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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09913
AIM Counselor Series Trust
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 100 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Philip A. Taylor 11 Greenway Plaza, Suite 100 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: 8/31
Date of reporting period: 8/31/09
The Registrant is filing this Amendment to its Certified Shareholder Report
on Form N-CSR filed with the Securities and Exchange Commission on November 6,
2009 to amend Item 1 "Reports to Stockholders" with respect to AIM Core Plus
Bond Fund's annual report. The purpose of this Amendment is to remove the first
bullet regarding active and frequent trading of portfolio securities under the
heading "Management's Discussion of Fund Performance - Principal risk of
investing in the Fund" and to revise the portfolio turnover listed in Note 9
"Financial Highlights" in the annual report. This N-CSR/S also updates Item 11
"Controls and Procedures" as required. Other than the aforementioned revisions
this Form N-CSR/A does not reflect events occurring after the filing of the
original Form N-CSR, or modify or update the disclosures therein in any way.
Item 1. Reports to Stockholders.
[INVESCO AIM LOGO] ANNUAL REPORT TO SHAREHOLDERS AUGUST 31, 2009
- SERVICE MARK -
AIM CORE PLUS BOND FUND
[GRAPHIC]
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2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Fund Performance
7 Supplemental Information
8 Schedule of Investments
13 Financial Statements
15 Notes to Financial Statements
23 Financial Highlights
24 Auditor's Report
25 Fund Expenses
26 Approval of Investment Advisory and Sub-Advisory Agreements
28 Tax Information
T-1 Trustees and Officers
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Dear Shareholders:
While the year covered by this report was difficult -- for long-time investors and veteran
investment professionals alike -- economic conditions and market trends appeared much more
favorable at the close of the fiscal year than at its start.
[TAYLOR
PHOTO] The 12 months ended August 31, 2009, included a sharp market sell-off that occurred in the
second half of 2008. That downturn affected virtually all sectors, markets and investors. The
decline had a number of causes, the most immediate being unprecedented turmoil in credit
markets. Economic uncertainty prompted banks to hoard cash and reduce lending, and caused
Philip Taylor investors to shun short-term corporate debt. As a result, businesses found it difficult to fund
their day-to-day operations, and the U.S. economy -- as well as economies around the globe --
virtually froze briefly.
INCREASED COMMUNICATION
These developments prompted a greater-than-usual number of shareholders to contact me. Some
of you took the time to write a letter while others of you emailed me at phil@invescoaim.com.
Many of you sought explanations for the decline in the value of your accounts, while others asked more general questions about
when the economy might improve. Your questions, comments and suggestions gave me better insight into what was on your minds, and I
was pleased that so many of you took the time to share your thoughts with me.
As a result, Invesco Aim's investment professionals and I have increased our efforts to stay in touch with and share our views
with you. We increased the number of "Investment Perspectives" articles on our website, invescoaim.com. Through these articles,
we've tried to provide timely market commentary, general investor education information and sector updates. I hope you'll take a
moment to read them and let me know if you find them useful.
To access your Fund's latest quarterly commentary, click on "Products and Performance" at the top of our website; next, select
"Mutual Funds"; and then click on "Quarterly Commentary."
I also hope you've stayed in touch with your financial advisor. An experienced financial advisor who is familiar with your
individual investment goals, time horizon and risk tolerance can be a source of comfort and information during uncertain times. He
or she can monitor your investments to ensure they're on track and can prevent you from making impulsive short-term decisions that
may have adverse long-term consequences.
REASONS FOR OPTIMISM
The economy and equity markets reacted to a barrage of negative news during the year. Consumer spending -- which accounts for more
than two-thirds(1) of the U.S. economy -- was sluggish as unemployment rose; more workers worried about their job security; home and
portfolio values declined; and credit became more difficult to obtain.
