United Kingdom–1.12% | ||||||||
African Barrick Gold Ltd. | 5,456,721 | 31,824,457 | ||||||
Total Common Stocks & Other Equity Interests (Cost $2,066,607,122) | 2,514,451,311 | |||||||
Preferred Stocks–1.24% | ||||||||
Brazil–1.24% | ||||||||
Companhia de Transmissao de Energia Eletrica Paulista–Pfd. (Cost $29,495,450) | 1,100,800 | 35,268,350 | ||||||
Money Market Funds–10.46% | ||||||||
Liquid Assets Portfolio–Institutional Class(c) | 148,538,597 | 148,538,597 | ||||||
Premier Portfolio–Institutional Class(c) | 148,538,597 | 148,538,597 | ||||||
Total Money Market Funds (Cost $297,077,194) | 297,077,194 | |||||||
TOTAL INVESTMENTS–100.19% (Cost $2,393,179,766) | 2,846,796,855 | |||||||
OTHER ASSETS LESS LIABILITIES–(0.19)% | (5,313,655 | ) | ||||||
NET ASSETS–100.00% | $ | 2,841,483,200 | ||||||
Investment Abbreviations:
ADR | – American Depositary Receipt | |
BDR | – British Deposit Receipt | |
Pfd. | – Preferred | |
SDR | – Swedish Depositary Receipt |
Notes to Schedule of Investments:
(a) | 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 April 30, 2012 was $20,980,526, which represented less than 1% of the Fund’s Net Assets. | |
(b) | Non-income producing security. | |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
By sector, based on Net Assets
as of April 30, 2012
Financials | 25.4 | % | ||
Consumer Discretionary | 11.2 | |||
Telecommunication Services | 11.0 | |||
Information Technology | 10.9 | |||
Energy | 7.8 | |||
Consumer Staples | 6.4 | |||
Materials | 6.2 | |||
Utilities | 4.5 | |||
Industrials | 3.5 | |||
Health Care | 2.8 | |||
Money Market Funds Plus Other Assets Less Liabilities | 10.3 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Developing Markets Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $2,096,102,572) | $ | 2,549,719,661 | ||
Investments in affiliated money market funds, at value and cost | 297,077,194 | |||
Total investments, at value (Cost $2,393,179,766) | 2,846,796,855 | |||
Foreign currencies, at value (Cost $8,299,634) | 8,208,811 | |||
Receivable for: | ||||
Investments sold | 8,444,775 | |||
Fund shares sold | 9,768,149 | |||
Dividends | 6,731,464 | |||
Investment for trustee deferred compensation and retirement plans | 51,471 | |||
Other assets | 56,625 | |||
Total assets | 2,880,058,150 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 17,352,865 | |||
Fund shares reacquired | 6,047,140 | |||
Accrued fees to affiliates | 1,534,030 | |||
Accrued foreign taxes | 12,491,147 | |||
Accrued other operating expenses | 951,640 | |||
Trustee deferred compensation and retirement plans | 198,128 | |||
Total liabilities | 38,574,950 | |||
Net assets applicable to shares outstanding | $ | 2,841,483,200 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 2,507,219,233 | ||
Undistributed net investment income | 4,834,371 | |||
Undistributed net realized gain (loss) | (124,105,346 | ) | ||
Unrealized appreciation | 453,534,942 | |||
$ | 2,841,483,200 | |||
Net Assets: | ||||
Class A | $ | 1,412,407,670 | ||
Class B | $ | 66,739,990 | ||
Class C | $ | 207,060,870 | ||
Class Y | $ | 582,487,756 | ||
Institutional Class | $ | 572,786,914 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 43,761,776 | |||
Class B | 2,128,267 | |||
Class C | 6,610,991 | |||
Class Y | 18,003,272 | |||
Institutional Class | 17,729,626 | |||
Class A: | ||||
Net asset value per share | $ | 32.27 | ||
Maximum offering price per share (Net asset value of $32.27 divided by 94.50%) | $ | 34.15 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 31.36 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 31.32 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 32.35 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 32.31 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Developing Markets Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $2,820,504) | $ | 26,437,457 | ||
Dividends from affiliated money market funds | 166,748 | |||
Total investment income | 26,604,205 | |||
Expenses: | ||||
Advisory fees | 11,418,210 | |||
Administrative services fees | 264,024 | |||
Custodian fees | 978,694 | |||
Distribution fees: | ||||
Class A | 1,707,326 | |||
Class B | 339,853 | |||
Class C | 1,019,354 | |||
Transfer agent fees — A, B, C and Y | 2,286,875 | |||
Transfer agent fees — Institutional | 88,895 | |||
Trustees’ and officers’ fees and benefits | 89,550 | |||
Other | 259,175 | |||
Total expenses | 18,451,956 | |||
Less: Fees waived and expense offset arrangement(s) | (171,137 | ) | ||
Net expenses | 18,280,819 | |||
Net investment income | 8,323,386 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities (net tax on the sale of foreign investments of $571,465) | 6,612,857 | |||
Foreign currencies (net of currency tax of $156,739) | (211,480 | ) | ||
6,401,377 | ||||
Change in net unrealized appreciation of: | ||||
Investment securities (net of foreign taxes on holding of $(5,505,052)) | 216,685,354 | |||
Foreign currencies | 238,006 | |||
216,923,360 | ||||
Net realized and unrealized gain | 223,324,737 | |||
Net increase in net assets resulting from operations | $ | 231,648,123 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Developing Markets Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income | $ | 8,323,386 | $ | 27,062,882 | ||||
Net realized gain | 6,401,377 | 56,074,961 | ||||||
Change in net unrealized appreciation (depreciation) | 216,923,360 | (291,001,520 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 231,648,123 | (207,863,677 | ) | |||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (10,421,614 | ) | (9,655,142 | ) | ||||
Class B | — | (81,586 | ) | |||||
Class C | — | (302,676 | ) | |||||
Class Y | (4,137,451 | ) | (2,082,680 | ) | ||||
Institutional Class | (5,752,226 | ) | (3,283,825 | ) | ||||
Total distributions from net investment income | (20,311,291 | ) | (15,405,909 | ) | ||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (26,956,403 | ) | (1,390,785 | ) | ||||
Class B | (1,403,045 | ) | (63,154 | ) | ||||
Class C | (4,146,527 | ) | (234,307 | ) | ||||
Class Y | (7,951,518 | ) | (237,094 | ) | ||||
Institutional Class | (9,449,973 | ) | (331,608 | ) | ||||
Total distributions from net realized gains | (49,907,466 | ) | (2,256,948 | ) | ||||
Share transactions–net: | ||||||||
Class A | (59,333,983 | ) | 169,724,959 | |||||
Class B | (8,636,522 | ) | 17,998,997 | |||||
Class C | (19,919,642 | ) | 13,263,172 | |||||
Class Y | 189,826,382 | 183,120,381 | ||||||
Institutional Class | 68,682,607 | 198,584,898 | ||||||
Net increase in net assets resulting from share transactions | 170,618,842 | 582,692,407 | ||||||
Net increase in net assets | 332,048,208 | 357,165,873 | ||||||
Net assets: | ||||||||
Beginning of period | 2,509,434,992 | 2,152,269,119 | ||||||
End of period (includes undistributed net investment income of $4,834,371 and $16,822,276, respectively) | $ | 2,841,483,200 | $ | 2,509,434,992 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Developing Markets Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 objective is to provide long-term growth of capital.
9 Invesco Developing Markets Fund
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. 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. 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 economic 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 |
10 Invesco Developing Markets Fund
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 declared and 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. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
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. |
11 Invesco Developing Markets 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .935% | ||
Next $250 million | 0 | .91% | ||
Next $500 million | 0 | .885% | ||
Next $1.5 billion | 0 | .86% | ||
Next $2.5 billion | 0 | .835% | ||
Next $2.5 billion | 0 | .81% | ||
Next $2.5 billion | 0 | .785% | ||
Over $10 billion | 0 | .76% | ||
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 Canada 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 June 30, 2012, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses after fee waiver and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y and Institutional Class shares to 2.10%, 2.85%, 2.85%, 1.85% and 1.85% 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 total annual operating expenses to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; 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 June 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, 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 six months ended April 30, 2012, the Adviser waived advisory fees of $168,821.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 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 and Class C 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 and 1.00% of the average daily net assets of Class B and Class C 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $27,675 in front-end sales commissions from the sale of Class A shares and $910, $47,187 and $5,664 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 the Adviser, IIS and/or IDI.
12 Invesco Developing Markets 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 April 30, 2012. 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 | |||||||||||||
Brazil | $ | 489,824,685 | $ | — | $ | — | $ | 489,824,685 | ||||||||
Canada | 33,618,325 | — | — | 33,618,325 | ||||||||||||
China | 98,594,256 | 167,930,889 | — | 266,525,145 | ||||||||||||
Czech Republic | 17,083,713 | — | — | 17,083,713 | ||||||||||||
Egypt | 21,743,551 | — | — | 21,743,551 | ||||||||||||
Hong Kong | 53,756,138 | 15,283,283 | — | 69,039,421 | ||||||||||||
Indonesia | — | 157,536,144 | — | 157,536,144 | ||||||||||||
Israel | 27,719,126 | 26,777,206 | — | 54,496,332 | ||||||||||||
Luxembourg | 9,372,811 | — | — | 9,372,811 | ||||||||||||
Malaysia | 51,294,465 | 39,736,114 | — | 91,030,579 | ||||||||||||
Mexico | 262,536,226 | 0 | 262,536,226 | |||||||||||||
Netherlands | 16,357,457 | — | — | 16,357,457 | ||||||||||||
Nigeria | 32,868,730 | — | — | 32,868,730 | ||||||||||||
Peru | 68,150,437 | — | — | 68,150,437 | ||||||||||||
Philippines | — | 210,861,888 | — | 210,861,888 | ||||||||||||
Russia | 79,888,418 | 29,603,478 | — | 109,491,896 | ||||||||||||
South Africa | 111,470,140 | — | — | 111,470,140 | ||||||||||||
South Korea | — | 119,044,757 | — | 119,044,757 | ||||||||||||
Taiwan | — | 105,351,242 | — | 105,351,242 | ||||||||||||
Thailand | 137,654,681 | 19,535,320 | — | 157,190,001 | ||||||||||||
Turkey | 97,301,410 | 17,000,314 | — | 114,301,724 | ||||||||||||
United Kingdom | 31,824,457 | — | — | 31,824,457 | ||||||||||||
United States | 297,077,194 | — | — | 297,077,194 | ||||||||||||
Total Investments | $ | 1,938,136,220 | $ | 908,660,635 | $ | 0 | $ | 2,846,796,855 | ||||||||
* | Transfers occurred between Level 1 and Level 2 due to foreign fair value adjustments. |
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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,316.
13 Invesco Developing Markets Fund
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 six months ended April 30, 2012, the Fund paid legal fees of $353 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A partner 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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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. Under these limitation rules, the Fund is limited to utilizing $14,997,570 of capital loss carryforward in the fiscal year ending October 31, 2012.
The Fund had a capital loss carryforward as of October 31, 2011, which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
October 31, 2016 | $ | 4,060,986 | ||
October 31, 2017 | 118,971,060 | |||
Total capital loss carryforward | $ | 123,032,046 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that realized gains as of May 23, 2011, the date of reorganization of Invesco Van Kampen Emerging Markets Fund into the Fund are realized on securities held in each fund at such date of reorganization, the capital loss carryforward may be further limited for up to five years from the date of reorganization. |
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 six months ended April 30, 2012 was $214,434,750 and $165,351,935, 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 | $ | 587,028,439 | ||
Aggregate unrealized (depreciation) of investment securities | (143,755,420 | ) | ||
Net unrealized appreciation of investment securities | $ | 443,273,019 | ||
Cost of investments for tax purposes is $2,403,523,836. |
14 Invesco Developing Markets Fund
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 4,659,681 | $ | 143,967,309 | 13,333,166 | $ | 433,592,819 | ||||||||||
Class B | 19,077 | 579,542 | 155,249 | 4,938,533 | ||||||||||||
Class C | 214,443 | 6,458,432 | 887,004 | 28,089,901 | ||||||||||||
Class Y | 8,669,369 | 269,853,393 | 9,216,332 | 290,951,222 | ||||||||||||
Institutional Class | 3,495,190 | 108,279,812 | 8,809,593 | 283,606,556 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 1,255,836 | 36,369,007 | 315,280 | 10,271,799 | ||||||||||||
Class B | 48,827 | 1,377,904 | 4,409 | 139,971 | ||||||||||||
Class C | 142,879 | 4,027,764 | 16,274 | 516,198 | ||||||||||||
Class Y | 392,481 | 11,385,861 | 65,534 | 2,138,366 | ||||||||||||
Institutional Class | 440,289 | 12,741,950 | 85,579 | 2,786,443 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 141,285 | 4,343,664 | 222,739 | 7,105,741 | ||||||||||||
Class B | (143,976 | ) | (4,343,664 | ) | (229,422 | ) | (7,105,741 | ) | ||||||||
Issued in connection with acquisitions(b) | ||||||||||||||||
— | — | 7,097,789 | 236,300,576 | |||||||||||||
Class B | — | — | 1,067,847 | 34,530,890 | ||||||||||||
Class C | — | — | 1,534,925 | 49,580,803 | ||||||||||||
Class Y | — | — | 275,332 | 9,192,213 | ||||||||||||
Institutional Class | — | — | 373 | 12,436 | ||||||||||||
Reacquired:(c) | ||||||||||||||||
Class A | (7,976,778 | ) | (244,013,963 | ) | (16,179,102 | ) | (517,545,976 | ) | ||||||||
Class B | (211,402 | ) | (6,250,304 | ) | (468,601 | ) | (14,504,656 | ) | ||||||||
Class C | (1,025,366 | ) | (30,405,838 | ) | (2,090,600 | ) | (64,923,730 | ) | ||||||||
Class Y | (3,002,414 | ) | (91,412,872 | ) | (3,744,182 | ) | (119,161,420 | ) | ||||||||
Institutional Class | (1,694,275 | ) | (52,339,155 | ) | (2,724,182 | ) | (87,820,537 | ) | ||||||||
Net increase in share activity | 5,425,146 | $ | 170,618,842 | 17,651,336 | $ | 582,692,407 | ||||||||||
(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 Fund 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 open of business on May 23, 2011 the Fund acquired all the net assets of Invesco Van Kampen Emerging Markets Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2011 and by the shareholders of Invesco Developing Markets Fund on April 14, 2011. The acquisition was accomplished by a tax-free exchange of 9,976,265 shares of the Fund for 21,482,018 shares outstanding of Invesco Van Kampen Emerging Markets Fund as of the close of business on May 20, 2011. Each class of Invesco Van Kampen Emerging Markets Fund was exchanged for the like class of shares of the Fund based on the relative net asset value of Invesco Van Kampen Emerging Markets Fund to the net asset value of the Fund at the close of business on May 20, 2011. Invesco Van Kampen Emerging Markets Fund’s net assets at that date of $329,616,919, including $44,451,279 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before and after the acquisition were $2,373,704,608 and $2,703,321,527, respectively. | |
(c) | Net of redemption fees of $39,962 and $162,747 allocated among the classes based on relative net assets of each class for the six months ended April 30, 2012 and the year ended October 31, 2011, respectively. |
15 Invesco Developing Markets 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) | 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)(a) | unrealized)(b) | operations | income | gains | distributions | of period | return(c) | (000s omitted) | absorbed | absorbed | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 30.38 | $ | 0.09 | $ | 2.63 | $ | 2.72 | $ | (0.23 | ) | $ | (0.60 | ) | $ | (0.83 | ) | $ | 32.27 | 9.26 | % | $ | 1,412,408 | 1.46 | %(e) | 1.47 | %(e) | 0.58 | %(e) | 7 | % | |||||||||||||||||||||||||
Year ended 10/31/11 | 33.15 | 0.36 | (2.87 | ) | (2.51 | ) | (0.23 | ) | (0.03 | ) | (0.26 | ) | 30.38 | (7.62 | ) | 1,388,008 | 1.45 | 1.47 | 1.11 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 25.61 | 0.33 | 7.54 | 7.87 | (0.33 | ) | — | (0.33 | ) | 33.15 | 31.04 | 1,355,604 | 1.52 | 1.53 | 1.17 | 22 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 16.28 | 0.27 | 9.80 | 10.07 | (0.33 | ) | (0.41 | ) | (0.74 | ) | 25.61 | 65.27 | 904,273 | 1.66 | 1.71 | 1.35 | 28 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 37.97 | 0.37 | (20.45 | ) | (20.08 | ) | (0.23 | ) | (1.38 | ) | (1.61 | ) | 16.28 | (55.04 | ) | 401,275 | 1.59 | 1.60 | 1.26 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 23.80 | 0.27 | 13.96 | 14.23 | (0.06 | ) | — | (0.06 | ) | 37.97 | 59.90 | 1,152,814 | 1.57 | 1.61 | 0.89 | 41 | ||||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 29.42 | (0.02 | ) | 2.56 | 2.54 | — | (0.60 | ) | (0.60 | ) | 31.36 | 8.85 | 66,740 | 2.21 | (e) | 2.22 | (e) | (0.17 | )(e) | 7 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 32.16 | 0.11 | (2.78 | ) | (2.67 | ) | (0.04 | ) | (0.03 | ) | (0.07 | ) | 29.42 | (8.30 | ) | 71,066 | 2.20 | 2.22 | 0.36 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 24.92 | 0.12 | 7.33 | 7.45 | (0.21 | ) | — | (0.21 | ) | 32.16 | 30.07 | 60,657 | 2.27 | 2.28 | 0.42 | 22 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 15.69 | 0.11 | 9.59 | 9.70 | (0.06 | ) | (0.41 | ) | (0.47 | ) | 24.92 | 64.01 | 49,822 | 2.41 | 2.46 | 0.60 | 28 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 36.72 | 0.15 | (19.74 | ) | (19.59 | ) | (0.06 | ) | (1.38 | ) | (1.44 | ) | 15.69 | (55.36 | ) | 32,309 | 2.34 | 2.35 | 0.51 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 23.14 | 0.04 | 13.54 | 13.58 | — | — | — | 36.72 | 58.69 | 103,476 | 2.32 | 2.36 | 0.14 | 41 | ||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 29.38 | (0.02 | ) | 2.56 | 2.54 | — | (0.60 | ) | (0.60 | ) | 31.32 | 8.86 | 207,061 | 2.21 | (e) | 2.22 | (e) | (0.17 | )(e) | 7 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 32.12 | 0.11 | (2.78 | ) | (2.67 | ) | (0.04 | ) | (0.03 | ) | (0.07 | ) | 29.38 | (8.31 | ) | 213,879 | 2.20 | 2.22 | 0.36 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 24.89 | 0.12 | 7.32 | 7.44 | (0.21 | ) | — | (0.21 | ) | 32.12 | 30.07 | 222,634 | 2.27 | 2.28 | 0.42 | 22 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 15.67 | 0.11 | 9.58 | 9.69 | (0.06 | ) | (0.41 | ) | (0.47 | ) | 24.89 | 64.03 | 139,845 | 2.41 | 2.46 | 0.60 | 28 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 36.68 | 0.15 | (19.72 | ) | (19.57 | ) | (0.06 | ) | (1.38 | ) | (1.44 | ) | 15.67 | (55.37 | ) | 76,853 | 2.34 | 2.35 | 0.51 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 23.12 | 0.04 | 13.52 | 13.56 | — | — | — | 36.68 | 58.65 | 219,121 | 2.32 | 2.36 | 0.14 | 41 | ||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 30.50 | 0.13 | 2.63 | 2.76 | (0.31 | ) | (0.60 | ) | (0.91 | ) | 32.35 | 9.39 | 582,488 | 1.21 | (e) | 1.22 | (e) | 0.83 | (e) | 7 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 33.26 | 0.44 | (2.88 | ) | (2.44 | ) | (0.29 | ) | (0.03 | ) | (0.32 | ) | 30.50 | (7.39 | ) | 364,320 | 1.20 | 1.22 | 1.36 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 25.66 | 0.41 | 7.56 | 7.97 | (0.37 | ) | — | (0.37 | ) | 33.26 | 31.41 | 203,884 | 1.27 | 1.28 | 1.42 | 22 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 16.29 | 0.37 | 9.75 | 10.12 | (0.34 | ) | (0.41 | ) | (0.75 | ) | 25.66 | 65.56 | 52,993 | 1.41 | 1.46 | 1.60 | 28 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08(f) | 20.65 | 0.02 | (4.38 | ) | (4.36 | ) | — | — | — | 16.29 | (21.11 | ) | 1,854 | 1.36 | (g) | 1.37 | (g) | 1.49 | (g) | 27 | ||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 30.48 | 0.16 | 2.63 | 2.79 | (0.36 | ) | (0.60 | ) | (0.96 | ) | 32.31 | 9.52 | 572,787 | 1.02 | (e) | 1.03 | (e) | 1.02 | (e) | 7 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 33.22 | 0.49 | (2.87 | ) | (2.38 | ) | (0.33 | ) | (0.03 | ) | (0.36 | ) | 30.48 | (7.24 | ) | 472,161 | 1.02 | 1.04 | 1.54 | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 25.63 | 0.48 | 7.52 | 8.00 | (0.41 | ) | — | (0.41 | ) | 33.22 | 31.59 | 309,491 | 1.11 | 1.12 | 1.58 | 22 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 16.40 | 0.37 | 9.77 | 10.14 | (0.50 | ) | (0.41 | ) | (0.91 | ) | 25.63 | 66.01 | 32,279 | 1.17 | 1.19 | 1.84 | 28 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 38.17 | 0.51 | (20.56 | ) | (20.05 | ) | (0.34 | ) | (1.38 | ) | (1.72 | ) | 16.40 | (54.81 | ) | 11,589 | 1.12 | 1.13 | 1.73 | 27 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 23.91 | 0.41 | 14.00 | 14.41 | (0.15 | ) | — | (0.15 | ) | 38.17 | 60.59 | 30,734 | 1.12 | 1.16 | 1.34 | 41 | ||||||||||||||||||||||||||||||||||||||||
(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) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended October 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $179,562,130 and sold of $2,725,925 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Van Kampen Emerging Markets Fund into the Fund. | |
(e) | Ratios are annualized and based on average daily net assets (000’s) of $1,373,366, $68,344, $204,991, $462,123 and $513,858 for Class A, Class B, Class C, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of October 3, 2008. | |
(g) | Annualized. |
16 Invesco Developing Markets 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,092.90 | $ | 7.75 | $ | 1,017.45 | $ | 7.47 | 1.49 | % | ||||||||||||||||||
B | 1,000.00 | 1,088.90 | 11.63 | 1,013.72 | 11.22 | 2.24 | ||||||||||||||||||||||||
C | 1,000.00 | 1,088.60 | 11.63 | 1,013.72 | 11.22 | 2.24 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,094.20 | 6.46 | 1,018.70 | 6.22 | 1.24 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,095.20 | 5.07 | 1,019.79 | 5.12 | 1.02 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
17 Invesco Developing Markets Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
The SEC file numbers for the Fund are 811-05426 and 033-19338.
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, 2011, is available at 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 US 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. |
DVM-SAR-1 Invesco Distributors, Inc.
Invesco Emerging Markets Equity Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: IEMAX § C: IEMCX § R: IEMRX § Y: IEMYX § Institutional: IEMIX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Schedule of Investments | |
6 | Financial Statements | |
8 | Notes to Financial Statements | |
14 | Financial Highlights | |
15 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 2.52 | % | ||
Class C Shares | 2.38 | |||
Class R Shares | 2.42 | |||
Class Y Shares | 2.74 | |||
Institutional Class Shares | 2.74 | |||
MSCI EAFE Index▼(Broad Market Index) | 2.44 | |||
MSCI Emerging Markets Index▼(Style-Specific Index) | 3.93 | |||
Lipper Emerging Markets Funds Index▼(Peer Group Index) | 5.92 | |||
Source: ▼Lipper Inc. |
The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East.
The MSCI Emerging Markets Index® is an unmanaged index considered representative of stocks of developing countries.
The Lipper Emerging Markets Funds Index is an unmanaged index considered representative of emerging markets funds tracked by Lipper.
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.
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (5/31/11) | -21.80 | % | ||
Class C Shares | ||||
Inception (5/31/11) | -18.50 | % | ||
Class R Shares | ||||
Inception (5/31/11) | -17.45 | % | ||
Class Y Shares | ||||
Inception (5/31/11) | -17.09 | % | ||
Institutional Class Shares | ||||
Inception (5/31/11) | -17.09 | % |
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
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (5/31/11) | -20.65 | % | ||
Class C Shares | ||||
Inception (5/31/11) | -17.30 | % | ||
Class R Shares | ||||
Inception (5/31/11) | -16.13 | % | ||
Class Y Shares | ||||
Inception (5/31/11) | -15.87 | % | ||
Institutional Class Shares | ||||
Inception (5/31/11) | -15.87 | % |
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 C, Class R, Class Y and Institutional Class shares was 1.91%, 2.66%, 2.16%, 1.66% and 1.66%, respectively. 1 The total annual Fund operating expense ratio set forth in the most recent Fund
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 C, Class R, Class Y and Institutional Class shares was 1.91%, 2.66%, 2.16%, 1.66% and 1.66%, 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 C, Class R, Class Y and Institutional Class shares was 5.34%, 6.09%, 5.59%, 5.09% and 4.92%, 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 C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. 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 February 28, 2013. See current prospectus for more information.
2 | Invesco Emerging Markets Equity Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth — while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically — and certainly without advance notice — depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 | Invesco Emerging Markets Equity Fund |
Schedule of Investments
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Foreign Stocks & Other Equity Interests–97.00% | ||||||||
Brazil–11.50% | ||||||||
Banco do Brasil S.A. | 17,100 | $ | 212,236 | |||||
Banco Santander Brasil S.A.(a) | 25,700 | 208,648 | ||||||
Companhia Energetica de Minas Gerais–ADR | 3,716 | 91,674 | ||||||
Companhia Paranaense de Energia-Copel–PFD | 14,500 | 363,813 | ||||||
PDG Realty SA Empreendimentos e Participacoes | 81,400 | 191,379 | ||||||
Petroleo Brasileiro S.A.–ADR | 24,425 | 574,964 | ||||||
Vale S.A.–ADR | 17,306 | 384,193 | ||||||
2,026,907 | ||||||||
China–12.19% | ||||||||
China Communications Construction Co. Ltd.–Class H | 367,000 | 366,126 | ||||||
China Construction Bank Corp.–Class H | 576,000 | 446,388 | ||||||
China Dongxiang Group Co. | 943,000 | 127,252 | ||||||
China Minsheng Banking Corp., Ltd.–Class H | 516,500 | 533,892 | ||||||
CNOOC Ltd. | 232,000 | 491,662 | ||||||
KWG Property Holding Ltd. | 278,500 | 182,709 | ||||||
2,148,029 | ||||||||
Hong Kong–4.06% | ||||||||
China Mobile Ltd. | 64,500 | 714,533 | ||||||
India–1.97% | ||||||||
Tata Motors Ltd.–ADR | 11,680 | 347,480 | ||||||
Indonesia–1.37% | ||||||||
Telekomunikasi Indonesia Tbk PT | 260,500 | 240,830 | ||||||
Ireland–2.12% | ||||||||
Dragon Oil PLC | 39,321 | 374,339 | ||||||
Mexico–2.68% | ||||||||
America Movil SAB. de C.V.–Series L | 353,200 | 471,526 | ||||||
Poland–2.04% | ||||||||
KGHM Polska Miedz S.A. | 8,135 | 358,878 | ||||||
Russia–6.74% | ||||||||
Gazprom OAO–ADR | 26,825 | 309,560 | ||||||
JSFC Sistema–REGS–GDR(b) | 15,209 | 288,971 | ||||||
Magnitogorsk Iron & Steel Works–REGS–GDR(b) | 36,634 | 193,428 | ||||||
Rosneft Oil Co.–REGS–GDR(b) | 55,387 | 395,186 | ||||||
1,187,145 | ||||||||
South Africa–10.85% | ||||||||
Sasol Ltd. | 9,071 | 431,224 | ||||||
Standard Bank Group Ltd. | 32,360 | 477,885 | ||||||
Steinhoff International Holdings Ltd.(c) | 156,373 | 570,729 | ||||||
Tiger Brands Ltd. | 11,783 | 432,178 | ||||||
1,912,016 | ||||||||
South Korea–20.13% | ||||||||
Dongbu Insurance Co., Ltd. | 8,405 | 335,086 | ||||||
Hyundai Mipo Dockyard Co., Ltd. | 2,525 | 271,371 | ||||||
Hyundai Mobis | 2,235 | 603,535 | ||||||
KT&G Corp. | 5,809 | 398,873 | ||||||
POSCO | 1,371 | 455,532 | ||||||
Samsung Electronics Co., Ltd. | 678 | 830,219 | ||||||
Shinhan Financial Group Co., Ltd. | 9,397 | 326,530 | ||||||
SK Telecom Co., Ltd.–ADR | 24,035 | 324,953 | ||||||
3,546,099 | ||||||||
Taiwan–6.28% | ||||||||
AU Optronics Corp.–ADR | 36,588 | 164,280 | ||||||
HTC Corp. | 14,137 | 212,716 | ||||||
Powertech Technology Inc. | 174,900 | 296,180 | ||||||
Unimicron Technology Corp. | 166,000 | 187,912 | ||||||
Wistron Corp. | 164,000 | 244,554 | ||||||
1,105,642 | ||||||||
Thailand–4.86% | ||||||||
Bangkok Bank Public Co. Ltd.–NVDR | 88,100 | 546,282 | ||||||
PTT PCL | 27,300 | 310,143 | ||||||
856,425 | ||||||||
Turkey–0.78% | ||||||||
Asya Katilim Bankasi AS(c) | 135,808 | 138,290 | ||||||
United Kingdom–2.20% | ||||||||
Eurasian Natural Resources Corp. | 42,553 | 387,631 | ||||||
United States–7.23% | ||||||||
PowerShares India Portfolio–ETF(d) | 17,231 | 307,401 | ||||||
WisdomTree India Earnings Fund–ETF | 38,200 | 700,206 | ||||||
iShares MSCI Emerging Markets Index–ETF | 6,300 | 265,860 | ||||||
1,273,467 | ||||||||
Total Foreign Stocks & Other Equity Interests (Cost $17,994,157) | 17,089,237 | |||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Emerging Markets Equity Fund
Shares | Value | |||||||
Money Market Funds–3.30% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 291,212 | $ | 291,212 | |||||
Premier Portfolio–Institutional Class(e) | 291,212 | 291,212 | ||||||
Total Money Market Funds (Cost $582,424) | 582,424 | |||||||
TOTAL INVESTMENTS–100.30% (Cost $18,576,581) | 17,671,661 | |||||||
OTHER ASSETS LESS LIABILITIES–(0.30)% | (53,060 | ) | ||||||
NET ASSETS–100.00% | $ | 17,618,601 | ||||||
Investment Abbreviations:
ADR | – American Depositary Receipt | |
ETF | – Exchange-Traded Fund | |
GDR | – Global Depositary Receipt | |
NVDR | – Non-Voting Depositary Receipt | |
PFD | – Preferred | |
REGS | – Regulation S |
Notes to Schedule of Investments:
(a) | Each unit represents 55 common shares and 50 preferred shares. | |
(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 April 30, 2012 was $877,585, which represented 4.98% of the Fund’s Net Assets. | |
(c) | Non-income producing security. | |
(d) | The Exchange Traded 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. | |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
By sector, based on Net Assets
as of April 30, 2012
Financials | 20.8 | % | ||
Energy | 16.4 | |||
Telecommunication Services | 11.6 | |||
Information Technology | 11.0 | |||
Materials | 10.1 | |||
Consumer Discretionary | 8.5 | |||
Unknown | 5.7 | |||
Industrials | 5.6 | |||
Consumer Staples | 4.7 | |||
Utilities | 2.6 | |||
Money Market Funds Plus Other Assets Less Liabilities | 3.0 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Emerging Markets Equity Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $17,994,157) | $ | 17,089,237 | ||
Investments in affiliated money market funds, at value and cost | 582,424 | |||
Total investments, at value (Cost $18,576,581) | 17,671,661 | |||
Foreign currencies, at value (Cost $97,264) | 97,966 | |||
Receivable for: | ||||
Investments sold | 137,923 | |||
Fund shares sold | 57,632 | |||
Dividends | 50,178 | |||
Investment for trustee deferred compensation and retirement plans | 3,115 | |||
Other assets | 62,806 | |||
Total assets | 18,081,281 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 240,639 | |||
Fund shares reacquired | 82,379 | |||
Accrued fees to affiliates | 89,342 | |||
Accrued other operating expenses | 47,205 | |||
Trustee deferred compensation and retirement plans | 3,115 | |||
Total liabilities | 462,680 | |||
Net assets applicable to shares outstanding | $ | 17,618,601 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 18,996,101 | ||
Undistributed net investment income | 9,492 | |||
Undistributed net realized gain (loss) | (481,523 | ) | ||
Unrealized appreciation (depreciation) | (905,469 | ) | ||
$ | 17,618,601 | |||
Net Assets: | ||||
Class A | $ | 8,312,162 | ||
Class C | $ | 1,390,394 | ||
Class R | $ | 19,023 | ||
Class Y | $ | 197,977 | ||
Institutional Class | $ | 7,699,045 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 1,016,986 | |||
Class C | 170,640 | |||
Class R | 2,330 | |||
Class Y | 24,243 | |||
Institutional Class | 942,198 | |||
Class A: | ||||
Net asset value per share | $ | 8.17 | ||
Maximum offering price per share | ||||
(Net asset value of $8.17 divided by 94.50%) | $ | 8.65 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 8.15 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 8.16 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 8.17 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 8.17 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Emerging Markets Equity Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $13,312) | $ | 148,602 | ||
Dividends from affiliated money market funds | 405 | |||
Total investment income | 149,007 | |||
Expenses: | ||||
Advisory fees | 66,648 | |||
Administrative services fees | 24,863 | |||
Custodian fees | 23,205 | |||
Distribution fees: | �� | |||
Class A | 7,344 | |||
Class C | 3,339 | |||
Class R | 33 | |||
Transfer agent fees — A, C, R and Y | 10,407 | |||
Transfer agent fees — Institutional | 266 | |||
Trustees’ and officers’ fees and benefits | 11,307 | |||
Registration and filing fees | 51,713 | |||
Professional services fees | 31,764 | |||
Other | 17,997 | |||
Total expenses | 248,886 | |||
Less: Fees waived and expenses reimbursed | (124,527 | ) | ||
Net expenses | 124,359 | |||
Net investment income | 24,648 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (313,150 | ) | ||
Foreign currencies | 9,983 | |||
(303,167 | ) | |||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 438,661 | |||
Foreign currencies | (767 | ) | ||
437,894 | ||||
Net realized and unrealized gain | 134,727 | |||
Net increase in net assets resulting from operations | $ | 159,375 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Emerging Markets Equity Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income | $ | 24,648 | $ | 26,878 | ||||
Net realized gain (loss) | (303,167 | ) | (144,160 | ) | ||||
Change in net unrealized appreciation (depreciation) | 437,894 | (1,343,363 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 159,375 | (1,460,645 | ) | |||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (32,643 | ) | — | |||||
Class C | (1,371 | ) | — | |||||
Class R | (61 | ) | — | |||||
Class Y | (375 | ) | — | |||||
Institutional Class | (76,092 | ) | — | |||||
Total distributions from net investment income | (110,542 | ) | — | |||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (17,089 | ) | — | |||||
Class C | (1,067 | ) | — | |||||
Class R | (36 | ) | — | |||||
Class Y | (156 | ) | — | |||||
Institutional Class | (31,730 | ) | — | |||||
Total distributions from net realized gains | (50,078 | ) | — | |||||
Share transactions–net: | ||||||||
Class A | 4,343,228 | 4,734,437 | ||||||
Class C | 1,188,808 | 251,618 | ||||||
Class R | 10,278 | 10,813 | ||||||
Class Y | 164,269 | 35,943 | ||||||
Institutional Class | (107,939 | ) | 8,449,036 | |||||
Net increase in net assets resulting from share transactions | 5,598,644 | 13,481,847 | ||||||
Net increase in net assets | 5,597,399 | 12,021,202 | ||||||
Net assets: | ||||||||
Beginning of period | 12,021,202 | — | ||||||
End of period (includes undistributed net investment income of $9,492 and $95,386, respectively) | $ | 17,618,601 | $ | 12,021,202 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Emerging Markets Equity Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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.
8 Invesco Emerging Markets Equity Fund
The Fund currently consists of five different classes of shares: Class A, 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 CDCS. Class R, Class Y and Institutional Class shares are sold at net asset value.
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. 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 economic 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. 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. |
9 Invesco Emerging Markets Equity 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 and net realized capital gain, if any, are generally declared and 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. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
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. |
10 Invesco Emerging Markets Equity 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .935% | ||
Next $250 million | 0 | .91% | ||
Next $500 million | 0 | .885% | ||
Next $1.5 billion | 0 | .86% | ||
Next $2.5 billion | 0 | .835% | ||
Next $2.5 billion | 0 | .81% | ||
Next $2.5 billion | 0 | .785% | ||
Over $10 billion | 0 | .76% | ||
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 Canada 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(s) 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 February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y and Institutional Class shares to 1.85%, 2.60%, 2.10%, 1.60% and 1.60% 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 net annual 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, including litigation expenses; 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 February 28, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Advisor will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
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 six months ended April 30, 2012, the Adviser waived advisory fees of $113,855 and reimbursed Class level expenses of $9,200, $1,046, $20, $141 and $265 for Class A, Class C, Class R, Class Y and Institutional Class shares, respectively.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 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 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 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $4,544 in front-end sales commissions from the sale of Class A shares and $13 and $37 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
11 Invesco Emerging Markets Equity 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 April 30, 2012. 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 | |||||||||||||
Brazil | $ | 2,026,907 | $ | — | $ | — | $ | 2,026,907 | ||||||||
China | — | 2,148,029 | — | 2,148,029 | ||||||||||||
Hong Kong | 714,533 | — | — | 714,533 | ||||||||||||
India | 347,480 | — | — | 347,480 | ||||||||||||
Indonesia | — | 240,830 | — | 240,830 | ||||||||||||
Ireland | 374,339 | — | — | 374,339 | ||||||||||||
Mexico | 471,526 | — | — | 471,526 | ||||||||||||
Poland | — | 358,878 | — | 358,878 | ||||||||||||
Russia | 1,187,145 | — | — | 1,187,145 | ||||||||||||
South Africa | 1,912,016 | — | — | 1,912,016 | ||||||||||||
South Korea | 1,179,358 | 2,366,741 | — | 3,546,099 | ||||||||||||
Taiwan | 164,280 | 941,362 | — | 1,105,642 | ||||||||||||
Thailand | 310,143 | 546,282 | — | 856,425 | ||||||||||||
Turkey | — | 138,290 | — | 138,290 | ||||||||||||
United Kingdom | — | 387,631 | — | 387,631 | ||||||||||||
United States | 1,855,891 | — | — | 1,855,891 | ||||||||||||
$ | 10,543,618 | $ | 7,128,043 | $ | — | $ | 17,671,661 | |||||||||
* | Transfers occurred between Level 1 and Level 2 due to foreign fair value adjustments. |
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.
During the six months ended April 30, 2012, the Fund paid no legal fees for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A partner of that firm is a Trustee of the Trust.
12 Invesco Emerging Markets Equity Fund
NOTE 5—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
The Fund did not have a capital loss carryforward as of October 31, 2011.
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 six months ended April 30, 2012 was $8,857,157 and $3,400,988, 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 | $ | 974,199 | ||
Aggregate unrealized (depreciation) of investment securities | (1,880,237 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (906,038 | ) | |
Cost of investments for tax purposes is $18,577,699. |
NOTE 8—Share Information
Summary of Share Activity | ||||||||||||||||
Year ended | ||||||||||||||||
Six months ended April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 659,875 | $ | 5,505,154 | 556,920 | $ | 5,217,786 | ||||||||||
Class C | 169,986 | 1,418,783 | 30,355 | 260,277 | ||||||||||||
Class R | 1,243 | 10,270 | 1,086.4 | 10,813 | ||||||||||||
Class Y | 19,518 | 163,852 | 4,971 | 38,917 | ||||||||||||
Institutional Class | 21,303 | 175,807 | 974,359 | 8,587,665 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 2,726 | 20,961 | — | — | ||||||||||||
Class C | 308 | 2,362 | — | — | ||||||||||||
Class R | 1 | 8 | — | — | ||||||||||||
Class Y | 54 | 417 | — | — | ||||||||||||
Institutional Class | 14,024 | 107,707 | — | — | ||||||||||||
Reacquired:(b) | ||||||||||||||||
Class A | (143,797 | ) | (1,182,887 | ) | (58,738 | ) | (483,349 | ) | ||||||||
Class C | (28,941 | ) | (232,337 | ) | (1,068 | ) | (8,659 | ) | ||||||||
Class R | — | — | — | — | ||||||||||||
Class Y | — | — | (300 | ) | (2,974 | ) | ||||||||||
Institutional Class | (49,320 | ) | (391,453 | ) | (18,168 | ) | (138,629 | ) | ||||||||
Net increase in share activity | 666,980 | $ | 5,598,644 | 1,489,417.4 | $ | 13,481,847 | ||||||||||
(a) | 57% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds that are also advised by Invesco. | |
(b) | Net of redemption fees of $1,310 and $2,312 allocated among the classes based on relative net assets of each for the six months ended April 30, 2012 and the year ended October 31, 2011, respectively. |
13 Invesco Emerging Markets Equity Fund
NOTE 9—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) on | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | 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)(a) | unrealized) | operations | income | gains | distributions | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 8.07 | $ | 0.01 | $ | 0.19 | $ | 0.20 | $ | (0.07 | ) | $ | (0.03 | ) | $ | (0.10 | ) | $ | 8.17 | 2.52 | % | $ | 8,312 | 1.84 | %(d) | 3.75 | %(d) | 0.25 | %(d) | 24 | % | |||||||||||||||||||||||||
Year ended 10/31/11(e) | 10.00 | 0.03 | (1.96 | ) | (1.93 | ) | — | — | — | 8.07 | (19.30 | ) | 4,019 | 1.84 | (f) | 5.28 | (f) | 0.87 | (f) | 16 | ||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 8.05 | (0.02 | ) | 0.20 | 0.18 | (0.05 | ) | (0.03 | ) | (0.08 | ) | 8.15 | 2.25 | 1,390 | 2.59 | (d) | 4.50 | (d) | (0.50 | )(d) | 24 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/11(e) | 10.00 | 0.00 | (1.95 | ) | (1.95 | ) | — | — | — | 8.05 | (19.50 | ) | 236 | 2.59 | (f) | 6.03 | (f) | 0.12 | (f) | 16 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 8.06 | (0.00 | ) | 0.19 | 0.19 | (0.06 | ) | (0.03 | ) | (0.09 | ) | 8.16 | 2.42 | 19 | 2.09 | (d) | 4.00 | (d) | — | 24 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11(e) | 10.00 | 0.02 | (1.96 | ) | (1.94 | ) | — | — | — | 8.06 | (19.40 | ) | 9 | 2.09 | (f) | 5.53 | (f) | 0.62 | (f) | 16 | ||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 8.07 | 0.02 | 0.19 | 0.21 | (0.08 | ) | (0.03 | ) | (0.11 | ) | 8.17 | 2.74 | 198 | 1.59 | (d) | 3.50 | (d) | 0.50 | (d) | 24 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11(e) | 10.00 | 0.04 | (1.97 | ) | (1.93 | ) | — | — | — | 8.07 | (19.30 | ) | 38 | 1.59 | (f) | 5.03 | (f) | 1.12 | (f) | 16 | ||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 8.07 | 0.02 | 0.19 | 0.21 | (0.08 | ) | (0.03 | ) | (0.11 | ) | 8.17 | 2.74 | 7,699 | 1.59 | (d) | 3.20 | (d) | 0.50 | (d) | 24 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11(e) | 10.00 | 0.04 | (1.97 | ) | (1.93 | ) | — | — | — | 8.07 | (19.30 | ) | 7,720 | 1.59 | (f) | 4.86 | (f) | 1.12 | (f) | 16 | ||||||||||||||||||||||||||||||||||||
(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 annualized and based on average daily net assets (000’s omitted) of $5,907, $672, $13, $90 and $7,652 for Class A, Class C, Class R, Class Y and Institutional Class, respectively. | |
(e) | Commencement date of May 31, 2011. | |
(f) | Annualized. |
14 Invesco Emerging Markets 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,025.20 | $ | 9.27 | $ | 1,015.71 | $ | 9.22 | 1.84 | % | ||||||||||||||||||
C | 1,000.00 | 1,023.80 | 13.03 | 1,011.98 | 12.96 | 2.59 | ||||||||||||||||||||||||
R | 1,000.00 | 1,024.20 | 10.52 | 1,014.47 | 10.47 | 2.09 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,027.40 | 8.01 | 1,016.96 | 7.97 | 1.59 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,207.40 | 7.93 | 1,016.93 | 8.00 | 1.59 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
15 Invesco Emerging Markets Equity Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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. |
EME-SAR-1 Invesco Distributors, Inc.
Invesco Emerging Market Local Currency Debt Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: IAEMX § B: IBEMX § C: ICEMX § R: IREMX § Y: IYEMX § Institutional: IIEMX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Schedule of Investments | |
7 | Financial Statements | |
10 | Notes to Financial Statements | |
17 | Financial Highlights | |
18 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 4.56 | % | ||
Class B Shares | 4.16 | |||
Class C Shares | 4.16 | |||
Class R Shares | 4.52 | |||
Class Y Shares | 4.69 | |||
Institutional Class Shares | 4.69 | |||
JP Morgan Government Bond Index - Emerging Markets Global Diversified▼ (Broad Market/Style-Specific Index) | 4.05 | |||
Lipper Emerging Markets Debt Funds Index■ (Peer Group Index) | 6.15 | |||
Source(s): ▼Invesco, Bloomberg L.P.;■ Invesco, Lipper Inc. |
The JP Morgan Government Bond Index — Emerging Markets Global Diversified is a comprehensive global local emerging markets index and consists of liquid, fixed-rate, domestic-currency government bonds.