In his semiannual monetary policy report to Congress in late July, U.S. Federal Reserve Board Chairman Ben Bernanke summarized
the stresses and strains the U.S. and global economies suffered in late 2008 and early 2009. Importantly, he suggested that the
aggressive, coordinated actions taken by governments and central banks around the world finally may be yielding results. He
testified that:
o The pace of overall economic decline appears to have slowed significantly.
o Credit availability, for consumers and businesses, has improved noticeably.
o Investors' extreme risk aversion has eased somewhat.
o The decline in housing activity appears to have moderated.
While these and other trends offer encouragement, uncertainties remain. Chairman Bernanke testified that he anticipates a gradual
recovery in 2010 with some acceleration in economic growth in 2011, together with subdued inflation over the next two years. His
considered judgment appears to be shared by investors who have begun to return, cautiously, to the equities market, causing major
U.S. stock-market indexes to bounce off their March lows.
A SINGLE FOCUS
I believe Invesco Aim is uniquely positioned to serve our clients. Our parent company, Invesco Ltd., is one of the largest(2) and
most diversified global asset managers. It provides clients with diversified investment strategies and a range of investment
products managed by distinct management teams around the world. We believe we can serve you best by focusing on one thing and doing
it well: managing your money.
Our investment professionals have managed clients' money in up markets and down markets. All of us here recognize that market
conditions change often; what will not change is our commitment to putting our clients first, helping you achieve your financial
goals and providing excellent customer service.
If you have questions about this report or your account, please contact one of our client services representatives at 800 959
4246. If you have comments for me, I encourage you to email me at phil@invescoaim.com.
Thank you for investing with us. All of us at Invesco Aim look forward to serving you.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
(1) Reuters;
(2) Pensions & Investments
2 AIM CORE PLUS BOND FUND
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Dear Fellow Shareholders:
Although the economy and financial markets have shown some signs of hope, investors remain
[CROCKETT rightfully cautious. Staying with an appropriately diversified investment program focused on
PHOTO] your individual long-term goals can be a wise course in such uncertain times. We believe the
route to financial success is more like a marathon than a sprint.
Please be assured that your Board continues to oversee the AIM Funds with a strong sense of
responsibility for your money and your trust. As always, we seek to manage costs and enhance
Bruce Crockett performance in ways that put your interests first.
We are near the end of a busy 2009 proxy season, during which Invesco Aim Advisors, Inc.'s
proxy committee votes on your behalf on issues put to a shareholder vote by the companies whose
stock the Funds hold. This year, after careful case-by-case analysis by committee members and portfolio managers, the proxy
committee voted with corporate management less often than in previous years, focusing on the issues of board independence,
Say-On-Pay initiatives, and stock option re-pricing in light of the market's decline. The committee remained committed to supporting
non-binding Say-on-Pay proposals and abstaining from voting on social issues.
At its June meeting, your Board reviewed and renewed the investment advisory contracts between the AIM Funds and Invesco Aim
Advisors, Inc. You can find the results of this rigorous annual process at invescoaim.com. Go to "Products & Performance" and click
on "Investment Advisory Agreement Renewals."
The website also contains news and market information, investment education and planning information and current reports and
prospectuses for all the AIM Funds and I highly recommend it to you.
You are always welcome to contact me at bruce@brucecrockett.com with any questions or concerns you may have. We look forward to
representing you and serving you in the coming months.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
3 AIM CORE PLUS BOND FUND
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MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
PERFORMANCE SUMMARY well as the risk parameters for the Fund.
Investments are evaluated for liquidity
From the Fund's inception on June 3, 2009, to the close of the fiscal year on August and risk versus relative value. Working
31, 2009, Class A shares of AIM Core Plus Bond Fund, at net asset value (NAV), closely with sector specialists and
outperformed the Fund's broad market and style-specific index, the Barclays Capital traders, we determine the timing and
U.S. Aggregate Index.(triangle) The Fund outperformed mainly due to its out-of-index amount of each alpha decision to use in
allocation to high-yield corporate bonds and its underweight allocation to U.S. the portfolio.
government securities.
Sell decisions are based on:
Additional performance information appears later in this report.
o Changes in security or issuer credit
- --------------------------------------------------------------------------------------- quality.
FUND VS. INDEXES
o Changes in the perceived relative
Cumulative total returns, 6/3/09 to 8/31/09, at net asset value (NAV). Performance value of a security leading the team
shown does not include applicable contingent deferred sales charges (CDSC) or front-end to seek better alternative
sales charges, which would have reduced performance. opportunities.
Class A Shares 3.58% o Changes in economic or market outlook
Class B Shares 3.39 that warrant a modification of the
Class C Shares 3.39 Fund's duration.
Class R Shares 3.51
Class Y Shares 3.64 o Changes in yield curve shape that
Barclays Capital U.S. Aggregate Index(triangle)(Broad Market/ alter positioning strategies.
Style-Specific Index) 3.27
Lipper Intermediate Investment Grade Debt Funds Index(triangle) o Changes in specific sector outlooks
(Peer Group Index) 5.29 or sectors falling out of favor.
(triangle)Lipper Inc. ------------------------------------------
MARKET CONDITIONS AND YOUR FUND
See page 7 for a detailed explanation of Fund performance.
Bond market volatility waned
- ------------------------------------------ significantly in 2009, despite persistent
HOW WE INVEST economic uncertainty and escalating
opportunities for investors that are best inflation fears. Government intervention
We invest primarily in investment grade captured by independent specialist and attractive valuations spurred
fixed-income securities represented by the decision makers interconnected as a global investors' risk appetite across
sector categories within the Barclays team. We use this philosophy in an effort non-government securities. Spread premiums
Capital U.S. Aggregate Index. We may also to produce total return for our compressed to comparable Treasuries which
invest in derivative instruments such as shareholders. boosted returns for these riskier assets.
futures contracts and swap agreements The U.S. Federal Reserve left its federal
(including, but not limited to, credit Our security selection is supported by funds target rate in a range of zero to
default swaps) and engage in mortgage a team of independent specialists. Team 0.25% even as the outlook for the economy
dollar roll transactions, a form of members conduct top-down macroeconomic and the markets remained uncertain.(1)
repurchase agreement activity in the analysis as well as bottom-up analysis on
to-be-announced market for agency individual securities. Recommendations are In this environment, the Barclays
mortgage-backed securities. Out-of-index communicated to portfolio managers through Capital U.S. Aggregate Index returned
alpha sources may make up to 30% of the proprietary technology that allows all 4.62% year to date through August 31,
overall portfolio and can include foreign investment professionals to communicate in 2009.(2) Many weak asset classes last year
government or corporate bonds, emerging a timely manner. have been among the strongest performers
market debt, non-dollar denominated in 2009, as a rally in credit-related
securities and high yield (below Portfolio construction begins with a fixed income assets, which began during
investment grade) bonds. well-defined Fund design that establishes the first quarter, carried over and
the target investment vehicles for spreads continued to tighten through the
We believe dynamic and complex generating the desired "alpha" (the extra end of the fiscal year.
fixed-income markets may create return above a specific benchmark) as
- ------------------------------------------ ------------------------------------------ ------------------------------------------
PORTFOLIO COMPOSITION TOP 10 FIXED INCOME ISSUERS* Total Net Assets $3.6 million
By security type, based on net assets
Total Number of Holdings* 102
Bonds and Notes 35.7% 1. U.S. Treasury 19.9%
U.S. Government Sponsored 2. Federal Home Loan Mortgage The Fund's holdings are subject to change,
Mortgage Backed Securities 35.1 Corp. 18.1 and there is no assurance that the Fund
U.S. Treasury Securities 19.9 3. Federal National Mortgage will continue to hold any particular
Asset-Backed Securities 9.5 Association 17.0 security.
Money Market Funds 4. Bear Stearns Commercial
Plus Other Assets Less Liabilities -0.2 Mortgage Securities 2.1 * Excluding money market fund holdings.