The Lipper Emerging Markets Debt Funds Index is an unmanaged index considered representative of emerging market debt funds tracked by Lipper.
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.
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (6/16/10) | 6.71 | % | ||
1 Year | -6.11 | |||
Class B Shares | ||||
Inception (6/16/10) | 6.70 | % | ||
1 Year | -6.53 | |||
Class C Shares | ||||
Inception (6/16/10) | 8.66 | % | ||
1 Year | -3.05 | |||
Class R Shares | ||||
Inception (6/16/10) | 9.26 | % | ||
1 Year | -1.58 | |||
Class Y Shares | ||||
Inception (6/16/10) | 9.79 | % | ||
1 Year | -1.17 | |||
Institutional Class Shares | ||||
Inception (6/16/10) | 9.74 | % | ||
1 Year | -1.18 | |||
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (6/16/10) | 6.57 | % | ||
1 Year | -2.65 | |||
Class B Shares | ||||
Inception (6/16/10) | 6.60 | % | ||
1 Year | -3.07 | |||
Class C Shares | ||||
Inception (6/16/10) | 8.65 | % | ||
1 Year | 0.46 | |||
Class R Shares | ||||
Inception (6/16/10) | 9.25 | % | ||
1 Year | 1.98 | |||
Class Y Shares | ||||
Inception (6/16/10) | 9.78 | % | ||
1 Year | 2.40 | |||
Institutional Class Shares | ||||
Inception (6/16/10) | 9.73 | % | ||
1 Year | 2.40 | |||
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 1.24%, 1.99%, 1.99%, 1.49%, 0.99% and 0.99%, 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 R, Class Y and Institutional Class shares was 1.86%, 2.61%, 2.61%, 2.11%, 1.61% and 1.36%, 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. 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, 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 February 28, 2013. See current prospectus for more information. |
2 | Invesco Emerging Market Local Currency Debt Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 | Invesco Emerging Market Local Currency Debt Fund |
Schedule of Investments
April 30, 2012
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
Non-U.S. Dollar Denominated Bonds & Notes–93.51%(a) | ||||||||
Brazil–9.77% | ||||||||
Banco Safra S.A., Sr. Unsec. Notes, 10.25%, 08/08/16(b) | BRL | 1,400,000 | $ | 767,778 | ||||
Oi S.A., Sr. Unsec. Notes, 9.75%, 09/15/16(b) | BRL | 860,000 | 477,276 | |||||
Brazil Notas do Tesouro Nacional, Series F, Notes, 10.00%, 01/01/21 | BRL | 3,700,000 | 1,873,782 | |||||
Unsub. Notes, 10.00%, 01/01/17 | BRL | 1,100,000 | 574,689 | |||||
Itau Unibanco Holding S.A., Sr. Unsec. Notes, 10.50%, 11/23/15(b) | BRL | 2,050,000 | 1,191,485 | |||||
4,885,010 | ||||||||
Chile–0.90% | ||||||||
Chile Government, Sr. Unsec. Global Notes, 5.50%, 08/05/20 | CLP | 209,000,000 | 451,480 | |||||
Colombia–2.10% | ||||||||
Colombia Government, Sr. Unsec. Global Bonds, 9.85%, 06/28/27 | COP | 530,000,000 | 440,062 | |||||
Empresas Publicas de Medellin, Sr. Unsec. Bonds, 8.38%, 02/01/21(b) | COP | 1,000,000,000 | 610,840 | |||||
1,050,902 | ||||||||
Germany–1.02% | ||||||||
KFW, Tranche 1, Sr. Unsec. Gtd. Medium-Term Euro Notes, 14.50%, 01/26/17 | TRY | 720,000 | 507,891 | |||||
Hungary–4.76% | ||||||||
Hungary Government, Series 15/A, Bonds, 8.00%, 02/12/15 | HUF | 153,000,000 | 709,406 | |||||
Series 17/B, Bonds, 6.75%, 02/24/17 | HUF | 348,500,000 | 1,536,955 | |||||
Series 20/A, Bonds, 7.50%, 11/12/20 | HUF | 30,000,000 | 134,479 | |||||
2,380,840 | ||||||||
Ireland–2.02% | ||||||||
RusHydro JSC via RusHydro Finance Ltd., Sr. Sec. Medium-Term Euro Loan Participation Notes, 7.88%, 10/28/15 | RUB | 30,000,000 | 1,011,078 | |||||
Luxembourg–2.09% | ||||||||
Russian Agricultural Bank OJSC Via RSHB Capital S.A., Sr. Unsec. Euro Loan Participation Notes, 7.50%, 03/25/13 | RUB | 30,600,000 | 1,047,703 | |||||
Malaysia–9.35% | ||||||||
Malaysia Government, Series 0111, Bonds, 4.16%, 07/15/21 | MYR | 6,781,000 | 2,350,280 | |||||
Series 0110, Sr. Unsec. Bonds, 3.84%, 08/12/15 | MYR | 1,700,000 | 572,413 | |||||
Series 0902, Sr. Unsec. Bonds, 4.38%, 11/29/19 | MYR | 5,000,000 | 1,750,923 | |||||
4,673,616 | ||||||||
Mali–1.85% | ||||||||
Sinochem Offshore Capital Co. Ltd., Sr. Unsec. Gtd. Euro. Notes, 1.80%, 01/18/14 | CNY | 6,000,000 | 927,311 | |||||
Mexico–4.31% | ||||||||
Mexican Bonos, Series M20, Bonds, 10.00%, 12/05/24 | MXN | 21,350,000 | 2,154,337 | |||||
Peru–3.87% | ||||||||
Peruvian Government, Sr. Unsec. Notes, 6.95%, 08/12/31(b) | PEN | 1,800,000 | 759,802 | |||||
8.20%, 08/12/26(b) | PEN | 2,460,000 | 1,175,379 | |||||
1,935,181 | ||||||||
Philippines–0.98% | ||||||||
Philippine Government, Sr. Unsec. Global Notes, 4.95%, 01/15/21 | PHP | 20,000,000 | 489,735 | |||||
Poland–9.26% | ||||||||
Poland Government, Series DS1015, Bonds, 6.25%, 10/24/15 | PLN | 6,125,000 | 2,038,285 | |||||
Series DS1017, Bonds, 5.25%, 10/25/17 | PLN | 6,855,000 | 2,207,414 | |||||
Series 1021, Bonds, 5.75%, 10/25/21 | PLN | 1,175,000 | 382,808 | |||||
4,628,507 | ||||||||
Russia–4.85% | ||||||||
Russia Foreign Bond, REGS, Sr. Unsec. Euro Bonds, 7.85%, 03/10/18(b) | RUB | 55,000,000 | 1,961,745 | |||||
Russian Agricultural Bank OJSC Via RSHB Capital S.A, Sr. Unsec. Medium-Term Euro Loan Participation Notes, 8.70%, 03/17/16 | RUB | 13,200,000 | 462,171 | |||||
2,423,916 | ||||||||
South Africa–5.67% | ||||||||
South Africa Government, Series R186, Bonds, 10.50%, 12/21/26 | ZAR | 9,370,000 | 1,442,757 | |||||
Series R208, Bonds, 6.75%, 03/31/21 | ZAR | 11,475,000 | 1,392,338 | |||||
2,835,095 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Emerging Market Local Currency Debt Fund
Principal | ||||||||
Amount | Value | |||||||
South Korea–0.64% | ||||||||
Export-Import Bank of Korea, Sr. Unsec. Notes, 8.30%, 03/15/14(b) | IDR | 2,850,000,000 | $ | 320,483 | ||||
Supranational–7.83% | ||||||||
Asian Development Bank, Series 421-00-2, Sr. Unsec. Medium-Term Euro Notes, 9.00%, 06/27/13 | ZAR | 8,950,000 | 1,177,450 | |||||
European Bank for Reconstruction & Development, Sr. Unsec. Medium-Term Euro Notes, 0.00%, 12/31/18(c) | ZAR | 5,600,000 | 454,436 | |||||
Sr. Unsec. Medium-Term Global Euro Notes, 8.00%, 02/18/13 | ZAR | 1,330,000 | 173,323 | |||||
European Investment Bank, Series 1629/08, Sr. Unsec. Medium-Term Euro Notes, 9.63%, 04/01/15 | TRY | 2,060,000 | 1,232,407 | |||||
International Bank for Reconstruction & Development, Sr. Unsec. Medium-Term Euro Notes, 10.00%, 03/02/17 | TRY | 1,400,000 | 878,528 | |||||
3,916,144 | ||||||||
Thailand–4.05% | ||||||||
Thailand Government, Sr. Unsec. Bonds, 3.88%, 06/13/19 | THB | 6,875,000 | 226,790 | |||||
4.13%, 11/18/16 | THB | 54,300,000 | 1,798,987 | |||||
2,025,777 | ||||||||
Turkey–4.47% | ||||||||
Turkey Government, Bonds, | ||||||||
4.63%, 04/01/20 | TRY | 650,000 | 447,968 | |||||
10.50%, 01/15/20 | TRY | 680,000 | 416,603 | |||||
11.00%, 08/06/14 | TRY | 1,290,000 | 762,042 | |||||
Unsec. Bonds, 9.50%, 01/12/22 | TRY | 1,040,000 | 608,438 | |||||
2,235,051 | ||||||||
United Kingdom–3.97% | ||||||||
Barclays Bank PLC, Series FR52, Sr. Unsec. Medium-Term Euro Notes, 10.50%, 08/19/30 | IDR | 13,200,000,000 | 1,984,962 | |||||
United States–9.75% | ||||||||
Citigroup Funding Inc., Unsec. Gtd. Medium-Term Euro Notes, 6.25%, 04/17/17 | IDR | 15,900,000,000 | 1,824,508 | |||||
General Electric Capital Corp., Sr. Unsec. Medium-Term Euro Notes, 8.87%, 06/02/18 | MXN | 17,800,000 | 1,432,557 | |||||
Morgan Stanley, Series G, Sr. Unsec. Medium-Term Euro Notes, 8.44%, 12/28/15 | MXN | 20,000,000 | 1,619,149 | |||||
4,876,214 | ||||||||
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $46,839,318) | 46,761,233 | |||||||
U.S. Dollar Denominated Bonds and Notes–0.94% | ||||||||
Hungary–0.94% | ||||||||
Hungary Government, Sr. Unsec. Global Notes, 4.75%, 02/03/15 | $ | 290,000 | 279,925 | |||||
6.25%, 01/29/20 | 200,000 | 193,000 | ||||||
Total U.S. Dollar Denominated Bonds and Notes (Cost $436,134) | 472,925 | |||||||
Shares | ||||||||
Money Market Funds–2.96% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 739,080 | 739,080 | ||||||
Premier Portfolio–Institutional Class(d) | 739,079 | 739,079 | ||||||
Total Money Market Funds (Cost $1,478,159) | 1,478,159 | |||||||
TOTAL INVESTMENTS–97.41% (Cost $48,753,611) | 48,712,317 | |||||||
OTHER ASSETS LESS LIABILITIES–2.59% | 1,294,979 | |||||||
NET ASSETS–100.00% | $ | 50,007,296 | ||||||
Investment Abbreviations:
BRL | – Brazillian Real | |
CLP | – Chilean Peso | |
CNY | – Chinese Yuan | |
COP | – Colombian Peso | |
Gtd. | – Guaranteed | |
HUF | – Hungary Forint | |
IDR | – Indonesian Rupiah | |
MXN | – Mexican Peso | |
MYR | – Malaysian Ringgit | |
PEN | – Peru Nuevo Sol | |
PHP | – Philippines Peso | |
PLN | – Poland Zloty | |
REGS | – Regulation S | |
RUB | – Russian Rouble | |
Sec. | – Secured | |
Sr. | – Senior | |
THB | – Thai Baht | |
TRY | – New Turkish Lira | |
Unsec. | – Unsecured | |
Unsub. | – Unsubordinated | |
ZAR | – South African Rand |
Notes to Schedule of Investments:
(a) | Foreign denominated security. Principal amount is denominated in currency indicated. | |
(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 April 30, 2012 was $7,264,788, which represented 14.53% of the Fund’s Net Assets. | |
(c) | Zero coupon bond issued at a discount. | |
(d) | 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.
5 Invesco Emerging Market Local Currency Debt Fund
By industry, based on Net Assets
as of April 30, 2012
Sovereign Debt | 59.2 | % | ||
Diversified Banks | 18.6 | |||
Other Diversified Financial Services | 7.4 | |||
Electric Utilities | 3.2 | |||
Investment Banking & Brokerage | 3.2 | |||
Diversified Chemicals | 1.9 | |||
Integrated Telecommunication Services | 1.0 | |||
Money Market Funds Plus Other Assets Less Liabilities | 5.5 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Emerging Market Local Currency Debt Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $47,275,452) | $ | 47,234,158 | ||
Investments in affiliated money market funds, at value and cost | 1,478,159 | |||
Total investments, at value (Cost $48,753,611) | 48,712,317 | |||
Foreign currencies, at value (Cost $293,528) | 302,776 | |||
Receivable for: | ||||
Fund shares sold | 125,237 | |||
Dividends and interest | 1,050,462 | |||
Investment for trustee deferred compensation and retirement plans | 5,649 | |||
Other assets | 55,831 | |||
Total assets | 50,252,272 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 138,539 | |||
Fund shares reacquired | 53,322 | |||
Accrued fees to affiliates | 9,424 | |||
Accrued other operating expenses | 36,298 | |||
Trustee deferred compensation and retirement plans | 7,393 | |||
Total liabilities | 244,976 | |||
Net assets applicable to shares outstanding | $ | 50,007,296 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 50,128,467 | ||
Undistributed net investment income | 144,456 | |||
Undistributed net realized gain (loss) | (225,799 | ) | ||
Unrealized appreciation (depreciation) | (39,828 | ) | ||
$ | 50,007,296 | |||
Net Assets: | ||||
Class A | $ | 12,415,792 | ||
Class B | $ | 894,513 | ||
Class C | $ | 3,501,396 | ||
Class R | $ | 632,214 | ||
Class Y | $ | 2,182,241 | ||
Institutional Class | $ | 30,381,140 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 1,270,125 | |||
Class B | 91,576 | |||
Class C | 358,355 | |||
Class R | 64,672 | |||
Class Y | 223,122 | |||
Institutional Class | 3,110,531 | |||
Class A: | ||||
Net asset value per share | $ | 9.78 | ||
Maximum offering price per share | ||||
(Net asset value of $9.78 divided by 95.25%) | $ | 10.27 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 9.77 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 9.77 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 9.78 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 9.78 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 9.77 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Emerging Market Local Currency Debt Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Interest | $ | 1,546,747 | ||
Dividends from affiliated money market funds | 600 | |||
Total investment income | 1,547,347 | |||
Expenses: | ||||
Advisory fees | 175,814 | |||
Administrative services fees | 24,863 | |||
Custodian fees | 13,437 | |||
Distribution fees: | ||||
Class A | 14,880 | |||
Class B | 4,248 | |||
Class C | 15,083 | |||
Class R | 1,189 | |||
Transfer agent fees — A, B, C, R and Y | 22,778 | |||
Transfer agent fees — Institutional | 410 | |||
Trustees’ and officers’ fees and benefits | 11,666 | |||
Registration and filing fees | 32,873 | |||
Professional services fees | 25,507 | |||
Other | 19,515 | |||
Total expenses | 362,263 | |||
Less: Fees waived and expenses reimbursed | (95,659 | ) | ||
Net expenses | 266,604 | |||
Net investment income | 1,280,743 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (116,816 | ) | ||
Foreign currencies | (88,314 | ) | ||
Swap agreements | 1,692 | |||
(203,438 | ) | |||
Change in net unrealized appreciation of: | ||||
Investment securities | 986,675 | |||
Foreign currencies | 57,537 | |||
Swap agreements | 472 | |||
1,044,684 | ||||
Net realized and unrealized gain | 841,246 | |||
Net increase in net assets resulting from operations | $ | 2,121,989 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Emerging Market Local Currency Debt Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,280,743 | $ | 2,359,214 | ||||
Net realized gain (loss) | (203,438 | ) | 3,326,426 | |||||
Change in net unrealized appreciation (depreciation) | 1,044,684 | (6,828,308 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 2,121,989 | (1,142,668 | ) | |||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (931,688 | ) | (355,179 | ) | ||||
Class B | (60,147 | ) | (32,336 | ) | ||||
Class C | (221,510 | ) | (57,061 | ) | ||||
Class R | (30,405 | ) | (3,770 | ) | ||||
Class Y | (95,858 | ) | (50,686 | ) | ||||
Institutional Class | (2,238,632 | ) | (2,130,960 | ) | ||||
Total distributions from net investment income | (3,578,240 | ) | (2,629,992 | ) | ||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (295,445 | ) | (37,695 | ) | ||||
Class B | (19,749 | ) | (8,132 | ) | ||||
Class C | (73,634 | ) | (8,445 | ) | ||||
Class R | (9,083 | ) | (837 | ) | ||||
Class Y | (25,872 | ) | (9,604 | ) | ||||
Institutional Class | (687,065 | ) | (476,938 | ) | ||||
Total distributions from net realized gains | (1,110,848 | ) | (541,651 | ) | ||||
Share transactions–net: | ||||||||
Class A | 288,005 | 12,108,990 | ||||||
Class B | 95,746 | 450,075 | ||||||
Class C | 608,278 | 2,967,745 | ||||||
Class R | 260,439 | 351,505 | ||||||
Class Y | 1,105,819 | 742,606 | ||||||
Institutional Class | 2,939,679 | (38,283,705 | ) | |||||
Net increase (decrease) in net assets resulting from share transactions | 5,297,966 | (21,662,784 | ) | |||||
Net increase (decrease) in net assets | 2,730,867 | (25,977,095 | ) | |||||
Net assets: | ||||||||
Beginning of period | 47,276,429 | 73,253,524 | ||||||
End of period (includes undistributed net investment income of $144,456 and $2,441,953, respectively) | $ | 50,007,296 | $ | 47,276,429 | ||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Emerging Market Local Currency Debt Fund
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Emerging Market Local Currency Debt Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 to provide total return.
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. 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 economic 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. |
10 Invesco Emerging Market Local Currency Debt Fund
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. 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. | 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 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. | |
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. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
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 |
11 Invesco Emerging Market Local Currency Debt Fund
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. | |
L. | 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. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. | ||
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. |
12 Invesco Emerging Market Local Currency Debt 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $500 million | 0 | .75% | ||
Next $500 million | 0 | .70% | ||
Next $500 million | 0 | .67% | ||
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 Canada 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(s) 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 February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual 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 1.24%, 1.99%, 1.99%, 1.49%, 0.99% and 0.99% 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 net annual 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, including litigation expenses; 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 February 28, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
The Adviser has contractually agreed, through at least June 30, 2012, to waive the advisory fee payable by the Class 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 six months ended April 30, 2012, the Adviser waived advisory fees of $72,471 and reimbursed Fund expenses of $15,204, $1,085, $3,853, $607, $2,029 and $410 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $3,029 in front-end sales commissions from the sale of Class A shares and $306, $36 and $1,226 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 the Adviser, IIS and/or IDI.
13 Invesco Emerging Market Local Currency Debt 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 April 30, 2012. 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 six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Corporate Debt Securities | $ | — | $ | 4,876,214 | $ | — | $ | 4,876,214 | ||||||||
Money Market Funds | 1,478,159 | — | — | 1,478,159 | ||||||||||||
Foreign Debt Securities | — | 13,225,122 | — | 13,225,122 | ||||||||||||
Foreign Government Debt Securities | — | 29,132,822 | — | 29,132,822 | ||||||||||||
$ | 1,478,159 | $ | 47,234,158 | $ | — | $ | 48,712,317 | |||||||||
NOTE 4—Derivative Investments
Effect of Derivative Instruments for the six months ended April 30, 2012
The table below summarizes the gains on derivative instruments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain on | ||||
Statement of Operations | ||||
Swap | ||||
Agreements* | ||||
Realized Gain | ||||
Interest rate risk | $ | 1,692 | ||
Change in Unrealized Appreciation | ||||
Interest rate risk | 472 | |||
Total | $ | 2,164 | ||
* | The average notional value of swap agreements during the period was $9,341. |
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.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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.
14 Invesco Emerging Market Local Currency Debt Fund
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
The Fund did not have a capital loss carryforward as of October 31, 2011.
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 six months ended April 30, 2012 was $6,216,675 and $4,720,186, 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 | $ | 1,503,536 | ||
Aggregate unrealized (depreciation) of investment securities | (1,544,830 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (41,294 | ) | |
Cost of investments for tax and financial reporting purposes is the same. |
15 Invesco Emerging Market Local Currency Debt Fund
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
414,374 | $ | 4,035,531 | 1,881,707 | $ | 20,475,302 | |||||||||||
Class B | 19,588 | 191,524 | 66,218 | 718,824 | ||||||||||||
Class C | 119,029 | 1,159,884 | 305,777 | 3,355,130 | ||||||||||||
Class R | 27,526 | 261,115 | 36,624 | 387,033 | ||||||||||||
Class Y | 159,306 | 1,542,554 | 163,593 | 1,742,215 | ||||||||||||
Institutional Class | 433,037 | 4,058,148 | 557,441 | 5,880,731 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 108,881 | 1,008,464 | 30,411 | 324,846 | ||||||||||||
Class B | 7,249 | 67,294 | 3,533 | 37,552 | ||||||||||||
Class C | 26,889 | 249,721 | 5,105 | 54,298 | ||||||||||||
Class R | 4,130 | 38,486 | 370 | 3,872 | ||||||||||||
Class Y | 8,516 | 79,676 | 4,534 | 48,370 | ||||||||||||
Institutional Class | 314,426 | 2,923,967 | 244,747 | 2,606,624 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 5,101 | 49,550 | 2,641 | 28,333 | ||||||||||||
Class B | (5,104 | ) | (49,550 | ) | (2,643 | ) | (28,333 | ) | ||||||||
Reacquired:(b) | ||||||||||||||||
Class A | (501,901 | ) | (4,805,540 | ) | (830,917 | ) | (8,719,491 | ) | ||||||||
Class B | (11,554 | ) | (113,522 | ) | (26,698 | ) | (277,968 | ) | ||||||||
Class C | (84,835 | ) | (801,327 | ) | (41,861 | ) | (441,683 | ) | ||||||||
Class R | (4,213 | ) | (39,162 | ) | (3,718 | ) | (39,400 | ) | ||||||||
Class Y | (53,767 | ) | (516,411 | ) | (97,916 | ) | (1,047,979 | ) | ||||||||
Institutional Class | (433,017 | ) | (4,042,436 | ) | (4,329,405 | ) | (46,771,060 | ) | ||||||||
Net increase (decrease) in share activity | 553,661 | $ | 5,297,966 | (2,030,457 | ) | $ | (21,662,784 | ) | ||||||||
(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 Fund has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. | |
In addition, 60% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by Invesco. | ||
(b) | Net of redemption fees of $129 and $2,715 allocated among the classes based on relative net assets of each class for the six months ended April 30,2012 and the year ended October 31, 2011, respectively. |
16 Invesco Emerging Market Local Currency Debt 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | on securities | Dividends | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | (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 | absorbed | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 10.36 | $ | 0.26 | $ | 0.15 | $ | 0.41 | $ | (0.75 | ) | $ | (0.24 | ) | $ | (0.99 | ) | $ | 9.78 | 4.66 | % | $ | 12,416 | 1.24 | %(e) | 1.80 | %(e) | 5.36 | %(e) | 10 | % | |||||||||||||||||||||||||
Year ended 10/31/11 | 11.11 | 0.53 | (0.49 | ) | 0.04 | (0.63 | ) | (0.16 | ) | (0.79 | ) | 10.36 | 0.34 | 12,886 | 1.23 | 1.86 | 4.97 | 106 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10(f) | 10.00 | 0.21 | 1.07 | 1.28 | (0.17 | ) | — | (0.17 | ) | 11.11 | 12.90 | 1,776 | 1.24 | (g) | 1.76 | (g) | 5.06 | (g) | 22 | |||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.35 | 0.22 | 0.16 | 0.38 | (0.72 | ) | (0.24 | ) | (0.96 | ) | 9.77 | 4.26 | 895 | 1.99 | (e) | 2.55 | (e) | 4.61 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.10 | 0.45 | (0.49 | ) | (0.04 | ) | (0.55 | ) | (0.16 | ) | (0.71 | ) | 10.35 | (0.42 | ) | 843 | 1.98 | 2.61 | 4.22 | 106 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10(f) | 10.00 | 0.18 | 1.07 | 1.25 | (0.15 | ) | — | (0.15 | ) | 11.10 | 12.52 | 455 | 1.99 | (g) | 2.51 | (g) | 4.31 | (g) | 22 | |||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.36 | 0.22 | 0.15 | 0.37 | (0.72 | ) | (0.24 | ) | (0.96 | ) | 9.77 | 4.16 | 3,501 | 1.99 | (e) | 2.55 | (e) | 4.61 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.10 | 0.45 | (0.48 | ) | (0.03 | ) | (0.55 | ) | (0.16 | ) | (0.71 | ) | 10.36 | (0.33 | ) | 3,079 | 1.98 | 2.61 | 4.22 | 106 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/10(f) | 10.00 | 0.18 | 1.07 | 1.25 | (0.15 | ) | — | (0.15 | ) | 11.10 | 12.52 | 314 | 1.99 | (g) | 2.51 | (g) | 4.31 | (g) | 22 | |||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.36 | 0.25 | 0.16 | 0.41 | (0.75 | ) | (0.24 | ) | (0.99 | ) | 9.78 | 4.52 | 632 | 1.49 | (e) | 2.05 | (e) | 5.11 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.11 | 0.49 | (0.48 | ) | 0.01 | (0.60 | ) | (0.16 | ) | (0.76 | ) | 10.36 | 0.09 | 386 | 1.48 | 2.11 | 4.72 | 106 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10(f) | 10.00 | 0.20 | 1.07 | 1.27 | (0.16 | ) | — | (0.16 | ) | 11.11 | 12.81 | 44 | 1.49 | (g) | 2.01 | (g) | 4.81 | (g) | 22 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.37 | 0.27 | 0.15 | 0.42 | (0.77 | ) | (0.24 | ) | (1.01 | ) | 9.78 | 4.69 | 2,182 | 0.99 | (e) | 1.55 | (e) | 5.61 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.11 | 0.56 | (0.49 | ) | 0.07 | (0.65 | ) | (0.16 | ) | (0.81 | ) | 10.37 | 0.69 | 1,131 | 0.98 | 1.61 | 5.22 | 106 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10(f) | 10.00 | 0.22 | 1.07 | 1.29 | (0.18 | ) | — | (0.18 | ) | 11.11 | 13.00 | 432 | 0.99 | (g) | 1.51 | (g) | 5.31 | (g) | 22 | |||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 10.35 | 0.27 | 0.16 | 0.43 | (0.77 | ) | (0.24 | ) | (1.01 | ) | 9.77 | 4.79 | 30,381 | 0.99 | (e) | 1.30 | (e) | 5.61 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 11.11 | 0.56 | (0.51 | ) | 0.05 | (0.65 | ) | (0.16 | ) | (0.81 | ) | 10.35 | 0.50 | 28,952 | 0.98 | 1.36 | 5.22 | 106 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10(f) | 10.00 | 0.21 | 1.08 | 1.29 | (0.18 | ) | — | (0.18 | ) | 11.11 | 13.00 | 70,233 | 0.99 | (g) | 1.29 | (g) | 5.31 | (g) | 22 | |||||||||||||||||||||||||||||||||||||
(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) | 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 $11,970, $854, $3,033, $478, $1,597 and $29,209 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(f) | Commencement date of June 16, 2010. | |
(g) | Annualized. |
17 Invesco Emerging Market Local Currency Debt 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 1,045.60 | $ | 6.31 | $ | 1,018.70 | $ | 6.22 | 1.24 | % | ||||||||||||||||||
Class B | 1,000.00 | 1,041.60 | 10.10 | 1,014.97 | 9.97 | 1.99 | ||||||||||||||||||||||||
Class C | 1,000.00 | 1,041.60 | 10.10 | 1,014.97 | 9.97 | 1.99 | ||||||||||||||||||||||||
Class R | 1,000.00 | 1,045.20 | 7.58 | 1,017.45 | 7.47 | 1.49 | ||||||||||||||||||||||||
Class Y | 1,000.00 | 1,046.90 | 5.04 | 1,019.94 | 4.97 | 0.99 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,046.90 | 5.04 | 1,019.94 | 4.97 | 0.99 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
18 Invesco Emerging Market Local Currency Debt Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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. |
EMLCD-SAR-1 Invesco Distributors, Inc.
Invesco Endeavor Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: ATDAX § B: ATDBX § C: ATDCX § R: ATDRX § Y: ATDYX § Institutional: ATDIX
A: ATDAX § B: ATDBX § C: ATDCX § R: ATDRX § Y: ATDYX § Institutional: ATDIX
2 | Fund Performance | |
4 | Letters to Shareholders | |
5 | Schedule of Investments | |
7 | Financial Statements | |
9 | Notes to Financial Statements | |
16 | Financial Highlights | |
17 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 7.09 | % | ||
Class B Shares | 6.75 | |||
Class C Shares | 6.68 | |||
Class R Shares | 7.00 | |||
Class Y Shares | 7.22 | |||
Institutional Class Shares | 7.37 | |||
S&P 500 Index▼ (Broad Market Index) | 12.77 | |||
Russell Midcap Index▼ (Style-Specific Index) | 11.87 | |||
Lipper Mid-Cap Core Funds Index▼ (Peer Group Index) | 11.23 | |||
Source: ▼ Lipper Inc. |
The S&P 500® Index is an unmanaged index considered representative of the US stock market.
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.
The Lipper Mid-Cap Core Funds Index is an unmanaged index considered representative of mid-cap core funds tracked by Lipper.
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.
2 Invesco Endeavor Fund
Average Annual Total Returns
As of 4/30/12, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (11/4/03) | 8.05 | % | ||||||
5 | Years | 0.82 | ||||||
1 | Year | -8.08 | ||||||
Class B Shares | ||||||||
Inception (11/4/03) | 8.02 | % | ||||||
5 | Years | 0.84 | ||||||
1 | Year | -8.24 | ||||||
Class C Shares | ||||||||
Inception (11/4/03) | 7.99 | % | ||||||
5 | Years | 1.21 | ||||||
1 | Year | -4.39 | ||||||
Class R Shares | ||||||||
Inception | 8.51 | % | ||||||
5 | Years | 1.74 | ||||||
1 | Year | -2.92 | ||||||
Class Y Shares | ||||||||
Inception | 8.89 | % | ||||||
5 | Years | 2.16 | ||||||
1 | Year | -2.43 | ||||||
Institutional Class Shares | ||||||||
Inception | 9.30 | % | ||||||
5 | Years | 2.53 | ||||||
1 | Year | -2.24 | ||||||
Class R shares incepted on April 30, 2004. 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 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 share 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 share 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.
Average Annual Total Returns
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (11/4/03) | 8.48 | % | ||||||
5 | Years | 1.93 | ||||||
1 | Year | -2.53 | ||||||
Class B Shares | ||||||||
Inception (11/4/03) | 8.45 | % | ||||||
5 | Years | 1.95 | ||||||
1 | Year | -2.65 | ||||||
Class C Shares | ||||||||
Inception (11/4/03) | 8.43 | % | ||||||
5 | Years | 2.33 | ||||||
1 | Year | 1.41 | ||||||
Class R Shares | ||||||||
Inception | 8.96 | % | ||||||
5 | Years | 2.86 | ||||||
1 | Year | 2.91 | ||||||
Class Y Shares | ||||||||
Inception | 9.33 | % | ||||||
5 | Years | 3.28 | ||||||
1 | Year | 3.37 | ||||||
Institutional Class Shares | ||||||||
Inception | 9.75 | % | ||||||
5 | Years | 3.68 | ||||||
1 | Year | 3.67 | ||||||
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 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 1.37%, 2.12%, 2.12%, 1.62%, 1.12% 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 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.
3 Invesco Endeavor Fund
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
4 Invesco Endeavor Fund
Schedule of Investments(a)
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–77.06% | ||||||||
Airlines–1.88% | ||||||||
Ryanair Holdings PLC–ADR (Ireland)(b) | 148,800 | $ | 5,010,096 | |||||
Brewers–3.86% | ||||||||
Molson Coors Brewing Co.–Class B | 246,908 | 10,266,435 | ||||||
Building Products–2.24% | ||||||||
Kingspan Group PLC (Ireland) | 571,400 | 5,961,034 | ||||||
Communications Equipment–1.59% | ||||||||
Plantronics, Inc. | 110,000 | 4,215,200 | ||||||
Construction & Engineering–13.03% | ||||||||
Orion Marine Group, Inc.(b)(c) | 1,501,706 | 10,391,805 | ||||||
Pike Electric Corp.(b) | 1,548,471 | 12,728,432 | ||||||
Quanta Services, Inc.(b) | 521,100 | 11,526,732 | ||||||
34,646,969 | ||||||||
Environmental & Facilities Services–5.60% | ||||||||
Newalta Corp. (Canada) | 1,040,369 | 14,881,974 | ||||||
Forest Products–4.27% | ||||||||
Louisiana-Pacific Corp.(b) | 1,254,250 | 11,350,962 | ||||||
Health Care Distributors–3.33% | ||||||||
Patterson Cos. Inc. | 260,000 | 8,863,400 | ||||||
Health Care Equipment–4.82% | ||||||||
Zimmer Holdings, Inc. | 203,500 | 12,806,255 | ||||||
Home Entertainment Software–3.70% | ||||||||
Activision Blizzard, Inc. | 765,000 | 9,845,550 | ||||||
Industrial Conglomerates–2.42% | ||||||||
DCC PLC (Ireland) | 254,531 | 6,436,196 | ||||||
Leisure Facilities–0.61% | ||||||||
International Speedway Corp.–Class A | 60,608 | 1,617,627 | ||||||
Life & Health Insurance–2.72% | ||||||||
Unum Group | 305,000 | 7,240,700 | ||||||
Managed Health Care–2.85% | ||||||||
UnitedHealth Group Inc. | 135,000 | 7,580,250 | ||||||
Multi-Line Insurance–2.38% | ||||||||
Vienna Insurance Group AG Wiener Versicherung Gruppe (Austria) | 155,473 | 6,339,586 | ||||||
Oil & Gas Exploration & Production–5.84% | ||||||||
Progress Energy Resources Corp. (Canada) | 647,200 | 7,121,952 | ||||||
Ultra Petroleum Corp. (Canada)(b) | 425,000 | 8,398,000 | ||||||
15,519,952 | ||||||||
Paper Products–2.53% | ||||||||
Fortress Paper Ltd.–Class A (Canada)(b) | 265,000 | 6,712,189 | ||||||
Semiconductors–4.55% | ||||||||
International Rectifier Corp.(b) | 554,598 | 12,106,874 | ||||||
Technology Distributors–2.51% | ||||||||
Brightpoint, Inc.(b) | 1,090,173 | 6,671,859 | ||||||
Trading Companies & Distributors–3.75% | ||||||||
Grafton Group PLC (Ireland)(d) | 2,278,806 | 9,955,807 | ||||||
Trucking–2.58% | ||||||||
Con-way Inc. | 211,300 | 6,867,250 | ||||||
Total Common Stocks & Other Equity Interests (Cost $181,358,005) | 204,896,165 | |||||||
Money Market Funds–22.81% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 30,317,688 | 30,317,688 | ||||||
Premier Portfolio–Institutional Class(e) | 30,317,687 | 30,317,687 | ||||||
Total Money Market Funds (Cost $60,635,375) | 60,635,375 | |||||||
TOTAL INVESTMENTS–99.87% (Cost $241,993,380) | 265,531,540 | |||||||
OTHER ASSETS LESS LIABILITIES–0.13% | 346,897 | |||||||
NET ASSETS–100.00% | $ | 265,878,437 | ||||||
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) | Affiliated company during the period. The Investment Company Act of 1940 defines affiliates as those issuances in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The value of this security as of April 30, 2012 represented 3.91% of the Fund’s Net Assets. See Note 5. | |
(d) | Each unit is comprised of one ordinary share of Euro 0.05, one C share and seventeen Class A shares. | |
(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.
5 Invesco Endeavor Fund
By sector, based on Net Assets
as of April 30, 2012
Industrials | 31.5 | % | ||
Information Technology | 12.4 | |||
Health Care | 11.0 | |||
Materials | 6.8 | |||
Energy | 5.8 | |||
Financials | 5.1 | |||
Consumer Staples | 3.9 | |||
Consumer Discretionary | 0.6 | |||
Money Market Funds Plus Other Assets Less Liabilities | 22.9 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Endeavor Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $167,111,426) | $ | 194,504,360 | ||
Investments in affiliates, at value (Cost $74,881,954) | 71,027,180 | |||
Total investments, at value (Cost $241,993,380) | 265,531,540 | |||
Foreign currencies, at value (Cost $218) | 219 | |||
Receivable for: | ||||
Fund shares sold | 739,023 | |||
Dividends | 249,739 | |||
Investment for trustee deferred compensation and retirement plans | 19,729 | |||
Other assets | 37,667 | |||
Total assets | 266,577,917 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 427,624 | |||
Foreign currency contracts outstanding | 49,554 | |||
Accrued fees to affiliates | 138,284 | |||
Accrued other operating expenses | 47,129 | |||
Trustee deferred compensation and retirement plans | 36,889 | |||
Total liabilities | 699,480 | |||
Net assets applicable to shares outstanding | $ | 265,878,437 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 236,867,679 | ||
Undistributed net investment income (loss) | (535,292 | ) | ||
Undistributed net realized gain | 6,057,474 | |||
Unrealized appreciation | 23,488,576 | |||
$ | 265,878,437 | |||
Net Assets: | ||||
Class A | $ | 108,182,337 | ||
Class B | $ | 6,868,783 | ||
Class C | $ | 24,775,178 | ||
Class R | $ | 19,030,196 | ||
Class Y | $ | 10,823,790 | ||
Institutional Class | $ | 96,198,153 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 6,203,437 | |||
Class B | 415,880 | |||
Class C | 1,499,393 | |||
Class R | 1,107,210 | |||
Class Y | 615,047 | |||
Institutional Class | 5,391,677 | |||
Class A: | ||||
Net asset value per share | $ | 17.44 | ||
Maximum offering price per share (Net asset value of $17.44 divided by 94.50%) | $ | 18.46 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 16.52 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 16.52 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 17.19 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 17.60 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 17.84 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Endeavor Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $24,808) | $ | 1,000,082 | ||
Dividends from affiliated money market funds | 35,285 | |||
Total investment income | 1,035,367 | |||
Expenses: | ||||
Advisory fees | 893,384 | |||
Administrative services fees | 52,444 | |||
Custodian fees | 12,660 | |||
Distribution fees: | ||||
Class A | 120,741 | |||
Class B | 36,701 | |||
Class C | 111,641 | |||
Class R | 42,214 | |||
Transfer agent fees — A, B, C, R and Y | 197,407 | |||
Transfer agent fees — Institutional | 4,773 | |||
Trustees’ and officers’ fees and benefits | 17,134 | |||
Other | 89,656 | |||
Total expenses | 1,578,755 | |||
Less: Fees waived and expense offset arrangement(s) | (34,263 | ) | ||
Net expenses | 1,544,492 | |||
Net investment income (loss) | (509,125 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 6,198,827 | |||
Foreign currencies | (43,677 | ) | ||
Foreign currency contracts | 172,050 | |||
6,327,200 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 9,979,715 | |||
Foreign currencies | (844 | ) | ||
Foreign currency contracts | 12,167 | |||
9,991,038 | ||||
Net realized and unrealized gain | 16,318,238 | |||
Net increase in net assets resulting from operations | $ | 15,809,113 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Endeavor Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (509,125 | ) | $ | (936,646 | ) | ||
Net realized gain | 6,327,200 | 10,468,280 | ||||||
Change in net unrealized appreciation | 9,991,038 | 12,283,669 | ||||||
Net increase in net assets resulting from operations | 15,809,113 | 21,815,303 | ||||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (416,024 | ) | — | |||||
Class B | (34,950 | ) | — | |||||
Class C | (100,196 | ) | — | |||||
Class R | (68,213 | ) | — | |||||
Class Y | (26,543 | ) | — | |||||
Institutional Class | (385,185 | ) | — | |||||
Total distributions from net realized gains | (1,031,111 | ) | — | |||||
Share transactions–net: | ||||||||
Class A | 10,533,114 | 1,659,003 | ||||||
Class B | (1,130,009 | ) | (2,446,312 | ) | ||||
Class C | 2,727,039 | (465,019 | ) | |||||
Class R | 3,238,401 | 476,691 | ||||||
Class Y | 4,683,581 | 1,253,030 | ||||||
Institutional Class | 2,565,907 | 3,396,515 | ||||||
Net increase in net assets resulting from share transactions | 22,618,033 | 3,873,908 | ||||||
Net increase in net assets | 37,396,035 | 25,689,211 | ||||||
Net assets: | ||||||||
Beginning of period | 228,482,402 | 202,793,191 | ||||||
End of period (includes undistributed net investment income (loss) of $(535,292) and $(26,167), respectively) | $ | 265,878,437 | $ | 228,482,402 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Endeavor Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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.
9 Invesco Endeavor Fund
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. 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 economic 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 |
10 Invesco Endeavor 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 declared and 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. | 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. |
11 Invesco Endeavor 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $250 million | 0 | .745% | ||
Next $250 million | 0 | .73% | ||
Next $500 million | 0 | .715% | ||
Next $1.5 billion | 0 | .70% | ||
Next $2.5 billion | 0 | .685% | ||
Next $2.5 billion | 0 | .67% | ||
Next $2.5 billion | 0 | .655% | ||
Over $10 billion | 0 | .64% | ||
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 Canada 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 February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses (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% 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 total annual 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, including litigation expenses; 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 February 28, 2013. The Adviser did not waive fees and/or reimburse expenses under this expense limitation.
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 six months ended April 30, 2012, the Adviser waived advisory fees of $33,904.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $12,385 in front-end sales commissions from the sale of Class A shares and $0, $4,631 and $685 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 the Adviser, IIS and/or IDI.
12 Invesco Endeavor 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 April 30, 2012. 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 six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 265,531,540 | $ | — | $ | — | $ | 265,531,540 | ||||||||
Foreign Currency Contracts* | — | (49,554 | ) | — | (49,554 | ) | ||||||||||
Total Investments | $ | 265,531,540 | $ | (49,554 | ) | $ | — | $ | 265,481,986 | |||||||
* | Unrealized appreciation (depreciation) |
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Currency risk(a) | ||||||||
Foreign currency contracts | $ | — | $ | (49,554 | ) | |||
(a) | Values are disclosed on the Statement of Assets and Liabilities under the Foreign currency contracts outstanding. |
Effect of Derivative Instruments for the six months ended April 30, 2012
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 | ||||
Foreign Currency Contracts* | ||||
Realized Gain | ||||
Currency risk | $ | 172,050 | ||
Change in Unrealized Appreciation | ||||
Currency risk | 12,167 | |||
Total | $ | 184,217 | ||
* | The average notional value of foreign currency contracts outstanding during the period was $3,969,021. |
Open Foreign Currency Contracts | ||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||
Contract to | Notional | Appreciation | ||||||||||||||||||||||
Settlement Date | Counterparty | Deliver | Receive | Value | (Depreciation) | |||||||||||||||||||
06/15/12 | Scotia McLeod | EUR | 3,000,000 | USD | 3,923,130 | $ | 3,972,684 | $ | (49,554 | ) | ||||||||||||||
Currency Abbreviations: | ||
EUR | – Euro | |
USD | – U.S. Dollar |
13 Invesco Endeavor Fund
NOTE 5—Investments in Other Affiliates
The 1940 Act affiliates as those issuances in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The following is a summary of the investments in affiliates for the six months ended April 30, 2012.
Change in | ||||||||||||||||||||
Value | Purchases | Proceeds | Unrealized | Realized | Value | Dividend | ||||||||||||||
10/31/11 | at Cost | from Sales | Appreciation | Gain | 04/30/12 | Income | ||||||||||||||
Orion Marine Group, Inc. | $9,811,550 | $307,561 | $— | $272,694 | $— | $10,391,805 | $ | — | ||||||||||||
NOTE 6—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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $359.
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.
NOTE 8—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 did not have a capital loss carryforward as of October 31, 2011.