5. Morgan Stanley Capital I 2.1
6. GS Mortgage Securities Corp. II 1.4
7. BA Credit Card Trust 1.1
8. Citigroup Mortgage Loan
Trust Inc. 1.1
9. Wachovia Corp. 1.0
10. British Sky Broadcasting
Group PLC 0.9
4 AIM CORE PLUS BOND FUND
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A shrinking economy and rising The Fund targets a portfolio duration CHUCK BURGE
unemployment are elements of a challenging within a band of plus or minus one year of Senior portfolio manager, is
fundamental backdrop for many the benchmark's duration. Duration [BURGE manager of AIM Core Plus Bond
consumer-related fixed-income securities, measures a portfolio's price sensitivity PHOTO] Fund. Mr. Burge joined
but their strong rebound of late to interest rate changes; a shorter Invesco in 2002 and assumed
demonstrates that their valuations had duration portfolio tends to be less his fund management
been pushed below levels warranted even by sensitive to these changes. We maintained responsibilities in 2009. He earned a B.S.
poor fundamentals. U.S. investment grade a shorter-than-benchmark duration since in economics from Texas A&M University and
corporate credit, represented by the the Fund's inception, and therefore did an M.B.A. in finance and accounting from
Barclays Capital U.S. Credit Index, posted not fully benefit from the fall in Rice University.
a 16.08% excess return over comparable general market yields during July and
Treasuries on a year-to-date basis through August. The Fund's yield curve posture CINDY BRIEN
August 31, 2009.(3) For the same period, over the period was neutral to the Chartered Financial Analyst,
the Barclays Capital U.S. Corporate High benchmark; therefore its impact on the [BRIEN portfolio manager, is manager
Yield Index posted a 42.24% excess return, Fund's relative performance was PHOTO] of AIM Core Plus Bond Fund.
the Barclays Capital Asset-Backed negligible. Ms. Brien joined Invesco Aim
Securities Index posted a 21.15% excess in 1996. She earned a B.B.A.
return, the Barclays Capital Thank you for investing in AIM Core from The University of Texas at Austin.
Mortgage-Backed Securities Index posted a Plus Bond Fund and for sharing our Ms. Brien is a director and a former
3.75% excess return, and the Barclays long-term investment horizon. president of the CFA Society of Houston.
Capital CMBS ERISA-Eligible Index posted a
23.06% excess return.(3) (1) U.S. Federal Reserve CLAUDIA CALICH
Senior portfolio manager, is
In the improving bond market (2) Lipper Inc. [CALICH manager of AIM Core Plus Bond
environment that characterized the 89-day PHOTO] Fund. Ms. Calich joined
period between the Fund's inception on (3) Barclays Capital Invesco Worldwide Fixed
June 3, 2009, and the end of the fiscal Income in 2004 and leads its
year on August 31, 2009, sector allocation The views and opinions expressed in Emerging Markets Team. She earned a B.A.
and security selection were primary management's discussion of Fund with honors from Susquehanna University
factors affecting the Fund's relative and performance are those of Invesco Aim and an M.A. in international economics
absolute performance. Our emphasis on Advisors, Inc. These views and opinions from the International University of Japan
investment grade credit, and our nearly are subject to change at any time based on in Niigata.
15% allocation to out-of-index high yield factors such as market and economic
bonds, drove the Fund's outperformance conditions. These views and opinions may PETER EHRET
relative to its benchmark. For the period, not be relied upon as investment advice or Chartered Financial Analyst,
U.S. investment grade credit and high recommendations, or as an offer for a [EHERT senior portfolio manager, is
yield were among the best performing bond particular security. The information is PHOTO] manager of AIM Core Plus Bond
market sectors, returning 8.11% and not a complete analysis of every aspect of Fund. He joined Invesco
9.02%(3), respectively, while the Barclays any market, country, industry, security or World-wide Fixed Income in
Capital U.S. Aggregate Index returned the Fund. Statements of fact are from 2001. Mr. Ehret graduated cum laude with a
3.27%.(2) sources considered reliable, but Invesco B.S. in economics and statistics from the
Aim Advisors, Inc. makes no representation University of Minnesota. He also earned an
Security selection that favored or warranty as to their completeness or M.S. in real estate appraisal and
industrial investment grade corporates accuracy. Although historical performance investment analysis from the University of
over financials and utilities bonds is no guarantee of future results, these Wisconsin-Madison.