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 six months ended April 30, 2012 was $34,756,570 and $24,297,989, 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 | $ | 33,563,486 | ||
Aggregate unrealized (depreciation) of investment securities | (10,346,717 | ) | ||
Net unrealized appreciation of investment securities | $ | 23,216,769 | ||
Cost of investments for tax purposes is $242,314,771. |
14 Invesco Endeavor Fund
NOTE 11—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 1,563,573 | $ | 26,812,036 | 2,250,578 | $ | 37,036,191 | ||||||||||
Class B | 22,845 | 365,991 | 87,343 | 1,363,653 | ||||||||||||
Class C | 344,333 | 5,520,092 | 378,193 | 6,046,481 | ||||||||||||
Class R | 403,968 | 6,793,138 | 328,658 | 5,318,586 | ||||||||||||
Class Y | 330,416 | 5,829,811 | 160,728 | 2,693,363 | ||||||||||||
Institutional Class | 778,436 | 13,630,893 | 1,334,279 | 22,166,183 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 24,634 | 392,420 | — | — | ||||||||||||
Class B | 2,200 | 33,305 | — | — | ||||||||||||
Class C | 6,418 | 97,166 | — | — | ||||||||||||
Class R | 4,339 | 68,213 | — | — | ||||||||||||
Class Y | 1,456 | 23,392 | — | — | ||||||||||||
Institutional Class | 23,664 | 385,012 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 41,461 | 718,970 | 80,655 | 1,357,508 | ||||||||||||
Class B | (43,722 | ) | (718,970 | ) | (84,506 | ) | (1,357,508 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (1,048,472 | ) | (17,390,312 | ) | (2,223,934 | ) | (36,734,696 | ) | ||||||||
Class B | (50,298 | ) | (810,335 | ) | (155,202 | ) | (2,452,457 | ) | ||||||||
Class C | (182,193 | ) | (2,890,219 | ) | (419,364 | ) | (6,511,500 | ) | ||||||||
Class R | (212,961 | ) | (3,622,950 | ) | (295,369 | ) | (4,841,895 | ) | ||||||||
Class Y | (68,715 | ) | (1,169,622 | ) | (88,061 | ) | (1,440,333 | ) | ||||||||
Institutional Class | (666,099 | ) | (11,449,998 | ) | (1,128,095 | ) | (18,769,668 | ) | ||||||||
Net increase in share activity | 1,275,283 | $ | 22,618,033 | 225,903 | $ | 3,873,908 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 11% 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 Fund 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, 27% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by Invesco. |
15 Invesco Endeavor 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 | 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 16.36 | $ | (0.04 | ) | $ | 1.19 | $ | 1.15 | $ | — | $ | (0.07 | ) | $ | (0.07 | ) | $ | 17.44 | 7.09 | % | $ | 108,182 | 1.37 | %(d) | 1.40 | %(d) | (0.51 | )%(d) | 13 | % | |||||||||||||||||||||||||
Year ended 10/31/11 | 14.78 | (0.08 | ) | 1.66 | 1.58 | — | — | — | 16.36 | 10.61 | 91,975 | 1.34 | 1.37 | (0.49 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.51 | (0.05 | ) | 2.32 | 2.27 | — | — | — | 14.78 | 18.15 | 81,536 | 1.45 | 1.47 | (0.36 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 8.99 | (0.04 | ) | 3.60 | 3.56 | (0.04 | ) | — | (0.04 | ) | 12.51 | 39.91 | 78,496 | 1.71 | 1.72 | (0.35 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.73 | 0.05 | (6.42 | ) | (6.37 | ) | (0.04 | ) | (1.33 | ) | (1.37 | ) | 8.99 | (41.00 | ) | 54,056 | 1.52 | 1.53 | 0.42 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.66 | 0.07 | 1.82 | 1.89 | — | (0.82 | ) | (0.82 | ) | 16.73 | 12.44 | 159,244 | 1.35 | 1.39 | 0.40 | 39 | ||||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 15.55 | (0.10 | ) | 1.14 | 1.04 | — | (0.07 | ) | (0.07 | ) | 16.52 | 6.75 | 6,869 | 2.12 | (d) | 2.15 | (d) | (1.26 | )(d) | 13 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 14.16 | (0.20 | ) | 1.59 | 1.39 | — | — | — | 15.55 | 9.82 | 7,542 | 2.09 | 2.12 | (1.24 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.07 | (0.15 | ) | 2.24 | 2.09 | — | — | — | 14.16 | 17.32 | 9,025 | 2.20 | 2.22 | (1.11 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 8.70 | (0.10 | ) | 3.47 | 3.37 | — | — | — | 12.07 | 38.74 | 8,823 | 2.46 | 2.47 | (1.10 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.30 | (0.04 | ) | (6.23 | ) | (6.27 | ) | — | (1.33 | ) | (1.33 | ) | 8.70 | (41.41 | ) | 7,771 | 2.27 | 2.28 | (0.33 | ) | 30 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.39 | (0.06 | ) | 1.79 | 1.73 | — | (0.82 | ) | (0.82 | ) | 16.30 | 11.58 | 22,258 | 2.10 | 2.14 | (0.35 | ) | 39 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 15.56 | (0.10 | ) | 1.13 | 1.03 | — | (0.07 | ) | (0.07 | ) | 16.52 | 6.68 | 24,775 | 2.12 | (d) | 2.15 | (d) | (1.26 | )(d) | 13 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 14.17 | (0.20 | ) | 1.59 | 1.39 | — | — | — | 15.56 | 9.81 | 20,710 | 2.09 | 2.12 | (1.24 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.08 | (0.15 | ) | 2.24 | 2.09 | — | — | — | 14.17 | 17.30 | 19,436 | 2.20 | 2.22 | (1.11 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 8.70 | (0.10 | ) | 3.48 | 3.38 | — | — | — | 12.08 | 38.85 | 16,995 | 2.46 | 2.47 | (1.10 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.30 | (0.04 | ) | (6.23 | ) | (6.27 | ) | — | (1.33 | ) | (1.33 | ) | 8.70 | (41.41 | ) | 14,941 | 2.27 | 2.28 | (0.33 | ) | 30 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.39 | (0.06 | ) | 1.79 | 1.73 | — | (0.82 | ) | (0.82 | ) | 16.30 | 11.58 | 41,790 | 2.10 | 2.14 | (0.35 | ) | 39 | ||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 16.14 | (0.06 | ) | 1.18 | 1.12 | — | (0.07 | ) | (0.07 | ) | 17.19 | 7.00 | 19,030 | 1.62 | (d) | 1.65 | (d) | (0.76 | )(d) | 13 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 14.63 | (0.12 | ) | 1.63 | 1.51 | — | — | — | 16.14 | 10.32 | 14,721 | 1.59 | 1.62 | (0.74 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.40 | (0.08 | ) | 2.31 | 2.23 | — | — | — | 14.63 | 17.98 | 12,850 | 1.70 | 1.72 | (0.61 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 8.91 | (0.06 | ) | 3.56 | 3.50 | (0.01 | ) | — | (0.01 | ) | 12.40 | 39.43 | 5,787 | 1.96 | 1.97 | (0.60 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.59 | 0.02 | (6.35 | ) | (6.33 | ) | (0.02 | ) | (1.33 | ) | (1.35 | ) | 8.91 | (41.06 | ) | 4,317 | 1.77 | 1.78 | 0.17 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.58 | 0.03 | 1.80 | 1.83 | — | (0.82 | ) | (0.82 | ) | 16.59 | 12.11 | 4,905 | 1.60 | 1.64 | 0.15 | 39 | ||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 16.49 | (0.02 | ) | 1.20 | 1.18 | — | (0.07 | ) | (0.07 | ) | 17.60 | 7.22 | 10,824 | 1.12 | (d) | 1.15 | (d) | (0.26 | )(d) | 13 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 14.86 | (0.04 | ) | 1.67 | 1.63 | — | — | — | 16.49 | 10.97 | 5,802 | 1.09 | 1.12 | (0.24 | ) | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.55 | (0.01 | ) | 2.32 | 2.31 | — | — | — | 14.86 | 18.41 | 4,150 | 1.20 | 1.22 | (0.11 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.00 | (0.01 | ) | 3.61 | 3.60 | (0.05 | ) | — | (0.05 | ) | 12.55 | 40.24 | 1,323 | 1.46 | 1.47 | (0.10 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08(e) | 11.18 | 0.00 | (2.18 | ) | (2.18 | ) | — | — | — | 9.00 | (19.50 | ) | 343 | 1.32 | (f) | 1.34 | (f) | 0.62 | (f) | 30 | ||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 16.69 | 0.00 | 1.22 | 1.22 | — | (0.07 | ) | (0.07 | ) | 17.84 | 7.37 | 96,198 | 0.87 | (d) | 0.90 | (d) | (0.01 | )(d) | 13 | |||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 15.01 | 0.00 | 1.68 | 1.68 | — | — | — | 16.69 | 11.19 | 87,733 | 0.85 | 0.88 | 0.00 | 30 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.62 | 0.02 | 2.37 | 2.39 | — | — | — | 15.01 | 18.94 | 75,795 | 0.94 | 0.96 | 0.16 | 38 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.12 | 0.03 | 3.60 | 3.63 | (0.13 | ) | — | (0.13 | ) | 12.62 | 40.76 | 2,655 | 1.08 | 1.09 | 0.28 | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.94 | 0.12 | (6.49 | ) | (6.37 | ) | (0.12 | ) | (1.33 | ) | (1.45 | ) | 9.12 | (40.66 | ) | 2,329 | 0.98 | 0.99 | 0.96 | 30 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.78 | 0.15 | 1.83 | 1.98 | — | (0.82 | ) | (0.82 | ) | 16.94 | 12.94 | 5,864 | 0.90 | 0.94 | 0.85 | 39 | ||||||||||||||||||||||||||||||||||||||||
(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 annualized and based on average daily net assets (000’s omitted) of $97,124, $7,381, $22,451, $16,978, $7,322, and $89,898 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. |
16 Invesco Endeavor 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,070.90 | $ | 7.05 | $ | 1,018.05 | $ | 6.87 | 1.37 | % | ||||||||||||||||||
B | 1,000.00 | 1,067.50 | 10.90 | 1,014.32 | 10.62 | 2.12 | ||||||||||||||||||||||||
C | 1,000.00 | 1,066.80 | 10.89 | 1,014.32 | 10.62 | 2.12 | ||||||||||||||||||||||||
R | 1,000.00 | 1,070.00 | 8.34 | 1,016.81 | 8.12 | 1.62 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,072.20 | 5.77 | 1,019.29 | 5.62 | 1.12 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,073.70 | 4.49 | 1,020.54 | 4.37 | 0.87 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
17 Invesco Endeavor Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
A description of the policies and procedures that the Fund uses to determine how to voteproxies 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, 2011, is available at 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 US 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 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 US 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.
END-SAR-1 | Invesco Distributors, Inc. |
Invesco Global Health Care Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: GGHCX § B: GTHBX § C: GTHCX § Y: GGHYX § Investor: GTHIX
A: GGHCX § B: GTHBX § C: GTHCX § Y: GGHYX § Investor: GTHIX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Schedule of Investments | |
6 | Financial Statements | |
8 | Notes to Financial Statements | |
15 | Financial Highlights | |
16 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 13.59 | % | ||
Class B Shares | 13.14 | |||
Class C Shares | 13.17 | |||
Class Y Shares | 13.71 | |||
Investor Class Shares | 13.55 | |||
MSCI World Index▼(Broad Market Index) | 7.54 | |||
MSCI World Health Care Index▼(Style-Specific Index) | 10.76 | |||
Lipper Global Health/Biotechnology Funds Index▼(Peer Group Index) | 12.96 | |||
Source: ▼Lipper Inc. |
The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries.
The MSCI World Health Care Index is an unmanaged index considered representative of health care stocks of developed countries.
The Lipper Global Health/Biotechnology Funds Index is an unmanaged index considered representative of global health/biotechnology funds tracked by Lipper.
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.
Average Annual Total Returns
As of 4/30/12, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (8/7/89) | 9.99 | % | ||||||
10 | Years | 3.63 | ||||||
5 | Years | 2.05 | ||||||
1 | Year | -2.38 | ||||||
Class B Shares | ||||||||
Inception (4/1/93) | 10.10 | % | ||||||
10 | Years | 3.67 | ||||||
5 | Years | 2.09 | ||||||
1 | Year | -2.49 | ||||||
Class C Shares | ||||||||
Inception (3/1/99) | 6.41 | % | ||||||
10 | Years | 3.51 | ||||||
5 | Years | 2.44 | ||||||
1 | Year | 1.55 | ||||||
Class Y Shares | ||||||||
10 | Years | 4.31 | % | |||||
5 | Years | 3.39 | ||||||
1 | Year | 3.56 | ||||||
Investor Class Shares | ||||||||
10 | Years | 4.22 | % | |||||
5 | Years | 3.21 | ||||||
1 | Year | 3.28 | ||||||
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 share performance reflects any applicable fee waivers or expense reimbursements.
Investor Class shares incepted on July 15, 2005. 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 share 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 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 Investor Class shares was 1.21%, 1.96%, 1.96%, 0.96% and 1.21%, 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 and Investor 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.
Average Annual Total Returns
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges
Class A Shares | ||||||||
Inception (8/7/89) | 10.01 | % | ||||||
10 | Years | 3.47 | ||||||
5 | Years | 2.99 | ||||||
1 | Year | 2.71 | ||||||
Class B Shares | ||||||||
Inception (4/1/93) | 10.12 | % | ||||||
10 | Years | 3.51 | ||||||
5 | Years | 3.02 | ||||||
1 | Year | 2.87 | ||||||
Class C Shares | ||||||||
Inception (3/1/99) | 6.43 | % | ||||||
10 | Years | 3.36 | ||||||
5 | Years | 3.38 | ||||||
1 | Year | 6.91 | ||||||
Class Y Shares | ||||||||
10 | Years | 4.15 | % | |||||
5 | Years | 4.34 | ||||||
1 | Year | 8.95 | ||||||
Investor Class Shares | ||||||||
10 | Years | 4.06 | % | |||||
5 | Years | 4.16 | ||||||
1 | Year | 8.68 | ||||||
2 Invesco Global Health Care Fund
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 Invesco Global Health Care Fund
Schedule of Investments(a)
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–92.77% | ||||||||
Biotechnology–16.92% | ||||||||
Actelion Ltd. (Switzerland)(b) | 438,741 | $ | 18,564,908 | |||||
Amarin Corp. PLC–ADR (United Kingdom)(b) | 1,397,478 | 17,063,206 | ||||||
Biogen Idec Inc.(b) | 168,135 | 22,531,771 | ||||||
BioMarin Pharmaceutical Inc.(b) | 745,145 | 25,856,532 | ||||||
Celgene Corp.(b) | 221,592 | 16,158,489 | ||||||
Dendreon Corp.(b) | 644,075 | 7,503,474 | ||||||
Evolutionary Genomics/GenoPlex, Inc. (Acquired 09/15/97-06/25/98; Cost $408,490)(b)(c)(d) | 109,377 | 0 | ||||||
Gilead Sciences, Inc.(b) | 589,107 | 30,639,455 | ||||||
Incyte Corp.(b) | 567,556 | 12,872,170 | ||||||
InterMune, Inc.(b) | 322,609 | 3,368,038 | ||||||
Medivation Inc.(b) | 151,144 | 12,224,527 | ||||||
Onyx Pharmaceuticals, Inc.(b) | 262,069 | 11,926,760 | ||||||
United Therapeutics Corp.(b) | 239,132 | 10,462,025 | ||||||
189,171,355 | ||||||||
Drug Retail–3.33% | ||||||||
CVS Caremark Corp. | 606,117 | 27,044,941 | ||||||
Raia Drogasil S.A. (Brazil) | 945,978 | 10,117,571 | ||||||
37,162,512 | ||||||||
Health Care Distributors–2.63% | ||||||||
McKesson Corp. | 321,887 | 29,423,691 | ||||||
Health Care Equipment–11.35% | ||||||||
Baxter International Inc. | 280,966 | 15,568,326 | ||||||
CareFusion Corp.(b) | 412,796 | 10,695,544 | ||||||
Covidien PLC (Ireland) | 517,438 | 28,578,101 | ||||||
DexCom Inc.(b) | 509,044 | 4,983,541 | ||||||
Hologic, Inc.(b) | 781,762 | 14,947,289 | ||||||
MAKO Surgical Corp.(b) | 260,600 | 10,765,386 | ||||||
Olympus Corp. (Japan) | 717,200 | 11,319,955 | ||||||
Sensys Medical, Inc. (Acquired 04/23/04-8/09/06; Cost $1,302)(b)(c)(d) | 8,750 | 0 | ||||||
Stryker Corp. | 307,264 | 16,767,397 | ||||||
Wright Medical Group, Inc.(b) | 714,051 | 13,302,770 | ||||||
126,928,309 | ||||||||
Health Care Facilities–2.81% | ||||||||
Assisted Living Concepts Inc.–Class A | 451,122 | 8,079,595 | ||||||
Health Management Associates Inc.–Class A(b) | 1,526,904 | 10,993,709 | ||||||
Universal Health Services, Inc.–Class B | 288,172 | 12,307,826 | ||||||
31,381,130 | ||||||||
Health Care Services–5.43% | ||||||||
DaVita, Inc.(b) | 316,225 | 28,011,210 | ||||||
Express Scripts Holding Co.(b) | 293,621 | 16,381,116 | ||||||
Quest Diagnostics Inc. | 282,715 | 16,309,828 | ||||||
60,702,154 | ||||||||
Health Care Technology–2.38% | ||||||||
Allscripts Healthcare Solutions, Inc.(b) | 803,067 | 8,897,982 | ||||||
Cerner Corp.(b) | 218,495 | 17,717,760 | ||||||
26,615,742 | ||||||||
Life Sciences Tools & Services–4.88% | ||||||||
Life Technologies Corp.(b) | 589,094 | 27,310,398 | ||||||
Thermo Fisher Scientific, Inc. | 489,781 | 27,256,313 | ||||||
54,566,711 | ||||||||
Managed Health Care–11.86% | ||||||||
Aetna Inc. | 357,240 | 15,732,850 | ||||||
AMERIGROUP Corp.(b) | 160,112 | 9,888,517 | ||||||
Amil Participacoes S.A. (Brazil)(c) | 859,600 | 8,408,787 | ||||||
Aveta, Inc. (Acquired 12/21/05; Cost $9,929,722)(b)(c) | 805,748 | 9,064,665 | ||||||
CIGNA Corp. | 240,917 | 11,137,593 | ||||||
Health Net Inc.(b) | 436,003 | 15,526,067 | ||||||
Humana Inc. | 180,602 | 14,570,969 | ||||||
UnitedHealth Group Inc. | 498,495 | 27,990,494 | ||||||
WellPoint, Inc. | 299,513 | 20,312,972 | ||||||
132,632,914 | ||||||||
Pharmaceuticals–30.56% | ||||||||
Abbott Laboratories | 486,490 | 30,191,569 | ||||||
Bayer AG (Germany) | 395,551 | 27,864,479 | ||||||
EastPharma Ltd. REGS–GDR (Turkey)(b)(c) | 429,434 | 300,604 | ||||||
Elan Corp. PLC–ADR (Ireland)(b) | 964,386 | 13,298,883 | ||||||
Hikma Pharmaceuticals PLC (United Kingdom) | 853,628 | 8,701,624 | ||||||
Jazz Pharmaceuticals PLC (Ireland)(b) | 214,165 | 10,928,840 | ||||||
Locus Pharmaceuticals, Inc. (Acquired 11/21/00-05/09/07; Cost $6,852,940)(b)(c)(d) | 258,824 | 0 | ||||||
MAP Pharmaceuticals Inc.(b) | 363,417 | 4,659,006 | ||||||
Medicis Pharmaceutical Corp.–Class A | 738,535 | 28,411,441 | ||||||
Nippon Shinyaku Co., Ltd. (Japan) | 834,000 | 10,607,143 | ||||||
Novartis AG–ADR (Switzerland) | 476,844 | 26,307,483 | ||||||
Pfizer Inc. | 2,116,217 | 48,524,856 | ||||||
Pharmstandard–GDR (Russia)(b)(c) | 138,700 | 2,427,250 | ||||||
Roche Holding AG (Switzerland) | 253,085 | 46,238,560 | ||||||
Sanofi–ADR (France) | 712,878 | 27,217,682 | ||||||
Shire PLC–ADR (Ireland) | 165,017 | 16,099,059 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Global Health Care Fund
Shares | Value | |||||||
Pharmaceuticals–(continued) | ||||||||
Teva Pharmaceutical Industries Ltd.–ADR (Israel) | 378,320 | $ | 17,304,357 | |||||
Warner Chilcott PLC–Class A (Ireland)(b) | 1,037,036 | 22,555,533 | ||||||
341,638,369 | ||||||||
Research & Consulting Services–0.62% | ||||||||
Qualicorp S.A. (Brazil)(b) | 791,200 | 6,896,789 | ||||||
Total Common Stocks & Other Equity Interests (Cost $775,633,286) | 1,037,119,676 | |||||||
Preferred Stocks–0.00% | ||||||||
Health Care Equipment–0.00% | ||||||||
Intact Medical Corp., Series C, Pfd. (Acquired 03/26/01; Cost $2,000,001)(b)(c)(d) | 2,439,026 | 0 | ||||||
Sensys Medical, Inc., Series A-2, Pfd. (Acquired 02/25/98-09/30/05; Cost $7,627,993)(b)(c)(d) | 2,173,209 | 0 | ||||||
Series B, Conv. Pfd. (Acquired 03/16/05-01/12/07; Cost $245,305)(b)(c)(d) | 282,004 | 0 | ||||||
Total Preferred Stocks (Cost $9,873,299) | 0 | |||||||
Money Market Funds–6.21% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 34,699,033 | 34,699,033 | ||||||
Premier Portfolio–Institutional Class(e) | 34,699,033 | 34,699,033 | ||||||
Total Money Market Funds (Cost $69,398,066) | 69,398,066 | |||||||
TOTAL INVESTMENTS–98.88% (Cost $854,904,651) | 1,106,517,742 | |||||||
OTHER ASSETS LESS LIABILITIES–1.12% | 11,428,656 | |||||||
NET ASSETS–100.00% | $ | 1,117,946,398 | ||||||
Investment Abbreviations:
ADR | – American Depositary Receipts | |
Conv. | – Convertible | |
GDR | – Global Depositary Receipts | |
Pfd. | – Preferred | |
REGS | – Regulation S |
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) | 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 April 30, 2012 was $20,201,306, which represented 1.80% of the Fund’s Net Assets. | |
(d) | Security is considered venture capital. See Note 1L. | |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
By sector, based on Net Assets
as of April 30, 2012
Health Care | 88.1 | % | ||
Consumer Staples | 3.3 | |||
Financials | 0.8 | |||
Industrials | 0.6 | |||
Money Market Funds Plus Other Assets Less Liabilities | 7.2 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Global Health Care Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $785,506,585) | $ | 1,037,119,676 | ||
Investments in affiliated money market funds, at value and cost | 69,398,066 | |||
Total investments, at value (Cost $854,904,651) | 1,106,517,742 | |||
Foreign currencies, at value (Cost $700,021) | 718,042 | |||
Receivable for: | ||||
Investments sold | 10,433,049 | |||
Fund shares sold | 1,884,789 | |||
Dividends | 2,211,481 | |||
Investment for trustee deferred compensation and retirement plans | 80,000 | |||
Other assets | 43,223 | |||
Total assets | 1,121,888,326 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 2,399,134 | |||
Foreign currency contracts outstanding | 432,306 | |||
Accrued fees to affiliates | 659,105 | |||
Accrued other operating expenses | 142,567 | |||
Trustee deferred compensation and retirement plans | 308,816 | |||
Total liabilities | 3,941,928 | |||
Net assets applicable to shares outstanding | $ | 1,117,946,398 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 819,056,972 | ||
Undistributed net investment income | (100,576 | ) | ||
Undistributed net realized gain | 47,724,038 | |||
Unrealized appreciation | 251,265,964 | |||
$ | 1,117,946,398 | |||
Net Assets: | ||||
Class A | $ | 568,709,084 | ||
Class B | $ | 24,499,096 | ||
Class C | $ | 35,228,688 | ||
Class Y | $ | 7,355,672 | ||
Investor Class | $ | 482,153,858 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 18,489,435 | |||
Class B | 953,003 | |||
Class C | 1,368,923 | |||
Class Y | 237,630 | |||
Investor Class | 15,672,227 | |||
Class A: | ||||
Net asset value per share | $ | 30.76 | ||
Maximum offering price per share | ||||
(Net asset value of $30.76 divided by 94.50%) | $ | 32.55 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 25.71 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 25.73 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 30.95 | ||
Investor Class: | ||||
Net asset value and offering price per share | $ | 30.76 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Global Health Care Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $890,414) | $ | 6,660,794 | ||
Dividends from affiliated money market funds | 43,824 | |||
Total investment income | 6,704,618 | |||
Expenses: | ||||
Advisory fees | 3,460,697 | |||
Administrative services fees | 142,776 | |||
Custodian fees | 46,889 | |||
Distribution fees: | ||||
Class A | 682,287 | |||
Class B | 135,992 | |||
Class C | 164,645 | |||
Investor Class | 570,555 | |||
Transfer agent fees | 1,164,675 | |||
Trustees’ and officers’ fees and benefits | 46,186 | |||
Other | 142,193 | |||
Total expenses | 6,556,895 | |||
Less: Fees waived and expense offset arrangement(s) | (58,469 | ) | ||
Net expenses | 6,498,426 | |||
Net investment income | 206,192 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from: | ||||
Investment securities (includes net gains from securities sold to affiliates of $374,887) | 47,935,427 | |||
Foreign currencies | 1,200,922 | |||
Foreign currency contracts | 3,801,307 | |||
52,937,656 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 85,891,095 | |||
Foreign currencies | 275,522 | |||
Foreign currency contracts | (3,600,936 | ) | ||
82,565,681 | ||||
Net realized and unrealized gain | 135,503,337 | |||
Net increase in net assets resulting from operations | $ | 135,709,529 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Global Health Care Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | 206,192 | $ | (1,364,363 | ) | |||
Net realized gain | 52,937,656 | 60,927,570 | ||||||
Change in net unrealized appreciation (depreciation) | 82,565,681 | (19,463,688 | ) | |||||
Net increase in net assets resulting from operations | 135,709,529 | 40,099,519 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (2,758,769 | ) | — | |||||
Class Y | (42,235 | ) | — | |||||
Investor Class | (2,284,196 | ) | — | |||||
Total distributions from net investment income | (5,085,200 | ) | — | |||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (9,279,147 | ) | — | |||||
Class B | (581,929 | ) | — | |||||
Class C | (654,508 | ) | — | |||||
Class Y | (95,637 | ) | — | |||||
Investor Class | (7,682,911 | ) | — | |||||
Total distributions from net realized gains | (18,294,132 | ) | — | |||||
Share transactions–net: | ||||||||
Class A | (29,131,522 | ) | 89,991,058 | |||||
Class B | (7,296,793 | ) | (2,172,218 | ) | ||||
Class C | (829,748 | ) | 8,524,053 | |||||
Class Y | 1,081,945 | 778,506 | ||||||
Investor Class | (12,201,175 | ) | (49,369,278 | ) | ||||
Net increase (decrease) in net assets resulting from share transactions | (48,377,293 | ) | 47,752,121 | |||||
Net increase in net assets | 63,952,904 | 87,851,640 | ||||||
Net assets: | ||||||||
Beginning of period | 1,053,993,494 | 966,141,854 | ||||||
End of period (includes undistributed net investment income of $(100,576) and $4,778,432, respectively) | $ | 1,117,946,398 | $ | 1,053,993,494 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Global Health Care Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 five different classes of shares: Class A, Class B, Class C, Class Y and Investor 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 waiver shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Investor Class
8 Invesco Global Health Care Fund
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. 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 economic 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. |
9 Invesco Global Health Care 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 and net realized capital gain, if any, are generally declared and 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. | |
I. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
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. | |
L. | Other Risks — The Fund may invest a large percentage of assets in securities of a limited number of companies, such that each investment may have a greater effect on the Fund’s overall performance, and any change in the value of those securities could significantly affect the value of your investment in the Fund. | |
The Fund has invested in non-publicly traded companies, some of which are in the startup or development stages. These investments are inherently risky, as the market for the technologies or products these companies are developing are typically in the early stages and may never materialize. The Fund |
10 Invesco Global Health Care Fund
could lose its entire investment in these companies. These investments are valued at fair value as determined in good faith in accordance with procedures approved by the Board of Trustees. Investments in privately held venture capital securities are illiquid. |
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 $350 million | 0 | .75% | ||
Next $350 million | 0 | .65% | ||
Next $1.3 billion | 0 | .55% | ||
Next $2 billion | 0 | .45% | ||
Next $2 billion | 0 | .40% | ||
Next $2 billion | 0 | .375% | ||
Over $8 billion | 0 | .35% | ||
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 Canada 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 June 30, 2012, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Class A, Class B, Class C, Class Y and Investor Class shares to 1.65%, 2.40%, 2.40%, 1.40% and 1.65% 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 total annual operating expenses after fee waivers and/or expense reimbursements to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; 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 June 30, 2012. The Adviser did not waive fees and/or reimburse expenses under this limitation during the period.
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 (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended April 30, 2012, the Adviser waived advisory fees of $55,605.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, the 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 Y and Investor 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 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 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $15,483 in front-end sales commissions from the sale of Class A shares and $0, $10,838 and $991 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 the Adviser, IIS and/or IDI.
11 Invesco Global Health Care 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 April 30, 2012. 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.
For the six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 1,084,418,684 | $ | 22,099,058 | $ | 0 | $ | 1,106,517,742 | ||||||||
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Currency risk | ||||||||
Foreign currency contracts(a) | $ | — | $ | (432,306 | ) | |||
(a) | Values are disclosed on the Statement of Assets and Liabilities under Foreign currency contracts outstanding. |
Effect of Derivative Instruments for the six months ended April 30, 2012
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 | $ | 3,801,307 | ||
Change in Unrealized Appreciation (Depreciation) | ||||
Currency risk | (3,600,936 | ) | ||
Total | $ | 200,371 | ||
* | The average notional value of foreign currency contracts outstanding during the period was $42,599,915. |
Open Foreign Currency Contracts | ||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||
Settlement | Contract to | Notional | Appreciation | |||||||||||||||||||||
Date | Counterparty | Deliver | Receive | Value | (Depreciation) | |||||||||||||||||||
05/11/12 | Citibank Capital | CHF | 19,500,000 | USD | 21,243,218 | $ | 21,489,852 | $ | (246,634 | ) | ||||||||||||||
05/11/12 | Citibank Capital | EUR | 12,880,000 | USD | 16,867,133 | 17,052,805 | (185,672 | ) | ||||||||||||||||
Total open foreign currency contracts | $ | 38,542,657 | $ | (432,306 | ) | |||||||||||||||||||
Currency Abbreviations: | ||
CHF | – Swiss Franc | |
EUR | – Euro | |
USD | – U.S. Dollar |
12 Invesco Global Health Care Fund
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 six months ended April 30, 2012, the Fund engaged in securities sales of $1,334,406, which resulted in net realized gains of $374,887.
NOTE 6—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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,864.
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.
NOTE 8—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
The Fund did not have a capital loss carryforward as of October 31, 2011.
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 six months ended April 30, 2012 was $193,275,459 and $223,103,607, 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 | $ | 282,503,520 | ||
Aggregate unrealized (depreciation) of investment securities | (32,915,164 | ) | ||
Net unrealized appreciation of investment securities | $ | 249,588,356 | ||
Cost of investments for tax purposes is $856,929,386. |
13 Invesco Global Health Care Fund
NOTE 11—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 629,750 | $ | 18,181,337 | 1,634,064 | $ | 47,335,868 | ||||||||||
Class B | 20,872 | 500,685 | 52,617 | 1,264,176 | ||||||||||||
Class C | 122,291 | 2,991,451 | 326,613 | 8,255,735 | ||||||||||||
Class Y | 62,376 | 1,851,688 | 75,726 | 2,151,877 | ||||||||||||
Investor Class | 202,451 | 5,834,727 | 394,903 | 11,397,577 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 405,173 | 10,842,417 | — | — | ||||||||||||
Class B | 24,689 | 553,768 | — | — | ||||||||||||
Class C | 27,663 | 621,030 | — | — | ||||||||||||
Class Y | 4,333 | 116,563 | — | — | ||||||||||||
Investor Class | 358,726 | 9,603,111 | — | — | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 188,766 | 5,509,774 | 387,138 | 11,042,267 | ||||||||||||
Class B | (225,584 | ) | (5,509,774 | ) | (460,746 | ) | (11,042,267 | ) | ||||||||
Issued in connection with acquisitions:(b) | ||||||||||||||||
Class A | — | — | 4,120,800 | 128,948,848 | ||||||||||||
Class B | — | — | 559,533 | 14,707,052 | ||||||||||||
Class C | — | — | 301,647 | 7,937,279 | ||||||||||||
Class Y | — | — | 16,184 | 509,567 | ||||||||||||
Reacquired:(c) | ||||||||||||||||
Class A | (2,208,102 | ) | (63,665,050 | ) | (3,470,569 | ) | (97,335,925 | ) | ||||||||
Class B | (117,552 | ) | (2,841,472 | ) | (299,822 | ) | (7,101,179 | ) | ||||||||
Class C | (186,790 | ) | (4,442,229 | ) | (326,798 | ) | (7,668,961 | ) | ||||||||
Class Y | (30,333 | ) | (886,306 | ) | (67,012 | ) | (1,882,938 | ) | ||||||||
Investor Class | (961,636 | ) | (27,639,013 | ) | (2,169,430 | ) | (60,766,855 | ) | ||||||||
Net increase (decrease) in share activity | (1,682,907 | ) | $ | (48,377,293 | ) | 1,074,848 | $ | 47,752,121 | ||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 16% 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 Fund 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 open of business on May 23, 2011 the Fund acquired all the net assets of Invesco Health Sciences Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of Invesco Health Sciences Fund on April 14, 2011. The acquisition was accomplished by a tax-free exchange of 4,998,164 shares of the Fund for 11,756,779 shares outstanding of Invesco Health Sciences Fund as of the close of business on May 20, 2011. Each class of Invesco Health Sciences Fund was exchanged for the like class of shares of the Fund based on the relative net asset value of Invesco Health Sciences Fund to the net asset value of the Fund at the close of business on May 20, 2011. Invesco Health Sciences Fund’s net assets at that date of $152,102,746, including $30,700,417 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before and after the acquisition were $1,090,486,862 and $1,242,589,608, respectively. | |
(c) | Net of redemption fees of $545 and $33,488 allocated among the classes based on relative net assets of each class for the six months ended April 30, 2012 and the year ended October 31, 2011, respectively. |
14 Invesco Global Health Care 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) | 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)(a) | unrealized) | operations | income | gains | distributions | of period(b) | return(c) | (000s omitted) | absorbed | absorbed | net assets | turnover(d) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 27.75 | $ | 0.01 | $ | 3.62 | $ | 3.63 | $ | (0.14 | ) | $ | (0.48 | ) | $ | (0.62 | ) | $ | 30.76 | 13.44 | % | $ | 568,709 | 1.18 | %(e) | 1.19 | %(e) | 0.08 | %(e) | 19 | % | |||||||||||||||||||||||||
Year ended 10/31/11 | 26.15 | (0.03 | ) | 1.63 | (f) | 1.60 | — | — | — | 27.75 | 6.12 | (f) | 540,451 | 1.20 | 1.21 | (0.09 | ) | 37 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 23.20 | (0.07 | ) | 3.02 | (f) | 2.95 | — | — | — | 26.15 | 12.71 | (f) | 439,402 | 1.23 | 1.23 | (0.28 | ) | 16 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 21.41 | (0.02 | ) | 2.41 | 2.39 | — | (0.60 | ) | (0.60 | ) | 23.20 | 11.80 | 425,719 | 1.31 | 1.32 | (0.08 | ) | 50 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 31.94 | 0.01 | (g) | (7.66 | ) | (7.65 | ) | — | (2.88 | ) | (2.88 | ) | 21.41 | (26.28 | ) | 425,928 | 1.21 | 1.22 | 0.03 | (g) | 61 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 31.28 | (0.13 | ) | 3.79 | 3.66 | — | (3.00 | ) | (3.00 | ) | 31.94 | 12.82 | 642,561 | 1.19 | 1.19 | (0.44 | ) | 46 | ||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 23.24 | (0.08 | ) | 3.03 | 2.95 | — | (0.48 | ) | (0.48 | ) | 25.71 | 13.01 | 24,499 | 1.93 | (e) | 1.94 | (e) | (0.67 | )(e) | 19 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 22.07 | (0.20 | ) | 1.37 | (f) | 1.17 | — | — | — | 23.24 | 5.30 | (f) | 29,064 | 1.95 | 1.96 | (0.84 | ) | 37 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 19.72 | (0.22 | ) | 2.57 | (f) | 2.35 | — | — | — | 22.07 | 11.92 | (f) | 30,872 | 1.98 | 1.98 | (1.04 | ) | 16 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 18.43 | (0.15 | ) | 2.04 | 1.89 | — | (0.60 | ) | (0.60 | ) | 19.72 | 10.96 | 48,194 | 2.06 | 2.07 | (0.83 | ) | 50 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 28.09 | (0.17 | )(g) | (6.61 | ) | (6.78 | ) | — | (2.88 | ) | (2.88 | ) | 18.43 | (26.84 | ) | 66,561 | 1.96 | 1.97 | (0.72 | )(g) | 61 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 28.06 | (0.32 | ) | 3.35 | 3.03 | — | (3.00 | ) | (3.00 | ) | 28.09 | 11.96 | 119,886 | 1.94 | 1.94 | (1.19 | ) | 46 | ||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 23.26 | (0.08 | ) | 3.03 | 2.95 | — | (0.48 | ) | (0.48 | ) | 25.73 | 13.00 | 35,229 | 1.93 | (e) | 1.94 | (e) | (0.67 | )(e) | 19 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 22.09 | (0.20 | ) | 1.37 | (f) | 1.17 | — | — | — | 23.26 | 5.30 | (f) | 32,702 | 1.95 | 1.96 | (0.84 | ) | 37 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 19.74 | (0.22 | ) | 2.57 | (f) | 2.35 | — | — | — | 22.09 | 11.91 | (f) | 24,390 | 1.98 | 1.98 | (1.04 | ) | 16 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 18.45 | (0.15 | ) | 2.04 | 1.89 | — | (0.60 | ) | (0.60 | ) | 19.74 | 10.95 | 24,783 | 2.06 | 2.07 | (0.83 | ) | 50 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 28.11 | (0.17 | )(g) | (6.61 | ) | (6.78 | ) | — | (2.88 | ) | (2.88 | ) | 18.45 | (26.82 | ) | 29,588 | 1.96 | 1.97 | (0.72 | )(g) | 61 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 28.08 | (0.32 | ) | 3.35 | 3.03 | — | (3.00 | ) | (3.00 | ) | 28.11 | 11.96 | 40,297 | 1.94 | 1.94 | (1.19 | ) | 46 | ||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 27.96 | 0.05 | 3.63 | 3.68 | (0.21 | ) | (0.48 | ) | (0.69 | ) | 30.95 | 13.56 | 7,356 | 0.93 | (e) | 0.94 | (e) | 0.33 | (e) | 19 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 26.28 | 0.05 | 1.63 | (f) | 1.68 | — | — | — | 27.96 | 6.39 | (f) | 5,628 | 0.95 | 0.96 | 0.16 | 37 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 23.26 | (0.01 | ) | 3.03 | (f) | 3.02 | — | — | — | 26.28 | 12.98 | (f) | 4,635 | 0.98 | 0.98 | (0.04 | ) | 16 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 21.41 | 0.04 | 2.41 | 2.45 | — | (0.60 | ) | (0.60 | ) | 23.26 | 12.09 | 2,631 | 1.06 | 1.07 | 0.17 | 50 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08(h) | 24.44 | 0.00 | (g) | (3.03 | ) | (3.03 | ) | — | — | — | 21.41 | (12.40 | ) | 617 | 0.96 | (i) | 0.97 | (i) | 0.28 | (g)(i) | 61 | |||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 27.76 | 0.01 | 3.61 | 3.62 | (0.14 | ) | (0.48 | ) | (0.62 | ) | 30.76 | 13.40 | 482,154 | 1.18 | (e) | 1.19 | (e) | 0.08 | (e) | 19 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 26.16 | (0.03 | ) | 1.63 | (f) | 1.60 | — | — | — | 27.76 | 6.12 | (f) | 446,149 | 1.20 | 1.21 | (0.09 | ) | 37 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 23.20 | (0.07 | ) | 3.03 | (f) | 2.96 | — | — | — | 26.16 | 12.76 | (f) | 466,842 | 1.23 | 1.23 | (0.29 | ) | 16 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 21.41 | (0.02 | ) | 2.41 | 2.39 | — | (0.60 | ) | (0.60 | ) | 23.20 | 11.80 | 459,704 | 1.31 | 1.32 | (0.08 | ) | 50 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 31.94 | 0.01 | (g) | (7.66 | ) | (7.65 | ) | — | (2.88 | ) | (2.88 | ) | 21.41 | (26.28 | ) | 456,309 | 1.21 | 1.22 | 0.03 | (g) | 61 | |||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 31.29 | (0.13 | ) | 3.78 | 3.65 | — | (3.00 | ) | (3.00 | ) | 31.94 | 12.78 | 688,705 | 1.19 | 1.19 | (0.44 | ) | 46 | ||||||||||||||||||||||||||||||||||||||
(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) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended October 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $121,012,126 and sold of $51,261,834 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Health Sciences Fund into the Fund. For the year ended October 31, 2007, the portfolio turnover calculation excludes the value of securities purchased of $132,508,164 and sold of $38,304,911 in the effort to realign the Fund’s portfolio holdings after the reorganization of AIM Advantage Health Sciences Fund into the Fund. | |
(e) | Ratios are annualized and based on average daily net assets (000’s) of $548,829, $27,348, $33,110, $6,202 and $458,952 for Class A, Class B, Class C, Class Y and Investor Class shares, respectively. | |
(f) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received, net gains on securities (both realized and unrealized) per share for the year ended October 31, 2011 would have been $1.44, $1.18, $1.18, $1.44 and $1.44 for Class A, Class B, Class C, Class Y and Investor Class shares, respectively, and total returns would have been lower; net gains on securities (both realized and unrealized) per share for the year ended October 31, 2010 would have been $2.90, $2.45, $2.45, $2.91 and $2.91 for Class A, Class B, Class C, Class Y and Investor Class shares, respectively, and total returns would have been lower. | |
(g) | Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets include a special cash dividend received of $5.23 per share owned of Allscripts-Misys Healthcare Solutions, Inc. on October 13, 2008. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the special dividend are $(0.05) and (0.19)%, $(0.23) and (0.94)%, $(0.23) and (0.94)%, $0.00 and 0.06%, and $(0.05) and (0.19)% for Class A, Class B, Class C, Class Y and Investor Class shares, respectively. | |
(h) | Commencement date of October 3, 2008. | |
(i) | Annualized. |
15 Invesco Global Health Care 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,135.90 | $ | 6.27 | $ | 1,019.00 | $ | 5.92 | 1.18 | % | ||||||||||||||||||
B | 1,000.00 | 1,131.40 | 10.23 | 1,015.27 | 9.67 | 1.93 | ||||||||||||||||||||||||
C | 1,000.00 | 1,131.70 | 10.23 | 1,015.27 | 9.67 | 1.93 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,137.10 | 4.94 | 1,020.24 | 4.67 | 0.93 | ||||||||||||||||||||||||
Investor | 1,000.00 | 1,135.50 | 6.27 | 1,019.00 | 5.92 | 1.18 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
16 Invesco Global Health Care Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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.
GHC-SAR-1 | Invesco Distributors, Inc. |
Invesco International Total Return Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: AUBAX § B: AUBBX § C: AUBCX § Y: AUBYX § Institutional: AUBIX
A: AUBAX § B: AUBBX § C: AUBCX § Y: AUBYX § Institutional: AUBIX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Schedule of Investments | |
7 | Financial Statements | |
9 | Notes to Financial Statements | |
17 | Financial Highlights | |
18 | Fund Expenses |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 0.89 | % | ||
Class B Shares | 0.40 | |||
Class C Shares | 0.49 | |||
Class Y Shares | 0.93 | |||
Institutional Class Shares | 1.02 | |||
Barclays Global Aggregate ex U.S. Index▼ (Broad Market/Style-Specific Index) | -0.06 | |||
Lipper International Income Funds Index▼ (Peer Group Index) | 1.24 | |||
Source(s): ▼Lipper Inc. | ||
The Barclays Global Aggregate ex U.S. Index is an unmanaged index considered representative of bonds of foreign countries. | ||
The Lipper International Income Funds Index is an unmanaged index considered representative of international income funds tracked by Lipper. | ||
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. |
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 share 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 1.10%, 1.85%, 1.85%, 0.85% and 0.85%, 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 1.58%, 2.33%, 2.33%, 1.33% and
1.08%, 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. 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 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 advisor not waived fees and/ or reimbursed expenses, performance would have been lower.
A redemption fee of 2% is 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. Effective January 1, 2012, after the close of the reporting period,
Average Annual Total Returns
As of 4/30/12, including maximum applicable
sales charges
Class A Shares | ||||
Inception (3/31/06) | 5.21 | % | ||
5 Years | 4.45 | |||
1 Year | -3.59 | |||
Class B Shares | ||||
Inception (3/31/06) | 5.24 | % | ||
5 Years | 4.33 | |||
1 Year | -4.36 | |||
Class C Shares | ||||
Inception (3/31/06) | 5.26 | % | ||
5 Years | 4.68 | |||
1 Year | -0.46 | |||
Class Y Shares | ||||
Inception | 6.20 | % | ||
5 Years | 5.64 | |||
1 Year | 1.45 | |||
Institutional Class Shares | ||||
Inception (3/31/06) | 6.32 | % | ||
5 Years | 5.74 | |||
1 Year | 1.46 |
Average Annual Total Returns
As of 3/31/12, the most recent calendar quarter-end,
including maximum applicable sales charges
Class A Shares | ||||
Inception (3/31/06) | 4.94 | % | ||
5 Years | 4.26 | |||
1 Year | -0.63 | |||
Class B Shares | ||||
Inception (3/31/06) | 4.85 | % | ||
5 Years | 4.14 | |||
1 Year | -1.44 | |||
Class C Shares | ||||
Inception (3/31/06) | 5.00 | % | ||
5 Years | 4.50 | |||
1 Year | 2.50 | |||
Class Y Shares | ||||
Inception | 5.93 | % | ||
5 Years | 5.46 | |||
1 Year | 4.55 | |||
Institutional Class Shares | ||||
Inception (3/31/06) | 6.06 | % | ||
5 Years | 5.56 | |||
1 Year | 4.55 |
the Fund will eliminate the redemption fee, if applicable, assessed on shares of the Fund redeemed or exchanged within 31 days of purchase.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least February 28, 2013. See current prospectus for more information. |
2 | Invesco International Total Return Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice — depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Philip Taylor
Senior Managing Director, Invesco Ltd.