proved a mild detractor from relative insights may help you understand our
performance, but on an absolute basis was investment management philosophy.
still beneficial to the Fund. At the same
time, the Fund benefited from underweight See important Fund and index disclosures
positions in U.S. government securities, later in this report.
relative to its benchmark.(3) The Barclays
Capital U.S. Government Index returned
only 1.45% from June 3, 2009, to August
31, 2009.(3)
While the Fund maintained investment
grade average credit quality overall, it
benefited from its tactical allocation to
lower quality, high yield bonds as that
segment of the U.S. bond market generally
outperformed the highest quality bonds
during the period.
5 AIM CORE PLUS BOND FUND
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- ------------------------------------------------------------------------------------------------------------------------------------
FUND PERFORMANCE
- ------------------------------------------ ------------------------------------------
CUMULATIVE TOTAL RETURNS CUMULATIVE TOTAL RETURNS CLASS A SHARE PERFORMANCE REFLECTS THE
As of 8/31/09, including maximum As of 6/30/09, the most recent calendar MAXIMUM 4.75% SALES CHARGE, AND CLASS B
applicable sales charges quarter-end, including maximum applicable AND CLASS C SHARE PERFORMANCE REFLECTS THE
sales charges APPLICABLE CONTINGENT DEFERRED SALES
CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
CLASS A SHARES CLASS A SHARES CDSC ON CLASS B SHARES DECLINES FROM 5%
Inception (6/3/09) -1.36% Inception (6/3/09) -4.69% BEGINNING AT THE TIME OF PURCHASE TO 0% AT
THE BEGINNING OF THE SEVENTH YEAR. THE
CLASS B SHARES CLASS B SHARES CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
Inception (6/3/09) -1.61% Inception (6/3/09) -4.98% YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
HAVE A FRONT-END SALES CHARGE; RETURNS
CLASS C SHARES CLASS C SHARES SHOWN ARE AT NET ASSET VALUE AND DO NOT
Inception (6/3/09) 2.39% Inception (6/3/09) -0.98% REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
ON A TOTAL REDEMPTION OF RETIREMENT PLAN
CLASS R SHARES CLASS R SHARES ASSETS WITHIN THE FIRST YEAR. CLASS Y
Inception (6/3/09) 3.51% Inception (6/3/09) 0.06% SHARES DO NOT HAVE A FRONT-END SALES
CHARGE OR A CDSC; THEREFORE, PERFORMANCE
CLASS Y SHARES CLASS Y SHARES IS AT NET ASSET VALUE.
Inception (6/3/09) 3.64% Inception (6/3/09) 0.10%
THE PERFORMANCE OF THE FUND'S SHARE
THE PERFORMANCE DATA QUOTED REPRESENT PAST OF THIS REPORT FOR CLASS A, CLASS B, CLASS CLASSES WILL DIFFER PRIMARILY DUE TO
PERFORMANCE AND CANNOT GUARANTEE C, CLASS R AND CLASS Y SHARES WAS 0.90%, DIFFERENT SALES CHARGE STRUCTURES AND
COMPARABLE FUTURE RESULTS; CURRENT 1.65%, 1.65%, 1.15% AND 0.65%, CLASS EXPENSES.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE RESPECTIVELY.(1) THE TOTAL ANNUAL FUND
VISIT INVESCOAIM.COM FOR THE MOST RECENT OPERATING EXPENSE RATIO SET FORTH IN THE HAD THE ADVISOR NOT WAIVED FEES
MONTH-END PERFORMANCE. PERFORMANCE FIGURES MOST RECENT FUND PROSPECTUS AS OF THE DATE AND/OR REIMBURSED EXPENSES, PERFORMANCE
REFLECT REINVESTED DISTRIBUTIONS, CHANGES OF THIS REPORT FOR CLASS A, CLASS B, CLASS WOULD HAVE BEEN LOWER.