3 | Invesco International Total Return Fund |
Schedule of Investments
April 30, 2012
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
Non U.S. Dollar Denominated Bonds & Notes–97.41%(a) | ||||||||
Belgium–1.35% | ||||||||
Anheuser Busch Inbev S.A., Sr. Unsec. Gtd. Medium-Term Euro Notes, 6.57%, 02/27/14 | EUR | 600,000 | $ | 874,068 | ||||
Botswana–0.78% | ||||||||
BAA Funding Ltd., Class B, Sec. Gtd. Sub. Medium-Term Euro Notes, 7.13%, 02/14/24 | GBP | 300,000 | 506,419 | |||||
Canada–7.82% | ||||||||
Canada Housing Trust No. 1, Sr. Sec. Gtd. Global Mortgage-Backed Bonds, 2.65%, 03/15/22(b) | CAD | 1,700,000 | 1,725,385 | |||||
Province of Ontario, Sr. Unsec. Floating Rate Medium-Term Notes, 1.46%, 06/27/16(c) | CAD | 800,000 | 808,463 | |||||
Sr. Unsec. Medium-Term Euro Notes, 2.00%, 12/10/13 | GBP | 1,050,000 | 1,735,074 | |||||
Province of Quebec, Bonds, 4.25%, 12/01/43 | CAD | 700,000 | 781,742 | |||||
5,050,664 | ||||||||
Cayman Islands–0.44% | ||||||||
IPIC Ltd., REGS, Sr. Unsec. Gtd. Medium-Term Euro Notes, 5.88%, 03/14/21(b) | EUR | 200,000 | 285,300 | |||||
Denmark–0.53% | ||||||||
TDC A/S, Sr. Unsec. Medium-Term Euro Notes, 3.75%, 03/02/22 | EUR | 250,000 | 345,718 | |||||
France–9.69% | ||||||||
AXA S.A., Jr. Unsec. Sub. Medium-Term Euro Notes, 6.77%(d) | GBP | 75,000 | 89,479 | |||||
BNP Paribas Home Loan S.A., Sr. Sec. Mortgage-Backed Euro Bonds, 2.25%, 10/01/12 | EUR | 650,000 | 865,903 | |||||
Dexia Municipal Agency S.A., Series 172, Tranche 2, Sr. Sec. Medium-Term Euro Notes, 0.80%, 05/21/12 | JPY | 150,000,000 | 1,877,026 | |||||
Series 301, Tranche 1, Sr. Sec. Medium-Term Euro Notes, 1.55%, 10/31/13 | JPY | 100,000,000 | 1,245,797 | |||||
Sr. Sec. Medium-Term Euro Notes, 1.80%, 05/09/17 | JPY | 189,000,000 | 2,181,786 | |||||
6,259,991 | ||||||||
Germany–15.21% | ||||||||
Bundesrepublik Deutschland, Euro Bonds, 2.25%, 09/04/21 | EUR | 1,780,000 | 2,505,263 | |||||
Series 05, Euro Bonds, 4.00%, 01/04/37 | EUR | 600,000 | 1,030,237 | |||||
Series 2008, Euro Bonds, 4.25%, 07/04/18 | EUR | 1,220,000 | 1,940,154 | |||||
Unsec. Euro Bonds, 2.00%, 01/04/22 | EUR | 1,300,000 | 1,787,273 | |||||
EnBW Energie Baden-Wuerttemberg AG, Sr. Unsec. Medium-Term Euro Notes, 7.38%, 04/02/72 | EUR | 120,000 | 162,641 | |||||
Kreditanstalt fuer Wiederaufbau, Sr. Unsec. Gtd. Global Notes, 2.05%, 02/16/26 | JPY | 150,000,000 | 2,068,899 | |||||
RWE AG, Jr. Unsec. Sub. Euro Notes, 7.00%(d) | GBP | 200,000 | 329,104 | |||||
9,823,571 | ||||||||
Ireland–0.45% | ||||||||
Cloverie PLC for Zurich Insurance Co. Ltd., Sub. Medium-Term Euro Notes, 7.50%, 07/24/39 | EUR | 200,000 | 287,699 | |||||
Italy–3.23% | ||||||||
Italy Buoni Poliennali Del Tesoro, Euro Bonds, 5.00%, 09/01/40 | EUR | 740,000 | 852,131 | |||||
Sr. Unsec. Euro Bonds, 4.75%, 08/01/23 | EUR | 1,000,000 | 1,232,960 | |||||
2,085,091 | ||||||||
Japan–8.95% | ||||||||
Bayer Holding Ltd., Sr. Unsec. Gtd. Medium-Term Euro Notes, 1.96%, 06/28/12 | JPY | 200,000,000 | 2,510,510 | |||||
Development Bank of Japan, Unsec. Gtd. Global Bonds, 1.70%, 09/20/22 | JPY | 35,000,000 | 468,411 | |||||
Unsec. Gtd. Global Notes, 1.05%, 06/20/23 | JPY | 45,000,000 | 568,568 | |||||
Japan Government Ten Years, Series 318, Sr. Unsec. Bonds, 1.00%, 09/20/21 | JPY | 70,000,000 | 890,533 | |||||
Japan Government Thirty Years, Series 31, Sr. Unsec. Bonds, 2.20%, 09/20/39 | JPY | 100,000,000 | 1,344,646 | |||||
5,782,668 | ||||||||
Luxembourg–6.88% | ||||||||
Arcelormittal, Sr. Unsec. Euro Bonds, 9.38%, 06/03/16 | EUR | 175,000 | 274,285 | |||||
Gazprom OAO Via Gaz Capital S.A., Sr. Unsec. Euro Bonds, 2.89%, 11/15/12 | JPY | 300,000,000 | 3,749,252 | |||||
Glencore Finance Europe S.A., Series 6, Tranche 1, Sr. Unsec. Gtd. Medium-Term Euro Notes, 5.25%, 10/11/13 | EUR | 300,000 | 417,291 | |||||
4,440,828 | ||||||||
Mexico–0.41% | ||||||||
Mexican Bonos, Series M, Bonds, 7.50%, 06/21/12 | MXN | 3,400,000 | 262,685 | |||||
Netherlands–4.94% | ||||||||
ASML Holding N.V., Sr. Unsec. Euro Bonds, 5.75%, 06/13/17 | EUR | 200,000 | 297,369 | |||||
Brennatag Finance BV, Gtd. Euro Notes, 5.50%, 07/19/18 | EUR | 300,000 | 421,993 | |||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco International Total Return Fund
Principal | ||||||||
Amount | Value | |||||||
Netherlands–(continued) | ||||||||
F Van Lanschot Bankiers N.V., Sr. Unsec. Medium-Term Euro Notes, 3.50%, 04/02/13 | EUR | 600,000 | $ | 802,032 | ||||
ING Bank N.V., Sec. Mortgage-Backed Medium-Term Euro Notes, 3.00%, 09/30/14 | EUR | 550,000 | 761,597 | |||||
Koninklijke KPN N.V., Sr. Unsec. Gtd. Medium-Term Euro Notes, 5.00%, 11/18/26 | GBP | 110,000 | 177,105 | |||||
Schiphol Nederland B.V., Sr. Unsec. Gtd. Medium-Term Euro Notes, 4.43%, 04/28/21 | EUR | 200,000 | 294,816 | |||||
6.63%, 01/23/14 | EUR | 300,000 | 433,032 | |||||
3,187,944 | ||||||||
Norway–3.56% | ||||||||
DNB Bank ASA, Unsec. Sub. Medium-Term Euro Notes, 4.75%, 03/08/22 | EUR | 250,000 | 329,865 | |||||
Norway Government, Series 472, Bonds, 4.25%, 05/19/17 | NOK | 10,000,000 | 1,971,584 | |||||
2,301,449 | ||||||||
Poland–6.33% | ||||||||
Poland Government, Series 1021, Bonds, 5.75%, 10/25/21 | PLN | 1,000,000 | 325,795 | |||||
Series 3BR, Sr. Unsec. Bonds, 1.00%, 06/20/12 | JPY | 200,000,000 | 2,504,219 | |||||
Series 8, Sr. Unsec. Bonds, 1.92%, 11/13/12 | JPY | 100,000,000 | 1,256,469 | |||||
4,086,483 | ||||||||
South Africa–0.40% | ||||||||
South Africa Government, Series R208, Bonds, 6.75%, 03/31/21 | ZAR | 2,150,000 | 260,874 | |||||
South Korea–1.92% | ||||||||
Korea Treasury, Series 1609, Sr. Unsec.Bonds, 3.50%, 09/10/16 | KRW | 1,400,000,000 | 1,238,509 | |||||
Spain–0.41% | ||||||||
CaixaBank, Sec. Mortgage-Backed Euro Bonds, 3.13%, 09/16/13 | EUR | 200,000 | 265,252 | |||||
Supranational–8.58% | ||||||||
Asian Development Bank, Series 339-00-1, Sr. Unsec. Medium-Term Global Notes, 2.35%, 06/21/27 | JPY | 130,000,000 | 1,831,881 | |||||
European Investment Bank, Sr. Unsec. Global Bonds, 1.40%, 06/20/17 | JPY | 120,000,000 | 1,591,288 | |||||
Sr. Unsec. Medium-Term Euro Bonds, 4.50%, 08/12/17 | SEK | 4,000,000 | 637,916 | |||||
Sr. Unsec. Medium-Term Notes, 6.00%, 08/06/20 | AUD | 1,400,000 | 1,478,097 | |||||
5,539,182 | ||||||||
Sweden–0.94% | ||||||||
Nordea Bank AB, Unsec. Sub. Variable Rate Medium-Term Euro Notes, 4.63%, 02/15/22(c) | EUR | 100,000 | 131,729 | |||||
Securities AB, Sr. Unsec. Medium-Term Euro Notes, 2.75%, 02/28/17 | EUR | 200,000 | 268,899 | |||||
TeliaSonera AB, Sr. Unsec. Medium-Term Euro Notes, 3.63%, 02/14/24 | EUR | 150,000 | 206,590 | |||||
607,218 | ||||||||
United Kingdom–14.59% | ||||||||
Abbey National Treasury Services PLC, Sr. Sec. Gtd. Mortgage-Backed Medium-Term Euro Notes, 5.25%, 02/16/29 | GBP | 200,000 | 336,730 | |||||
Bat International Finance PLC, Sr. Unsec. Gtd. Medium-Term Euro Notes, 5.88%, 03/12/15 | EUR | 450,000 | 668,280 | |||||
Carnival PLC, Sr. Unsec. Gtd. Euro Notes, 7.13%, 06/25/12 | GBP | 500,000 | 813,950 | |||||
Centrica PLC, Sr. Unsec. Medium-Term Euro Notes, 4.38%, 03/13/29 | GBP | 350,000 | 566,563 | |||||
Co-Operative Group Ltd., Sr. Unsec. Gtd. Euro Notes, 5.63%, 07/08/20 | GBP | 300,000 | 483,114 | |||||
Direct Line Insurance PLC, Unsec. Sub. Gtd. Euro Notes, 9.25%, 04/27/42 | GBP | 400,000 | 653,828 | |||||
Everything Everywhere Finance PLC, Sr. Unsec. Gtd. Medium-Term Euro Notes, 3.50%, 02/06/17 | EUR | 200,000 | 269,055 | |||||
FCE Bank PLC, Sr. Unsec. Medium-Term Euro Notes, 5.13%, 11/16/15 | GBP | 50,000 | 84,001 | |||||
G4S International Finance PLC, Gtd. Medium-Term Euro Notes, 2.88%, 05/02/17 | EUR | 150,000 | 199,727 | |||||
Imperial Tobacco Finance PLC, Series 19, Tranche 1, Sr. Unsec. Gtd. Medium-Term Euro Notes, 4.38%, 11/22/13 | EUR | 500,000 | 691,481 | |||||
International Power Finance 2010 PLC, REGS, Sr. Unsec. Gtd. Euro Notes, 7.25%, 05/11/17(b) | EUR | 150,000 | 236,805 | |||||
ISS Financing PLC, REGS, Sr. Sec. Euro Bonds, 11.00%, 06/15/14(b) | EUR | 200,000 | 281,464 | |||||
Permanent Master Issuer PLC, Series 2009-1, Class A3, Floating Rate Pass Through Ctfs., 2.46%, 07/15/42(c) | EUR | 500,000 | 669,468 | |||||
Royal Bank of Scotland PLC (The), Sr. Sec. Mortgage-Backed Euro Bonds, 5.13%, 01/13/24 | GBP | 200,000 | 346,239 | |||||
United Kingdom Treasury, Bonds, 4.00%, 03/07/22 | GBP | 600,000 | 1,139,020 | |||||
4.25%, 12/07/40 | GBP | 740,000 | 1,406,875 | |||||
4.75%, 12/07/38 | GBP | 280,000 | 573,361 | |||||
9,419,961 | ||||||||
Total Non U.S. Dollar Denominated Bonds & Notes (Cost $60,615,518) | 62,911,574 | |||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco International Total Return Fund
Shares | Value | |||||||
Money Market Funds–0.50% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 161,569 | $ | 161,569 | |||||
Premier Portfolio–Institutional Class(e) | 161,570 | 161,570 | ||||||
Total Money Market Funds (Cost $323,139) | 323,139 | |||||||
TOTAL INVESTMENTS–97.91% (Cost $60,938,657) | 63,234,713 | |||||||
OTHER ASSETS LESS LIABILITIES–2.09% | 1,352,323 | |||||||
NET ASSETS–100.00% | $ | 64,587,036 | ||||||
Investment Abbreviations:
AUD | – Australian Dollar | |
CAD | – Canadian Dollar | |
Ctfs. | – Certificates | |
EUR | – Euro | |
GBP | – British Pound Sterling | |
Gtd. | – Guaranteed | |
JPY | – Japanese Yen | |
Jr. | – Junior | |
KRW | – South Korean Won | |
MXN | – Mexican Peso | |
NOK | – Norwegian Krona | |
PLN | – Poland Zloty | |
REGS | – Regulation S | |
Sec. | – Secured | |
SEK | – Swedish Krona | |
Sr. | – Senior | |
Sub. | – Subordinated | |
Unsec. | – Unsecured | |
ZAR | – South African Rand |
Notes to Schedule of Investments:
(a) | Foreign denominated security. Principal amount is denominated in currency indicated. | |
(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 April 30, 2012 was $2,528,954, which represented 3.92% of the Fund’s Net Assets. | |
(c) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on April 30, 2012. | |
(d) | Perpetual bond with no specified maturity date. | |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
By sector, based on Net Assets
as of April 30, 2012
Sovereign Debt | 44.3 | % | ||
Financials | 29.8 | |||
Energy | 5.8 | |||
Industrials | 4.6 | |||
Health Care | 3.9 | |||
Consumer Staples | 3.5 | |||
Utilities | 2.0 | |||
Telecommunication Services | 1.5 | |||
Collateralized Mortgage Obligations | 1.0 | |||
Information Technology | 0.5 | |||
Materials | 0.4 | |||
Consumer Discretionary | 0.1 | |||
Money Market Funds Plus Other Assets Less Liabilities | 2.6 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco International Total Return Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $60,615,518) | $ | 62,911,574 | ||
Investments in affiliated money market funds, at value and cost | 323,139 | |||
Total investments, at value (Cost $60,938,657) | 63,234,713 | |||
Foreign currencies, at value (Cost $744,486) | 725,892 | |||
Receivable for: | ||||
Deposits with brokers for open futures contracts | 44,000 | |||
Variation margin | 8,505 | |||
Fund shares sold | 157,104 | |||
Dividends and interest | 826,461 | |||
Foreign currency contracts | 16,039 | |||
Investment for trustee deferred compensation and retirement plans | 14,153 | |||
Other assets | 43,406 | |||
Total assets | 65,070,273 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 197,266 | |||
Fund shares reacquired | 191,015 | |||
Accrued fees to affiliates | 39,398 | |||
Accrued other operating expenses | 37,024 | |||
Trustee deferred compensation and retirement plans | 18,534 | |||
Total liabilities | 483,237 | |||
Net assets applicable to shares outstanding | $ | 64,587,036 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 63,144,730 | ||
Undistributed net investment income | 11,057 | |||
Undistributed net realized gain (loss) | (997,872 | ) | ||
Unrealized appreciation | 2,429,121 | |||
$ | 64,587,036 | |||
Net Assets: | ||||
Class A | $ | 43,375,810 | ||
Class B | $ | 5,111,727 | ||
Class C | $ | 9,896,462 | ||
Class Y | $ | 1,147,789 | ||
Institutional Class | $ | 5,055,248 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 3,891,891 | |||
Class B | 459,555 | |||
Class C | 889,470 | |||
Class Y | 103,010 | |||
Institutional Class | 453,536 | |||
Class A: | ||||
Net asset value per share | $ | 11.15 | ||
Maximum offering price per share | ||||
(Net asset value of $11.15 divided by 95.25%) | $ | 11.71 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 11.12 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 11.13 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 11.14 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 11.15 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco International Total Return Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Interest (net of foreign withholding taxes of $1,098) | $ | 850,685 | ||
Dividends from affiliated money market funds | 477 | |||
Total investment income | 851,162 | |||
Expenses: | ||||
Advisory fees | 214,141 | |||
Administrative services fees | 24,863 | |||
Custodian fees | 12,702 | |||
Distribution fees: | ||||
Class A | 55,039 | |||
Class B | 27,451 | |||
Class C | 51,272 | |||
Transfer agent fees — A, B, C and Y | 79,220 | |||
Transfer agent fees — Institutional | 339 | |||
Trustees’ and officers’ fees and benefits | 11,313 | |||
Registration and filing fees | 33,304 | |||
Other | 41,394 | |||
Total expenses | 551,038 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | (137,926 | ) | ||
Net expenses | 413,112 | |||
Net investment income | 438,050 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (1,013,868 | ) | ||
Foreign currencies | (55,372 | ) | ||
Foreign currency contracts | 82,022 | |||
Futures contracts | 12,687 | |||
(974,531 | ) | |||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 758,520 | |||
Foreign currencies | (21,946 | ) | ||
Foreign currency contracts | (34,761 | ) | ||
Futures contracts | 194,065 | |||
895,878 | ||||
Net realized and unrealized gain (loss) | (78,653 | ) | ||
Net increase in net assets resulting from operations | $ | 359,397 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco International Total Return Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income | $ | 438,050 | $ | 831,518 | ||||
Net realized gain (loss) | (974,531 | ) | 2,847,532 | |||||
Change in net unrealized appreciation (depreciation) | 895,878 | (2,680,756 | ) | |||||
Net increase in net assets resulting from operations | 359,397 | 998,294 | ||||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (1,785,165 | ) | (1,688,264 | ) | ||||
Class B | (202,824 | ) | (259,361 | ) | ||||
Class C | (376,554 | ) | (361,736 | ) | ||||
Class Y | (74,410 | ) | (28,171 | ) | ||||
Institutional Class | (189,534 | ) | (227,338 | ) | ||||
Total distributions from net investment income | (2,628,487 | ) | (2,564,870 | ) | ||||
Distributions to shareholders from net realized gains: | ||||||||
Class A | (499,885 | ) | (976,342 | ) | ||||
Class B | (63,007 | ) | (190,113 | ) | ||||
Class C | (116,668 | ) | (263,923 | ) | ||||
Class Y | (21,080 | ) | (15,498 | ) | ||||
Institutional Class | (50,708 | ) | (130,713 | ) | ||||
Total distributions from net realized gains | (751,348 | ) | (1,576,589 | ) | ||||
Share transactions–net: | ||||||||
Class A | (1,777,266 | ) | 16,239,636 | |||||
Class B | (566,709 | ) | (315,311 | ) | ||||
Class C | (412,882 | ) | 2,152,498 | |||||
Class Y | (82,042 | ) | 642,425 | |||||
Institutional Class | 549,772 | 433,994 | ||||||
Net increase (decrease) in net assets resulting from share transactions | (2,289,127 | ) | 19,153,242 | |||||
Net increase (decrease) in net assets | (5,309,565 | ) | 16,010,077 | |||||
Net assets: | ||||||||
Beginning of period | 69,896,601 | 53,886,524 | ||||||
End of period (includes undistributed net investment income of $11,057 and $2,201,494, respectively) | $ | 64,587,036 | $ | 69,896,601 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco International Total Return Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 total return, comprised of current income and capital appreciation.
9 Invesco International Total Return Fund
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. 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. | |
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. 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. | ||
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 economic 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. 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 |
10 Invesco International Total Return Fund
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 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. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
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 |
11 Invesco International Total Return Fund
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. | ||
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. |
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 | .65% | ||
Next $250 million | 0 | .59% | ||
Next $500 million | 0 | .565% | ||
Next $1.5 billion | 0 | .54% | ||
Next $2.5 billion | 0 | .515% | ||
Next $5 billion | 0 | .49% | ||
Over $10 billion | 0 | .465% | ||
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 Canada 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 February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual 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 1.10%, 1.85%, 1.85%, 0.85% and 0.85% 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 total annual operating expenses after fee waivers and/or expense reimbursements to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; 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 February 28, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Advisor will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
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 six months ended April 30, 2012, the Adviser waived advisory fees $58,368 and reimbursed class level expenses of $56,925, $7,098, $13,257, $1,739 and $339 of Class A, Class B, Class C, Class Y, and Institutional Class shares, respectively.
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 six months ended April 30, 2012, 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
12 Invesco International Total Return Fund
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 six months ended April 30, 2012, 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 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 and Class C 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 and 1.00% of the average daily net assets of Class B and Class C 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $7,473 in front-end sales commissions from the sale of Class A shares and $1,717, $3,144 and $1,048 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 the Adviser, 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 April 30, 2012. 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 six months ended April 30, 2012, there were no material transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Money Market Funds | $ | 323,139 | $ | — | $ | — | $ | 323,139 | ||||||||
Foreign Debt Securities | — | 37,066,654 | — | 37,066,654 | ||||||||||||
Foreign Government Debt Securities | — | 25,844,920 | — | 25,844,920 | ||||||||||||
323,139 | 62,911,574 | — | 63,234,713 | |||||||||||||
Foreign Currency Contracts* | — | 37,153 | — | 37,153 | ||||||||||||
Futures* | 186,295 | — | — | 186,295 | ||||||||||||
Total Investments | $ | 509,434 | $ | 62,948,727 | $ | — | $ | 63,458,161 | ||||||||
* | Unrealized appreciation |
13 Invesco International Total Return Fund
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Currency risk | ||||||||
Foreign Currency Contracts(a) | $ | 9,170 | $ | (46,323 | ) | |||
Interest rate risk | ||||||||
Futures contracts(b) | 261,155 | (74,860 | ) | |||||
(a) | Values are disclosed on the Statement of Assets and Liabilities under the Foreign currency contracts. | |
(b) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin payable is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Instruments for the six months ended April 30, 2012
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 | ||||||||
Futures* | Contracts* | |||||||
Realized Gain | ||||||||
Currency risk | $ | — | $ | 82,022 | ||||
Interest rate risk | 12,687 | — | ||||||
Change in Unrealized Appreciation (Depreciation) | ||||||||
Currency risk | $ | — | $ | (34,761 | ) | |||
Interest rate risk | 194,065 | — | ||||||
Total | $ | 206,752 | $ | 47,261 | ||||
* | The average notional value of futures and foreign currency contracts outstanding during the period was $22,709,825 and $2,193,015, respectively. |
Open Foreign Currency Contracts | ||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||
Settlement | Contract to | Notional | Appreciation | |||||||||||||||||||
Date | Counterparty | Deliver | Receive | Value | (Depreciation) | |||||||||||||||||
05/25/12 | Citibank N.A. | AUD | 700,000 | USD | 736,511 | $ | 727,341 | $ | 9,170 | |||||||||||||
05/25/12 | Citibank N.A. | CAD | 1,600,000 | USD | 1,595,537 | 1,618,946 | (23,409 | ) | ||||||||||||||
05/25/12 | State Street | JPY | 105,000 | USD | 1,292,610 | 1,315,524 | (22,914 | ) | ||||||||||||||
$ | (37,153 | ) | ||||||||||||||||||||
Closed Foreign Currency Contracts | ||||||||||||||||||||||
Closed | Contract to | Notional | Realized | |||||||||||||||||||
Date | Counterparty | Deliver | Receive | Value | Gain | |||||||||||||||||
05/25/12 | Citibank N.A. | USD | 50,000,000 | JPY | 623,196 | $ | 602,482 | $ | 20,714 | |||||||||||||
05/25/12 | State Street | USD | 35,000,000 | JPY | 431,353 | 421,936 | 9,417 | |||||||||||||||
05/25/12 | State Street | USD | 100,000,000 | JPY | 1,228,592 | 1,205,531 | 23,061 | |||||||||||||||
$ | 53,192 | |||||||||||||||||||||
Total open foreign currency contracts | $ | 16,039 | ||||||||||||||||||||
Currency Abbreviations:
AUD | – Australian Dollar | |
CAD | – Canadian Dollar | |
JPY | – Japanese Yen | |
USD | – U.S. Dollar |
14 Invesco International Total Return Fund
Open Futures Contracts | ||||||||||||||||
Unrealized | ||||||||||||||||
Number of | Expiration | Notional | Appreciation | |||||||||||||
Long Contracts | Contracts | Month | Value | (Depreciation) | ||||||||||||
Australia 10 Year Bond | 34 | June-2012 | $ | 4,245,380 | $ | 105,896 | ||||||||||
Euro-Bobl | 14 | June-2012 | 2,322,385 | 20,865 | ||||||||||||
Euro Bonds | 16 | June-2012 | 2,988,625 | 54,301 | ||||||||||||
Japanese 10 Year Bonds | 30 | June-2012 | 5,374,295 | 24,438 | ||||||||||||
Subtotal | $ | 205,500 | ||||||||||||||
Short Contracts | ||||||||||||||||
Canada 10 Year Bonds | 4 | June-2012 | $ | (534,724 | ) | $ | (636 | ) | ||||||||
Euro Bonds | 17 | June-2012 | (2,289,116 | ) | 55,655 | |||||||||||
Long Gilt | 22 | June-2012 | (4,128,479 | ) | (31,099 | ) | ||||||||||
U.S. Treasury 10 Year Notes | 40 | June-2012 | (5,291,250 | ) | (43,125 | ) | ||||||||||
Subtotal | $ | (19,205 | ) | |||||||||||||
Total | $ | 186,295 | ||||||||||||||
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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $200.
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 six months ended April 30, 2012, the Fund paid legal fees of $723 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A partner of that firm is a Trustee of the Trust.
NOTE 7—Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Fund’s total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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. A Fund may not purchase additional securities when any borrowings from banks exceeds 5% of the Fund’s total assets.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
The Fund did not have a capital loss carryforward as of October 31, 2011.
15 Invesco International Total Return 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 six months ended April 30, 2012 was $35,626,361 and $39,135,499, 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 | $ | 2,813,118 | ||
Aggregate unrealized (depreciation) of investment securities | (517,062 | ) | ||
Net unrealized appreciation of investment securities | $ | 2,296,056 | ||
Cost of investments for tax purposes and financial reporting purposes is the same. |
NOTE 10—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 556,586 | $ | 6,167,101 | 2,864,497 | $ | 33,446,444 | ||||||||||
Class B | 55,205 | 612,908 | 165,764 | 1,902,975 | ||||||||||||
Class C | 101,921 | 1,133,317 | 455,959 | 5,297,263 | ||||||||||||
Class Y | 79,323 | 899,672 | 85,574 | 1,000,978 | ||||||||||||
Institutional Class | 48,993 | 542,423 | 66,768 | 763,768 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 190,095 | 2,060,730 | 220,292 | 2,427,647 | ||||||||||||
Class B | 23,071 | 249,977 | 38,744 | 424,252 | ||||||||||||
Class C | 41,701 | 451,833 | 54,237 | 594,615 | ||||||||||||
Class Y | 7,977 | 86,410 | 3,821 | 42,130 | ||||||||||||
Institutional Class | 22,064 | 238,903 | 32,470 | 357,603 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 41,967 | 462,825 | 82,279 | 923,242 | ||||||||||||
Class B | (42,051 | ) | (462,825 | ) | (82,447 | ) | (923,242 | ) | ||||||||
Reacquired:(b) | ||||||||||||||||
Class A | (951,180 | ) | (10,467,922 | ) | (1,808,916 | ) | (20,557,697 | ) | ||||||||
Class B | (87,892 | ) | (966,769 | ) | (151,421 | ) | (1,719,296 | ) | ||||||||
Class C | (182,819 | ) | (1,998,032 | ) | (333,120 | ) | (3,739,380 | ) | ||||||||
Class Y | (97,990 | ) | (1,068,124 | ) | (35,124 | ) | (400,683 | ) | ||||||||
Institutional Class | (21,150 | ) | (231,554 | ) | (60,306 | ) | (687,377 | ) | ||||||||
Net increase (decrease) in share activity | (214,179 | ) | $ | (2,289,127 | ) | 1,599,071 | $ | 19,153,242 | ||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% 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 Fund 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 $6 and $82,105 for the six months ended April 30, 2012 and the year ended October 31, 2011, respectively. |
16 Invesco International Total Return Fund
NOTE 11—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) on | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | securities | Dividends | Distributions | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | Net | (both | Total from | from net | from net | Net asset | Net assets, | with fee waivers | fee waivers | income | ||||||||||||||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | realized | Return of | Total | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | gains | capital | distributions | of period(b) | return(c) | (000s omitted) | absorbed | absorbed | net assets | turnover(d) | ||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 11.63 | $ | 0.08 | $ | 0.00 | $ | 0.08 | $ | (0.44 | ) | $ | (0.12 | ) | — | $ | (0.56 | ) | $ | 11.15 | 0.89 | % | $ | 43,376 | 1.10 | %(e) | 1.54 | %(e) | 1.49 | %(e) | 58 | % | ||||||||||||||||||||||||||||
Year ended 10/31/11 | 12.22 | 0.19 | 0.16 | 0.35 | (0.58 | ) | (0.36 | ) | — | (0.94 | ) | 11.63 | 3.37 | 47,162 | 1.10 | 1.58 | 1.64 | 226 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.68 | 0.19 | 0.51 | 0.70 | (0.16 | ) | — | — | (0.16 | ) | 12.22 | 6.12 | 32,947 | 1.10 | 1.55 | 1.69 | 203 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.96 | 0.22 | 1.65 | 1.87 | (0.14 | ) | — | (0.01 | ) | (0.15 | ) | 11.68 | 18.93 | 32,460 | 1.10 | 1.51 | 2.10 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 11.18 | 0.24 | (0.90 | ) | (0.66 | ) | (0.41 | ) | — | (0.15 | ) | (0.56 | ) | 9.96 | (6.22 | ) | 39,418 | 1.11 | 1.42 | 2.16 | 224 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.44 | 0.25 | 0.69 | 0.94 | (0.20 | ) | — | — | (0.20 | ) | 11.18 | 9.17 | 6,247 | 1.12 | 2.06 | 2.39 | 509 | |||||||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.61 | 0.04 | (0.01 | ) | 0.03 | (0.40 | ) | (0.12 | ) | — | (0.52 | ) | 11.12 | 0.40 | 5,112 | 1.85 | (e) | 2.29 | (e) | 0.74 | (e) | 58 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 12.19 | 0.10 | 0.17 | 0.27 | (0.49 | ) | (0.36 | ) | — | (0.85 | ) | 11.61 | 2.66 | 5,934 | 1.85 | 2.33 | 0.89 | 226 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.65 | 0.11 | 0.51 | 0.62 | (0.08 | ) | — | — | (0.08 | ) | 12.19 | 5.34 | 6,591 | 1.85 | 2.30 | 0.94 | 203 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.94 | 0.14 | 1.64 | 1.78 | (0.06 | ) | — | (0.01 | ) | (0.07 | ) | 11.65 | 18.00 | 9,026 | 1.85 | 2.26 | 1.35 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 11.16 | 0.16 | (0.90 | ) | (0.74 | ) | (0.40 | ) | — | (0.08 | ) | (0.48 | ) | 9.94 | (6.95 | ) | 11,432 | 1.86 | 2.17 | 1.41 | 224 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.42 | 0.17 | 0.70 | 0.87 | (0.13 | ) | — | — | (0.13 | ) | 11.16 | 8.44 | 2,395 | 1.87 | 2.81 | 1.64 | 509 | |||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.61 | 0.04 | 0.00 | 0.04 | (0.40 | ) | (0.12 | ) | — | (0.52 | ) | 11.13 | 0.49 | 9,896 | 1.85 | (e) | 2.29 | (e) | 0.74 | (e) | 58 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 12.19 | 0.10 | 0.17 | 0.27 | (0.49 | ) | (0.36 | ) | — | (0.85 | ) | 11.61 | 2.65 | 10,782 | 1.85 | 2.33 | 0.89 | 226 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.66 | 0.11 | 0.50 | 0.61 | (0.08 | ) | — | — | (0.08 | ) | 12.19 | 5.24 | 9,165 | 1.85 | 2.30 | 0.94 | 203 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.94 | 0.14 | 1.65 | 1.79 | (0.06 | ) | — | (0.01 | ) | (0.07 | ) | 11.66 | 18.10 | 13,887 | 1.85 | 2.26 | 1.35 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 11.16 | 0.16 | (0.90 | ) | (0.74 | ) | (0.40 | ) | — | (0.08 | ) | (0.48 | ) | 9.94 | (6.95 | ) | 16,262 | 1.86 | 2.17 | 1.41 | 224 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.43 | 0.17 | 0.69 | 0.86 | (0.13 | ) | — | — | (0.13 | ) | 11.16 | 8.34 | 1,999 | 1.87 | 2.81 | 1.64 | 509 | |||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.63 | 0.10 | (0.01 | ) | 0.09 | (0.46 | ) | (0.12 | ) | — | (0.58 | ) | 11.14 | 0.93 | 1,148 | 0.85 | (e) | 1.29 | (e) | 1.74 | (e) | 58 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 12.22 | 0.22 | 0.16 | 0.38 | (0.61 | ) | (0.36 | ) | — | (0.97 | ) | 11.63 | 3.63 | 1,322 | 0.85 | 1.33 | 1.89 | 226 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.68 | 0.22 | 0.51 | 0.73 | (0.19 | ) | — | — | (0.19 | ) | 12.22 | 6.39 | 726 | 0.85 | 1.30 | 1.94 | 203 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.96 | 0.26 | 1.64 | 1.90 | (0.17 | ) | — | (0.01 | ) | (0.18 | ) | 11.68 | 19.22 | 284 | 0.85 | 1.26 | 2.35 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08(f) | 10.54 | 0.02 | (0.60 | ) | (0.58 | ) | — | — | — | — | 9.96 | (5.50 | ) | 24 | 0.86 | (g) | 1.20 | (g) | 2.41 | (g) | 224 | |||||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 11.63 | 0.10 | 0.00 | 0.10 | (0.46 | ) | (0.12 | ) | — | (0.58 | ) | 11.15 | 1.02 | 5,055 | 0.85 | (e) | 1.04 | (e) | 1.74 | (e) | 58 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 12.22 | 0.22 | 0.16 | 0.38 | (0.61 | ) | (0.36 | ) | — | (0.97 | ) | 11.63 | 3.63 | 4,696 | 0.85 | 1.08 | 1.89 | 226 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.68 | 0.22 | 0.51 | 0.73 | (0.19 | ) | — | — | (0.19 | ) | 12.22 | 6.39 | 4,457 | 0.85 | 1.03 | 1.94 | 203 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.96 | 0.25 | 1.65 | 1.90 | (0.17 | ) | — | (0.01 | ) | (0.18 | ) | 11.68 | 19.22 | 27,008 | 0.85 | 1.01 | 2.35 | 233 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 11.18 | 0.27 | (0.90 | ) | (0.63 | ) | (0.42 | ) | — | (0.17 | ) | (0.59 | ) | 9.96 | (5.99 | ) | 28,117 | 0.85 | 0.94 | 2.42 | 224 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 10.44 | 0.28 | 0.69 | 0.97 | (0.23 | ) | — | — | (0.23 | ) | 11.18 | 9.42 | 35,952 | 0.86 | 1.55 | 2.64 | 509 | |||||||||||||||||||||||||||||||||||||||||||
(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) | 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) of $44,273, $5,520, $10,311, $1,353, and $4,795 for Class A, Class B, Class C, Class Y, and Institutional Class shares, respectively. | |
(f) | Commencement date of October 3, 2008. | |
(g) | Annualized. |
17 Invesco International Total Return 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,008.90 | $ | 5.49 | $ | 1,019.39 | $ | 5.52 | 1.10 | % | ||||||||||||||||||
B | 1,000.00 | 1,004.00 | 9.22 | 1,015.66 | 9.27 | 1.85 | ||||||||||||||||||||||||
C | 1,000.00 | 1,004.90 | 9.22 | 1,015.66 | 9.27 | 1.85 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,009.30 | 4.25 | 1,020.64 | 4.27 | 0.85 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,010.20 | 4.25 | 1,020.64 | 4.27 | 0.85 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
18 Invesco International Total Return Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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.
ITR-SAR-1 | Invesco Distributors, Inc. |
Invesco Premium Income Fund
Semiannual Report to Shareholders § April 30, 2012
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: PIAFX § C: PICFX § R: PIRFX § Y: PIYFX § Institutional: IPNFX
A: PIAFX § C: PICFX § R: PIRFX § Y: PIYFX § Institutional: IPNFX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Schedule of Investments | |
14 | Financial Statements | |
16 | Notes to Financial Statements | |
23 | Financial Highlights | |
24 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 12/14/11 to 4/30/12, 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 | 4.22 | % | ||
Class C Shares | 3.93 | |||
Class R Shares | 4.16 | |||
Class Y Shares | 4.39 | |||
Institutional Class Shares | 4.39 | |||
Barclays U.S. Aggregate Index▼ (Broad Market Index) | 2.53 | * | ||
Custom Premium Income Index■ (Style-Specific Index) | 8.03 | * | ||
Lipper Mixed-Asset Target Allocation Conservative Funds Index▼ (Peer Group Index) | 5.42 | * | ||
Source(s): ▼ Lipper Inc.; ■ Invesco, Lipper Inc.
* | Returns for the Fund’s indexes are from 11/30/11, the month-end closest to the date of the Fund’s inception. |
The Barclays U.S. Aggregate Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market.
The Custom Premium Income Index, created by Invesco to serve as a benchmark for Invesco Premium Income Fund, is composed of the following indexes: the S&P 500 Index (50%) and the Barclays U.S. Universal Index (50%).
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 S&P 500® Index is an unmanaged index considered representative of the US stock market.
The Barclays 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 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.
Cumulative Total Returns
As of 4/30/12, including maximum applicable
sales charges
sales charges
Class A Shares | ||||
Inception (12/14/11) | -1.47 | % | ||
Class C Shares | ||||
Inception (12/14/11) | 2.93 | % | ||
Class R Shares | ||||
Inception (12/14/11) | 4.16 | % | ||
Class Y Shares | ||||
Inception (12/14/11) | 4.39 | % | ||
Institutional Class Shares | ||||
Inception (12/14/11) | 4.39 | % |
Cumulative Total Returns
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges
Class A Shares | ||||
Inception (12/14/11) | -3.67 | % | ||
Class C Shares | ||||
Inception (12/14/11) | 0.67 | % | ||
Class R Shares | ||||
Inception (12/14/11) | 1.86 | % | ||
Class Y Shares | ||||
Inception (12/14/11) | 2.04 | % | ||
Institutional Class Shares | ||||
Inception (12/14/11) | 2.04 | % |
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 C, Class R, Class Y and Institutional Class shares was 0.92%, 1.67%, 1.17%, 0.67% and 0.67%, 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 C, Class R, Class Y and Institutional Class shares was 1.32%, 2.07%, 1.57%, 1.07% and 0.95%, 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 C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. 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 February 28, 2013. See current prospectus for more information. |
2 | Invesco Premium Income Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically – and certainly without advance notice – depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 | Invesco Premium Income Fund |
Schedule of Investments(a)
April 30, 2012
(Unaudited)
Principal | ||||||||
Amount | Value | |||||||
U.S. Dollar Denominated Bonds and Notes–42.57% | ||||||||
Advertising–0.01% | ||||||||
National CineMedia LLC, Sr. Sec. Gtd. Notes, 6.00%, 04/15/22(b) | $ | 20,000 | $ | 20,450 | ||||
Aerospace & Defense–0.47% | ||||||||
BE Aerospace Inc., Sr. Unsec. Notes, 5.25%, 04/01/22 | 110,000 | 112,200 | ||||||
Bombardier Inc. (Canada), Sr. Unsec. Notes, 7.75%, 03/15/20(b) | 500,000 | 568,750 | ||||||
680,950 | ||||||||
Airlines–0.72% | ||||||||
American Airlines Pass Through Trust, Series 2011-1, Class B, Sec. Gtd. Pass Through Ctfs., 7.00%, 01/31/18(b) | 530,290 | 530,290 | ||||||
Continental Airlines Pass Through Trust, Series 2010-1, Class B, Sec. Pass Through Ctfs., 6.00%, 01/12/19 | 239,878 | 238,828 | ||||||
UAL Pass Through Trust, Series 2007-1, Class B, Sr. Sec. Gtd. Global Pass Through Ctfs., 7.34%, 07/02/19 | 196,855 | 194,394 | ||||||
US Airways Pass Through Trust, Series 2012 1-A, Sr. Sec. Bonds, 5.90%, 10/01/24 | 20,000 | 20,050 | ||||||
Series 2012 1-B, Sec. Bonds, 8.00%, 10/01/19 | 20,000 | 20,226 | ||||||
Series 2012 1-C, Sec. Bonds, 9.13%, 10/01/15 | 25,000 | 25,000 | ||||||
1,028,788 | ||||||||
Alternative Carriers–0.47% | ||||||||
Cogent Communications Group, Inc., Sr. Sec. Gtd. Notes, 8.38%, 02/15/18(b) | 150,000 | 161,250 | ||||||
Level 3 Financing Inc., Sr. Unsec. Gtd. Notes, 8.13%, 07/01/19(b) | 500,000 | 516,250 | ||||||
677,500 | ||||||||
Aluminum–0.18% | ||||||||
Century Aluminum Co., Sr. Sec. Gtd. Notes, 8.00%, 05/15/14 | 250,000 | 255,781 | ||||||
Apparel Retail–0.59% | ||||||||
Gap, Inc. (The), Sr. Unsec. Notes, 5.95%, 04/12/21 | 250,000 | 258,281 | ||||||
J. Crew Group, Inc., Sr. Unsec. Gtd. Global Notes, 8.13%, 03/01/19 | 500,000 | 517,500 | ||||||
Limited Brands Inc., Sr. Unsec. Gtd. Global Notes, 5.63%, 02/15/22 | 75,000 | 75,844 | ||||||
851,625 | ||||||||
Apparel, Accessories & Luxury Goods���0.80% | ||||||||
Hanesbrands Inc., Sr. Unsec. Gtd. Global Notes, 6.38%, 12/15/20 | 115,000 | 119,025 | ||||||
Jones Group Inc./Apparel Group Holdings/Apparel Group USA/Footwear Accessories Retail, Sr. Unsec. Notes, 6.88%, 03/15/19 | 250,000 | 243,750 | ||||||
Levi Strauss & Co., Sr. Unsec. Global Notes, 7.63%, 05/15/20 | 500,000 | 538,750 | ||||||
Quiksilver Inc., Sr. Unsec. Gtd. Global Notes, 6.88%, 04/15/15 | 250,000 | 252,969 | ||||||
1,154,494 | ||||||||
Auto Parts & Equipment–0.39% | ||||||||
Allison Transmission Inc., Sr. Unsec. Gtd. Notes, 7.13%, 05/15/19(b) | 500,000 | 525,000 | ||||||
American Axle & Manufacturing, Inc., Sr. Unsec. Gtd. Notes, 7.75%, 11/15/19 | 35,000 | 37,537 | ||||||
562,537 | ||||||||
Automobile Manufacturers–1.07% | ||||||||
Chrysler Group LLC/CG Co-Issuer Inc., Sec. Gtd. Global Notes, 8.00%, 06/15/19 | 250,000 | 260,000 | ||||||
Ford Motor Co., Sr. Unsec. Global Notes, 7.45%, 07/16/31 | 1,000,000 | 1,277,500 | ||||||
1,537,500 | ||||||||
Broadcasting–0.07% | ||||||||
Clear Channel Worldwide Holdings Inc., Sr. Unsec. Gtd. Sub. Notes, 7.63%, 03/15/20(b) | 100,000 | 99,625 | ||||||
Building Products–0.77% | ||||||||
Building Materials Corp. of America, Sr. Sec. Gtd. Notes, 7.50%, 03/15/20(b) | 250,000 | 269,375 | ||||||
Masco Corp., Sr. Unsec. Global Notes, 5.95%, 03/15/22 | 40,000 | 40,750 | ||||||
Nortek Inc., Sr. Unsec. Gtd. Global Notes, 8.50%, 04/15/21 | 380,000 | 377,150 | ||||||
USG Corp., Sr. Unsec. Gtd. Notes, 7.88%, 03/30/20(b) | 135,000 | 140,063 | ||||||
Sr. Unsec. Notes, 9.75%, 01/15/18 | 265,000 | 270,962 | ||||||
1,098,300 | ||||||||
Cable & Satellite–0.43% | ||||||||
Intelsat Jackson Holdings S.A. (Luxembourg), Sr. Unsec. Gtd. Global Notes, 7.25%, 10/15/20 | 500,000 | 525,000 | ||||||
ViaSat Inc., Sr. Unsec. Gtd. Notes, 6.88%, 06/15/20(b) | 85,000 | 87,550 | ||||||
612,550 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Premium Income Fund
Principal | ||||||||
Amount | Value | |||||||
Casinos & Gaming–1.59% | ||||||||
Chester Downs & Marina LLC, Sr. Sec. Gtd. Notes, 9.25%, 02/01/20(b) | $ | 15,000 | $ | 15,862 | ||||
MGM Resorts International, Sr. Unsec. Gtd. Global Notes, 6.63%, 07/15/15 | 1,000,000 | 1,045,000 | ||||||
Seneca Gaming Corp., Sr. Unsec. Gtd. Notes, 8.25%, 12/01/18(b) | 95,000 | 98,325 | ||||||
Snoqualmie Entertainment Authority, | ||||||||
Sr. Sec. Floating Rate Notes, 4.53%, 02/01/14(b)(c) | 30,000 | 28,800 | ||||||
Sr. Sec. Notes, 9.13%, 02/01/15(b) | 750,000 | 761,250 | ||||||
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., Sr. Sec. Gtd. First Mortgage Notes, 5.38%, 03/15/22(b) | 340,000 | 334,900 | ||||||
2,284,137 | ||||||||
Coal & Consumable Fuels–0.16% | ||||||||
Berau Coal Energy Tbk PT (Indonesia), Sr. Sec. Gtd. Notes, 7.25%, 03/13/17(b) | 200,000 | 199,965 | ||||||
Westmoreland Coal Co./Westmoreland Partners, Sr. Sec. Gtd. Notes, 10.75%, 02/01/18(b) | 30,000 | 28,650 | ||||||
228,615 | ||||||||
Communications Equipment–0.21% | ||||||||
Avaya Inc., | ||||||||
Sr. Sec. Gtd. Notes, 7.00%, 04/01/19(b) | 250,000 | 250,937 | ||||||
Sr. Unsec. Gtd. Global Notes, 9.75%, 11/01/15 | 50,000 | 49,813 | ||||||
300,750 | ||||||||
Construction & Farm Machinery & Heavy Trucks–0.40% | ||||||||
Commercial Vehicle Group Inc., Sec. Gtd. Global Notes, 7.88%, 04/15/19 | 250,000 | 251,250 | ||||||
Navistar International Corp., Sr. Unsec. Gtd. Notes, 8.25%, 11/01/21 | 100,000 | 107,500 | ||||||
Titan International Inc., Sr. Sec. Gtd. Global Notes, 7.88%, 10/01/17 | 200,000 | 214,000 | ||||||
572,750 | ||||||||
Construction Materials–0.61% | ||||||||
Cemex Finance LLC, Sr. Sec. Gtd. Bonds, 9.50%, 12/14/16(b) | 150,000 | 148,741 | ||||||
China Shanshui Cement Group Ltd. (China), Sr. Unsec. Gtd. Notes, 10.50%, 04/27/17(b) | 300,000 | 305,385 | ||||||
Rearden G Holdings EINS GmbH (Germany), Sr. Unsec. Gtd. Notes, 7.88%, 03/30/20(b) | 200,000 | 211,502 | ||||||
Texas Industries Inc., Sr. Unsec. Gtd. Global Notes, 9.25%, 08/15/20 | 215,000 | 211,238 | ||||||
876,866 | ||||||||
Consumer Finance–0.80% | ||||||||
Ally Financial Inc., Sr. Unsec. Gtd. Global Notes, 8.00%, 03/15/20 | 750,000 | 860,625 | ||||||
National Money Mart Co. (Canada), Sr. Unsec. Gtd. Global Notes, 10.38%, 12/15/16 | 250,000 | 282,187 | ||||||
1,142,812 | ||||||||
Data Processing & Outsourced Services–0.35% | ||||||||
CoreLogic, Inc., Sr. Unsec. Gtd. Notes, 7.25%, 06/01/21(b) | 205,000 | 216,275 | ||||||
Fidelity National Information Services Inc., Sr. Unsec. Gtd. Notes, 5.00%, 03/15/22(b) | 15,000 | 14,963 | ||||||
SunGard Data Systems Inc., Sr. Unsec. Gtd. Global Notes, 7.38%, 11/15/18 | 250,000 | 267,500 | ||||||
498,738 | ||||||||
Distillers & Vintners–0.12% | ||||||||
Constellation Brands Inc., | ||||||||
Sr. Unsec. Gtd. Global Notes, 7.25%, 05/15/17 | 85,000 | 96,263 | ||||||
Sr. Unsec. Gtd. Notes, 6.00%, 05/01/22 | 70,000 | 74,025 | ||||||
170,288 | ||||||||
Diversified Banks–2.02% | ||||||||
Banco Bradesco S.A. (Brazil), Unsec. Sub. Notes, 5.75%, 03/01/22 | 200,000 | 204,677 | ||||||
Banco de Credito Del Peru (Peru), Sub. Notes, 6.13%, 04/24/27(b) | 190,000 | 196,204 | ||||||
Banco Santander S.A. (Brazil), Sr. Unsec. Notes, 4.63%, 02/13/17(b) | 280,000 | 277,759 | ||||||
Bangkok Bank PCL (Thailand), Sr. Unsec. Notes, 4.80%, 10/18/20(b) | 300,000 | 304,537 | ||||||
BBVA Bancomer S.A. (Mexico), Sr. Unsec. Notes, 4.50%, 03/10/16(b) | 400,000 | 404,087 | ||||||
BDO Unibank Inc. (Philippines), Sr. Unsec. Bonds, 3.88%, 04/22/16 | 300,000 | 290,810 | ||||||
DBS Bank Ltd. (Singapore), Unsec. Sub. Variable Rate Notes, 3.63%, 09/21/22(b)(c) | 300,000 | 304,871 | ||||||
GTB Finance B.V. (Netherlands), Sr. Unsec. Gtd. Notes, 7.50%, 05/19/16(b) | 250,000 | 261,247 | ||||||
Nomos Bank Via Nomos Capital PLC (Russia), Sub. Notes, 10.00%, 04/26/19(b) | 200,000 | 200,536 | ||||||
Sberbank Via SB Capital S.A. (Russia), Sr. Unsec. Notes, 6.13%, 02/07/22(b) | 250,000 | 257,361 | ||||||
Turkiye Vakiflar Bankasi Tao (Turkey), Sr. Unsec. Notes, 5.75%, 04/24/17(b) | 200,000 | 200,659 | ||||||
2,902,748 | ||||||||
Diversified Metals & Mining–0.32% | ||||||||
Midwest Vanadium Pty. Ltd. (Australia), Sr. Sec. Gtd. Mortgage Notes, 11.50%, 02/15/18(b) | 65,000 | 44,849 | ||||||
Volcan Cia Minera S.A.A (Peru), Sr. Unsec. Notes, 5.38%, 02/02/22(b) | 390,000 | 407,612 | ||||||
452,461 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Premium Income Fund
Principal | ||||||||
Amount | Value | |||||||
Electric Utilities–0.46% | ||||||||
Comission Federal de Electridad (Mexico), Sr. Unsec. Notes, 5.75%, 02/14/42(b) | $ | 300,000 | $ | 306,691 | ||||
Majapahit Holding B.V. (Netherlands), Sr. Unsec. Gtd. Notes, 7.75%, 01/20/20(b) | 300,000 | 356,936 | ||||||
663,627 | ||||||||
Electronic Manufacturing Services–0.08% | ||||||||
Sanmina-SCI Corp., Sr. Unsec. Gtd. Notes, 7.00%, 05/15/19(b) | 110,000 | 112,750 | ||||||
Gas Utilities–0.14% | ||||||||
Transportadora de Gas Internacional S.A. ESP (Colombia), Sr. Unsec. Notes, 5.70%, 03/20/22(b) | 200,000 | 205,268 | ||||||
Gold–0.31% | ||||||||
Gold Fields Orogen Holding BVI Ltd. (Mali), Sr. Unsec. Gtd. Notes, 4.88%, 10/07/20(b) | 450,000 | 426,668 | ||||||
New Gold Inc. (Canada), Sr. Unsec. Gtd. Notes, 7.00%, 04/15/20(b) | 20,000 | 20,681 | ||||||
447,349 | ||||||||
Health Care Equipment–0.08% | ||||||||
DJO Finance LLC/Corp., Sec. Notes, 8.75%, 03/15/18(b) | 120,000 | 121,800 | ||||||
Health Care Facilities–0.87% | ||||||||
HCA, Inc., Sr. Sec. Gtd. Global Notes, 5.88%, 03/15/22 | 190,000 | 194,275 | ||||||
HealthSouth Corp., Sr. Unsec. Gtd. Notes, 7.75%, 09/15/22 | 150,000 | 162,375 | ||||||
Radiation Therapy Services Inc., Sr. Sec. Gtd. Notes, 8.88%, 01/15/17(b) | 140,000 | 138,600 | ||||||
Select Medical Holdings Corp., Sr. Unsec. Floating Rate Global Notes, 6.49%, 09/15/15(c) | 250,000 | 238,125 | ||||||
Tenet Healthcare Corp., Sr. Unsec. Global Notes, 8.00%, 08/01/20 | 500,000 | 522,500 | ||||||
1,255,875 | ||||||||
Health Care Services–0.07% | ||||||||
Prospect Medical Holdings Inc., Sr. Sec. Notes, 8.38%, 05/01/19(b) | 100,000 | 100,500 | ||||||
Health Care Technology–0.10% | ||||||||
MedAssets Inc., Sr. Unsec. Gtd. Global Notes, 8.00%, 11/15/18 | 133,000 | 139,650 | ||||||
Homebuilding–0.65% | ||||||||
Beazer Homes USA Inc., Sr. Unsec. Gtd. Global Notes, 6.88%, 07/15/15 | 250,000 | 228,750 | ||||||
D.R. Horton Inc., Sr. Unsec. Gtd. Notes, 4.75%, 05/15/17 | 35,000 | 35,963 | ||||||
Lennar Corp., Sr. Unsec. Gtd. Global Notes, 6.95%, 06/01/18 | 250,000 | 266,875 | ||||||
Meritage Homes Corp., Sr. Unsec. Gtd. Notes, 7.00%, 04/01/22(b) | 200,000 | 205,000 | ||||||
Servicios Corp. Javer SAPI de C.V. (Mexico), Sr. Unsec. Gtd. Notes, 9.88%, 04/06/21(b) | 160,000 | 154,387 | ||||||
Toll Brothers Finance Corp., Sr. Unsec. Gtd. Notes, 5.88%, 02/15/22 | 40,000 | 41,400 | ||||||
932,375 | ||||||||
Hotels, Resorts & Cruise Lines–0.51% | ||||||||
CityCenter Holdings LLC/CityCenter Finance Corp., Sec. Gtd. PIK Global Notes, 10.75%, 01/15/17 | 174,487 | 194,989 | ||||||
Royal Caribbean Cruises Ltd., Sr. Unsec. Global Notes, 7.25%, 06/15/16 | 500,000 | 537,500 | ||||||
732,489 | ||||||||
Household Products–0.18% | ||||||||
Central Garden & Pet Co., Sr. Gtd. Sub. Notes, 8.25%, 03/01/18 | 250,000 | 259,375 | ||||||
Housewares & Specialties–0.07% | ||||||||
American Greetings Corp., Sr. Unsec. Gtd. Notes, 7.38%, 12/01/21 | 90,000 | 94,050 | ||||||
Hypermarkets & Super Centers–0.15% | ||||||||
Cencosud S.A. (Chile), Sr. Unsec. Gtd. Notes, 5.50%, 01/20/21(b) | 200,000 | 211,415 | ||||||
Independent Power Producers & Energy Traders–0.65% | ||||||||
AES Corp. (The), Sr. Unsec. Global Notes, 8.00%, 10/15/17 | 500,000 | 572,500 | ||||||
Calpine Corp., Sr. Sec. Gtd. Notes, 7.50%, 02/15/21(b) | 165,000 | 177,787 | ||||||
Sr. Sec. Notes, 7.25%, 10/15/17(b) | 110,000 | 117,700 | ||||||
NRG Energy Inc., Sr. Unsec. Gtd. Global Notes, 7.63%, 01/15/18 | 70,000 | 71,225 | ||||||
939,212 | ||||||||
Industrial Conglomerates–0.21% | ||||||||
Hutchison Whampoa International Ltd. (Hong Kong), Unsec. Gtd. Sub. Notes, 6.00%(b)(d) | 300,000 | 306,750 | ||||||
Industrial Machinery–0.05% | ||||||||
Actuant Corp., Sr. Unsec. Gtd. Notes, 5.63%, 06/15/22(b) | 50,000 | 51,750 | ||||||
Mcron Finance Sub. LLC/Mcron Finance Corp., Sr. Sec. Notes, 8.38%, 05/15/19(b) | 20,000 | 20,425 | ||||||
72,175 | ||||||||
Integrated Oil & Gas–1.79% | ||||||||
Gazprom OAO Via Gaz Capital S.A. (Luxembourg), Sr. Unsec. Loan Participation Notes, | ||||||||
4.95%, 05/23/16(b) | 300,000 | 313,042 | ||||||
6.00%, 01/23/21(b) | 200,000 | 213,845 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Premium Income Fund
Principal | ||||||||
Amount | Value | |||||||
Integrated Oil & Gas–(continued) | ||||||||
IPIC GMTN Ltd. (Cayman Islands), Sr. Unsec. Gtd. Notes, 5.50%, 03/01/22(b) | $ | 300,000 | $ | 314,175 | ||||
KazMunayGas National Co. (Kazakhstan), Sr. Unsec. Bonds, 7.00%, 05/05/20(b) | 620,000 | 711,934 | ||||||
Petrobras International Finance Co. (Brazil), Sr. Unsec. Gtd. Global Notes, 5.38%, 01/27/21 | 230,000 | 251,517 | ||||||
Petroleos de Venezuela S.A. (Venezuela), Sr. Unsec. Gtd. Notes, 8.50%, 11/02/17(b) | 200,000 | 181,985 | ||||||
Petroleos Mexicanos (Mexico), Sr. Unsec. Gtd. Global Notes, 6.50%, 06/02/41 | 500,000 | 579,756 | ||||||
2,566,254 | ||||||||
Integrated Telecommunication Services–0.42% | ||||||||
Globo Comunicacao e Participacoes S.A. (Brazil), Sr. Sec. Notes, 6.25%(b)(d)(e) | 300,000 | 320,974 | ||||||
Oi S.A. (Brazil), Sr. Unsec. Notes, 5.75%, 02/10/22(b) | 280,000 | 287,942 | ||||||
608,916 | ||||||||
Internet Software & Services–0.38% | ||||||||
Equinix Inc., Sr. Unsec. Notes, 7.00%, 07/15/21 | 500,000 | 548,750 | ||||||
Movies & Entertainment–0.04% | ||||||||
Carmike Cinemas Inc., Sec. Gtd. Notes, 7.38%, 05/15/19(b) | 55,000 | 56,650 | ||||||
Multi-Line Insurance–0.81% | ||||||||
American International Group Inc., Jr. Unsec. Sub. Global Variable Rate Deb., 8.18%, 05/15/58(c) | 500,000 | 537,500 | ||||||
Hartford Financial Services Group Inc. (The), Jr. Unsec. Sub. Variable Rate Deb., 8.13%, 06/15/38(c) | 350,000 | 371,000 | ||||||
Liberty Mutual Group Inc., Jr. Unsec. Gtd. Sub. Bonds, 7.80%, 03/15/37(b) | 250,000 | 248,125 | ||||||
1,156,625 | ||||||||
Oil & Gas Drilling–0.01% | ||||||||
Atwood Oceanics Inc., Sr. Unsec. Notes, 6.50%, 02/01/20 | 12,000 | 12,690 | ||||||
Oil & Gas Equipment & Services–0.50% | ||||||||
Bristow Group, Inc., Sr. Unsec. Gtd. Global Notes, 7.50%, 09/15/17 | 500,000 | 525,000 | ||||||
Key Energy Services Inc., Sr. Unsec. Gtd. Notes, 6.75%, 03/01/21(b) | 195,000 | 199,631 | ||||||
724,631 | ||||||||
Oil & Gas Exploration & Production–3.02% | ||||||||
Chaparral Energy Inc., | ||||||||
Sr. Unsec. Gtd. Global Notes, 8.25%, 09/01/21 | 500,000 | 532,500 | ||||||
Sr. Unsec. Gtd. Notes, 7.63%, 11/15/22(b) | 40,000 | 40,350 | ||||||
Chesapeake Energy Corp., Sr. Unsec. Gtd. Global Notes, 6.88%, 11/15/20 | 240,000 | 234,900 | ||||||
Sr. Unsec. Gtd. Notes, 6.63%, 08/15/20 | 90,000 | 88,088 | ||||||
Cimarex Energy Co., Sr. Unsec. Gtd. Notes, 5.88%, 05/01/22 | 65,000 | 67,600 | ||||||
Continental Resources Inc., Sr. Unsec. Gtd. Notes, 5.00%, 09/15/22(b) | 215,000 | 219,300 | ||||||
Dolphin Energy Ltd. (United Arab Emirates), Sr. Sec. Bonds, 5.50%, 12/15/21(b) | 400,000 | 431,297 | ||||||
EV Energy Partners LP/EV Energy Finance Corp., Sr. Unsec. Gtd. Global Notes, 8.00%, 04/15/19 | 90,000 | 92,025 | ||||||
EXCO Resources Inc., Sr. Unsec. Gtd. Notes, 7.50%, 09/15/18 | 105,000 | 90,038 | ||||||
Laredo Petroleum Inc., Sr. Unsec. Gtd. Notes, 7.38%, 05/01/22(b) | 20,000 | 20,700 | ||||||
McMoRan Exploration Co., Sr. Unsec. Gtd. Notes, 11.88%, 11/15/14 | 500,000 | 523,437 | ||||||
OGX Petroleo e Gas Participacoes S.A. (Brazil), Sr. Unsec. Gtd. Notes, 8.50%, 06/01/18(b) | 400,000 | 418,090 | ||||||
8.38%, 04/01/22(b) | 400,000 | 410,092 | ||||||
Pertamina Persero PT, Sr. Unsec. Notes, 4.88%, 05/03/22(b) | 250,000 | 248,750 | ||||||
6.00%, 05/03/42(b) | 250,000 | 245,625 | ||||||
Plains Exploration & Production Co., Sr. Unsec. Gtd. Notes, 6.13%, 06/15/19 | 320,000 | 325,200 | ||||||
QEP Resources Inc., Sr. Unsec. Notes, 5.38%, 10/01/22 | 65,000 | 65,325 | ||||||
Range Resources Corp., Sr. Unsec. Gtd. Sub. Notes, 5.00%, 08/15/22 | 170,000 | 170,000 | ||||||
SM Energy Co., Sr. Unsec. Global Notes, 6.50%, 11/15/21 | 100,000 | 105,750 | ||||||
4,329,067 | ||||||||
Oil & Gas Refining & Marketing–0.54% | ||||||||
Reliance Holdings USA Inc., Sr. Unsec. Gtd. Notes, 5.40%, 02/14/22(b) | 250,000 | 251,231 | ||||||
United Refining Co., Sr. Sec. Gtd. Global Notes, 10.50%, 02/28/18 | 500,000 | 523,750 | ||||||
774,981 | ||||||||
Oil & Gas Storage & Transportation–0.98% | ||||||||
Chesapeake Midstream Partners LP/CHKM Finance Corp., Sr. Unsec. Gtd. Global Notes, 6.13%, 07/15/22 | 175,000 | 168,875 | ||||||
Copano Energy LLC/Copano Energy Finance Corp., Sr. Unsec. Gtd. Notes, 7.13%, 04/01/21 | 500,000 | 530,000 | ||||||
MarkWest Energy Partners L.P./MarkWest Energy Finance Corp., Sr. Unsec. Gtd. Notes, 6.50%, 08/15/21 | 500,000 | 532,500 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Premium Income Fund
Principal | ||||||||
Amount | Value | |||||||
Oil & Gas Storage & Transportation–(continued) | ||||||||
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., Sr. Unsec. Gtd. Notes, 6.38%, 08/01/22(b) | $ | 180,000 | $ | 182,250 | ||||
1,413,625 | ||||||||
Other Diversified Financial Services–0.66% | ||||||||
Corp Financiera de Desarrollo S.A. (Peru), Sr. Unsec. Notes, 4.75%, 02/08/22(b) | 300,000 | 314,464 | ||||||
International Lease Finance Corp., Sr. Unsec. Global Notes, 8.75%, 03/15/17 | 500,000 | 563,437 | ||||||
Taylor Morrison Communities Inc./ Monarch Communities Inc., Sr. Unsec. Notes, 7.75%, 04/15/20(b) | 65,000 | 66,138 | ||||||
944,039 | ||||||||
Packaged Foods & Meats–0.12% | ||||||||
Grupo Bimbo S.A.B. de C.V. (Mexico), Sr. Unsec. Gtd. Notes, 4.50%, 01/25/22(b) | 150,000 | 155,913 | ||||||
Post Holdings Inc., Sr. Unsec. Gtd. Notes, 7.38%, 02/15/22(b) | 15,000 | 15,712 | ||||||
171,625 | ||||||||
Paper Products–0.49% | ||||||||
Boise Cascade LLC, Sr. Unsec. Gtd. Sub. Global Notes, 7.13%, 10/15/14 | 500,000 | 502,813 | ||||||
Inversiones CMPC S.A. (Chile), Sr. Unsec. Gtd. Notes, 4.50%, 04/25/22(b) | 200,000 | 199,531 | ||||||
702,344 | ||||||||
Pharmaceuticals–0.19% | ||||||||
Elan Finance PLC/Corp. (Ireland), Sr. Unsec. Gtd. Global Notes, 8.75%, 10/15/16 | 250,000 | 276,875 | ||||||
Real Estate Development–0.44% | ||||||||
Country Garden Holdings Co. Ltd. (China), Sr. Unsec. Notes, 11.13%, 02/23/18(b) | 400,000 | 401,481 | ||||||
Franshion Development Ltd. (China), Sr. Unsec. Gtd. Notes, 6.75%, 04/15/21(b) | 250,000 | 231,821 | ||||||
633,302 | ||||||||
Regional Banks–0.71% | ||||||||
CIT Group Inc., | ||||||||
Sr. Gtd. Notes, 7.00%, 05/02/17(b) | 110,000 | 110,412 | ||||||
Sr. Unsec. Global Notes, 5.25%, 03/15/18 | 175,000 | 181,125 | ||||||
Sr. Unsec. Notes, 5.50%, 02/15/19(b) | 45,000 | 46,463 | ||||||
Regions Financial Corp., Sr. Unsec. Notes, 5.75%, 06/15/15 | 350,000 | 370,125 | ||||||
Synovus Financial Corp., Sr. Unsec. Global Notes, 7.88%, 02/15/19 | 70,000 | 74,375 | ||||||
Unsec. Sub. Global Notes, 5.13%, 06/15/17 | 250,000 | 233,125 | ||||||
1,015,625 | ||||||||
Semiconductor Equipment–0.42% | ||||||||
Amkor Technology Inc., Sr. Unsec. Global Notes, 7.38%, 05/01/18 | 230,000 | 247,250 | ||||||
Freescale Semiconductor Inc., Sr. Unsec. Gtd. Global Notes, 8.05%, 02/01/20 | 350,000 | 354,375 | ||||||
601,625 | ||||||||
Sovereign Debt–9.84% | ||||||||
Argentina Boden Bonds (Argentina), Sr. Unsec. Bonds, 7.00%, 10/03/15 | 850,000 | 768,873 | ||||||
Chile Government International Bond (Chile), Sr. Unsec. Global Notes, 3.25%, 09/14/21 | 480,000 | 501,600 | ||||||
Colombia Government International Bond (Colombia), Sr. Unsec. Global Bonds, 6.13%, 01/18/41 | 280,000 | 355,040 | ||||||
Dominican Republic International Bond (Mult. Countries), Sr. Unsec. Notes, 9.04%, 01/23/18(b) | 327,893 | 366,584 | ||||||
Hungary Government International Bond (Hungary), Sr. Unsec. Global Notes, 7.63%, 03/29/41 | 350,000 | 333,813 | ||||||
Indonesia Government International Bond (Indonesia), Sr. Unsec. Bonds, 7.75%, 01/17/38(b) | 400,000 | 545,000 | ||||||
Indonesia International Government Bond (Indonesia), Unsec. Notes, 3.75%, 04/25/22(b) | 200,000 | 198,000 | ||||||
Lithuania Government International Bond (Lithuania),Sr. Unsec. Notes, 6.13%, 03/09/21(b) | 250,000 | 272,500 | ||||||
6.63%, 02/01/22(b) | 200,000 | 224,750 | ||||||
Mexico Government International Bond (Mexico), Sr. Unsec. Global Notes, 3.63%, 03/15/22 | 300,000 | 313,898 | ||||||
Mexico Government International Bond (Mexico), Sr. Unsec. Global MTN, 4.75%, 03/08/44 | 500,000 | 515,250 | ||||||
Namibia International Bonds (Mult. Countries), Sr. Unsec. Notes, 5.50%, 11/03/21(b) | 200,000 | 209,500 | ||||||
Panama Government International Bond (Panama), Sr. Unsec. Global Bonds, 5.20%, 01/30/20 | 480,000 | 560,400 | ||||||
Perusahaan Penerbit SBSN (Indonesia), Sr. Unsec. Notes, 4.00%, 11/21/18(b) | 400,000 | 406,000 | ||||||
Peruvian Government International Bond (Peru), Sr. Unsec. Global Bonds, 8.75%, 11/21/33 | 200,000 | 321,500 | ||||||
Philippine Government International Bond (Philippines), Sr. Unsec. Global Bonds, 6.38%, 10/23/34 | 400,000 | 498,500 | ||||||
5.00%, 01/13/37 | 300,000 | 315,750 | ||||||
Poland Government International Bond (Poland), Sr. Unsec. Global Notes, 5.00%, 03/23/22 | 625,000 | 671,875 | ||||||
Provincia de Buenos Aires (Argentina), Sr. Unsec. Notes, 10.88%, 01/26/21(b) | 700,000 | 492,625 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Premium Income Fund
Principal | ||||||||
Amount | Value | |||||||
Sovereign Debt–(continued) | ||||||||
Republic of Latvia (Latvia), Sr. Unsec. Notes, | ||||||||
5.25%, 02/22/17(b) | $ | 200,000 | $ | 206,000 | ||||
5.25%, 06/16/21(b) | 350,000 | 350,438 | ||||||
Republic of Serbia, Sr. Unsec. Bonds, 6.75%, 11/01/24(b)(e) | 86,667 | 86,233 | ||||||
Romanian Government International Bond (Romania), Sr. Unsec. Notes, 6.75%, 02/07/22(b) | 160,000 | 168,800 | ||||||
Russian Foreign Bond (Russia), Sr. Unsec. Euro Bonds, 5.00%, 04/29/20(b) | 200,000 | 217,250 | ||||||
Senegal Government International Bond (Supranational), Sr. Unsec. Notes, 8.75%, 05/13/21(b) | 270,000 | 292,788 | ||||||
South Africa Government International Bond (South Africa), Sr. Unsec. Global Notes, 6.25%, 03/08/41 | 100,000 | 120,625 | ||||||
Sri Lanka Government International Bond (Sri Lanka), | ||||||||
Sr. Unsec. Notes, 6.25%, 10/04/20(b) | 300,000 | 306,750 | ||||||
REGS, Notes, 7.40%, 01/22/15(b) | 250,000 | 268,125 | ||||||
Turkey Government International Bond (Turkey), Sr. Unsec. Global Notes, | ||||||||
6.25%, 09/26/22 | 550,000 | 611,875 | ||||||
6.75%, 05/30/40 | 350,000 | 389,375 | ||||||
Unsec. Global Notes, 5.13%, 03/25/22 | 450,000 | 459,450 | ||||||
Ukraine Government International Bond (Ukraine), REGS, Sr. Unsec. Notes, 6.75%, 11/14/17(b) | 575,000 | 518,937 | ||||||
Uruguay Government International Bond (Uruguay), Unsec. Global Notes, 8.00%, 11/18/22 | 500,000 | 693,250 | ||||||
Venezuela Government International Bond (Venezuela), | ||||||||
REGS, Sr. Unsec. Bonds, 11.95%, 08/05/31(b) | 320,000 | 320,800 | ||||||
REGS, Sr. Unsec. Euro Bonds, 6.00%, 12/09/20(b) | 1,000,000 | 775,000 | ||||||
Vietnam Government International Bond, Sr. Unsec. Bonds, 6.75%, 01/29/20(b) | 200,000 | 216,977 | ||||||
Wakala Global Sukuk BHD (Malaysia), Bonds, 2.99%, 07/06/16(b) | 250,000 | 258,120 | ||||||
14,132,251 | ||||||||
Specialized REIT’s–0.10% | ||||||||
Host Hotels & Resorts L.P., Sr. Unsec. Notes, 5.25%, 03/15/22(b) | 150,000 | 150,000 | ||||||
Specialty Chemicals–0.30% | ||||||||
Ferro Corp., Sr. Unsec. Notes, 7.88%, 08/15/18 | 150,000 | 154,125 | ||||||
PolyOne Corp., Sr. Unsec. Notes, 7.38%, 09/15/20 | 250,000 | 269,375 | ||||||
423,500 | ||||||||
Specialty Stores–0.18% | ||||||||
Michaels Stores Inc., Sr. Unsec. Gtd. Global Notes, 7.75%, 11/01/18 | 250,000 | 264,375 | ||||||
Steel–0.40% | ||||||||
ArcelorMittal (Luxembourg), Sr. Unsec. Global Notes, 6.25%, 02/25/22 | 40,000 | 40,834 | ||||||
Evraz Group S.A. (Russia), Unsec. Notes, 7.40%, 04/24/17(b) | 200,000 | 201,737 | ||||||
FMG Resources August 2006 Pty Ltd. (Australia), Sr. Unsec. Notes, 6.88%, 04/01/22(b) | 250,000 | 254,327 | ||||||
United States Steel Corp., Sr. Unsec. Global Notes, 7.50%, 03/15/22 | 75,000 | 76,312 | ||||||
573,210 | ||||||||
Technology Distributors–0.09% | ||||||||
Anixter Inc., Sr. Unsec. Gtd. Global Notes, 5.63%, 05/01/19 | 125,000 | 128,438 | ||||||
Tires & Rubber–0.15% | ||||||||
Goodyear Tire & Rubber Co. (The), Sr. Unsec. Gtd. Notes, 7.00%, 05/15/22 | 210,000 | 208,425 | ||||||
Trading Companies & Distributors–0.32% | ||||||||
Air Lease Corp., Sr. Unsec. Notes, 5.63%, 04/01/17(b) | 55,000 | 54,450 | ||||||
Aircastle Ltd., Sr. Unsec. Notes, 6.75%, 04/15/17(b) | 310,000 | 314,650 | ||||||
7.63%, 04/15/20(b) | 35,000 | 35,700 | ||||||
UR Financing Escrow Corp., | ||||||||
Sec. Gtd. Notes, 5.75%, 07/15/18(b) | 10,000 | 10,400 | ||||||
Sr. Unsec. Notes, 7.63%, 04/15/22(b) | 40,000 | 42,400 | ||||||
457,600 | ||||||||
Trucking–0.56% | ||||||||
Avis Budget Car Rental LLC/Avis Budget Finance Inc., Sr. Unsec. Gtd. Notes, 8.25%, 01/15/19(b) | 260,000 | 272,350 | ||||||
Hertz Corp. (The), Sr. Unsec. Gtd. Global Notes, 6.75%, 04/15/19 | 500,000 | 525,000 | ||||||
797,350 | ||||||||
Wireless Telecommunication Services–1.98% | ||||||||
Clearwire Communications LLC/Clearwire Finance, Inc., Sr. Sec. Gtd. Notes, 12.00%, 12/01/15(b) | 250,000 | 231,250 | ||||||
Cricket Communications, Inc., Sr. Unsec. Gtd. Global Notes, 7.75%, 10/15/20 | 250,000 | 235,625 | ||||||
Digicel Group Ltd. (Bermuda), Sr. Unsec. Notes, 8.88%, 01/15/15(b) | 250,000 | 252,187 | ||||||
Intelstat Jackson Holdings S.A. (Luxembourg), Sr. Unsec. Gtd. Notes, 7.25%, 10/15/20(b) | 75,000 | 78,563 | ||||||
MetroPCS Wireless Inc., Sr. Unsec. Gtd. Notes, | ||||||||
7.88%, 09/01/18 | 500,000 | 514,062 | ||||||
6.63%, 11/15/20 | 50,000 | 48,750 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Premium Income Fund
Principal | ||||||||
Amount | Value | |||||||
Wireless Telecommunication Services–(continued) | ||||||||
Sprint Nextel Corp., Sr. Unsec. Gtd. Notes, | ||||||||
9.00%, 11/15/18(b) | $ | 500,000 | $ | 553,125 | ||||
7.00%, 03/01/20(b) | 40,000 | 41,000 | ||||||
VimpelCom Holdings B.V. (Netherlands), Sr. Unsec. Gtd. Notes, 7.50%, 03/01/22(b) | 400,000 | 389,000 | ||||||
Wind Acquisition Finance S.A. (Luxembourg), Sr. Sec. Gtd. Notes, 11.75%, 07/15/17(b) | 500,000 | 496,250 | ||||||
2,839,812 | ||||||||
Total U.S. Dollar Denominated Bonds and Notes (Cost $58,743,972) | 61,117,510 | |||||||
Shares | ||||||||
Preferred Stocks–27.98% | ||||||||
Asset Management & Custody Banks–0.29% | ||||||||
Ameriprise Financial Inc., 7.75% Sr. Unsec. Pfd. | 1,900 | 54,340 | ||||||
Ares Capital Corp., 7.00% Sr. Unsec. Pfd. | 7,400 | 191,013 | ||||||
BNY Capital V, Series F, 5.95% Jr. Sub. Pfd. | 7,100 | 179,630 | ||||||
424,983 | ||||||||
Automobile Manufacturers–0.11% | ||||||||
Ford Motor Co., Series A 7.50% Sr. Unsec. Pfd. | 6,200 | 166,718 | ||||||
Cable & Satellite–0.11% | ||||||||
Comcast Corp., 6.63% Sr. Gtd. Unsec. Pfd. | 6,100 | 153,415 | ||||||
Consumer Finance–0.48% | ||||||||
Ally Financial, 7.30% Sr. Unsec. Pfd. | 11,600 | 270,860 | ||||||
Ally Financial Inc., 7.38% Sr. Pfd. | 11,600 | 271,092 | ||||||
Capital One Capital II, 7.50% Jr. Gtd. Sub. Pfd. | 3,300 | 83,820 | ||||||
SLM Corp., 6.00% Sr. Unsec. Pfd. | 2,900 | 62,727 | ||||||
688,499 | ||||||||
Diversified Banks–5.40% | ||||||||
Barclays Bank PLC (United Kingdom), | ||||||||
Series 4, 7.75% Pfd., | 21,700 | 544,670 | ||||||
Series 5, 8.13% Pfd., | 36,700 | 937,318 | ||||||
Fifth Third Capital Trust VI, 7.25% Jr. Unsec. Gtd. Sub. Pfd. | 15,200 | 387,600 | ||||||
HSBC Holdings PLC (United Kingdom), 8.13% Pfd. | 26,400 | 695,376 | ||||||
Series 2, 8.00% Jr. Unsec. Sub. Pfd. | 56,000 | 1,537,760 | ||||||
Lloyds Banking Group PLC (United Kingdom), 7.75% Pfd. | 9,100 | 238,056 | ||||||
Royal Bank of Scotland PLC (The) (United Kingdom), Series L, 5.75% Jr. Sub. Pfd. | 12,700 | 240,030 | ||||||
Series T, 7.25% Jr. Sub. Pfd. | 5,190 | 99,025 | ||||||
Santander Finance Preferred SAU (Spain), Series 10, 10.50% Jr. Gtd. Sub. Pfd. | 9,900 | 258,984 | ||||||
US Bancorp, Series F, 6.50% Pfd. | 29,100 | 787,446 | ||||||
Wells Fargo & Co., Series J, 8.00% Pfd. | 68,900 | 2,035,306 | ||||||
7,761,571 | ||||||||
Diversified Capital Markets–1.17% | ||||||||
Deutsche Bank Contingent Capital Trust III, 7.60% Jr. Unsec. Gtd. Sub. Pfd. | 31,700 | 815,007 | ||||||
Deutsche Bank Contingent Capital Trust V, 8.05% Jr. Unsec. Gtd. Sub. Pfd. | 32,800 | 861,000 | ||||||
1,676,007 | ||||||||
Diversified REIT’s–0.44% | ||||||||
PS Business Parks, Inc., | ||||||||
Series P, 6.70% Pfd. | 2,800 | 70,784 | ||||||
Series S, 6.45% Pfd. | 2,400 | 62,664 | ||||||
Vornado Realty L.P., 7.88% Sr. Unsec. Pfd. | 9,100 | 252,525 | ||||||
Vornado Realty Trust, Series J, 6.88% Pfd. | 9,100 | 246,701 | ||||||
632,674 | ||||||||
Electric Utilities–1.01% | ||||||||
Alabama Power Co., 5.63% Pfd. | 13,700 | 345,498 | ||||||
American Electric Power Co. Inc. 8.75% Jr. Unsec. Pfd. | 3,300 | 89,298 | ||||||
BGE Capital Trust II, 6.20% Jr. Unsec. Gtd. Sub. Pfd. | 2,700 | 67,959 | ||||||
Entergy Mississippi Inc., 6.00% Sr. Sec. Mortgage Pfd. | 5,200 | 143,104 | ||||||
Entergy Texas Inc., 7.88% Sr. Sec. Mortgage Pfd. | 5,400 | 153,090 | ||||||
Interstate Power & Light Co., Series B, 8.38% Pfd. | 1,400 | 40,502 | ||||||
NextEra Energy Capital Holdings Inc., Series G, 5.70% Jr. Unsec. Gtd. Sub. Pfd. | 4,200 | 108,454 | ||||||
Series F, 8.75% Jr. Unsec. Gtd. Sub. Pfd. | 13,500 | 380,700 | ||||||
Pacific Gas & Electric Co., Series A, 6.00% Pfd. | 1,000 | 29,950 | ||||||
PPL Electric Utilities Corp., Series C, 6.25% Pfd. | 3,700 | 92,731 | ||||||
1,451,286 | ||||||||
Independent Power Producers & Energy Traders–0.09% | ||||||||
Constellation Energy Group Inc., Series A, 8.63% Jr. Unsec. Gtd. Sub. Pfd. | 4,800 | 128,208 | ||||||
Integrated Telecommunication Services–0.39% | ||||||||
Qwest Corp., | ||||||||
7.00% Sr. Unsec. Pfd. | 5,300 | 134,726 | ||||||
7.38% Sr. Unsec. Pfd. | 8,300 | 216,464 | ||||||
7.50% Sr. Unsec. Pfd. | 7,800 | 204,438 | ||||||
555,628 | ||||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Premium Income Fund
Shares | Value | |||||||
Investment Banking & Brokerage–1.06% | ||||||||
Goldman Sachs Group, Inc. (The), | ||||||||
6.13% Sr. Unsec. Pfd. | 10,100 | $ | 252,601 | |||||
6.50% Sr. Unsec. Pfd. | 13,200 | 340,296 | ||||||
Series B, 6.20% Pfd. | 6,500 | 162,955 | ||||||
Morgan Stanley Capital Trust III, 6.25% Jr. Unsec. Gtd. Sub. Pfd. | 24,200 | 591,690 | ||||||
Raymond James Financial Inc., 6.90% Sr. Pfd. | 4,500 | 116,685 | ||||||
Stifel Financial Corp., 6.70% Sr. Pfd. | 2,300 | 62,008 | ||||||
1,526,235 | ||||||||
Life & Health Insurance–1.40% | ||||||||
Aegon N.V. (Netherlands), | ||||||||
6.38% Unsec. Sub. Pfd. | 32,000 | 755,200 | ||||||
8.00% Jr. Unsec. Sub. Pfd. | 6,800 | 180,081 | ||||||
MetLife Inc., Series B, 6.50% Pfd. | 17,400 | 440,220 | ||||||
Principal Financial Group Inc., Series B, 6.52% Pfd. | 7,500 | 193,425 | ||||||
Prudential Financial Inc., 9.00% Jr. Sub. Pfd. | 9,700 | 260,348 | ||||||
Prudential PLC (Canada), 6.75% Jr. Unsec. Sub. Pfd. | 7,100 | 181,050 | ||||||
2,010,324 | ||||||||
Multi-Line Insurance–0.99% | ||||||||
Allianz SE (Germany), 8.38% Unsec. Sub. Pfd. | 20,600 | 545,257 | ||||||
American International Group Inc., 7.70% Jr. Unsec. Sub. Deb. Pfd. | 18,000 | 456,660 | ||||||
Aviva PLC (United Kingdom), 8.25% Jr. Unsec. Sub. Pfd. | 5,400 | 142,398 | ||||||
Hartford Financial Services Group Inc. 7.88% Jr. Sub. Pfd. | 10,400 | 274,066 | ||||||
1,418,381 | ||||||||
Multi-Utilities–0.35% | ||||||||
Dominion Resources Inc., Series A, 8.38% Pfd. | 8,900 | 254,095 | ||||||
DTE Energy Co., 6.50% Jr. Sub. Deb. Pfd. | 2,700 | 74,925 | ||||||
SCANA Corp., 7.70% Jr. Sub. Pfd. | 1,400 | 39,270 | ||||||
Xcel Energy Inc., 7.60% Jr. Unsec. Sub. Pfd. | 5,400 | 139,860 | ||||||
508,150 | ||||||||
Office REIT’s–0.21% | ||||||||
Alexandria Real Estate Equities Inc., Series E, 6.45% Pfd. | 1,400 | 35,126 | ||||||
Commonwealth REIT, Series C, 7.13% Pfd. | 4,500 | 111,915 | ||||||
Digital Realty Trust Inc., Series F, 6.63% Pfd. | 4,900 | 124,558 | ||||||
Kilroy Realty Corp., Series G, 6.88% Pfd. | 1,000 | 25,180 | ||||||
296,779 | ||||||||
Oil & Gas Exploration & Production–0.09% | ||||||||
Nexen Inc. (Canada), 7.35% Sr. Unsec. Sub. Pfd. | 4,900 | 124,166 | ||||||
Other Diversified Financial Services–10.72% | ||||||||
BAC Capital Trust VIII, 6.00% Jr. Unsec. Gtd. Sub. Pfd. | 9,500 | 226,575 | ||||||
BAC Capital Trust X, Series B, 6.25% Jr. Unsec. Gtd. Sub. Pfd. | 9,500 | 225,720 | ||||||
Bank of America Corp., Series 3, 6.38% Pfd. | 25,400 | 604,520 | ||||||
Series 8, 8.63% Pfd. | 47,700 | 1,228,752 | ||||||
Series D, 6.20% Pfd. | 17,000 | 407,660 | ||||||
Series H, 8.20% Pfd. | 47,600 | 1,205,232 | ||||||
Series I, 6.63% Pfd. | 15,900 | 396,069 | ||||||
Series J, 7.25% Pfd. | 19,100 | 472,343 | ||||||
Citigroup Capital XII, 8.50% Jr. Sub. Pfd. | 42,300 | 1,088,802 | ||||||
Citigroup Capital XIII, 7.88% Jr. Sub. Pfd. | 68,900 | 1,834,807 | ||||||
Countrywide Capital V, 7.00% Jr. Gtd. Sub. Pfd. | 21,100 | 502,602 | ||||||
Credit Suisse AG/Guernsey (Switzerland), 7.90% Jr. Unsec. Sub. Pfd. | 16,100 | 422,625 | ||||||
General Electric Capital Corp., | ||||||||
5.88% Sr. Unsec. Pfd. | 25,100 | 640,803 | ||||||
6.00% Sr. Unsec. Pfd. | 27,200 | 686,256 | ||||||
ING Groep NV (Netherlands), | ||||||||
7.38% Unsec. Sub. Pfd. | 29,600 | 708,624 | ||||||
8.50% Unsec. Sub. Pfd. | 43,300 | 1,098,088 | ||||||
JPMorgan Chase & Co., Series J, 8.63% Pfd. | 52,800 | 1,405,008 | ||||||
JPMorgan Chase Capital XXIX, 6.70% Sub. Pfd. | 31,700 | 822,932 | ||||||
JPMorgan Chase Capital XXVI, 8.00% Gtd. Pfd. | 31,700 | 824,834 | ||||||
Morgan Stanley Capital Trust VI, 6.60% Jr. Unsec. Gtd. Sub. Pfd. | 24,200 | 591,448 | ||||||
15,393,700 | ||||||||
Property & Casualty Insurance–0.31% | ||||||||
Assured Guaranty Municipal Holdings Inc., 6.25% Sr. Unsec. Gtd. Pfd. | 5,800 | 137,692 | ||||||
Axis Capital Holdings Ltd., Series A, 7.25% Pfd. | 2,600 | 66,508 | ||||||
Series C, 6.88% Pfd. | 4,200 | 108,990 | ||||||
Berkley W.R. Capital Trust II, 6.75% Jr. Gtd. Sub. Pfd. | 2,600 | 65,338 | ||||||
Markel Corp., 7.50% Sr. Unsec. Deb. Pfd. | 1,400 | 35,896 | ||||||
Selective Insurance Group Inc., 7.50% Jr. Sub. Pfd. | 1,000 | 25,370 | ||||||
439,794 | ||||||||
Regional Banks–1.29% | ||||||||
BB&T Capital Trust VI, 9.60% Jr. Gtd. Sub. Pfd. | 14,000 | 365,120 | ||||||
First Niagara Financial Group Inc., Series B, 8.63% Sec. Pfd. | 3,700 | 105,011 | ||||||
First Republic Bank, Series A, 6.70% Pfd. | 2,000 | 51,920 | ||||||
KeyCorp Capital X, 8.00% Jr. Unsec. Gtd. Sub. Pfd. | 7,700 | 196,658 | ||||||
PNC Capital Trust, Series E, 7.75% Jr. Gtd. Sub. Pfd. | 8,500 | 222,445 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Premium Income Fund
Shares | Value | |||||||
Regional Banks–(continued) | ||||||||
PNC Financial Services Group Inc., Series L, 9.88% Pfd. | 8,100 | $ | 217,566 | |||||
Regions Financing Trust III, 8.88% Jr. Gtd. Sub. Pfd. | 3,600 | 92,880 | ||||||
SunTrust Capital IX, 7.88% Jr. Unsec. Gtd. Sub. Pfd. | 8,900 | 226,594 | ||||||
Zions Bancorp., Series C, 9.50% Pfd. | 14,230 | 373,111 | ||||||
1,851,305 | ||||||||
Reinsurance–0.51% | ||||||||
Arch Capital Group Ltd., | ||||||||
Series B, 7.88% Pfd. | 3,100 | 77,407 | ||||||
Series C, 6.75% Pfd. | 3,400 | 87,558 | ||||||
Endurance Specialty Holdings Ltd., Series A, 7.75% Pfd. | 1,900 | 50,407 | ||||||
Series B, 7.50% Pfd. | 2,200 | 57,816 | ||||||
Everest Re Capital Trust II, Series B, 6.20% Jr. Unsec. Gtd. Sub. Pfd. | 3,100 | 77,035 | ||||||
PartnerRe Ltd., Series E, 7.25% Pfd. | 7,700 | 204,358 | ||||||
RenaissanceRe Holdings Ltd., Series D, 6.60% Pfd. | 7,100 | 178,565 | ||||||
733,146 | ||||||||
Residential REIT’s–0.02% | ||||||||
Equity Residential, Series N, 6.48% Pfd. | 1,400 | 35,154 | ||||||
Residential REIT’s–0.08% | ||||||||
Apartment Investment & Management Co., Series T, 8.00% Pfd. | 4,800 | 122,400 | ||||||
Retail REIT’s–0.43% | ||||||||
Kimco Realty Corp., | ||||||||
Series G, 7.75% Pfd. | 8,600 | 218,870 | ||||||
Series I, 6.00% Pfd., | 3,700 | 92,611 | ||||||
National Retail Properties Inc. Series D, 6.63% Pfd. | 2,600 | 66,222 | ||||||
Realty Income Corp., Series E, 6.75% Pfd. | 3,300 | 82,929 | ||||||
Series F, 6.63% Pfd. | 3,200 | 84,640 | ||||||
Regency Centers, Series 6, 6.63% Pfd. | 2,600 | 67,269 | ||||||
612,541 | ||||||||
Specialized Finance–0.05% | ||||||||
KKR Financial Holdings LLC., 8.38% Pfd. | 2,500 | 66,975 | ||||||
Specialized REIT’s–0.59% | ||||||||
Public Storage, Series Q, 6.50% Pfd. | 30,600 | 842,112 | ||||||
Specialty Properties–0.17% | ||||||||
Health Care REIT, Inc., Series J, 6.50% Pfd. | 3,000 | 77,719 | ||||||
Hospitality Properties Trust, Series D, 7.13% Pfd. | 6,300 | 163,422 | ||||||
241,141 | ||||||||
Wireless Telecommunication Services–0.22% | ||||||||
Telephone & Data Systems Inc., 7.00% Sr. Unsec. Pfd. | 8,300 | 224,432 | ||||||
United States Cellular Corp., 6.95% Sr. Unsec. Pfd. | 3,300 | 86,955 | ||||||
311,387 | ||||||||
Total Preferred Stocks (Cost $38,938,701) | 40,172,679 | |||||||
Principal | ||||||||
Amount | ||||||||
U.S. Treasury Securities–14.19% | ||||||||
U.S. Treasury Bills–0.66% | ||||||||
0.04%, 05/24/12(f)(g) | $ | 950,000 | 949,961 | |||||
U.S. Treasury STRIPS–13.53% | ||||||||
3.28%, 11/15/40(f) | 49,800,000 | 19,425,891 | ||||||
Total U.S. Treasury Securities (Cost $21,011,521) | 20,375,852 | |||||||
Non-U.S. Dollar Denominated Bonds & Notes–0.59%(h) | ||||||||
Canada–0.05% | ||||||||
Gateway Casinos & Entertainment Ltd., Sec. Gtd. Notes, 8.88%, 11/15/17(b) | CAD | 70,000 | 73,876 | |||||
France–0.09% | ||||||||
Europcar Groupe S.A., REGS, Sec. Gtd. Floating Rate Euro Bonds, 4.56%, 05/15/13(b)(c) | EUR | 100,000 | 130,735 | |||||
Luxembourg–0.08% | ||||||||
Cirsa Funding Luxembourg S.A., REGS, Sr. Gtd. Euro Notes, 8.75%, 05/15/18(b) | EUR | 100,000 | 118,489 | |||||
Netherlands–0.27% | ||||||||
Carlson Wagonlit B.V., REGS, Sr. Sec. Gtd. Floating Rate Euro Notes, 6.88%, 05/01/15(b)(c) | EUR | 250,000 | 330,975 | |||||
Cemex Finance Europe B.V., Gtd. Euro Notes, 4.75%, 03/05/14 | EUR | 50,000 | 61,151 | |||||
392,126 | ||||||||
United Kingdom–0.10% | ||||||||
Boparan Finance PLC, REGS, Sr. Unsec. Gtd. Euro Notes, 9.75%, 04/30/18(b) | EUR | 100,000 | 139,341 | |||||
Total Non-U.S. Dollar Denominated Bonds & Notes (Cost $805,086) | 854,567 | |||||||
Shares | ||||||||
Money Market Funds–14.04% | ||||||||
Liquid Assets Portfolio–Institutional Class(i) | $ | 10,079,846 | 10,079,846 | |||||
Premier Portfolio–Institutional Class(i) | 10,079,847 | 10,079,847 | ||||||
Total Money Market Funds (Cost $20,159,693) | 20,159,693 | |||||||
TOTAL INVESTMENTS–99.37% (Cost $139,658,973) | 142,680,301 | |||||||
OTHER ASSETS LESS LIABILITIES–0.63% | 897,586 | |||||||
NET ASSETS–100.00% | $ | 143,577,887 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Premium Income Fund
Investment Abbreviations:
CAD | – Canadian Dollar | |
Ctfs. | – Certificates | |
Deb. | – Debentures | |
Disc. | – Discounted | |
EUR | – Euro | |
Gtd. | – Guaranteed | |
Jr. | – Junior | |
MTN | – Medium-Term Notes | |
Pfd. | – Preferred | |
PIK | – Payment in Kind | |
REGS | – Regulation S | |
REIT | – Real Estate Investment Trust | |
Sec. | – Secured | |
Sr. | – Senior | |
STRIPS | – Separately Traded Registered Interest and Principal Security | |
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 April 30, 2012 was $29,158,893, which represented 20.31% of the Fund’s Net Assets. | |
(c) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on April 30, 2012. | |
(d) | Perpetual bond with no specified maturity date. | |
(e) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. | |
(f) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. | |
(g) | A portion of the principal balance was pledged as collateral for open credit default swap contracts. See Note 1K and Note 4. | |
(h) | Foreign denominated security. Principal amount is denominated in currency indicated. | |
(i) | The money market fund and the Fund are affiliated by having the same investment adviser. |
By security type, based on Net Assets
as of April 30, 2012
U.S. Dollar Denominated Bonds and Notes | 42.6% | |
Preferred Stocks | 28.0 | |
U.S. Treasury Securities | 14.2 | |
Non-U.S. Dollar Denominated Bonds & Notes | 0.6 | |
Money Market Funds Plus Other Assets Less Liabilities | 14.6 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Premium Income Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $119,499,280) | $ | 122,520,608 | ||
Investments in affiliated money market funds, at value and cost | 20,159,693 | |||
Total investments, at value (Cost $139,658,973) | 142,680,301 | |||
Receivable for: | ||||
Deposits with brokers for open futures contracts | 980,000 | |||
Investments sold | 10,302 | |||
Variation margin | 28,125 | |||
Fund shares sold | 130,387 | |||
Dividends and interest | 1,177,368 | |||
Fund expenses absorbed | 15,683 | |||
Unrealized appreciation on swap agreements | 599,293 | |||
Other assets | 43,173 | |||
Total assets | 145,664,632 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,196,443 | |||
Foreign currency contracts | 402 | |||
Accrued fees to affiliates | 3,086 | |||
Accrued other operating expenses | 34,550 | |||
Trustee deferred compensation and retirement plans | 141 | |||
Premiums received on swap agreements | 852,123 | |||
Total liabilities | 2,086,745 | |||
Net assets applicable to shares outstanding | $ | 143,577,887 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 139,926,263 | ||
Undistributed net investment income | 141,158 | |||
Undistributed net realized gain (loss) | (406,822 | ) | ||
Unrealized appreciation | 3,917,288 | |||
$ | 143,577,887 | |||
Net Assets: | ||||
Class A | $ | 1,805,100 | ||
Class C | $ | 1,823,935 | ||
Class R | $ | 10,617 | ||
Class Y | $ | 921,697 | ||
Institutional Class | $ | 139,016,538 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 175,173 | |||
Class C | 177,180 | |||
Class R | 1,031 | |||
Class Y | 89,375 | |||
Institutional Class | 13,485,101 | |||
Class A: | ||||
Net asset value per share | $ | 10.30 | ||
Maximum offering price per share (Net asset value of $10.30 divided by 94.50%) | $ | 10.90 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 10.29 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 10.30 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 10.31 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 10.31 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Premium Income Fund
Statement of Operations
For the period December 14, 2011 (commencement date) through April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $2,133) | $ | 879,101 | ||
Dividends from affiliated money market funds | 9,635 | |||
Interest | 1,664,879 | |||
Total investment income | 2,553,615 | |||
Expenses: | ||||
Advisory fees | 319,896 | |||
Administrative services fees | 18,989 | |||
Custodian fees | 5,817 | |||
Distribution fees: | ||||
Class A | 566 | |||
Class C | 3,670 | |||
Class R | 19 | |||
Transfer agent fees — A, C, R and Y | 800 | |||
Transfer agent fees — Institutional | 170 | |||
Trustees’ and officers’ fees and benefits | 8,735 | |||
Professional services fees | 23,986 | |||
Other | 21,857 | |||
Total expenses | 404,505 | |||
Less: Fees waived and expenses reimbursed | (94,734 | ) | ||
Net expenses | 309,771 | |||
Net investment income | 2,243,844 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (274,850 | ) | ||
Foreign currencies | (4,731 | ) | ||
Foreign currency contracts | (4,608 | ) | ||
Futures contracts | (417,009 | ) | ||
Swap agreements | 294,376 | |||
(406,822 | ) | |||
Change in net unrealized appreciation of: | ||||
Investment securities | 3,021,328 | |||
Foreign currencies | 253 | |||
Foreign currency contracts | 692 | |||
Futures contracts | 295,722 | |||
Swap agreements | 599,293 | |||
3,917,288 | ||||
Net realized and unrealized gain | 3,510,466 | |||
Net increase in net assets resulting from operations | $ | 5,754,310 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Premium Income Fund
Statement of Changes in Net Assets
For the period December 14, 2011 (commencement date) through April 30, 2012
(Unaudited)
April 30, | ||||
2012 | ||||
Operations: | ||||
Net investment income | $ | 2,243,844 | ||
Net realized gain (loss) | (406,822 | ) | ||
Change in net unrealized appreciation | 3,917,288 | |||
Net increase in net assets resulting from operations | 5,754,310 | |||
Distributions to shareholders from net investment income: | ||||
Class A | (13,345 | ) | ||
Class C | (16,409 | ) | ||
Class R | (146 | ) | ||
Class Y | (6,403 | ) | ||
Institutional Class | (2,066,383 | ) | ||
Total distributions from net investment income | (2,102,686 | ) | ||
Share transactions–net: | ||||
Class A | 1,788,173 | |||
Class C | 1,798,787 | |||
Class R | 10,313 | |||
Class Y | 912,607 | |||
Institutional Class | 135,416,383 | |||
Net increase in net assets resulting from share transactions | 139,926,263 | |||
Net increase in net assets | 143,577,887 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period (includes undistributed net investment income of $141,158) | $ | 143,577,887 | ||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Premium Income Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 to provide current income.