IN NET ASSET VALUE AND THE EFFECT OF THE C, CLASS R AND CLASS Y SHARES WAS 2.67%,
MAXIMUM SALES CHARGE UNLESS OTHERWISE 3.42%, 3.42%, 2.92% AND 2.42%, (1) Total annual operating expenses less
STATED. INVESTMENT RETURN AND PRINCIPAL RESPECTIVELY. THE EXPENSE RATIOS PRESENTED any contractual fee waivers and/or
VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE ABOVE MAY VARY FROM THE EXPENSE RATIOS expense reimbursements by the advisor
A GAIN OR LOSS WHEN YOU SELL SHARES. PRESENTED IN OTHER SECTIONS OF THIS REPORT in effect through at least June 30,
THAT ARE BASED ON EXPENSES INCURRED DURING 2010. See current prospectus for more
THE NET ANNUAL FUND OPERATING EXPENSE THE PERIOD COVERED BY THIS REPORT. information.
RATIO SET FORTH IN THE MOST RECENT FUND
PROSPECTUS AS OF THE DATE
- ------------------------------------------------------------------------------------------------------------------------------------
continued from page 7
------------------------------------------
excluded, but Canadian and global bonds o The BARCLAYS CAPITAL U.S. GOVERNMENT OTHER INFORMATION
(SEC-registered) of issuers in INDEX consists of securities issued by
non-emerging countries are included. the U.S. government including public o The Chartered Financial Analyst (R)
obligations of the U.S. Treasury with a (CFA(R)) designation is globally
o The BARCLAYS CAPITAL ASSET-BACKED remaining maturity of one year or more recognized and attests to a
SECURITIES INDEX is a subset of the or publicly issued debt of U.S. charter-holder's success in a rigorous
Barclays Capital U.S. Aggregate Index government agencies, quasi-federal and comprehensive study program in the
that focuses on credit cards, auto corporations and corporate or foreign field of investment management and
loans and home equity loans. The index debt guaranteed by the U.S. government. research analysis.
includes only the senior class and
ERISA-eligible B and C tranches of each o The Fund is not managed to track the o Industry classifications used in this
ABS issue. performance of any particular index, report are generally according to the
including the indexes defined here, and Global Industry Classification
o The BARCLAYS CAPITAL MORTGAGE-BACKED consequently, the performance of the Standard, which was developed by and is
SECURITIES INDEX is an unmanaged index Fund may deviate significantly from the the exclusive property and a service
composed of all fixed securities performance of the indexes. mark of MSCI Inc. and Standard &
mortgage pools by GNMA, FNMA and the Poor's.
FHLMC, including GNMA Graduated Payment o A direct investment cannot be made in
Mortgages. an index. Unless otherwise indicated, o The returns shown in management's
index results include reinvested discussion of Fund performance are
o The BARCLAYS CAPITAL CMBS dividends, and they do not reflect based on net asset values calculated
ERISA-ELIGIBLE INDEX is the sales charges. Performance of an index for shareholder transactions. Generally
ERISA-eligible component of the of funds reflects fund expenses; accepted accounting principles require
Barclays Capital CMBS Index, which performance of a market index does not. adjustments to be made to the net
measures the performance of the assets of the Fund at period end for
commercial mortgage-backed securities financial reporting purposes, and as
(CMBS) market. The index includes such, the net asset values for
investment grade securities that are shareholder transactions and the
ERISA eligible under the underwriter's returns based on those net asset values
exemption. may differ from the net asset values
and returns reported in the Financial
Highlights.