The Fund currently consists of five different classes of shares: Class A, 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 waiver shares may be subject to contingent deferred sales charges (“CDSC”). Class C, Class R, Class Y and Institutional Class shares are sold at net asset value.
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. 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. |
16 Invesco Premium Income 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. | ||
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 economic 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. 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. | 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 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. |
17 Invesco Premium Income 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. | |
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 |
18 Invesco Premium Income Fund
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. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. | ||
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. | Other Risks — The Fund may invest in lower-quality debt securities, i.e., “junk bonds”. Investments in lower-rated securities or unrated securities of comparable quality tend to be more sensitive to economic conditions than higher rated securities. Junk bonds involve a greater risk of default by the issuer because such securities are generally unsecured and are often subordinated to other creditors’ claim. | |
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. |
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 Daily Net Assets | Rate | |||
First $500 million | 0 | .65% | ||
Next $500 million | 0 | .60% | ||
Next $500 million | 0 | .55% | ||
Over $1.5 billion | 0 | .54% | ||
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 Canada 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 February 28, 2013, 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 C, Class R, Class Y and Institutional Class shares to 0.89%, 1.64%, 1.14%, 0.64% and 0.64% 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, including litigation expenses; 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 February 28, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Advisor will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
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 December 14, 2011 (commencement date) to April 30, 2012, the Adviser waived advisory fees of $93,764 and reimbursed class level expenses of $258, $418, $4, $120 and $170 for Class A, Class C, Class R, Class Y and Institutional Class shares, respectively.
19 Invesco Premium Income 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 period December 14, 2011 (commencement date) to April 30, 2012, 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 December 14, 2011 (commencement date) to April 30, 2012, 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 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 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 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 period December 14, 2011(commencement date) to April 30, 2012, 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 period December 14, 2011 (commencement date) to April 30, 2012, IDI advised the Fund that IDI retained $1,152 in front-end sales commissions from the sale of Class A shares and $2 Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, 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 April 30, 2012. 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 period December 14, 2011 (commencement date) to April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 58,257,715 | $ | 2,074,657 | $ | — | $ | 60,332,372 | ||||||||
U.S. Treasury Securities | — | 20,375,852 | — | 20,375,852 | ||||||||||||
Foreign Government Debt Securities | — | 14,132,251 | — | 14,132,251 | ||||||||||||
Corporate Debt Securities | — | 47,839,826 | — | 47,839,826 | ||||||||||||
58,257,715 | 84,422,586 | — | 142,680,301 | |||||||||||||
Foreign Currency Contracts* | — | (402 | ) | — | (402 | ) | ||||||||||
Futures* | 295,722 | — | — | 295,722 | ||||||||||||
Swap Agreements* | — | 599,293 | — | 599,293 | ||||||||||||
Total Investments | $ | 58,553,437 | $ | 85,021,477 | $ | — | $ | 143,574,914 | ||||||||
* | Unrealized appreciation (depreciation). |
20 Invesco Premium Income Fund
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Credit risk | ||||||||
Credit default swaps(a) | $ | 599,293 | $ | — | ||||
Currency risk | ||||||||
Foreign currency contracts(a) | 692 | — | ||||||
Interest rate risk | ||||||||
Futures contracts(b) | 295,722 | — | ||||||
(a) | Values are disclosed on the Statement of Assets and Liabilities under the Unrealized appreciation on swap agreements and Foreign currency contracts, respectively. | |
(b) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Instruments for the period December 14, 2011 (commencement date) to April 30, 2012
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 | Swap | |||||||||||
Futures* | Contracts* | Agreements* | ||||||||||
Realized Gain (Loss) | ||||||||||||
Credit risk | $ | — | $ | — | $ | 294,376 | ||||||
Currency risk | — | (4,608 | ) | — | ||||||||
Interest rate risk | $ | (417,009 | ) | — | — | |||||||
Change in Unrealized Appreciation | ||||||||||||
Credit risk | $ | — | $ | — | $ | 599,293 | ||||||
Currency risk | — | 692 | — | |||||||||
Interest rate risk | 295,722 | — | — | |||||||||
Total | $ | (121,287 | ) | $ | (3,916 | ) | $ | 893,669 | ||||
* | The average notional value of futures, foreign currency contracts and swap agreements outstanding during the period was $14,429,956, $427,879 and $12,984,000, respectively. |
Open Futures Contracts | ||||||||||||||||
Number of | Expiration | Notional | Unrealized | |||||||||||||
Long Contracts | Contracts | Month | Value | Appreciation | ||||||||||||
U.S. Treasury Long Bonds | 180 | June-2012 | $ | 25,717,500 | $ | 295,722 | ||||||||||
Open Foreign Currency Contracts | ||||||||||||||||||||||
Settlement | Contract to | Notional | Unrealized | |||||||||||||||||||
Date | Counterparty | Deliver | Receive | Value | Appreciation | |||||||||||||||||
05/09/12 | RBC Dain Rausch | EUR | 560,000 | USD | 742,110 | $ | 741,418 | $ | 692 | |||||||||||||
Closed Foreign Currency Contracts | ||||||||||||||||||||||
Closed | Contract to | Notional | Realized Gain | |||||||||||||||||||
Date | Counterparty | Deliver | Receive | Value | (Loss) | |||||||||||||||||
03/22/12 | RBC Dain Rausch | USD | 105,584 | EUR | 80,000 | $ | 105,712 | $ | 128 | |||||||||||||
03/27/12 | RBC Dain Rausch | USD | 7,999 | EUR | 6,000 | 7,928 | (71 | ) | ||||||||||||||
03/30/12 | RBC Dain Rausch | USD | 131,970 | EUR | 99,000 | 130,819 | (1,151 | ) | ||||||||||||||
Total closed foreign currency contracts | (1,094 | ) | ||||||||||||||||||||
Total foreign currency contracts | (402 | ) | ||||||||||||||||||||
Currency Abbreviations: | ||
EUR | – Euro | |
USD | – U.S. Dollar |
21 Invesco Premium Income Fund
Open Credit Default Swap Agreements | ||||||||||||||||||||||||||
�� | Implied | Notional | Value | |||||||||||||||||||||||
Buy/Sell | Receive | Expiration | Credit | Value | Unrealized | |||||||||||||||||||||
Counterparty | Reference Entity | Protection | Fixed Rate | Date | Spread(a) | (000) | Appreciation | |||||||||||||||||||
JPMorgan Chase N.A. | CDX North American High Yield Series 17 Index | Sell | 5.00 | %(b) | 12/20/16 | 5.56 | % | $ | 11,640 | $ | 599,293 | |||||||||||||||
(a) | Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing credit default swap contract and serve as an indicator of the current status of the payment/performance risk of the credit default swap contract. An implied credit 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 generally. | |
(b) | Unamortized premium at period end of $852,123. |
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 period December 14, 2011 (commencement date) to April 30, 2012, the Fund did not receive credits from this arrangement.
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.
NOTE 7—Cash Balances
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 period December 14, 2011 (commencement date) to April 30, 2012 was $132,661,829 and $34,574,767, respectively.
During the same period, purchases and sales of U.S. Treasury obligations were $37,966,384 and $17,542,172. In a Fund’s initial year of operations, the cost of investments for tax purposes will not reflect any tax adjustments until its fiscal year end reporting period.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities | $ | 3,921,545 | ||
Aggregate unrealized (depreciation) of investment securities | (900,217 | ) | ||
Net unrealized appreciation of investment securities | $ | 3,021,328 | ||
Cost of investments for tax purposes is $139,658,973. |
22 Invesco Premium Income Fund
NOTE 10—Share Information
Summary of Share Activity | ||||||||
December 14, 2011 | ||||||||
(commencement date) to | ||||||||
April 30, 2012(a) | ||||||||
Shares | Amount | |||||||
Sold: | ||||||||
Class A | 176,169 | $ | 1,798,322 | |||||
Class C | 179,400 | 1,821,546 | ||||||
Class R | 1,035 | 10,364 | ||||||
Class Y | 89,160 | 910,412 | ||||||
Institutional Class | 14,033,316 | 140,962,096 | ||||||
Issued as reinvestment of dividends: | ||||||||
Class A | 1,286 | 13,075 | ||||||
Class C | 1,596 | 16,225 | ||||||
Class Y | 228 | 2,326 | ||||||
Institutional Class | 203,116 | 2,066,225 | ||||||
Reacquired: | ||||||||
Class A | (2,282 | ) | (23,224 | ) | ||||
Class C | (3,816 | ) | (38,984 | ) | ||||
Class R | (4 | ) | (51 | ) | ||||
Class Y | (13 | ) | (131 | ) | ||||
Institutional Class | (751,331 | ) | (7,611,938 | ) | ||||
Net increase in share activity | 13,927,860 | $ | 139,926,263 | |||||
(a) | 97% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are other mutual funds that are also advised by Invesco. |
NOTE 11—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 | net assets | assets without | investment | |||||||||||||||||||||||||||||||||||||||||||
value, | Net | securities (both | Total from | from net | Net asset | Net assets, | with fee waivers | fee waivers | income | |||||||||||||||||||||||||||||||||||||||
beginning | investment | realized and | investment | investment | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Portfolio | |||||||||||||||||||||||||||||||||||||
of period | income(a) | unrealized) | operations | income | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 04/30/12(d) | $ | 10.03 | $ | 0.17 | $ | 0.25 | $ | 0.42 | $ | (0.15 | ) | $ | 10.30 | 4.22 | % | $ | 1,805 | 0.87 | %(e) | 1.18 | %(e) | 4.32 | %(e) | 48 | % | |||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 04/30/12(d) | 10.03 | 0.14 | 0.25 | 0.39 | (0.13 | ) | 10.29 | 3.93 | 1,824 | 1.62 | (e) | 1.93 | (e) | 3.57 | (e) | 48 | ||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 04/30/12(d) | 10.03 | 0.16 | 0.26 | 0.42 | (0.15 | ) | 10.30 | 4.16 | 11 | 1.12 | (e) | 1.43 | (e) | 4.07 | (e) | 48 | ||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 04/30/12(d) | 10.03 | 0.18 | 0.26 | 0.44 | (0.16 | ) | 10.31 | 4.39 | 922 | 0.62 | (e) | 0.93 | (e) | 4.57 | (e) | 48 | ||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||
Period ended 04/30/12(d) | 10.03 | 0.18 | 0.26 | 0.44 | (0.16 | ) | 10.31 | 4.39 | 139,017 | 0.62 | (e) | 0.81 | (e) | 4.57 | (e) | 48 | ||||||||||||||||||||||||||||||||
(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) | Commencement date of December 14, 2011. | |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $596, $966, $10, $278 and $127,737 for Class A, Class C, Class R, Class Y and Institutional Class shares, respectively. |
23 Invesco Premium Income 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 December 14, 2011 (commencement date) through April 30, 2012. The hypothetical ending account value and expenses in the example below are based on an investment of $1,000 invested at the beginning of the period and held for the entire period November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period3 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,042.20 | $ | 3.38 | $ | 1,015.68 | $ | 3.33 | 0.87 | % | ||||||||||||||||||
C | 1,000.00 | 1,039.30 | 6.28 | 1,012.83 | 6.20 | 1.62 | ||||||||||||||||||||||||
R | 1,000.00 | 1,041.60 | 4.35 | 1,014.73 | 4.29 | 1.12 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,043.90 | 2.41 | 1,016.63 | 2.38 | 0.62 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,043.90 | 2.41 | 1,016.63 | 2.37 | 0.62 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period December 14, 2011 (commencement date) through April 30, 2012 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 139 (as of close of business December 14, 2011 (commencement date) through April 30, 2012)/366. Because the Class A, Class C, Class R, Class Y and Institutional Class shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 182/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class A, Class C, Class R, Class Y and Institutional Class shares of the Fund and other funds because such data is based on a full six month period. |
24 Invesco Premium Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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.
PIN-SAR-1 | Invesco Distributors, Inc. |
Invesco Small Companies Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: ATIAX § B: ATIBX § C: ATICX § R: ATIRX § Y: ATIYX § Institutional: ATIIX
2 | Fund Performance | |
4 | Letters to Shareholders | |
5 | Schedule of Investments | |
7 | Financial Statements | |
9 | Notes to Financial Statements | |
15 | Financial Highlights | |
16 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 5.80 | % | ||
Class B Shares | 5.40 | |||
Class C Shares | 5.41 | |||
Class R Shares | 5.68 | |||
Class Y Shares | 5.94 | |||
Institutional Class Shares | 5.96 | |||
S&P 500 Index▼ (Broad Market Index) | 12.77 | |||
Russell 2000 Index▼ (Style-Specific Index) | 11.02 | |||
Lipper Small-Cap Core Funds Index▼ (Peer Group Index) | 10.00 | |||
Source(s): ▼Lipper Inc. |
The S&P 500® Index is an unmanaged index considered representative of the US stock market.
The Russell 2000® Index is an unmanaged index considered representative of small-cap stocks. The Russell 2000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.
The Lipper Small-Cap Core Funds Index is an unmanaged index considered representative of small-cap core funds tracked by Lipper.
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.
2 | Invesco Small Companies Fund |
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (11/4/03) | 10.01 | % | ||
5 Years | 4.33 | |||
1 Year | -4.34 | |||
Class B Shares | ||||
Inception (11/4/03) | 9.99 | % | ||
5 Years | 4.38 | |||
1 Year | -4.57 | |||
Class C Shares | ||||
Inception (11/4/03) | 9.94 | % | ||
5 Years | 4.72 | |||
1 Year | -0.57 | |||
Class R Shares | ||||
Inception | 10.49 | % | ||
5 Years | 5.25 | |||
1 Year | 0.92 | |||
Class Y Shares | ||||
Inception | 10.85 | % | ||
5 Years | 5.69 | |||
1 Year | 1.46 | |||
Institutional Class Shares | ||||
Inception | 11.22 | % | ||
5 Years | 5.99 | |||
1 Year | 1.58 | |||
Class R shares incepted on April 30, 2004. 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 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 share 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 share 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
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (11/4/03) | 10.48 | % | ||
5 Years | 5.09 | |||
1 Year | 2.23 | |||
Class B Shares | ||||
Inception (11/4/03) | 10.45 | % | ||
5 Years | 5.17 | |||
1 Year | 2.34 | |||
Class C Shares | ||||
Inception (11/4/03) | 10.41 | % | ||
5 Years | 5.49 | |||
1 Year | 6.34 | |||
Class R Shares | ||||
Inception | 10.97 | % | ||
5 Years | 6.02 | |||
1 Year | 7.93 | |||
Class Y Shares | ||||
Inception | 11.33 | % | ||
5 Years | 6.46 | |||
1 Year | 8.43 | |||
Institutional Class Shares | ||||
Inception | 11.70 | % | ||
5 Years | 6.77 | |||
1 Year | 8.62 | |||
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 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 1.28%, 2.03%, 2.03%, 1.53%, 1.03% and 0.87%, 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.
3 | Invesco Small Companies Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth — while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically — and certainly without advance notice — depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
4 | Invesco Small Companies Fund |
Schedule of Investments(a)
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–62.65% | ||||||||
Advertising–1.04% | ||||||||
Arbitron Inc. | 337,759 | $ | 12,851,730 | |||||
Aluminum–0.01% | ||||||||
Cymat Technologies Ltd. (Canada)(b) | 2,497,500 | 88,492 | ||||||
Apparel Retail–0.44% | ||||||||
Collective Brands, Inc.(b) | 259,600 | 5,391,892 | ||||||
Apparel, Accessories & Luxury Goods–0.11% | ||||||||
Hampshire Group, Ltd.(b)(c) | 592,824 | 1,304,213 | ||||||
Application Software–2.09% | ||||||||
Solera Holdings Inc. | 573,968 | 25,794,122 | ||||||
Automotive Retail–2.31% | ||||||||
Lithia Motors, Inc.–Class A | 1,060,626 | 28,456,596 | ||||||
Biotechnology–0.78% | ||||||||
Grifols S.A.–ADR (Spain)(b) | 1,017,379 | 9,624,405 | ||||||
Commodity Chemicals–1.41% | ||||||||
Chemtrade Logistics Income Fund (Canada) | 1,045,784 | 17,341,508 | ||||||
Computer Storage & Peripherals–2.91% | ||||||||
Synaptics Inc.(b) | 1,170,840 | 35,956,496 | ||||||
Data Processing & Outsourced Services–8.04% | ||||||||
Alliance Data Systems Corp.(b) | 380,637 | 48,908,048 | ||||||
Lender Processing Services, Inc. | 1,892,576 | 50,247,893 | ||||||
99,155,941 | ||||||||
Education Services–1.86% | ||||||||
American Public Education Inc.(b) | 661,501 | 22,967,315 | ||||||
Electric Utilities–2.26% | ||||||||
Generac Holdings, Inc.(b) | 1,156,560 | 27,849,965 | ||||||
Electrical Components & Equipment–2.67% | ||||||||
Regal-Beloit Corp. | 486,668 | 32,918,224 | ||||||
Health Care Supplies–6.90% | ||||||||
Alere, Inc.(b) | 1,724,971 | 41,209,557 | ||||||
Cooper Cos., Inc. (The) | 498,104 | 43,917,830 | ||||||
85,127,387 | ||||||||
Internet Retail–0.80% | ||||||||
Nutrisystem, Inc. | 852,502 | 9,871,973 | ||||||
Investment Companies–0.00% | ||||||||
Brompton Corp. (Canada) (Acquired 11/19/03-07/21/05; Cost $0)(b) | 69,374 | 0 | ||||||
IT Consulting & Other Services–1.36% | ||||||||
Booz Allen Hamilton Holding Corp. | 684,169 | 11,699,290 | ||||||
NCI, Inc.–Class A(b)(c) | 1,019,293 | 5,055,693 | ||||||
16,754,983 | ||||||||
Leisure Products–0.79% | ||||||||
MEGA Brands Inc. (Canada)(b)(c) | 1,328,164 | 8,000,175 | ||||||
MEGA Brands Inc.–Wts. Expiring 03/30/15 (Canada)(b) | 12,488,000 | 1,706,702 | ||||||
9,706,877 | ||||||||
Life Sciences Tools & Services–2.88% | ||||||||
Charles River Laboratories International, Inc.(b) | 998,888 | 35,490,491 | ||||||
Oil & Gas Equipment & Services–0.27% | ||||||||
ION Geophysical Corp.(b) | 544,547 | 3,392,528 | ||||||
Oil & Gas Exploration & Production–2.66% | ||||||||
Ultra Petroleum Corp.(b) | 1,663,057 | 32,862,006 | ||||||
Publishing–3.78% | ||||||||
John Wiley & Sons, Inc.–Class A | 1,032,487 | 46,658,088 | ||||||
Real Estate Services–3.21% | ||||||||
FirstService Corp. (Canada)(b)(c) | 1,450,295 | 39,641,592 | ||||||
Semiconductors–8.94% | ||||||||
International Rectifier Corp.(b)(c) | 3,558,728 | 77,687,032 | ||||||
Microsemi Corp.(b) | 1,516,834 | 32,642,268 | ||||||
110,329,300 | ||||||||
Technology Distributors–3.68% | ||||||||
Brightpoint, Inc.(b)(c) | 7,412,082 | 45,361,942 | ||||||
Trucking–1.45% | ||||||||
Con-way Inc. | 550,873 | 17,903,372 | ||||||
Total Common Stocks & Other Equity Interests (Cost $746,052,248) | 772,801,438 | |||||||
Principal | ||||||||
Amount | ||||||||
Non-U.S. Dollar Denominated Bonds & Notes–0.49% | ||||||||
Leisure Products–0.49% | ||||||||
MEGA Brands Inc. (Canada)–Class A, Sr. Sec. Gtd. Deb., 10.00%, 03/31/15 (Cost $5,728,134)(d) | CAD | 5,880,503 | 6,085,528 | |||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Small Companies Fund
Shares | Value | |||||||
Preferred Stock–0.16% | ||||||||
Real Estate Services–0.16% | ||||||||
FirstService Corp.(Canada), Series 1 7.00% Pfd. (Cost $1,880,000)(b) | 75,200 | $ | 1,917,600 | |||||
Money Market Funds–37.18% | ||||||||
Liquid Assets Portfolio–Institutional Class(e) | 229,350,625 | 229,350,625 | ||||||
Premier Portfolio–Institutional Class(e) | 229,350,626 | 229,350,626 | ||||||
Total Money Market Funds (Cost $458,701,251) | 458,701,251 | |||||||
TOTAL INVESTMENTS–100.48% (Cost $1,212,361,633) | 1,239,505,817 | |||||||
OTHER ASSETS LESS LIABILITIES–(0.48)% | (5,892,520 | ) | ||||||
NET ASSETS–100.00% | $ | 1,233,613,297 | ||||||
Investment Abbreviations:
ADR | – American Depositary Receipt | |
CAD | – Canadian Dollar | |
Deb. | – Debentures | |
Gtd. | – Guaranteed | |
Pfd. | – Preferred | |
Sec. | – Secured | |
Sr. | – Senior | |
Wts. | – Warrants |
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) | Affiliated company during the period. The Investment Company Act of 1940 defines affiliates as those companies in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The aggregate value of these securities as of April 30, 2012 was $177,050,647, which represented 14.35% of the Fund’s Net Assets. See Note 5. | |
(d) | Foreign denominated security. Principal amount is denominated in currency indicated. | |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
By sector, based on Net Assets
as of April 30, 2012
Information Technology | 27.0 | % | ||
Consumer Discretionary | 11.6 | |||
Health Care | 10.6 | |||
Industrials | 4.1 | |||
Financials | 3.4 | |||
Energy | 2.9 | |||
Utilities | 2.3 | |||
Materials | 1.4 | |||
Money Market Funds Plus Other Assets Less Liabilities | 36.7 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Small Companies Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $491,915,141) | $ | 603,753,919 | ||
Investments in affiliates, at value (Cost $720,446,492) | 635,751,898 | |||
Total investments, at value (Cost $1,212,361,633) | 1,239,505,817 | |||
Foreign currencies, at value (Cost $96,445) | 95,855 | |||
Receivable for: | ||||
Investments sold | 373,731 | |||
Fund shares sold | 5,993,438 | |||
Dividends and interest | 346,649 | |||
Investment for trustee deferred compensation and retirement plans | 24,064 | |||
Other assets | 67,553 | |||
Total assets | 1,246,407,107 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 2,535,415 | |||
Fund shares reacquired | 9,325,199 | |||
Accrued fees to affiliates | 750,151 | |||
Accrued other operating expenses | 107,184 | |||
Trustee deferred compensation and retirement plans | 75,861 | |||
Total liabilities | 12,793,810 | |||
Net assets applicable to shares outstanding | $ | 1,233,613,297 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,175,860,684 | ||
Undistributed net investment income (loss) | (3,724,828 | ) | ||
Undistributed net realized gain | 34,331,670 | |||
Unrealized appreciation | 27,145,771 | |||
$ | 1,233,613,297 | |||
Net Assets: | ||||
Class A | $ | 719,261,901 | ||
Class B | $ | 14,940,297 | ||
Class C | $ | 163,569,362 | ||
Class R | $ | 70,134,391 | ||
Class Y | $ | 190,108,107 | ||
Institutional Class | $ | 75,599,239 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 35,839,225 | |||
Class B | 789,605 | |||
Class C | 8,654,433 | |||
Class R | 3,556,091 | |||
Class Y | 9,428,360 | |||
Institutional Class | 3,667,350 | |||
Class A: | ||||
Net asset value per share | $ | 20.07 | ||
Maximum offering price per share | ||||
(Net asset value of $20.07 ¸ 94.50%) | $ | 21.24 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 18.92 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 18.90 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 19.72 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 20.16 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 20.61 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Small Companies Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $105,135) | $ | 2,352,121 | ||
Dividends from affiliates | 265,339 | |||
Interest | 305,069 | |||
Total investment income | 2,922,529 | |||
Expenses: | ||||
Advisory fees | 3,798,259 | |||
Administrative services fees | 145,374 | |||
Custodian fees | 40,728 | |||
Distribution fees: | ||||
Class A | 779,325 | |||
Class B | 77,651 | |||
Class C | 719,378 | |||
Class R | 169,213 | |||
Transfer agent fees — A, B, C, R and Y | 897,012 | |||
Transfer agent fees — Institutional | 21,293 | |||
Trustees’ and officers’ fees and benefits | 33,569 | |||
Other | 168,151 | |||
Total expenses | 6,849,953 | |||
Less: Fees waived and expense offset arrangement(s) | (255,804 | ) | ||
Net expenses | 6,594,149 | |||
Net investment income (loss) | (3,671,620 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 67,745,371 | |||
Foreign currencies | (43,988 | ) | ||
67,701,383 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (9,151,949 | ) | ||
Foreign currencies | 3,635 | |||
(9,148,314 | ) | |||
Net realized and unrealized gain | 58,553,069 | |||
Net increase in net assets resulting from operations | $ | 54,881,449 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Small Companies Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (3,671,620 | ) | $ | (4,672,833 | ) | ||
Net realized gain | 67,701,383 | 46,903,993 | ||||||
Change in net unrealized appreciation (depreciation) | (9,148,314 | ) | 64,385,774 | |||||
Net increase in net assets resulting from operations | 54,881,449 | 106,616,934 | ||||||
Share transactions–net: | ||||||||
Class A | 200,263,255 | 143,911,524 | ||||||
Class B | (1,353,026 | ) | (1,434,017 | ) | ||||
Class C | 33,362,370 | 17,633,640 | ||||||
Class R | 4,148,019 | 21,849,983 | ||||||
Class Y | 143,940,256 | 26,131,930 | ||||||
Institutional Class | (241,382 | ) | 33,079,310 | |||||
Net increase in net assets resulting from share transactions | 380,119,492 | 241,172,370 | ||||||
Net increase in net assets | 435,000,941 | 347,789,304 | ||||||
Net assets: | ||||||||
Beginning of period | 798,612,356 | 450,823,052 | ||||||
End of period (includes undistributed net investment income (loss) of $(3,724,828) and $(53,208), respectively) | $ | 1,233,613,297 | $ | 798,612,356 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Small Companies Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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. | |
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”). |
9 Invesco Small Companies Fund
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. 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 economic 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. 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. | 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 declared and 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. |
10 Invesco Small Companies Fund
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 | .745% | ||
Next $250 million | 0 | .73% | ||
Next $500 million | 0 | .715% | ||
Next $1.5 billion | 0 | .70% | ||
Next $2.5 billion | 0 | .685% | ||
Next $2.5 billion | 0 | .67% | ||
Next $2.5 billion | 0 | .655% | ||
Over $10 billion | 0 | .64% | ||
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 Canada 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).
11 Invesco Small Companies Fund
The Advisor has contractually agreed, through at least February 28, 2013, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual 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% 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 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, including litigation expenses; 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 February 28, 2013. 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, 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 six months ended April 30, 2012, the Adviser waived advisory fees of $254,871.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $125,780 in front-end sales commissions from the sale of Class A shares and $25, $6,378 and $6,806 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 the Adviser, 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 April 30, 2012. 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.
12 Invesco Small Companies Fund
During the six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities | $ | 1,233,420,289 | $ | — | $ | 0 | $ | 1,233,420,289 | ||||||||
Corporate Debt Securities | — | 6,085,528 | — | 6,085,528 | ||||||||||||
Total Investments | $ | 1,233,420,289 | $ | 6,085,528 | $ | 0 | $ | 1,239,505,817 | ||||||||
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 six months ended April 30, 2012, the Fund engaged in securities purchases of $2,828,187.
NOTE 5—Investments in Other Affiliates
The 1940 Act defines affiliates as those issuances in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The following is a summary of the investments in affiliates for the six months ended April 30, 2012.
Change in | ||||||||||||||||||||||||||||
Unrealized | ||||||||||||||||||||||||||||
Value | Purchases | Proceeds | Appreciation | Realized | Value | Dividend | ||||||||||||||||||||||
10/31/11 | at Cost | from Sales | (Depreciation) | Gain | 04/30/12 | Income | ||||||||||||||||||||||
Advanced Analogic Technologies Inc. | $ | 10,699,440 | $ | — | $ | (14,233,200 | ) | $ | (2,754,126 | ) | $ | 6,287,886 | $ | — | $ | — | ||||||||||||
Brightpoint, Inc. | 41,138,924 | 31,656,159 | — | (27,433,141 | ) | — | 45,361,942 | — | ||||||||||||||||||||
FirstService Corp. | 28,874,703 | 10,487,110 | — | 279,779 | — | 39,641,592 | — | |||||||||||||||||||||
Hampshire Group, Ltd. | 1,689,548 | — | — | (385,335 | ) | — | 1,304,213 | — | ||||||||||||||||||||
International Rectifier Corp. | 58,324,905 | 23,863,066 | — | (4,500,939 | ) | — | 77,687,032 | — | ||||||||||||||||||||
MEGA Brands Inc. | 10,806,540 | 655,784 | — | (3,462,149 | ) | — | 8,000,175 | — | ||||||||||||||||||||
NCI, Inc.–Class A | 9,941,090 | 3,487,432 | — | (8,372,829 | ) | — | 5,055,693 | — | ||||||||||||||||||||
Total | $ | 161,475,150 | $ | 70,149,551 | $ | (14,233,200 | ) | $ | (46,628,740 | ) | $ | 6,287,886 | $ | 177,050,647 | $ | — | ||||||||||||
NOTE 6—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 six months ended April 30, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $933.
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.
NOTE 8—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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.
13 Invesco Small Companies Fund
NOTE 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 had a capital loss carryforward as of October 31, 2011, which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
October 31, 2017 | $ | 29,411,404 | ||
* | 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 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 six months ended April 30, 2012 was $324,170,744 and $159,804,803, 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 | $ | 141,327,888 | ||
Aggregate unrealized (depreciation) of investment securities | (118,142,012 | ) | ||
Net unrealized appreciation of investment securities | $ | 23,185,876 | ||
Cost of investments for tax purposes is $1,216,319,941. |
NOTE 11—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 16,867,371 | $ | 332,071,639 | 14,278,326 | $ | 261,735,932 | ||||||||||
Class B | 94,152 | 1,760,484 | 163,425 | 2,827,116 | ||||||||||||
Class C | 2,439,499 | 45,628,506 | 2,477,925 | 43,049,778 | ||||||||||||
Class R | 1,306,662 | 25,521,728 | 2,411,619 | 43,295,088 | ||||||||||||
Class Y | 8,272,226 | 164,488,374 | 2,489,800 | 46,671,152 | ||||||||||||
Institutional Class | 1,902,265 | 38,048,249 | 2,293,579 | 42,909,551 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 87,862 | 1,723,188 | 91,315 | 1,681,928 | ||||||||||||
Class B | (93,026 | ) | (1,723,188 | ) | (96,144 | ) | (1,681,928 | ) | ||||||||
Reacquired: | ||||||||||||||||
Class A | (6,717,537 | ) | (133,531,572 | ) | (6,562,130 | ) | (119,506,336 | ) | ||||||||
Class B | (73,832 | ) | (1,390,322 | ) | �� | (149,111 | ) | (2,579,205 | ) | |||||||
Class C | (660,777 | ) | (12,266,136 | ) | (1,468,255 | ) | (25,416,138 | ) | ||||||||
Class R | (1,078,531 | ) | (21,373,709 | ) | (1,194,364 | ) | (21,445,105 | ) | ||||||||
Class Y | (1,023,080 | ) | (20,548,118 | ) | (1,131,630 | ) | (20,539,222 | ) | ||||||||
Institutional Class | (1,868,017 | ) | (38,289,631 | ) | (524,725 | ) | (9,830,241 | ) | ||||||||
Net increase in share activity | 19,455,237 | $ | 380,119,492 | 13,079,630 | $ | 241,172,370 | ||||||||||
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 33% 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 Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
14 Invesco Small Companies 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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) on | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | 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)(a) | unrealized) | operations | income | gains | distributions | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | turnover(c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 18.97 | $ | (0.06 | ) | $ | 1.16 | $ | 1.10 | $ | — | $ | — | $ | — | $ | 20.07 | 5.80 | % | $ | 719,262 | 1.18 | %(d) | 1.23 | %(d) | (0.63 | )%(d) | 24 | % | |||||||||||||||||||||||||||
Year ended 10/31/11 | 15.50 | (0.12 | ) | 3.59 | 3.47 | — | — | — | 18.97 | 22.39 | 485,609 | 1.24 | 1.27 | (0.64 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.09 | (0.02 | ) | 3.44 | 3.42 | (0.01 | ) | — | (0.01 | ) | 15.50 | 28.28 | 275,777 | 1.31 | 1.33 | (0.18 | ) | 50 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.21 | 0.06 | 2.94 | 3.00 | — | (0.12 | ) | (0.12 | ) | 12.09 | 33.26 | 207,084 | 1.47 | 1.48 | 0.69 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.71 | 0.03 | (6.71 | ) | (6.68 | ) | (0.09 | ) | (0.73 | ) | (0.82 | ) | 9.21 | (41.70 | ) | 188,482 | 1.37 | 1.38 | 0.28 | 41 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 16.07 | 0.17 | 1.64 | 1.81 | — | (1.17 | ) | (1.17 | ) | 16.71 | 12.10 | 458,286 | 1.27 | 1.34 | 1.06 | 44 | ||||||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 17.95 | (0.13 | ) | 1.10 | 0.97 | — | — | — | 18.92 | 5.40 | 14,940 | 1.93 | (d) | 1.98 | (d) | (1.38 | )(d) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 14.78 | (0.24 | ) | 3.41 | 3.17 | — | — | — | 17.95 | 21.45 | 15,478 | 1.99 | 2.02 | (1.39 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.61 | (0.13 | ) | 3.30 | 3.17 | — | — | — | 14.78 | 27.30 | 13,952 | 2.06 | 2.08 | (0.93 | ) | 50 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 8.92 | (0.00 | ) | 2.81 | 2.81 | — | (0.12 | ) | (0.12 | ) | 11.61 | 32.20 | 12,951 | 2.22 | 2.23 | (0.06 | ) | 27 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.24 | (0.06 | ) | (6.52 | ) | (6.58 | ) | (0.01 | ) | (0.73 | ) | (0.74 | ) | 8.92 | (42.12 | ) | 12,304 | 2.12 | 2.13 | (0.47 | ) | 41 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.75 | 0.05 | 1.61 | 1.66 | — | (1.17 | ) | (1.17 | ) | 16.24 | 11.35 | 31,025 | 2.02 | 2.09 | 0.31 | 44 | ||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 17.93 | (0.13 | ) | 1.10 | 0.97 | — | — | — | 18.90 | 5.41 | 163,569 | 1.93 | (d) | 1.98 | (d) | (1.38 | )(d) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 14.76 | (0.24 | ) | 3.41 | 3.17 | — | — | — | 17.93 | 21.48 | 123,286 | 1.99 | 2.02 | (1.39 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.60 | (0.13 | ) | 3.29 | 3.16 | — | — | — | 14.76 | 27.24 | 86,591 | 2.06 | 2.08 | (0.93 | ) | 50 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 8.91 | (0.00 | ) | 2.81 | 2.81 | — | (0.12 | ) | (0.12 | ) | 11.60 | 32.23 | 64,368 | 2.22 | 2.23 | (0.06 | ) | 27 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.22 | (0.06 | ) | (6.51 | ) | (6.57 | ) | (0.01 | ) | (0.73 | ) | (0.74 | ) | 8.91 | (42.12 | ) | 59,806 | 2.12 | 2.13 | (0.47 | ) | 41 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.74 | 0.05 | 1.60 | 1.65 | — | (1.17 | ) | (1.17 | ) | 16.22 | 11.28 | 116,625 | 2.02 | 2.09 | 0.31 | 44 | ||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 18.66 | (0.08 | ) | 1.14 | 1.06 | — | — | — | 19.72 | 5.68 | 70,134 | 1.43 | (d) | 1.48 | (d) | (0.88 | )(d) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 15.29 | (0.16 | ) | 3.53 | 3.37 | — | — | — | 18.66 | 22.04 | 62,112 | 1.49 | 1.52 | (0.89 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 11.95 | (0.06 | ) | 3.40 | 3.34 | (0.00 | ) | — | (0.00 | ) | 15.29 | 27.97 | 32,270 | 1.56 | 1.58 | (0.43 | ) | 50 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.13 | 0.04 | 2.90 | 2.94 | — | (0.12 | ) | (0.12 | ) | 11.95 | 32.89 | 17,423 | 1.72 | 1.73 | 0.44 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 16.58 | 0.01 | (6.66 | ) | (6.65 | ) | (0.07 | ) | (0.73 | ) | (0.80 | ) | 9.13 | (41.82 | ) | 13,541 | 1.62 | 1.63 | 0.03 | 41 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 15.98 | 0.13 | 1.64 | 1.77 | — | (1.17 | ) | (1.17 | ) | 16.58 | 11.90 | 10,073 | 1.52 | 1.59 | 0.81 | 44 | ||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 19.03 | (0.04 | ) | 1.17 | 1.13 | — | — | — | 20.16 | 5.94 | 190,108 | 0.93 | (d) | 0.98 | (d) | (0.38 | )(d) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 15.51 | (0.07 | ) | 3.59 | 3.52 | — | — | — | 19.03 | 22.70 | 41,476 | 0.99 | 1.02 | (0.39 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.07 | 0.01 | 3.44 | 3.45 | (0.01 | ) | — | (0.01 | ) | 15.51 | 28.62 | 12,735 | 1.06 | 1.08 | 0.07 | 50 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.21 | 0.10 | 2.91 | 3.01 | (0.03 | ) | (0.12 | ) | (0.15 | ) | 12.07 | 33.49 | 6,763 | 1.22 | 1.23 | 0.94 | 27 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08(e) | 10.58 | 0.00 | (1.37 | ) | (1.37 | ) | — | — | — | 9.21 | (12.95 | ) | 511 | 1.17 | (f) | 1.17 | (f) | 0.48 | (f) | 41 | ||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 19.45 | (0.02 | ) | 1.18 | 1.16 | — | — | — | 20.61 | 5.96 | 75,599 | 0.80 | (d) | 0.85 | (d) | (0.25 | )(d) | 24 | ||||||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 15.82 | (0.04 | ) | 3.67 | 3.63 | — | — | — | 19.45 | 22.95 | 70,652 | 0.83 | 0.86 | (0.23 | ) | 38 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 12.30 | 0.04 | 3.50 | 3.54 | (0.02 | ) | — | (0.02 | ) | 15.82 | 28.79 | 29,499 | 0.86 | 0.88 | 0.27 | 50 | ||||||||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 9.39 | 0.11 | 2.99 | 3.10 | (0.07 | ) | (0.12 | ) | (0.19 | ) | 12.30 | 34.05 | 45,672 | 0.94 | 0.95 | 1.22 | 27 | |||||||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 17.00 | 0.10 | (6.84 | ) | (6.74 | ) | (0.14 | ) | (0.73 | ) | (0.87 | ) | 9.39 | (41.45 | ) | 147,944 | 0.90 | 0.91 | 0.75 | 41 | ||||||||||||||||||||||||||||||||||||
Year ended 10/31/07 | 16.26 | 0.25 | 1.66 | 1.91 | — | (1.17 | ) | (1.17 | ) | 17.00 | 12.60 | 169,019 | 0.86 | 0.93 | 1.47 | 44 | ||||||||||||||||||||||||||||||||||||||||
(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 annualized and based on average daily net assets (000’s omitted) of $626,885, $15,616, $144,666, $68,057, $118,100 and $80,356 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. |
NOTE 13—Subsequent Event
Effective August 1, 2012, the Fund will change its name to Invesco Select Companies Fund.
15 Invesco Small Companies 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,058.00 | $ | 6.04 | $ | 1,019.00 | $ | 5.92 | 1.18 | % | ||||||||||||||||||
B | 1,000.00 | 1,054.00 | 9.86 | 1,015.27 | 9.67 | 1.93 | ||||||||||||||||||||||||
C | 1,000.00 | 1,054.10 | 9.86 | 1,015.27 | 9.67 | 1.93 | ||||||||||||||||||||||||
R | 1,000.00 | 1,056.80 | 7.31 | 1,017.75 | 7.17 | 1.43 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,059.40 | 4.76 | 1,020.24 | 4.67 | 0.93 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,059.60 | 4.10 | 1,020.89 | 4.02 | 0.80 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
16 Invesco Small Companies Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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. |
SCO-SAR-1 Invesco Distributors, Inc.
Invesco Commodities Strategy Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: COAAX § B: COAHX § C: COACX § R: COARX § Y: COAIX § Institutional: COAJX
2 | Fund Performance | |
3 | Letters to Shareholders | |
4 | Consolidated Schedule of Investments | |
6 | Consolidated Financial Statements | |
9 | Notes to Consolidated Financial Statements | |
16 | Consolidated Financial Highlights | |
18 | Fund Expenses | |
19 | Results of Proxy | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | -3.11 | % | ||
Class B Shares | -3.44 | |||
Class C Shares | -3.50 | |||
Class R Shares | -3.26 | |||
Class Y Shares | -3.01 | |||
Institutional Class Shares | -2.93 | |||
Dow Jones-UBS Commodity Total Return Index▼(Broad Market/Style-Specific Index) | -5.45 | |||
Source(s): ▼Lipper Inc. |
The Dow Jones-UBS Commodity Total Return Index is an unmanaged index designed to be a highly liquid and diversified benchmark for the commodity futures market.
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.
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (4/30/08) | -10.28 | % | ||
1 Year | -21.41 | |||
Class B Shares | ||||
Inception (2/5/10) | 4.31 | % | ||
1 Year | -20.77 | |||
Class C Shares | ||||
Inception (4/30/08) | -9.69 | % | ||
1 Year | -18.06 | |||
Class R Shares | ||||
Inception (4/30/08) | -9.24 | % | ||
1 Year | -17.05 | |||
Class Y Shares | ||||
Inception (4/30/08) | -8.77 | % | ||
1 Year | -16.64 | |||
Institutional Class Shares | ||||
Inception | -8.82 | % | ||
1 Year | -16.50 |
Effective June 1, 2010, Class A, Class B, Class C, Class I and Class R shares of the predecessor fund, Morgan Stanley Commodities Alpha Fund, advised by Morgan Stanley Investment Advisors Inc. were reorganized into Class A, Class B, Class C, Class Y and Class R shares, respectively, of
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (4/30/08) | -10.36 | % | ||
1 Year | -18.21 | |||
Class B Shares | ||||
Inception (2/5/10) | 4.73 | % | ||
1 Year | -17.56 | |||
Class C Shares | ||||
Inception (4/30/08) | -9.74 | % | ||
1 Year | -14.69 | |||
Class R Shares | ||||
Inception (4/30/08) | -9.29 | % | ||
1 Year | -13.59 | % | ||
Class Y Shares | ||||
Inception (4/30/08) | -8.83 | % | ||
1 Year | -13.21 | |||
Institutional Class Shares | ||||
Inception | -8.88 | % | ||
1 Year | -13.07 | % |
Invesco Commodities Strategy Fund. Returns shown above for Class A, Class B, Class C, Class R and Class Y shares are blended returns of the predecessor fund and Invesco Commodities Strategy 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 share 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 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 1.26%, 2.01%, 2.01%, 1.51%, 1.01% and 0.81%, 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.
Had the adviser not waived fees and/or reimbursed expenses in the past, performance would have been lower.
2 | Invesco Commodities Strategy Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth – while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically — and certainly without advance notice — depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
3 | Invesco Commodities Strategy Fund |
Consolidated Schedule of Investments
April 30, 2012
(Unaudited)
(Unaudited)
Interest | Maturity | Principal | ||||||||||||||
Rate | Date | Amount | Value | |||||||||||||
U.S. Treasury Securities–50.08% | ||||||||||||||||
U.S. Treasury Bills(a)(b) (Cost $37,995,129) | 0.06 | % | 07/19/12 | $ | 38,000,000 | $ | 37,992,931 | |||||||||
Expiration | ||||||||||||||||
Date | ||||||||||||||||
Commodity-Linked Securities–26.17% | ||||||||||||||||
Cargill Commodity Linked Note, one-month U.S. Dollar LIBOR minus 0.30% (linked to the Dow Jones-UBS Commodities IndexSM Total Return, multiplied by 3) | 01/22/13 | 6,266,667 | 6,837,561 | |||||||||||||
Swedish Export Credit Corp. Commodity Linked Note, three-month U.S. Dollar LIBOR minus 0.50% (linked to the Dow Jones-UBSSM Enhanced E137 Total Return Index, multiplied by 3) (Sweden) | 11/20/12 | 11,540,000 | 10,322,070 | |||||||||||||
UBS Commodity Linked Note, one-month U.S. Dollar LIBOR minus 0.30% (linked to the Dow Jones-UBS Commodities IndexSM Total Return, multiplied by 3) | 01/23/13 | 2,430,000 | 2,693,145 | |||||||||||||
Total Commodity-Linked Securities (Cost $20,236,667) | 19,852,776 | |||||||||||||||
Shares | ||||||||||||||||
Money Market Funds–22.24% | ||||||||||||||||
Liquid Assets Portfolio–Institutional Class(c) | 4,455,588 | 4,455,588 | ||||||||||||||
Premier Portfolio–Institutional Class(c) | 4,455,587 | 4,455,587 | ||||||||||||||
STIC (Global Series) PLC–U.S. Dollar Liquidity Portfolio–Institutional Class(c) | 7,958,322 | 7,958,322 | ||||||||||||||
Total Money Market Funds (Cost $16,869,497) | 16,869,497 | |||||||||||||||
TOTAL INVESTMENTS–98.49% (Cost $75,101,293) | 74,715,204 | |||||||||||||||
OTHER ASSETS LESS LIABILITIES–1.51% | 1,144,182 | |||||||||||||||
NET ASSETS–100.00% | $ | 75,859,386 | ||||||||||||||
Notes to Schedule of Investments:
(a) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. | |
(b) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts and swap agreements. See Note 1J, 1K and Note 4. | |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
4 Invesco Commodities Strategy Fund
Open Futures Contracts and Swap Agreements at Period-End | ||||||||||||||
Unrealized | ||||||||||||||
Number of | Expiration | Notional | Appreciation | |||||||||||
Futures Contracts | Contracts | Month | Value | (Depreciation) | ||||||||||
Long Contracts | ||||||||||||||
100 Ounce Gold | 27 | June-2012 | $ | 4,493,340 | $ | (59,349 | ) | |||||||
Brent Crude Oil | 7 | October-2012 | 824,110 | (28,586 | ) | |||||||||
Reformulated Blendstock Oxygenate Blending Gasoline | 7 | June-2012 | 918,632 | (58,935 | ) | |||||||||
Heating Oil | 4 | June-2012 | 534,946 | 8,260 | ||||||||||
Ice European Gasoline | 9 | June-2012 | 902,700 | (25,222 | ) | |||||||||
Silver | 14 | July-2012 | 2,171,120 | (58,303 | ) | |||||||||
Soybean | 30 | July-2012 | 2,258,250 | 120,754 | ||||||||||
Soybean Oil | 10 | July-2012 | 330,300 | (5,972 | ) | |||||||||
WTI Light Sweet Crude Oil | 12 | October-2012 | 1,269,480 | (11,496 | ) | |||||||||
Subtotal | $ | 13,702,878 | $ | (118,849 | ) | |||||||||
Short Contracts | ||||||||||||||
Coffee C | 6 | July-2012 | $ | (403,988 | ) | $ | 14,768 | |||||||
Corn | 11 | July-2012 | (348,838 | ) | (435 | ) | ||||||||
Live cattle | 27 | June-2012 | (1,232,820 | ) | 23,445 | |||||||||
Wheat | 11 | July-2012 | (359,975 | ) | (12,598 | ) | ||||||||
Subtotal | $ | (2,345,621 | ) | $ | 25,180 | |||||||||
Total Futures Contracts | $ | (93,669 | ) | |||||||||||
Termination | ||||||||||||||
Swap Agreements | Counterparty | Date | ||||||||||||
Long Agreements | ||||||||||||||
Receive a return equal to Merrill Lynch Commodity eXtra Aluminum Annual ER Index and pay the product of (i) 0.28% of the Notional Amount multiplied by (ii) days in the period divided by 365 | Merrill Lynch | May-2013 | $ | 799,417 | $ | 7,437 | ||||||||
Receive a return equal to Barclays Capital Copper 3 Month Deferred Excess Return Index and pay the product of (i) 0.30% of the Notional Amount multiplied by (ii) days in the period divided by 365 | Barclays Capital | April-2013 | 4,077,556 | 207,490 | ||||||||||
Receive a return equal to S&P GSCI Sugar Excess Return A141 Strategy and pay the product of (i) 0.37% of the Notional Amount multiplied by (ii) days in the period divided by 365 | Goldman Sachs | April-2013 | 1,794,650 | (163,202 | ) | |||||||||
Receive a return equal to Goldman Sachs Soybean Meal Total Return and pay the product of (i) 0.30% of the Notional Amount multiplied by (ii) days in the period divided by 365 | Goldman Sachs | November-2012 | 2,118,802 | 240,322 | ||||||||||
Subtotal | $ | 8,790,425 | $ | 292,047 | ||||||||||
Short Agreements | ||||||||||||||
Pay a floating rate equal to Dow Jones-UBS Commodities Index Total Return and receive the product of (i) 0.15% of the Notional Amount multiplied by (ii) days in the period divided by 365 | Goldman Sachs | April-2013 | $ | 1,296,537 | $ | (15,755 | ) | |||||||
Total Swap Agreements | $ | 276,292 | ||||||||||||
By commodity sector, based on Net Assets
as of April 30, 2012
Precious Metals | 33.1 | % | ||
Industrial Metals | 30.3 | |||
Energy | 21.8 | |||
Agriculture | 14.8 | |||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
5 Invesco Commodities Strategy Fund
Consolidated Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $58,231,796) | $ | 57,845,707 | ||
Investments in affiliated money market funds, at value and cost | 16,869,497 | |||
Total investments, at value (Cost $75,101,293) | 74,715,204 | |||
Foreign currencies, at value (Cost $3,092) | 3,129 | |||
Receivable for: | ||||
Deposits with brokers for open futures contracts | 1,384,000 | |||
Fund shares sold | 266,791 | |||
Dividends | 6,823 | |||
Unrealized appreciation on swap agreements | 276,292 | |||
Investment for trustee deferred compensation and retirement plans | 5,987 | |||
Other assets | 54,920 | |||
Total assets | 76,713,146 | |||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 497,431 | |||
Variation margin | 163,175 | |||
Accrued fees to affiliates | 64,422 | |||
Accrued other operating expenses | 55,030 | |||
Trustee deferred compensation and retirement plans | 73,702 | |||
Total liabilities | 853,760 | |||
Net assets applicable to shares outstanding | $ | 75,859,386 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 89,793,675 | ||
Undistributed net investment income (loss) | (904,018 | ) | ||
Undistributed net realized gain (loss) | (12,830,776 | ) | ||
Unrealized appreciation (depreciation) | (199,495 | ) | ||
$ | 75,859,386 | |||
Net Assets: | ||||
Class A | $ | 60,112,618 | ||
Class B | $ | 4,975,995 | ||
Class C | $ | 5,959,516 | ||
Class R | $ | 203,855 | ||
Class Y | $ | 4,577,263 | ||
Institutional Class | $ | 30,139 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 3,880,549 | |||
Class B | 324,262 | |||
Class C | 388,531 | |||
Class R | 13,191 | |||
Class Y | 294,145 | |||
Institutional Class | 1,932 | |||
Class A: | ||||
Net asset value per share | $ | 15.49 | ||
Maximum offering price per share | ||||
(Net asset value of $15.49 ¸ 94.50%) | $ | 16.39 | ||
Class B: | ||||
Net asset value and offering price per share | $ | 15.35 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 15.34 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 15.45 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 15.56 | ||
Institutional Class: | ||||
Net asset value and offering price per share | $ | 15.60 | ||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
6 Invesco Commodities Strategy Fund
Consolidated Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Interest | $ | 12,142 | ||
Dividends from affiliated money market funds | 9,972 | |||
Total investment income | 22,114 | |||
Expenses: | ||||
Advisory fees | 202,593 | |||
Administrative services fees | 24,863 | |||
Custodian fees | 2,544 | |||
Distribution fees: | ||||
Class A | 76,310 | |||
Class B | 31,059 | |||
Class C | 32,195 | |||
Class R | 467 | |||
Transfer agent fees — A, B, C, R and Y | 66,101 | |||
Transfer agent fees — Institutional | 21 | |||
Trustees’ and officers’ fees and benefits | 14,291 | |||
Registration and filing fees | 38,333 | |||
Professional services fees | 30,849 | |||
Other | 25,296 | |||
Total expenses | 544,922 | |||
Less: Fees waived | (11,892 | ) | ||
Net expenses | 533,030 | |||
Net investment income (loss) | (510,916 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (1,290,503 | ) | ||
Foreign currencies | 263 | |||
Futures contracts | 2,266,929 | |||
Swap agreements | 281,023 | |||
1,257,712 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (2,003,791 | ) | ||
Foreign currencies | 3,565 | |||
Futures contracts | (1,849,751 | ) | ||
Swap agreements | 231,697 | |||
(3,618,280 | ) | |||
Net realized and unrealized gain (loss) | (2,360,568 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | (2,871,484 | ) | |
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
7 Invesco Commodities Strategy Fund
Consolidated Statement of Changes in Net Assets
For the six months ended April 30, 2012, the period August 1, 2011 to October 31, 2011 and the year ended July 31, 2011
(Unaudited)
Six months | Three months | Year | ||||||||||
ended | ended | ended | ||||||||||
April 30, | October 31, | July 31, | ||||||||||
2012 | 2011 | 2011 | ||||||||||
Operations: | ||||||||||||
Net investment income (loss) | $ | (510,916 | ) | $ | (302,899 | ) | $ | (1,193,470 | ) | |||
Net realized gain (loss) | 1,257,712 | (6,673,736 | ) | 23,356,981 | ||||||||
Change in net unrealized appreciation (depreciation) | (3,618,280 | ) | (2,030,266 | ) | (407,869 | ) | ||||||
Net increase (decrease) in net assets resulting from operations | (2,871,484 | ) | (9,006,901 | ) | 21,755,642 | |||||||
Distributions to shareholders from net investment income: | ||||||||||||
Class A | (3,595,292 | ) | — | (1,932,809 | ) | |||||||
Class B | (304,249 | ) | — | (216,652 | ) | |||||||
Class C | (312,036 | ) | — | (160,154 | ) | |||||||
Class R | (9,151 | ) | — | (2,526 | ) | |||||||
Class Y | (278,094 | ) | — | (139,066 | ) | |||||||
Institutional Class | (3,069 | ) | — | (283 | ) | |||||||
Total distributions from net investment income | (4,501,891 | ) | — | (2,451,490 | ) | |||||||
Distributions to shareholders from net realized gains: | ||||||||||||
Class A | (10,259,487 | ) | — | — | ||||||||
Class B | (1,087,329 | ) | — | — | ||||||||
Class C | (1,069,595 | ) | — | — | ||||||||
Class R | (27,966 | ) | — | — | ||||||||
Class Y | (749,368 | ) | — | — | ||||||||
Institutional Class | (7,969 | ) | — | — | ||||||||
Total distributions from net realized gains | (13,201,714 | ) | — | — | ||||||||
Share transactions–net: | ||||||||||||
Class A | 5,514,817 | (3,560,097 | ) | (10,669,592 | ) | |||||||
Class B | (752,248 | ) | (967,156 | ) | (4,121,844 | ) | ||||||
Class C | 153,729 | (1,689,954 | ) | 738,340 | ||||||||
Class R | 39,631 | 4,583 | 179,166 | |||||||||
Class Y | 671,918 | (63,077 | ) | (2,008,396 | ) | |||||||
Institutional Class | (11,475 | ) | — | (1,298,653 | ) | |||||||
Net increase (decrease) in net assets resulting from share transactions | 5,616,372 | (6,275,701 | ) | (17,180,979 | ) | |||||||
Net increase (decrease) in net assets | (14,958,717 | ) | (15,282,602 | ) | 2,123,173 | |||||||
Net assets: | ||||||||||||
Beginning of period | 90,818,103 | 106,100,705 | 103,977,532 | |||||||||
End of period (includes undistributed net investment income (loss) of $(904,018), $4,108,789 and $4,054,285, respectively) | $ | 75,859,386 | $ | 90,818,103 | $ | 106,100,705 | ||||||
See accompanying Notes to Consolidated Financial Statements which are an integral part of the financial statements.
8 Invesco Commodities Strategy Fund
Notes to Consolidated Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Commodities Strategy Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 total return.
The Fund will seek to gain exposure to the commodity markets primarily through investments in the Invesco Cayman Commodity Fund II Ltd. (the “Subsidiary”), a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund to invest in commodity-linked derivatives. The Fund may invest up to 25% of its total assets in the Subsidiary.
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 consolidated 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. 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 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 economic 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. |
9 Invesco Commodities Strategy Fund
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 consolidated 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. 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 Consolidated 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 Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated 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 Consolidated Statement of Operations and Consolidated Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Consolidated 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 Consolidated 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 declared and 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 consolidated financial statements. | |
The Subsidiary is classified as a controlled foreign corporation under Subchapter N of the Internal Revenue Code. Therefore, the Fund is required to increase its taxable income by its share of the Subsidiary’s income. Net investment losses of the Subsidiary cannot be deducted by the Fund in the current period nor carried forward to offset taxable income in future periods. | ||
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 financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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. The accompanying financial statements reflect the financial position of the Fund and its Subsidiary and the results of operations on a consolidated basis. All inter-company accounts and transactions have been eliminated in consolidation. | |
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 consolidated financial statements are released to print. | ||
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust, and under the Subsidiary’s organizational documents, the directors and officers of the Subsidiary, are indemnified against certain liabilities that may arise out of performance of their duties to the Fund and/or the Subsidiary, respectively. 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. |
10 Invesco Commodities Strategy Fund
I. | Structured Securities — The Fund may invest in structured securities. Structured securities are a type of derivative security whose value is determined by reference to changes in the value of underlying securities, currencies, interest rates, commodities, indices or other financial indicators (“reference instruments”). Most structured securities are fixed-income securities that have maturities of three years or less. Structured securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying reference instrument appreciates) and may have return characteristics similar to direct investments in the underlying reference instrument. | |
Structured securities may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference instruments. In addition to the credit risk of structured securities and the normal risks of price changes in response to changes in interest rates, the principal amount of structured notes or indexed securities may decrease as a result of changes in the value of the underlying reference instruments. Changes in the daily value of structured securities are recorded as unrealized gains (losses) in the Consolidated Statement of Operations. When the structured securities mature or are sold, the Fund recognizes a realized gain (loss) on the Consolidated Statement of Operations. | ||
J. | 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 Consolidated 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 Consolidated 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 Consolidated Statement of Assets and Liabilities. | |
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. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. | ||
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 Consolidated 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 Consolidated 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 Consolidated Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Consolidated 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 |
11 Invesco Commodities Strategy Fund
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 Consolidated 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. | Other Risks — The Fund will seek to gain exposure to commodity markets primarily through an investment in the Subsidiary and through investments in exchange traded funds. The Subsidiary, unlike the Fund, may invest without limitation in commodities, commodity-linked derivatives and other securities, such as exchange traded notes, that may provide leverage and non-leveraged exposure to commodity markets. The Fund is indirectly exposed to the risks associated with the Subsidiary’s investments. | |
The Fund is non-diversified and may invest in securities of fewer issuers than if it were diversified. Thus, the value of the Fund’s shares may vary more widely and the Fund may be subject to greater market and credit risk than if the Fund invested more broadly. | ||
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. |
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 Advisor at the annual rate of 0.50% of the 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 Canada 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 Subsidiary has entered into a separate contract with the Adviser whereby the Adviser provides investment advisory and other services to the Subsidiary. In consideration of these services, the Subsidiary pays an advisory fee to the Adviser based on the annual rate of the Subsidiary’s average daily net assets as set forth above.
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 R, Class Y and Institutional Class shares to 1.25%, 2.00%, 2.00%, 1.50%, 1.00% and 1.00%, 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, including litigation expenses; 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 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 invest. As a result, total annual fund operating expenses after expense reimbursement 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 Acquired Fund Fees and Expenses are included in the total return of the Fund. 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 this 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 six months ended April 30, 2012, the Adviser waived advisory fees of $11,892.
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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Consolidated 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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Consolidated Statement of Operations as Transfer agent fees.
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; (3) Class C — up to 1.00% of the average daily net assets of Class C shares; and (4) Class R — up to 0.50% of the average daily net assets of Class R 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.
12 Invesco Commodities Strategy Fund
For the six months ended April 30, 2012, expenses incurred under these agreements are shown in the Consolidated 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $398 in front-end sales commissions from the sale of Class A shares and $0, $2,350 and $237 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 the Adviser, 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 April 30, 2012. 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 consolidated financial statements may materially differ from the value received upon actual sale of those investments.
�� During the six months ended April 30, 2012, there were no significant transfers between investment levels.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Commodity-Linked Securities | $ | — | $ | 19,852,776 | $ | — | $ | 19,852,776 | ||||||||
Money Market Funds | 16,869,497 | — | — | 16,869,497 | ||||||||||||
U.S. Treasury Debt Securities | — | 37,992,931 | — | 37,992,931 | ||||||||||||
16,869,497 | 57,845,707 | — | 74,715,204 | |||||||||||||
Futures and Swap Agreements* | (93,669 | ) | 276,292 | — | 182,623 | |||||||||||
Total Investments | $ | 16,775,828 | $ | 58,121,999 | $ | — | $ | 74,897,827 | ||||||||
* | Unrealized appreciation (depreciation) |
NOTE 4—Derivative Investments
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 April 30, 2012:
Value | ||||||||
Risk Exposure/ Derivative Type | Assets | Liabilities | ||||||
Commodity risk | ||||||||
Futures contracts(a) | $ | 167,227 | $ | (260,896 | ) | |||
Commodity risk | ||||||||
Swap agreements(b) | 455,249 | (178,957 | ) | |||||
$ | 622,476 | $ | (439,853 | ) | ||||
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current day’s variation margin receivable (payable) is reported within the Consolidated Statement of Assets & Liabilities. | |
(b) | Values are disclosed on the Consolidated Statement of Assets and Liabilities under the Unrealized appreciation on swap agreements. |
13 Invesco Commodities Strategy Fund
Effect of Derivative Instruments for the six months ended April 30, 2012
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 | ||||||||
Consolidated Statement of Operations | ||||||||
Swap | ||||||||
Futures* | Agreements* | |||||||
Realized Gain | ||||||||
Commodity risk | $ | 2,266,929 | $ | 281,023 | ||||
Change in Unrealized Appreciation (Depreciation) | ||||||||
Commodity risk | (1,849,751 | ) | 231,697 | |||||
Total | $ | 417,178 | $ | 512,720 | ||||
* | The average notional value of futures and swap agreements outstanding during the period was $15,740,459 and $9,208,383, 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.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due custodian. 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—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 Regulated Investment Company Modernization Act of 2010 (the “Act”) eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. 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 Fund is limited to utilizing $5,596,943 of capital loss carryforward in the fiscal year ending October 31, 2012.
The Fund had a capital loss carryforward as of October 31, 2011, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
October 31, 2016 | $ | 9,263,864 | $ | — | $ | 9,263,864 | ||||||
October 31, 2017 | 276,503 | — | 276,503 | |||||||||
Not subject to expiration | 3,368,467 | 20,033 | 3,388,500 | |||||||||
Total capital loss carryforward | $ | 12,908,834 | $ | 20,033 | $ | 12,928,867 | ||||||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
14 Invesco Commodities Strategy Fund
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 six months ended April 30, 2012 was $12,563,896 and $17,438,880, 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 | $ | 834,039 | ||
Aggregate unrealized (depreciation) of investment securities | (1,400,689 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (566,650 | ) | |
Cost of investments for tax purposes is $75,281,854. |
NOTE 9—Share Information
Summary of Share Activity | ||||||||||||||||||||||||
Six months ended | Three months ended | Year ended | ||||||||||||||||||||||
April 30, 2012(a) | October 31, 2011 | July 31, 2011 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
Sold: | ||||||||||||||||||||||||
Class A | 26,595 | $ | 425,287 | 11,048 | $ | 233,249 | 313,129 | $ | 6,674,587 | |||||||||||||||
Class B | 1,794 | 27,990 | 3,151 | 65,990 | 33,974 | 718,223 | ||||||||||||||||||
Class C | 1,263 | 19,478 | 1,562 | 33,168 | 128,378 | 2,749,015 | ||||||||||||||||||
Class R | 1,692 | 26,434 | 426 | 8,646 | 8,631 | 180,566 | ||||||||||||||||||
Class Y | 31,594 | 507,183 | 269 | 5,759 | 15,772 | 342,594 | ||||||||||||||||||
Institutional Class | — | — | — | — | 29,414 | 562,629 | ||||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||||||
Class A | 821,813 | 12,639,481 | — | — | 84,559 | 1,747,833 | ||||||||||||||||||
Class B | 81,331 | 1,242,727 | — | — | 9,483 | 194,391 | ||||||||||||||||||
Class C | 82,459 | 1,259,152 | — | — | 6,865 | 140,802 | ||||||||||||||||||
Class R | 2,404 | 36,927 | — | — | 121 | 2,504 | ||||||||||||||||||
Class Y | 60,520 | 933,816 | — | — | 6,067 | 125,892 | ||||||||||||||||||
Institutional Class | 557 | 8,614 | — | — | — | — | ||||||||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||||||||||
Class A | 52,880 | 835,142 | 22,654 | 467,073 | 100,110 | 2,107,668 | ||||||||||||||||||
Class B | (53,336 | ) | (835,142 | ) | (22,987 | ) | (467,073 | ) | (101,248 | ) | (2,107,668 | ) | ||||||||||||
Reacquired: | ||||||||||||||||||||||||
Class A | (511,019 | ) | (8,385,093 | ) | (204,114 | ) | (4,260,419 | ) | (1,012,867 | ) | (21,199,680 | ) | ||||||||||||
Class B | (75,054 | ) | (1,187,823 | ) | (27,518 | ) | (566,073 | ) | (139,391 | ) | (2,926,790 | ) | ||||||||||||
Class C | (67,984 | ) | (1,124,901 | ) | (89,767 | ) | (1,723,122 | ) | (104,379 | ) | (2,151,477 | ) | ||||||||||||
Class R | (1,194 | ) | (23,730 | ) | (194 | ) | (4,063 | ) | (174 | ) | (3,904 | ) | ||||||||||||
Class Y | (48,202 | ) | (769,081 | ) | (3,231 | ) | (68,836 | ) | (124,534 | ) | (2,476,882 | ) | ||||||||||||
Institutional Class | (1,256 | ) | (20,089 | ) | — | — | (93,343 | ) | (1,861,282 | ) | ||||||||||||||
Net increase (decrease) in share activity | 406,857 | $ | 5,616,372 | (308,701 | ) | $ | (6,275,701 | ) | (839,433 | ) | $ | (17,180,979 | ) | |||||||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 70% 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 Fund has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. |
15 Invesco Commodities Strategy Fund
NOTE 10—Consolidated Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
to average | expenses | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | net assets | to average net | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) on | with fee | assets without | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | securities | Dividends | Distributions | waivers | fee waivers | investment | Rebate from | ||||||||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | from net | Net asset | Net assets, | and/or | and/or | income (loss) | Morgan | |||||||||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | realized | Total | value, end | Total | end of period | expenses | expenses | to average | Stanley | Portfolio | ||||||||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | gains | distributions | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | affiliates | turnover(c) | ||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 20.24 | $ | (0.09 | ) | $ | (0.57 | ) | $ | (0.66 | ) | $ | (1.06 | ) | $ | (3.03 | ) | $ | (4.09 | ) | $ | 15.49 | (3.11 | )% | $ | 60,113 | 1.21 | %(d) | 1.24 | %(d) | (1.16 | )%(d) | — | % | 54 | % | ||||||||||||||||||||||||
Three months ended 10/31/11 | 22.13 | (0.06 | ) | (1.83 | ) | (1.89 | ) | — | — | — | 20.24 | (8.54 | ) | 70,653 | 1.25 | (i) | 1.32 | (i) | (1.13 | )(i) | — | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 07/31/11 | 18.45 | (0.21 | ) | 4.38 | 4.17 | (0.49 | ) | — | (0.49 | ) | 22.13 | 22.82 | 81,005 | 1.17 | 1.21 | (0.98 | ) | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/10 | 18.19 | (0.18 | )(e) | 0.44 | (e) | 0.26 | — | — | — | 18.45 | 1.43 | 77,046 | 1.15 | (e) | 1.21 | (e) | (1.00 | )(e) | — | 131 | ||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/09 | 29.55 | (0.07 | )(e) | (10.90 | )(e) | (10.97 | ) | (0.39 | ) | — | (0.39 | ) | 18.19 | (36.93 | ) | 5,528 | 1.45 | (e)(f) | 2.53 | (e)(f) | (0.41 | )(e)(f)(g) | 0.05 | 225 | ||||||||||||||||||||||||||||||||||||
Year ended 07/31/08(h) | 30.00 | 0.10 | (e) | (0.55 | )(e) | (0.45 | ) | — | — | — | 29.55 | (1.50 | ) | 6,342 | 1.38 | (e)(f)(i) | 1.38 | (e)(f)(i) | 1.27 | (e)(f)(i) | 0.00 | (i)(j) | 6 | |||||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 19.93 | (0.15 | ) | (0.55 | ) | (0.70 | ) | (0.85 | ) | (3.03 | ) | (3.88 | ) | 15.35 | (3.44 | ) | 4,976 | 1.97 | (d) | 2.00 | (d) | (1.92 | )(d) | — | 54 | |||||||||||||||||||||||||||||||||||
Three months ended 10/31/11 | 21.83 | (0.10 | ) | (1.80 | ) | (1.90 | ) | — | — | — | 19.93 | (8.70 | ) | 7,366 | 2.00 | (i) | 2.07 | (i) | (1.88 | )(i) | — | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 07/31/11 | 18.27 | (0.36 | ) | 4.32 | 3.96 | (0.40 | ) | — | (0.40 | ) | 21.83 | 21.83 | 9,101 | 1.92 | 1.96 | (1.73 | ) | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/10(h) | 17.44 | (0.15 | )(e) | 0.98 | (e) | 0.83 | — | — | — | 18.27 | 4.76 | 11,221 | 1.90 | (e)(i) | 1.96 | (e)(i) | (1.75 | )(e)(i) | — | 131 | ||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 19.97 | (0.15 | ) | (0.57 | ) | (0.72 | ) | (0.88 | ) | (3.03 | ) | (3.91 | ) | 15.34 | (3.50 | ) | 5,960 | 1.97 | (d) | 2.00 | (d) | (1.92 | )(d) | — | 54 | |||||||||||||||||||||||||||||||||||
Three months ended 10/31/11 | 21.87 | (0.10 | ) | (1.80 | ) | (1.90 | ) | — | — | — | 19.97 | (8.69 | )(k) | 7,443 | 1.98 | (i)(k) | 2.05 | (i)(k) | (1.86 | )(i)(k) | — | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 07/31/11 | 18.27 | (0.34 | ) | 4.34 | 4.00 | (0.40 | ) | — | (0.40 | ) | 21.87 | 22.05 | 10,082 | 1.80 | 1.84 | (1.61 | ) | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/10 | 18.15 | (0.32 | )(e) | 0.44 | (e) | 0.12 | — | — | — | 18.27 | 0.66 | 7,859 | 1.90 | (e) | 1.96 | (e) | (1.75 | )(e) | — | 131 | ||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/09 | 29.47 | (0.21 | )(e) | (10.86 | )(e) | (11.07 | ) | (0.25 | ) | — | (0.25 | ) | 18.15 | (37.47 | ) | 2,408 | 2.22 | (e)(f) | 3.30 | (e)(f) | (1.17 | )(e)(f)(g) | 0.05 | 225 | ||||||||||||||||||||||||||||||||||||
Year ended 07/31/08(h) | 30.00 | 0.04 | (e) | (0.57 | )(e) | (0.53 | ) | — | — | — | 29.47 | (1.70 | ) | 5,111 | 2.13 | (e)(f)(i) | 2.13 | (e)(f)(i) | 0.53 | (e)(f)(i) | 0.00 | (i)(j) | 6 | |||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 20.15 | (0.11 | ) | (0.57 | ) | (0.68 | ) | (0.99 | ) | (3.03 | ) | (4.02 | ) | 15.45 | (3.26 | ) | 204 | 1.47 | (d) | 1.50 | (d) | (1.42 | )(d) | — | 54 | |||||||||||||||||||||||||||||||||||
Three months ended 10/31/11 | 22.04 | (0.07 | ) | (1.82 | ) | (1.89 | ) | — | — | — | 20.15 | (8.58 | ) | 207 | 1.50 | (i) | 1.57 | (i) | (1.38 | )(i) | — | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 07/31/11 | 18.39 | (0.27 | ) | 4.38 | 4.11 | (0.46 | ) | — | (0.46 | ) | 22.04 | 22.54 | 222 | 1.42 | 1.46 | (1.23 | ) | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/10 | 18.18 | (0.23 | )(e) | 0.44 | (e) | 0.21 | — | — | — | 18.39 | 1.16 | 27 | 1.40 | (e) | 1.46 | (e) | (1.25 | )(e) | — | 131 | ||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/09 | 29.53 | (0.12 | )(e) | (10.90 | )(e) | (11.02 | ) | (0.33 | ) | — | (0.33 | ) | 18.18 | (37.13 | ) | 102 | 1.72 | (e)(f) | 2.80 | (e)(f) | (0.67 | )(e)(f)(g) | 0.05 | 225 | ||||||||||||||||||||||||||||||||||||
Year ended 07/31/08(h) | 30.00 | 0.03 | (e) | (0.50 | )(e) | (0.47 | ) | — | — | — | 29.53 | (1.57 | ) | 146 | 1.68 | (e)(f)(i) | 1.68 | (e)(f)(i) | 0.39 | (e)(f)(i) | 0.00 | (i)(j) | 6 | |||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 20.36 | (0.07 | ) | (0.58 | ) | (0.65 | ) | (1.12 | ) | (3.03 | ) | (4.15 | ) | 15.56 | (3.01 | ) | 4,577 | 0.97 | (d) | 1.00 | (d) | (0.92 | )(d) | — | 54 | |||||||||||||||||||||||||||||||||||
Three months ended 10/31/11 | 22.24 | (0.05 | ) | (1.83 | ) | (1.88 | ) | — | — | — | 20.36 | (8.45 | ) | 5,095 | 1.00 | (i) | 1.07 | (i) | (0.88 | )(i) | — | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 07/31/11 | 18.52 | (0.15 | ) | 4.39 | 4.24 | (0.52 | ) | — | (0.52 | ) | 22.24 | 23.11 | 5,632 | 0.92 | 0.96 | (0.73 | ) | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/10 | 18.21 | (0.14 | )(e) | 0.45 | (e) | 0.31 | — | — | — | 18.52 | 1.70 | 6,591 | 0.90 | (e) | 0.96 | (e) | (0.75 | )(e) | — | 131 | ||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/09 | 29.57 | (0.03 | )(e) | (10.91 | )(e) | (10.94 | ) | (0.42 | ) | — | (0.42 | ) | 18.21 | (36.77 | ) | 36,939 | 1.22 | (e)(f) | 2.30 | (e)(f) | (0.17 | )(e)(f)(g) | 0.05 | 225 | ||||||||||||||||||||||||||||||||||||
Year ended 07/31/08(h) | 30.00 | 0.07 | (e) | (0.50 | )(e) | (0.43 | ) | — | — | — | 29.57 | (1.47 | ) | 49,066 | 1.19 | (e)(f)(i) | 1.19 | (e)(f)(i) | 0.88 | (e)(f)(i) | 0.00 | (i)(j) | 6 | |||||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 20.44 | (0.07 | ) | (0.57 | ) | (0.64 | ) | (1.17 | ) | (3.03 | ) | (4.20 | ) | 15.60 | (2.98 | ) | 30 | 0.91 | (d) | 0.94 | (d) | (0.86 | )(d) | — | 54 | |||||||||||||||||||||||||||||||||||
Three months ended 10/31/11 | 22.32 | (0.04 | ) | (1.84 | ) | (1.88 | ) | — | — | — | 20.44 | (8.42 | ) | 54 | 0.82 | (i) | 0.87 | (i) | (0.70 | )(i) | — | 22 | ||||||||||||||||||||||||||||||||||||||
Year ended 07/31/11 | 18.53 | (0.11 | ) | 4.39 | 4.28 | (0.49 | ) | — | (0.49 | ) | 22.32 | 23.28 | 59 | 0.75 | 0.79 | (0.56 | ) | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Year ended 07/31/10(h) | 17.29 | (0.02 | )(e) | 1.26 | (e) | 1.24 | — | — | — | 18.53 | 7.17 | 1,233 | 0.89 | (e)(i) | 0.95 | (e)(i) | (0.74 | )(e)(i) | — | 131 | ||||||||||||||||||||||||||||||||||||||||
(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 annualized and based on average daily net assets (000’s omitted) of $63,783, $6,246, $6,474, $188, $4,749 and $43 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(e) | Effective January 31, 2011, the Fund began reporting operations of its wholly-owned subsidiary on a consolidated basis. Had the Fund reported on a consolidated basis in prior periods, ratio of expenses to average net assets without fee waivers and/or expense reimbursements would have increased by 0.13%, 0.18% and 0.04% for the years ended July 31, 2008, 2009 and 2010, respectively. The ratio of expenses to average net assets with fee waivers and/or expense reimbursements would have increased 0.00%, 0.00% and 0.02%, respectively for the same time period. The ratio of net investment income (loss) to average net assets would have increased 0.14%, 0.08% and 0.00% for the years ended July 31, 2008, 2009 and 2010, respectively. This change did not have a material impact to net investment income (loss) per share or net realized and unrealized gain (loss) per share. | |
(f) | The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as “Rebate from Morgan Stanley affiliates”. | |
(g) | Ratio of net investment income (loss) to average net assets without fee waivers and/or expense reimbursements for Class A, Class C, Class R and Class Y was (1.48)%, (2.25)%, (1.75)% and (1.25)%, respectively, for the year ended July 31, 2009. | |
(h) | Commencement date of April 30, 2008 for Class A, Class C, Class R and Class Y shares. Commencement date of February 5, 2010 and June 1, 2010 for Class B and Institutional Class shares, respectively. | |
(i) | Annualized. | |
(j) | Amount is less than 0.005%. | |
(k) | 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 0.98% for the period ended October 31, 2011. |
16 Invesco Commodities Strategy Fund
NOTE 11—Subsequent Event
The Board of Trustees of the Fund 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 Balanced-Risk Commodity Strategy Fund (the “Acquiring Fund”).
The Agreement was approved by the Fund’s shareholders on May 25, 2012 and the reorganization was consummated on June 11, 2012. Upon closing of the reorganization, shareholders of the Fund received a corresponding class of shares of the Acquiring Fund in exchange for their shares of the Fund and the Fund liquidated and ceased operations.
17 Invesco Commodities Strategy 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 968.90 | $ | 5.92 | $ | 1,018.85 | $ | 6.07 | 1.21 | % | ||||||||||||||||||
B | 1,000.00 | 965.60 | 9.63 | 1,015.07 | 9.87 | 1.97 | ||||||||||||||||||||||||
C | 1,000.00 | 965.00 | 9.62 | 1,015.07 | 9.87 | 1.97 | ||||||||||||||||||||||||
R | 1,000.00 | 967.40 | 7.19 | 1,017.55 | 7.37 | 1.47 | ||||||||||||||||||||||||
Y | 1,000.00 | 969.90 | 4.75 | 1,020.04 | 4.87 | 0.97 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 970.70 | 4.46 | 1,020.34 | 4.57 | 0.91 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
18 Invesco Commodities Strategy Fund
Proxy Results |
A Special Meeting (“Meeting”) of Shareholders of Invesco Commodities Strategy Fund (“Fund”) was held on April 2, 2012 and was adjourned until April 16, 2012, April 30, 2012, and further adjourned until May 25, 2012. The Meeting on May 25, 2012 was held for the following purpose:
(1) | Approve an Agreement and Plan of Reorganization. |
The results of the voting on the above matter were as follows:
Votes | Votes | Broker | ||||||||||||||||
Matter | Votes For | Against | Abstain | Non-Votes | ||||||||||||||
(1) | Approve an Agreement and Plan of Reorganization | 2,275,454 | 158,787 | 276,863 | 0 |
19 Invesco Commodities Strategy Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
The SEC file numbers for the Fund are 811-05426 and 033-19338.
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.
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, 2011, is available at 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 US 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-CSTR-SAR-1 Invesco Distributors, Inc.
Invesco Pacific Growth Fund
Semiannual Report to Shareholders § April 30, 2012
Nasdaq:
A: TGRAX § B: TGRBX § C: TGRCX § R: TGRRX § Y: TGRDX § Institutional: TGRSX
2 | Fund Performance | |
4 | Letters to Shareholders | |
5 | Schedule of Investments | |
8 | Financial Statements | |
10 | Notes to Financial Statements | |
17 | Financial Highlights | |
18 | Fund Expenses | |
For the most current month-end Fund performance and commentary, please visit invesco.com/performance.
Unless otherwise noted, all data provided by Invesco.
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 Performance
Performance summary
Fund vs. Indexes
Cumulative total returns, 10/31/11 to 4/30/12, 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 | 3.99 | % | ||
Class B Shares | 3.54 | |||
Class C Shares | 3.55 | |||
Class R Shares | 3.83 | |||
Class Y Shares | 4.16 | |||
Institutional Class Shares | 4.20 | |||
MSCI EAFE Index▼ (Broad Market Index) | 2.44 | |||
Custom Pacific Growth Index■ (Style-Specific Index) | 4.09 | |||
Lipper Pacific Region Funds Index▼ (Peer Group Index) | 6.68 | |||
Source(s): ▼Lipper Inc.; ■Invesco, Lipper Inc. |
The MSCI EAFE® Index is an unmanaged index considered representative of stocks of Europe, Australasia and the Far East.