6 AIM CORE PLUS BOND FUND
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- ------------------------------------------------------------------------------------------------------------------------------------
AIM CORE PLUS BOND FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN.
o Unless otherwise stated, information presented in this report is as of August 31, 2009, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
- ------------------------------------------
ABOUT SHARE CLASSES inflation or sharply devalued changes in the rate at which the
currencies against the U.S. dollar. underlying loans are prepaid.
o Effective September 30, 2003, for Transaction costs are often higher, and
qualified plans only, those previously there may be delays in settlement o Nondiversification increases the risk
established are eligible to purchase procedures. that the value of the Fund's shares may
Class B shares of any AIM fund. Please vary more widely, and the Fund may be
see the prospectus for more o Foreign securities have additional subject to greater investment and
information. risks, including exchange rate changes, credit risk than if it invested more
political and economic upheaval, broadly.
o Class R shares are available only to relative lack of information,
certain retirement plans. Please see relatively low market liquidity, and o Reinvestment risk is the risk that a
the prospectus for more information. the potential lack of strict financial bond's cash flows will be reinvested at
and accounting controls and standards. an interest rate below that of the
o Class Y shares are available to only original bond.
certain investors. Please see the o Lower rated securities may be more
prospectus for more information. susceptible to real or perceived o The Fund may invest in obligations
adverse economic and competitive issued by agencies and
- ------------------------------------------ industry conditions, and the secondary instrumentalities of the U.S.
PRINCIPAL RISKS OF INVESTING IN THE FUND markets in which lower rated securities government that may vary in the level
are traded may be less liquid than of support they receive from the U.S.
o Individually negotiated, or higher grade securities. The loans in government. The U.S. government may
over-the-counter, derivatives are also which the Fund may invest are typically choose not to provide financial support
subject to counterparty risk -- the noninvestment-grade and involve a to U.S.-government- sponsored agencies
risk that the other party to the greater risk of default on interest and or instrumentalities if it is not
contract will not fulfill its principal payments and of price changes legally obligated to do so. In this
contractual obligation to complete the due to the changes in the credit case, if the issuer defaulted, the fund
transaction of an underlying fund. quality of the issuer. holding securities of such an issuer
might not be able to recover its
o Credit risk is the risk of loss on an o Interest rate risk refers to the risk investment from the U.S. government.
investment due to the deterioration of that bond prices generally fall as
an issuer's financial health. Such a interest rates rise and vice versa. ABOUT INDEXES USED IN THIS REPORT
deterioration of financial health may
result in a reduction of the credit o Leveraging entails risks such as o The BARCLAYS CAPITAL U.S. AGGREGATE
rating of the issuer's securities and magnifying changes in the value of the INDEX covers U.S. investment-grade
may lead to the issuer's inability to portfolio's securities. fixed-rate bonds with components for
honor its contractual obligations, government and corporate securities,
including making timely payment of o Since a large percentage of the Fund's mortgage pass-throughs, and
interest and principal. assets may be invested in securities of asset-backed securities.
a limited number of companies, each
o The Fund is subject to currency/ investment has a greater effect on the o The LIPPER INTERMEDIATE INVESTMENT
exchange rate risk because it may buy Fund's overall performance, and any GRADE DEBT FUNDS INDEX is an equally
or sell currencies other than the U.S. change in the value of those securities weighted representation of the largest
dollar. could significantly affect the value of funds in the Lipper Intermediate
your investment in the Fund. Investment Grade Debt Funds category.
o The Fund may use enhanced investment These funds invest at least 65% of
techniques such as derivatives. The o A majority of the Fund's assets are assets in investment-grade debt issues
principal risk of derivatives is that likely to be invested in loans and (rated in the top four grades) with
the fluctuations in their values may securities that are less liquid than dollar-weighted average maturities of
not correlate perfectly with the those rated on national exchanges. five to 10 years.
overall securities markets. Derivatives
are subject to counterparty risk -- the o There is no guarantee that the invest o The BARCLAYS CAPITAL U.S. CREDIT INDEX
risk that the other party will not -ment techniques and risk analysis used is an unmanaged index that consists of
complete the transaction with the Fund. by the Fund's portfolio managers will publicly issued, SEC-registered U.S.
produce the desired results. corporate and specified foreign
o Investing in developing countries can debentures and secured notes that meet
add additional risk, such as high rates o The prices of securities held by the the specified maturity, liquidity
of Fund may decline in response to market and quality requirements.