The Custom Pacific Growth Index, created by Invesco to serve as a benchmark for Invesco Pacific Growth Fund, is composed of the following indexes: MSCI Japan (50%) and MSCI All Country Asia Pacific Ex-Japan (50%).
The Lipper Pacific Region Funds Index is an unmanaged index considered representative of Pacific region funds tracked by Lipper.
The MSCI Japan Index is an unmanaged index considered representative of stocks of Japan.
The MSCI All Country Asia Pacific Ex-Japan Index is an unmanaged index considered representative of Pacific region stock markets, excluding Japan.
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.
2 | Invesco Pacific Growth Fund |
Average Annual Total Returns | ||||
As of 4/30/12, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception (7/28/97) | 0.62 | % | ||
10 Years | 6.81 | |||
5 Years | -2.07 | |||
1 Year | -18.17 | |||
Class B Shares | ||||
Inception (11/30/90) | 4.40 | % | ||
10 Years | 6.71 | |||
5 Years | -2.08 | |||
1 Year | -18.37 | |||
Class C Shares | ||||
Inception (7/28/97) | 0.28 | % | ||
10 Years | 6.57 | |||
5 Years | -1.67 | |||
1 Year | -14.89 | |||
Class R Shares | ||||
Inception (3/31/08) | -2.67 | % | ||
1 Year | -13.65 | |||
Class Y Shares | ||||
Inception (7/28/97) | 1.25 | % | ||
10 Years | 7.64 | |||
5 Years | -0.68 | |||
1 Year | -13.19 | |||
Institutional Class Shares | ||||
10 Years | 7.45 | % | ||
5 Years | -0.88 | |||
1 Year | -13.09 | |||
Effective June 1, 2010, Class A, Class B, Class C, Class R, Class W and Class I shares of the predecessor fund, Morgan Stanley Pacific Growth Fund Inc., advised by Morgan Stanley Investment Advisors Inc. were reorganized into Class A, Class B, Class C, Class R, Class A and Class Y shares, respectively, of Invesco Pacific Growth Fund. Returns shown above for Class A, Class B, Class C, Class R and Class Y shares are blended returns of the predecessor fund and Invesco Pacific Growth Fund. Share class returns will differ from the predecessor fund because of different expenses.
Institutional Class shares incepted on May 23, 2011. 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 share performance reflects any applicable fee waivers or expense reimbursements.
Average Annual Total Returns | ||||
As of 3/31/12, the most recent calendar quarter-end, including maximum applicable sales charges | ||||
Class A Shares | ||||
Inception Inception (7/28/97) | 0.74 | % | ||
10 Years | 7.17 | |||
5 Years | -1.51 | |||
1 Year | -14.25 | |||
Class B Shares | ||||
Inception (11/30/90) | 4.50 | % | ||
10 Years | 7.08 | |||
5 Years | -1.51 | |||
1 Year | -14.34 | |||
Class C Shares | ||||
Inception (7/28/97) | 0.41 | % | ||
10 Years | 6.95 | |||
5 Years | -1.09 | |||
1 Year | -10.70 | |||
Class R Shares | ||||
Inception (3/31/08) | -2.30 | % | ||
1 Year | -9.44 | |||
Class Y Shares | ||||
Inception (7/28/97) | 1.38 | % | ||
10 Years | 8.03 | |||
5 Years | -0.11 | |||
1 Year | -9.01 | |||
Institutional Class Shares | ||||
10 Years | 7.82 | % | ||
5 Years | -0.32 | |||
1 Year | -8.94 | |||
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 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 1.69%, 2.44%,
2.39%, 1.94%, 1.44% and 1.25%, 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.
3 | Invesco Pacific Growth Fund |
Letters to Shareholders
Bruce Crockett
Dear Fellow Shareholders:
As always, the Invesco Funds Board of Trustees remains committed to putting your interests first. We’ve continued to work to ensure that the depth and breadth of our fund offerings and their cost to shareholders remain highly competitive. We’ve also worked to manage costs, and this remains a continuing focus of your Board. We continue to oversee the funds with the same strong sense of responsibility for your money and your continued trust that we’ve always maintained.
Across the globe, demographic and economic trends are profoundly reshaping the world’s wealth. Emerging markets like China, India, Brazil and Russia are experiencing tremendous growth — while established markets such as the US and Europe are struggling with debt issues and are experiencing much slower rates of growth. Given these ever-changing trends, you’ll want to stay informed regarding the markets and keep up to date with news that affects your investment portfolio. Invesco’s website, invesco.com/us, provides a wealth of information about your investments and news regarding global markets.
I would like to close by thanking Bob Baker for his distinguished 30-year service with the Invesco Funds Board and his unflagging commitment to our funds’ shareholders. As always, I encourage you to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We appreciate the opportunity to represent and serve you.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
Independent Chair
Invesco Funds Board of Trustees
Philip Taylor
Dear Shareholders:
This report provides important information about your Fund, including its short- and long-term performance. Also, this report includes a listing of investments held by your Fund at the close of the reporting period.
As we’ve seen often in recent years, market sentiment can change suddenly and dramatically — and certainly without advance notice — depending on economic developments and world events. Similarly, your own situation, needs and goals can change, requiring adjustments in your financial strategy.
In addition to meeting with your financial adviser to discuss your individual situation, you also may find it helpful to stay abreast of market trends and developments. Doing so may provide reassurance in times of economic uncertainty and market volatility.
Invesco can help you stay informed about your investments and market trends. On our website, invesco.com/us, we provide timely market updates and commentary from many of our portfolio managers and other investment professionals. Also on our website, you 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 at invesco.com/us.
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.
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,
Philip Taylor
Senior Managing Director, Invesco Ltd.
Senior Managing Director, Invesco Ltd.
4 | Invesco Pacific Growth Fund |
Schedule of Investments
April 30, 2012
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–99.89% | ||||||||
Australia–16.85% | ||||||||
ASX Ltd. | 12,756 | $ | 424,180 | |||||
Australia & New Zealand Banking Group Ltd. | 59,970 | 1,488,453 | ||||||
Beach Energy Ltd. | 207,483 | 301,255 | ||||||
Bendigo and Adelaide Bank Ltd. | 46,758 | 366,016 | ||||||
BHP Billiton Ltd. | 54,844 | 2,036,204 | ||||||
Caltex Australia Ltd. | 22,843 | 327,373 | ||||||
Campbell Brothers Ltd. | 5,617 | 400,652 | ||||||
Coca-Cola Amatil Ltd. | 14,304 | 185,084 | ||||||
Commonwealth Bank of Australia | 28,036 | 1,513,515 | ||||||
Crown Ltd. | 41,288 | 391,539 | ||||||
CSL Ltd. | 17,322 | 660,242 | ||||||
Iluka Resources Ltd. | 25,509 | 450,283 | ||||||
Macmahon Holdings Ltd. | 312,108 | 227,105 | ||||||
Miclyn Express Offshore Pte Ltd. | 29,490 | 63,922 | ||||||
National Australia Bank Ltd. | 50,997 | 1,336,134 | ||||||
New Hope Corp. Ltd. | 18,716 | 94,984 | ||||||
Newcrest Mining Ltd. | 3,093 | 84,771 | ||||||
Orica Ltd. | 8,806 | 245,377 | ||||||
Resolute Mining Ltd.(a) | 178,268 | 312,099 | ||||||
Rio Tinto Ltd. | 11,989 | 827,639 | ||||||
Roc Oil Co. Ltd.(a) | 175,877 | 72,865 | ||||||
Santos Ltd. | 30,079 | 439,461 | ||||||
Sigma Pharmaceuticals Ltd. | 204,821 | 141,207 | ||||||
Suncorp Group Ltd. | 60,892 | 514,280 | ||||||
TABCORP Holdings Ltd. | 41,413 | 123,859 | ||||||
Telstra Corp. Ltd. | 172,825 | 637,557 | ||||||
Wesfarmers Ltd. | 7,976 | 250,848 | ||||||
Westpac Banking Corp. | 63,154 | 1,495,924 | ||||||
Woodside Petroleum Ltd. | 2,654 | 96,457 | ||||||
Woolworths Ltd. | 21,460 | 579,137 | ||||||
16,088,422 | ||||||||
China–11.53% | ||||||||
AAC Technologies Holdings Inc. | 238,000 | 700,528 | ||||||
Bank of China Ltd.–Class H | 2,570,390 | 1,071,563 | ||||||
China Construction Bank Corp.–Class H | 1,396,840 | 1,082,521 | ||||||
China Life Insurance Co., Ltd.–Class H | 182,000 | 485,315 | ||||||
China Shenhua Energy Co. Ltd.–Class H | 192,500 | 854,745 | ||||||
Chongqing Rural Commercial Bank Co., Ltd.–Class H(a) | 1,023,000 | 470,861 | ||||||
CNOOC Ltd. | 404,000 | 856,170 | ||||||
GOME Electrical Appliances Holdings Ltd. | 1,785,160 | 320,134 | ||||||
Great Wall Motor Co. Ltd.–Class H | 240,000 | 516,760 | ||||||
Jiangxi Copper Co. Ltd.–Class H | 247,000 | 594,148 | ||||||
Lianhua Supermarket Holdings Ltd.–Class H | 434,000 | 453,656 | ||||||
PetroChina Co. Ltd.–Class H | 574,000 | 853,672 | ||||||
Tencent Holdings Ltd. | 39,200 | 1,226,932 | ||||||
Vinda International Holdings Ltd. | 365,000 | 648,695 | ||||||
Want Want China Holdings Ltd. | 421,000 | 516,578 | ||||||
Weichai Power Co. Ltd.–Class H | 75,000 | 351,472 | ||||||
11,003,750 | ||||||||
Hong Kong–4.21% | ||||||||
AIA Group Ltd. | 209,400 | 741,304 | ||||||
BOC Hong Kong (Holdings) Ltd. | 251,500 | 777,034 | ||||||
China Mobile Ltd. | 129,500 | 1,434,605 | ||||||
Citic Pacific Ltd. | 214,000 | 351,603 | ||||||
Investment Co. of China (Acquired 08/05/92; Cost $783,626)(a)(b) | 100,000 | 0 | ||||||
Lifestyle International Holdings Ltd. | 306,000 | 715,722 | ||||||
4,020,268 | ||||||||
India–2.58% | ||||||||
Bank of Baroda | 48,865 | 710,102 | ||||||
Dr. Reddy’s Laboratories Ltd. | 15,143 | 505,630 | ||||||
ICICI Bank Ltd. | 30,078 | 505,580 | ||||||
Larsen & Toubro Ltd. | 13,482 | 312,405 | ||||||
Tata Consultancy Services Ltd. | 18,075 | 425,834 | ||||||
2,459,551 | ||||||||
�� Indonesia–1.90% | ||||||||
PT Astra International Tbk | 88,500 | 682,519 | ||||||
PT Bank Mandiri Tbk | 1,012,662 | 814,929 | ||||||
PT Gudang Garam Tbk | 49,000 | 315,134 | ||||||
1,812,582 | ||||||||
Japan–37.19% | ||||||||
Amada Co., Ltd. | 85,000 | 574,438 | ||||||
Astellas Pharma Inc. | 23,300 | 942,701 | ||||||
Canon Inc. | 31,500 | 1,426,451 | ||||||
Casio Computer Co., Ltd.(c) | 34,400 | 228,627 | ||||||
Dai Nippon Printing Co., Ltd. | 19,000 | 168,693 | ||||||
Daicel Corp. | 102,000 | 644,777 | ||||||
Daifuku Co., Ltd. | 59,000 | 314,688 | ||||||
Daiichi Sankyo Co., Ltd. | 36,000 | 616,646 | ||||||
Daikin Industries, Ltd. | 25,100 | 666,735 | ||||||
Denki Kagaku Kogyo Kabushiki Kaisha | 140,000 | 542,362 | ||||||
East Japan Railway Co. | 9,200 | 571,846 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Pacific Growth Fund
Shares | Value | |||||||
Japan–(continued) | ||||||||
FamilyMart Co., Ltd. | 16,300 | $ | 725,082 | |||||
Fuji Machine Manufacturing Co., Ltd. | 10,600 | 217,849 | ||||||
FUJIFILM Holdings Corp. | 27,800 | 589,649 | ||||||
Fujitsu Ltd. | 155,000 | 750,671 | ||||||
Furukawa Electric Co., Ltd. | 101,000 | 273,255 | ||||||
Hitachi Capital Corp. | 26,800 | 443,260 | ||||||
Hitachi High-Technologies Corp. | 18,100 | 453,744 | ||||||
Hitachi, Ltd. | 170,000 | 1,083,100 | ||||||
House Foods Corp. | 12,200 | 205,639 | ||||||
Kaneka Corp. | 56,000 | 345,763 | ||||||
Kurita Water Industries Ltd. | 14,600 | 357,826 | ||||||
Kyocera Corp. | 10,300 | 1,004,485 | ||||||
Kyudenko Corp. | 24,000 | 136,490 | ||||||
Lintec Corp. | 23,400 | 453,460 | ||||||
Maeda Road Construction Co., Ltd. | 17,000 | 205,401 | ||||||
Marubeni Corp. | 124,000 | 857,998 | ||||||
Minebea Co., Ltd. | 113,000 | 512,789 | ||||||
Mitsubishi Chemical Holdings Corp. | 113,500 | 596,163 | ||||||
Mitsubishi Corp. | 58,100 | 1,255,924 | ||||||
Mitsubishi Estate Co. Ltd. | 49,000 | 864,986 | ||||||
Mitsubishi Heavy Industries, Ltd. | 253,000 | 1,145,766 | ||||||
Mitsui Mining & Smelting Co., Ltd. | 190,000 | 476,098 | ||||||
Nagase & Co., Ltd. | 26,900 | 324,385 | ||||||
Nifco Inc. | 20,100 | 538,998 | ||||||
Nintendo Co., Ltd. | 3,300 | 447,125 | ||||||
Nippon Meat Packers, Inc. | 23,000 | 293,713 | ||||||
Nippon Steel Corp. | 56,000 | 139,499 | ||||||
Nippon Telegraph & Telephone Corp. | 12,200 | 552,108 | ||||||
Nissan Motor Co., Ltd. | 120,500 | 1,248,781 | ||||||
Nisshinbo Holdings Inc. | 33,000 | 289,674 | ||||||
Obayashi Corp. | 136,000 | 577,527 | ||||||
Ono Pharmaceutical Co., Ltd. | 13,600 | 768,040 | ||||||
ORIX Corp. | 4,610 | 439,116 | ||||||
Panasonic Corp. | 36,000 | 281,185 | ||||||
Pigeon Corp. | 3,700 | 147,852 | ||||||
Ricoh Co., Ltd. | 39,000 | 349,951 | ||||||
Rohm Co. Ltd. | 7,500 | 339,224 | ||||||
Ryosan Co., Ltd. | 7,900 | 149,826 | ||||||
Sanki Engineering Co., Ltd. | 22,000 | 115,195 | ||||||
Sanwa Holdings Corp. | 96,000 | 362,447 | ||||||
Sekisui Chemical Co., Ltd. | 81,000 | 727,276 | ||||||
Shin-Etsu Polymer Co., Ltd.(a) | 28,300 | 134,711 | ||||||
Sony Corp. | 33,300 | 539,861 | ||||||
Sumitomo Metal Mining Co., Ltd. | 40,000 | 524,295 | ||||||
Suzuki Motor Corp. | 31,600 | 743,570 | ||||||
TDK Corp. | 13,500 | 705,262 | ||||||
Teijin Ltd. | 143,000 | 480,110 | ||||||
Toho Co., Ltd. | 10,100 | 181,090 | ||||||
Toshiba Corp. | 218,000 | 891,375 | ||||||
Toyo Ink SC Holdings Co., Ltd. | 74,000 | 293,988 | ||||||
Toyoda Gosei Co., Ltd. | 11,700 | 238,383 | ||||||
Toyota Motor Corp. | 34,200 | 1,397,029 | ||||||
Tsubakimoto Chain Co. | 81,000 | 490,768 | ||||||
Yamaha Corp. | 31,200 | 301,827 | ||||||
Yamaha Motor Co., Ltd. | 30,300 | 404,746 | ||||||
Yaskawa Electronic Corp. | 49,000 | 424,990 | ||||||
35,497,289 | ||||||||
Malaysia–0.93% | ||||||||
Axiata Group Berhad | 253,300 | 444,269 | ||||||
Sime Darby Berhad | 137,500 | 441,844 | ||||||
886,113 | ||||||||
Philippines–2.51% | ||||||||
Energy Development Corp. | 2,514,200 | 351,070 | ||||||
Megaworld Corp. | 12,265,000 | 629,034 | ||||||
Puregold Price Club, Inc.(a) | 1,646,800 | 942,458 | ||||||
Security Bank Corp. | 139,540 | 472,248 | ||||||
2,394,810 | ||||||||
Singapore–1.85% | ||||||||
Capitaland Ltd. | 228,000 | 538,679 | ||||||
Keppel Corp. Ltd. | 58,000 | 516,072 | ||||||
Singapore Telecommunications Ltd. | 284,000 | 714,830 | ||||||
1,769,581 | ||||||||
South Korea–10.63% | ||||||||
CJ CheilJedang Corp. | 1,607 | 531,095 | ||||||
Hyundai Mobis | 4,528 | 1,222,733 | ||||||
Hyundai Motor Co. | 5,765 | 1,363,125 | ||||||
KB Financial Group Inc. | 13,280 | 449,923 | ||||||
KCC Corp. | 2,966 | 760,882 | ||||||
LG Chem Ltd. | 2,773 | 693,100 | ||||||
LG Fashion Corp. | 10,658 | 353,973 | ||||||
Samsung Electronics Co., Ltd. | 2,933 | 3,591,493 | ||||||
Samsung Life Insurance Co. Ltd. | 9,682 | 855,200 | ||||||
Shinhan Financial Group Co., Ltd. | 9,500 | 330,109 | ||||||
10,151,633 | ||||||||
Taiwan–7.56% | ||||||||
Ali Corp. | 393,000 | 523,223 | ||||||
Hon Hai Precision Industry Co., Ltd. | 315,000 | 990,295 | ||||||
Largan Precision Co. Ltd. | 34,000 | 536,374 | ||||||
Mega Financial Holding Co., Ltd. | 1,360,000 | 1,068,555 | ||||||
Mstar Semiconductor Inc. | 103,000 | 607,487 | ||||||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Pacific Growth Fund
Shares | Value | |||||||
Taiwan–(continued) | ||||||||
Ruentex Development Co., Ltd. | 444,000 | $ | 634,759 | |||||
Taiwan Cement Corp. | 538,000 | 639,991 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 484,143 | 1,432,233 | ||||||
Teco Electric and Machinery Co. Ltd. | 1,070,000 | 781,671 | ||||||
7,214,588 | ||||||||
Thailand–0.93% | ||||||||
Asian Property Development PCL–NVDR | 175,700 | 39,035 | ||||||
Asian Property Development PCL | 3,811,100 | 846,703 | ||||||
885,738 | ||||||||
United States–1.22% | ||||||||
iShares MSCI All Country Asia ex Japan Index Fund–ETF | 20,700 | 1,163,340 | ||||||
Total Common Stocks & Other Equity Interests (Cost $95,378,959) | 95,347,665 | |||||||
Money Market Funds–0.23% | ||||||||
Liquid Assets Portfolio–Institutional Class(d) | 110,482 | 110,482 | ||||||
Premier Portfolio–Institutional Class(d) | 110,482 | 110,482 | ||||||
Total Money Market Funds (Cost $220,964) | 220,964 | |||||||
TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)–100.12% (Cost $95,599,923) | 95,568,629 | |||||||
Investments Purchased with Cash Collateral from Securities on Loan | ||||||||
Money Market Funds–0.19% | ||||||||
Liquid Assets Portfolio–Institutional Class (Cost $178,500)(d)(e) | 178,500 | 178,500 | ||||||
TOTAL INVESTMENTS–100.31% (Cost $95,778,423) | 95,747,129 | |||||||
OTHER ASSETS LESS LIABILITIES–(0.31)% | (299,332 | ) | ||||||
NET ASSETS–100.00% | $ | 95,447,797 | ||||||
Investment Abbreviations:
ETF | – Exchange-Traded Fund | |
NVDR | – Non-Voting Depositary Receipt |
Notes to Schedule of Investments:
(a) | Non-income producing security. | |
(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 value of this security at April 30, 2012 represented less than 1% of the Fund’s Net Assets. | |
(c) | All or a portion of this security was out on loan at April 30, 2012. | |
(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 1J. |
By sector, based on Net Assets
as of April 30, 2012
Financials | 22.8 | % | ||
Information Technology | 19.5 | |||
Industrials | 14.8 | |||
Consumer Discretionary | 13.4 | |||
Materials | 11.0 | |||
Consumer Staples | 6.1 | |||
Energy | 4.1 | |||
Telecommunication Services | 4.0 | |||
Health Care | 3.8 | |||
Utilities | 0.4 | |||
Money Market Funds Plus Other Assets Less Liabilities | 0.1 | |||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Pacific Growth Fund
Statement of Assets and Liabilities
April 30, 2012
(Unaudited)
Assets: | ||||
Investments, at value (Cost $95,378,959)* | $ | 95,347,665 | ||
Investments in affiliated money market funds, at value and cost | 399,464 | |||
Total investments, at value (Cost $95,778,423) | 95,747,129 | |||
Foreign currencies, at value (Cost $182,623) | 184,620 | |||
Receivable for: | ||||
Investments sold | 823,327 | |||
Fund shares sold | 173,807 | |||
Dividends | 522,821 | |||
Investment for trustee deferred compensation and retirement plans | 16,886 | |||
Other assets | 41,013 | |||
Total assets | 97,509,603 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,166,816 | |||
Fund shares reacquired | 429,756 | |||
Collateral upon return of securities loaned | 178,500 | |||
Accrued fees to affiliates | 102,514 | |||
Accrued other operating expenses | 100,593 | |||
Trustee deferred compensation and retirement plans | 83,627 | |||
Total liabilities | 2,061,806 | |||
Net assets applicable to shares outstanding | $ | 95,447,797 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 119,661,466 | ||
Undistributed net investment income (loss) | (480,676 | ) | ||
Undistributed net realized gain (loss) | (23,687,290 | ) | ||
Unrealized appreciation (depreciation) | (45,703 | ) | ||
$ | 95,447,797 | |||
Net assets: | ||||
Class A | $ | 81,682,937 | ||
Class B | $ | 2,595,400 | ||
Class C | $ | 5,198,772 | ||
Class R | $ | 200,535 | ||
Class Y | $ | 5,759,292 | ||
Institutional Class | $ | 10,861 | ||
Shares outstanding, $0.01 par value per share, with an unlimited number of shares authorized: | ||||
Class A | 3,989,273 | |||
Class B | 133,835 | |||
Class C | 267,800 | |||
Class R | 9,841 | |||
Class Y | 277,236 | |||
Institutional Class | 523 | |||
Class A: Net asset value per share | $ | 20.48 | ||
Maximum offering price per share | ||||
(Net asset value of $20.48 divided by 94.50%) | $ | 21.67 | ||
Class B: Net asset value and offering price per share | $ | 19.39 | ||
Class C: Net asset value and offering price per share | $ | 19.41 | ||
Class R: Net asset value and offering price per share | $ | 20.38 | ||
Class Y: Net asset value and offering price per share | $ | 20.77 | ||
Institutional Class: Net asset value and offering price per share | $ | 20.77 | ||
* | At April 30, 2012, securities with an aggregate value of $168,946 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Pacific Growth Fund
Statement of Operations
For the six months ended April 30, 2012
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $45,565) | $ | 847,788 | ||
Dividends from affiliated money market funds (includes securities lending income of $324) | 602 | |||
Total investment income | 848,390 | |||
Expenses: | ||||
Advisory fees | 420,964 | |||
Administrative services fees | 24,863 | |||
Custodian fees | 66,319 | |||
Distribution fees: | ||||
Class A | 96,505 | |||
Class B | 17,574 | |||
Class C | 25,872 | |||
Class R | 379 | |||
Transfer agent fees — A, B, C, R and Y | 120,840 | |||
Transfer agent fees — Institutional | 5 | |||
Trustees’ and officers’ fees and benefits | 17,158 | |||
Other | 98,979 | |||
Total expenses | 889,458 | |||
Less: Fees waived | (194 | ) | ||
Net expenses | 889,264 | |||
Net investment income (loss) | (40,874 | ) | ||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities (net of foreign taxes of $17,472) | (2,037,145 | ) | ||
Foreign currencies | (363,973 | ) | ||
(2,401,118 | ) | |||
Change in net unrealized appreciation of: | ||||
Investment securities (net of foreign taxes on holdings of $(14,948)) | 5,911,087 | |||
Foreign currencies | 126,452 | |||
6,037,539 | ||||
Net realized and unrealized gain | 3,636,421 | |||
Net increase in net assets resulting from operations | $ | 3,595,547 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Pacific Growth Fund
Statement of Changes in Net Assets
For the six months ended April 30, 2012 and the year ended October 31, 2011
(Unaudited)
April 30, | October 31, | |||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income (loss) | $ | (40,874 | ) | $ | 1,197,214 | |||
Net realized gain (loss) | (2,401,118 | ) | 8,310,683 | |||||
Change in net unrealized appreciation (depreciation) | 6,037,539 | (19,316,806 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 3,595,547 | (9,808,909 | ) | |||||
Distributions to shareholders from net investment income: | ||||||||
Class A | (1,428,073 | ) | (904,495 | ) | ||||
Class B | (42,405 | ) | (13,561 | ) | ||||
Class C | (57,159 | ) | (9,939 | ) | ||||
Class R | (2,150 | ) | (249 | ) | ||||
Class Y | (155,818 | ) | (108,260 | ) | ||||
Institutional Class | (228 | ) | — | |||||
Total distributions from net investment income | (1,685,833 | ) | (1,036,504 | ) | ||||
Share transactions–net: | ||||||||
Class A | (3,860,196 | ) | (12,876,671 | ) | ||||
Class B | (1,854,671 | ) | (3,435,021 | ) | ||||
Class C | (500,942 | ) | 362,503 | |||||
Class R | 68,051 | 108,582 | ||||||
Class Y | (2,177,251 | ) | (712,783 | ) | ||||
Institutional Class | — | 13,632 | ||||||
Net increase (decrease) in net assets resulting from share transactions | (8,325,009 | ) | (16,539,758 | ) | ||||
Net increase (decrease) in net assets | (6,415,295 | ) | (27,385,171 | ) | ||||
Net assets: | ||||||||
Beginning of period | 101,863,092 | 129,248,263 | ||||||
End of period (includes undistributed net investment income (loss) of $(480,676) and $1,246,031, respectively) | $ | 95,447,797 | $ | 101,863,092 | ||||
Notes to Financial Statements
April 30, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Pacific Growth Fund (the “Fund”) is a series portfolio of AIM Investment Funds (Invesco Investment Funds) (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 thirteen 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 to maximize the capital appreciation of its investments.
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.
10 Invesco Pacific Growth Fund
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. 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 economic 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. |
11 Invesco Pacific Growth Fund
D. | Distributions — Distributions from income and net realized capital gain, if any, are generally declared and 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. | |
I. | 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. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. | |
J. | 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 affiliated money market funds 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. | |
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 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. |
12 Invesco Pacific Growth 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 based on the annual rate of the Fund’s average daily net assets as follows:
Average Net Assets | Rate | |||
First $1 billion | 0 | .87% | ||
Next $1 billion | 0 | .82% | ||
Over $2 billion | 0 | .77% | ||
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 Canada 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 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 R, Class Y and Institutional Class shares to 1.88%, 2.63%, 2.63%, 2.13%, 1.63% and 1.63%, 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, including litigation expenses; 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 June 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, 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 six months ended April 30, 2012, the Adviser waived advisory fees of $194.
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 six months ended April 30, 2012, 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 six months ended April 30, 2012, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
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; (3) Class C — up to 1.00% of the average daily net assets of Class C shares; and (4) Class R — up to 0.50% of the average daily net assets of Class R 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.
For the six months ended April 30, 2012, 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 six months ended April 30, 2012, IDI advised the Fund that IDI retained $1,534 in front-end sales commissions from the sale of Class A shares and $0, $623 and $520 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 the Adviser, IIS and/or IDI.
13 Invesco Pacific Growth 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 April 30, 2012. 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 | $ | 3,644,116 | $ | 12,444,306 | $ | — | $ | 16,088,422 | ||||||||
China | 1,824,979 | 9,178,771 | — | 11,003,750 | ||||||||||||
Hong Kong | 1,434,605 | 2,585,663 | 0 | 4,020,268 | ||||||||||||
India | — | 2,459,551 | — | 2,459,551 | ||||||||||||
Indonesia | — | 1,812,582 | — | 1,812,582 | ||||||||||||
Japan | 1,261,601 | 34,235,688 | — | 35,497,289 | ||||||||||||
Malaysia | 444,269 | 441,844 | — | 886,113 | ||||||||||||
Philippines | — | 2,394,810 | — | 2,394,810 | ||||||||||||
Singapore | — | 1,769,581 | — | 1,769,581 | ||||||||||||
South Korea | — | 10,151,633 | — | 10,151,633 | ||||||||||||
Taiwan | — | 7,214,588 | — | 7,214,588 | ||||||||||||
Thailand | — | 885,738 | — | 885,738 | ||||||||||||
United States | 1,562,804 | — | — | 1,562,804 | ||||||||||||
Total Investments | $ | 10,172,374 | $ | 85,574,755 | $ | 0 | $ | 95,747,129 | ||||||||
* | Transfers occurred between Level 1 and Level 2 due to foreign fair value adjustments. |
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 State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. 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.
14 Invesco Pacific Growth Fund
NOTE 6—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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. Under these limitation rules, the Fund is limited to utilizing $16,221,024 of capital loss carryforward in the fiscal year ending October 31, 2012.
The Fund had a capital loss carryforward as of October 31, 2011, which expires as follows:
Capital Loss | ||||
Expiration | Carryforward* | |||
October 31, 2015 | $ | 362,147 | ||
October 31, 2016 | 1,247,693 | |||
October 31, 2017 | 15,965,093 | |||
Total capital loss carryforward | $ | 17,574,933 | ||
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of May 23, 2011, the date of reorganization of Invesco Japan Fund into the Fund and realized on securities held in each fund at such date of reorganization, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. |
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 six months ended April 30, 2012 was $48,446,739 and $53,465,083, 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 | $ | 8,052,252 | ||
Aggregate unrealized (depreciation) of investment securities | (12,055,308 | ) | ||
Net unrealized appreciation (depreciation) of investment securities | $ | (4,003,056 | ) | |
Cost of investments for tax purposes is $99,750,185. |
15 Invesco Pacific Growth Fund
NOTE 8—Share Information
Summary of Share Activity | ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
April 30, 2012(a) | October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: | ||||||||||||||||
Class A | 105,758 | $ | 2,130,325 | 158,488 | $ | 3,590,708 | ||||||||||
Class B | 3,001 | 58,619 | 6,451 | 136,705 | ||||||||||||
Class C | 9,067 | 173,791 | 31,052 | 671,489 | ||||||||||||
Class R | 3,305 | 66,358 | 5,192 | 116,975 | ||||||||||||
Class Y | 86,693 | 1,815,957 | 66,411 | 1,533,907 | ||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | 71,357 | 1,371,476 | 38,181 | 871,290 | ||||||||||||
Class B | 2,184 | 39,893 | 602 | 13,057 | ||||||||||||
Class C | 2,996 | 54,766 | 449 | 9,753 | ||||||||||||
Class R | 100 | 1,912 | 6 | 145 | ||||||||||||
Class Y | 7,906 | 154,011 | 4,636 | 107,272 | ||||||||||||
Issued in connection with acquisitions:(b) | ||||||||||||||||
Class A | — | — | 128,344 | 2,971,581 | ||||||||||||
Class B | — | — | 24,269 | 532,863 | ||||||||||||
Class C | — | — | 78,631 | 1,727,654 | ||||||||||||
Class Y | — | — | 37,302 | 876,903 | ||||||||||||
Institutional Class(c) | — | — | 16,741 | 393,565 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: | ||||||||||||||||
Class A | 78,157 | 1,568,177 | 112,336 | 2,498,935 | ||||||||||||
Class B | (82,408 | ) | (1,568,177 | ) | (118,750 | ) | (2,498,935 | ) | ||||||||
Reacquired:(d) | ||||||||||||||||
Class A | (445,243 | ) | (8,930,174 | ) | (1,004,442 | ) | (22,809,185 | ) | ||||||||
Class B | (20,289 | ) | (385,006 | ) | (76,024 | ) | (1,618,711 | ) | ||||||||
Class C | (38,394 | ) | (729,499 | ) | (99,536 | ) | (2,046,393 | ) | ||||||||
Class R | (11 | ) | (219 | ) | (423 | ) | (8,538 | ) | ||||||||
Class Y | (210,007 | ) | (4,147,219 | ) | (139,055 | ) | (3,230,865 | ) | ||||||||
Institutional Class(c) | — | — | (16,218 | ) | (379,933 | ) | ||||||||||
Net increase (decrease) in share activity | (425,828 | ) | $ | (8,325,009 | ) | (745,357 | ) | $ | (16,539,758 | ) | ||||||
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 67% 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 Fund has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. | |
(b) | As of the open of business on May 23, 2011, the Fund acquired all the net assets of Invesco Japan Fund pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of Invesco Japan Fund on April 14, 2011. The acquisition was accomplished by a tax free exchange of 285,287 shares of the Fund for 1,270,808 shares outstanding of Invesco Japan Fund as of the close of business on May 20, 2011. Each class of Invesco Japan Fund was exchanged for the like class of shares of the Fund based on the relative net asset value of Invesco Japan Fund to the net asset value of the Fund on the close of business, May 20, 2011. Invesco Japan Fund net assets at that date of $6,502,566 including $361,589 of unrealized appreciation, was combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $124,500,950. The net assets of the Fund immediately following the acquisition were $131,003,517. | |
(c) | Commencement date of May 23, 2011. | |
(d) | Net of redemption fees of $12 and $1,167 allocated among the classes based on relative net assets of each class for the six months ended April 30, 2012 and year ended October 31, 2011, respectively. |
16 Invesco Pacific Growth Fund
NOTE 9—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Ratio of | Ratio of | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net gains | expenses | expenses | ||||||||||||||||||||||||||||||||||||||||||||||||||
(losses) on | to average | to average net | Ratio of net | |||||||||||||||||||||||||||||||||||||||||||||||||
Net asset | Net | securities | Dividends | net assets | assets without | investment | ||||||||||||||||||||||||||||||||||||||||||||||
value, | investment | (both | Total from | from net | Net asset | Net assets, | with fee waivers | fee waivers | income (loss) | Rebate from | ||||||||||||||||||||||||||||||||||||||||||
beginning | income | realized and | investment | investment | value, end | Total | end of period | and/or expenses | and/or expenses | to average | Morgan Stanley | Portfolio | ||||||||||||||||||||||||||||||||||||||||
of period | (loss)(a) | unrealized) | operations | income | of period | return(b) | (000s omitted) | absorbed | absorbed | net assets | Affiliate | turnover(c) | ||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | $ | 20.05 | $ | (0.00 | ) | $ | 0.78 | $ | 0.78 | $ | (0.35 | ) | $ | 20.48 | (d) | 3.99 | %(e) | $ | 81,683 | 1.79 | %(e)(f) | 1.79 | %(e)(f) | (0.04 | )%(e)(f) | N/A | 51 | % | ||||||||||||||||||||||||
Year ended 10/31/11 | 22.21 | 0.23 | (2.20 | ) | (1.97 | ) | (0.19 | ) | 20.05 | (d) | (8.95 | ) | 83,779 | 1.68 | 1.68 | 1.03 | N/A | 109 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 19.48 | 0.06 | 2.72 | 2.78 | (0.05 | ) | 22.21 | 14.29 | 105,428 | 1.78 | (g) | 1.78 | (g) | 0.31 | (g) | 0.00 | %(h) | 76 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 14.61 | 0.06 | 4.94 | 5.00 | (0.13 | ) | 19.48 | 34.66 | 107,103 | 1.88 | (g) | 1.88 | (g) | 0.37 | (g) | 0.00 | (h) | 33 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 29.20 | 0.16 | (14.66 | ) | (14.50 | ) | (0.09 | ) | 14.61 | (49.79 | ) | 89,605 | 1.72 | (g) | 1.72 | (g) | 0.67 | (g) | 0.00 | (h) | 42 | |||||||||||||||||||||||||||||||
Year ended 10/31/07 | 19.55 | 0.02 | 9.66 | 9.68 | (0.03 | ) | 29.20 | 49.59 | 193,477 | 1.67 | (g) | 1.67 | (g) | 0.10 | (g) | 0.00 | (h) | 50 | ||||||||||||||||||||||||||||||||||
Class B | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 18.91 | (0.07 | ) | 0.74 | 0.67 | (0.19 | ) | 19.39 | (d) | 3.60 | 2,595 | 2.55 | (f) | 2.55 | (f) | (0.80 | )(f) | N/A | 51 | |||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 20.97 | 0.06 | (2.08 | ) | (2.02 | ) | (0.04 | ) | 18.91 | (d) | (9.68 | ) | 4,376 | 2.43 | 2.43 | 0.28 | N/A | 109 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 18.49 | (0.09 | ) | 2.57 | 2.48 | — | 20.97 | 13.41 | 8,279 | 2.53 | (g) | 2.53 | (g) | (0.44 | )(g) | 0.00 | (h) | 76 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 13.83 | (0.06 | ) | 4.72 | 4.66 | — | 18.49 | 33.69 | 11,221 | 2.63 | (g) | 2.63 | (g) | (0.38 | )(g) | 0.00 | (h) | 33 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 27.75 | (0.04 | ) | (13.88 | ) | (13.92 | ) | — | 13.83 | (50.16 | ) | 12,198 | 2.47 | (g) | 2.47 | (g) | (0.17 | )(g) | 0.00 | (h) | 42 | |||||||||||||||||||||||||||||||
Year ended 10/31/07 | 18.70 | (0.15 | ) | 9.20 | 9.05 | — | 27.75 | 48.40 | 39,328 | 2.43 | (g) | 2.43 | (g) | (0.66 | )(g) | 0.00 | (h) | 50 | ||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 18.94 | (0.07 | ) | 0.74 | 0.67 | (0.20 | ) | 19.41 | (d) | 3.61 | (i) | 5,199 | 2.52 | (f)(i) | 2.52 | (f)(i) | (0.77 | )(f)(i) | N/A | 51 | ||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 20.99 | 0.07 | (2.08 | ) | (2.01 | ) | (0.04 | ) | 18.94 | (d) | (9.62 | )(i) | 5,572 | 2.39 | (i) | 2.39 | (i) | 0.32 | (i) | N/A | 109 | |||||||||||||||||||||||||||||||
Year ended 10/31/10 | 18.51 | (0.09 | ) | 2.57 | 2.48 | — | 20.99 | 13.40 | 5,951 | 2.53 | (g) | 2.53 | (g) | (0.44 | )(g) | 0.00 | (h) | 76 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 13.85 | (0.06 | ) | 4.72 | 4.66 | — | 18.51 | 33.65 | 5,649 | 2.63 | (g) | 2.63 | (g) | (0.38 | )(g) | 0.00 | (h) | 33 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 27.77 | (0.00 | ) | (13.92 | ) | (13.92 | ) | — | 13.85 | (50.13 | ) | 4,506 | 2.38 | (g) | 2.38 | (g) | (0.01 | )(g) | 0.00 | (h) | 42 | |||||||||||||||||||||||||||||||
Year ended 10/31/07 | 18.71 | (0.14 | ) | 9.20 | 9.06 | — | 27.77 | 48.42 | 10,995 | 2.43 | (g) | 2.43 | (g) | (0.66 | )(g) | 0.00 | (h) | 50 | ||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 19.95 | (0.03 | ) | 0.78 | 0.75 | (0.32 | ) | 20.38 | (d) | 3.88 | 201 | 2.05 | (f) | 2.05 | (f) | (0.30 | )(f) | N/A | 51 | |||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 22.11 | 0.17 | (2.19 | ) | (2.02 | ) | (0.14 | ) | 19.95 | (d) | (9.21 | ) | 129 | 1.93 | 1.93 | 0.78 | N/A | 109 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 19.41 | 0.01 | 2.70 | 2.71 | (0.01 | ) | 22.11 | 13.97 | 37 | 2.03 | (g) | 2.03 | (g) | 0.06 | (g) | 0.00 | (h) | 76 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 14.58 | 0.02 | 4.94 | 4.96 | (0.13 | ) | 19.41 | 34.35 | 84 | 2.13 | (g) | 2.13 | (g) | 0.12 | (g) | 0.00 | (h) | 33 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/08(j) | 23.52 | 0.09 | (9.03 | ) | (8.94 | ) | — | 14.58 | (38.01 | ) | 62 | 2.01 | (g)(k) | 2.01 | (g)(k) | 0.71 | (g)(k) | 0.00 | (h) | 42 | ||||||||||||||||||||||||||||||||
Class Y(l) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 20.37 | 0.02 | 0.79 | 0.81 | (0.41 | ) | 20.77 | (d) | 4.11 | 5,759 | 1.55 | (f) | 1.55 | (f) | 0.20 | (f) | N/A | 51 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/11 | 22.57 | 0.29 | (2.24 | ) | (1.95 | ) | (0.25 | ) | 20.37 | (d) | (8.77 | ) | 7,998 | 1.43 | 1.43 | 1.28 | N/A | 109 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/10 | 19.77 | 0.12 | 2.77 | 2.89 | (0.09 | ) | 22.57 | 14.67 | 9,553 | 1.53 | (g) | 1.53 | (g) | 0.56 | (g) | 0.00 | (h) | 76 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/09 | 14.83 | 0.11 | 5.02 | 5.13 | (0.19 | ) | 19.77 | 35.11 | 616 | 1.63 | (g) | 1.63 | (g) | 0.62 | (g) | 0.00 | (h) | 33 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/08 | 29.64 | 0.22 | (14.88 | ) | (14.66 | ) | (0.15 | ) | 14.83 | (49.69 | ) | 373 | 1.48 | (g) | 1.48 | (g) | 0.93 | (g) | 0.00 | (h) | 42 | |||||||||||||||||||||||||||||||
Year ended 10/31/07 | 19.85 | 0.09 | 9.78 | 9.87 | (0.08 | ) | 29.64 | 49.89 | 1,291 | 1.43 | (g) | 1.43 | (g) | 0.34 | (g) | 0.00 | (h) | 50 | ||||||||||||||||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 04/30/12 | 20.39 | 0.03 | 0.79 | 0.82 | (0.44 | ) | 20.77 | (d) | 4.15 | 11 | 1.40 | (f) | 1.40 | (f) | 0.35 | (f) | N/A | 51 | ||||||||||||||||||||||||||||||||||
Year ended 10/31/11(j) | 23.52 | 0.35 | (3.48 | ) | (3.13 | ) | — | 20.39 | (d) | (13.31 | ) | 11 | 1.22 | (k) | 1.22 | (k) | 1.49 | (k) | N/A | 109 | ||||||||||||||||||||||||||||||||
(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 ended October 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $5,980,249 and sold of $4,944,271 in effect to realign the Fund’s portfolio holdings after the reorganization of Invesco Japan Fund into the Fund. | |
(d) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. | |
(e) | 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 0.24% for the six months ended April 30, 2012. | |
(f) | Ratios are annualized and based on average daily net assets (000’s) of $81,852, $3,534, $5,331, $152, $6,425 and $11 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. | |
(g) | The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is disclosed in the above table as “Rebate from Morgan Stanley affiliate”. | |
(h) | Amount is less than 0.005%. | |
(i) | 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 0.98% and 0.95% for the six months ended April 30, 2012 and the year ended October 31, 2011, respectively. | |
(j) | Commencement date of March 31, 2008 and May 23, 2011 for Class R and Institutional Class shares, respectively. | |
(k) | Annualized. | |
(l) | On June 1, 2010, the Fund’s former Class I shares were reorganized into Class Y shares. |
17 Invesco Pacific 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 November 1, 2011 through April 30, 2012.
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 | (11/01/11) | (04/30/12)1 | Period2 | (04/30/12) | Period2 | Ratio | ||||||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,039.90 | $ | 9.08 | $ | 1,015.96 | $ | 8.97 | 1.79 | % | ||||||||||||||||||
B | 1,000.00 | 1,035.40 | 12.90 | 1,012.18 | 12.76 | 2.55 | ||||||||||||||||||||||||
C | 1,000.00 | 1,035.50 | 12.75 | 1,012.33 | 12.61 | 2.52 | ||||||||||||||||||||||||
R | 1,000.00 | 1,038.30 | 10.39 | 1,014.67 | 10.27 | 2.05 | ||||||||||||||||||||||||
Y | 1,000.00 | 1,041.60 | 7.87 | 1,017.16 | 7.77 | 1.55 | ||||||||||||||||||||||||
Institutional | 1,000.00 | 1,042.00 | 7.12 | 1,017.89 | 7.04 | 1.40 | ||||||||||||||||||||||||
1 | The actual ending account value is based on the actual total return of the Fund for the period November 1, 2011 through April 30, 2012, 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 182/366 to reflect the most recent fiscal half year. |
18 Invesco Pacific Growth Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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 811-05426 and 033-19338.
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, 2011, is available at 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 US 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-PGRO-SAR-1 Invesco Distributors, Inc.
ITEM 2. | CODE OF ETHICS. |
There were no amendments to the Code of Ethics (the “Code”) that applies to the Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) during the period covered by the report. 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. |
Not applicable. |
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not applicable. |
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 INVESTMENT 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 June 12, 2012, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“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 June 12, 2012, 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 the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. | EXHIBITS. |
12(a) (1) | Not applicable. | |
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 Investment Funds (Invesco Investment Funds)
By: /s/ | Philip A. Taylor | |
Philip A. Taylor | ||
Principal Executive Officer | ||
Date: | July 9, 2012 |
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: | July 9, 2012 | |
By: /s/ | Sheri Morris | |
Sheri Morris | ||
Principal Financial Officer | ||
Date: | July 9, 2012 |
EXHIBIT INDEX
12(a) (1) | Not applicable. | |
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. |