risks.
o The BARCLAYS CAPITAL U.S. CORPORATE
o The Fund may invest in mortgage and HIGH YIELD INDEX covers the universe of
asset-backed securities. These fixed rate, non-investment grade debt.
securities are subject to prepayment or Pay-in-kind bonds, Eurobonds, and debt
call risk, which is the risk that issues from countries designated as
payments from the borrower may be emerging markets are
received earlier or later than expected
due to continued on page 6
------------------------------------------
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, FUND NASDAQ SYMBOLS
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. Class A Shares ACPSX
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class B Shares CPBBX
Class C Shares CPCFX
- --------------------------------------------------------------------------------------- Class R Shares CPBRX
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE Class Y Shares CPBYX
7 AIM CORE PLUS BOND FUND
</Table>
SCHEDULE OF INVESTMENTS(a)
August 31, 2009
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
BONDS & NOTES-35.71%
AEROSPACE & DEFENSE-1.25%
Alliant Techsystems Inc.,
Sr. Unsec. Gtd. Sub. Notes,
6.75%, 04/01/16 $ 10,000 $ 9,625
- -----------------------------------------------------------------------------
BE Aerospace, Inc.,
Sr. Unsec. Unsub. Notes,
8.50%, 07/01/18 10,000 9,950
- -----------------------------------------------------------------------------
Northrop Grumman Corp.,
Sr. Unsec. Unsub. Notes,
5.05%, 08/01/19 25,000 25,877
=============================================================================
45,452
=============================================================================
AGRICULTURAL PRODUCTS-0.63%
Bunge Limited Finance Corp.,
Sr. Unsec. Gtd. Notes,
8.50%, 06/15/19 20,000 22,990
=============================================================================
AIRLINES-1.86%
American Airlines Pass Through Trust,
Series 2001-2, Class A-1, Sec. Global Pass
Through Ctfs.,
6.98%, 04/01/11 13,053 12,714
- -----------------------------------------------------------------------------
Series 2009-1A, Sec. Pass Through Ctfs.,
10.38%, 07/02/19 20,000 21,075
- -----------------------------------------------------------------------------
Continental Airlines Inc.,
Pass Through Ctfs.,
9.00%, 07/08/16 30,000 30,919
- -----------------------------------------------------------------------------
Delta Air Lines, Inc.,
Series 2002-1, Class C, Sec. Pass Through Ctfs.,
7.78%, 01/02/12 3,108 2,975
=============================================================================
67,683
=============================================================================
APPAREL RETAIL-0.70%
Limited Brands, Inc.,
Sr. Notes,
8.50%, 06/15/19(b) 25,000 25,375
=============================================================================
AUTO PARTS & EQUIPMENT-0.38%
Affinia Group Inc.,
Sr. Sec. Notes,
10.75%, 08/15/16(b) 5,000 5,219
- -----------------------------------------------------------------------------
Allison Transmission Inc.,
Sr. Unsec. Gtd. Toggle Notes,
11.25%, 11/01/15(b) 10,000 8,550
=============================================================================
13,769
=============================================================================
AUTOMOBILE MANUFACTURERS-0.60%
Case New Holland Inc.,
Sr. Gtd. Notes,
7.75%, 09/01/13(b) 5,000 4,963
- -----------------------------------------------------------------------------
Ford Motor Co.,
Sr. Unsec. Unsub. Global Notes,
7.45%, 07/16/31 10,000 7,725
- -----------------------------------------------------------------------------
Ford Motor Credit Co. LLC,
Sr. Unsec. Unsub. Global Notes,
7.50%, 08/01/12 10,000 9,200
=============================================================================
21,888
=============================================================================
AUTOMOTIVE RETAIL-0.72%
AutoZone Inc.,
Sr. Unsec. Notes,
5.75%, 01/15/15 25,000 26,380
=============================================================================
BIOTECHNOLOGY-0.79%
Amgen Inc.,
Sr. Unsec. Global Notes,
6.40%, 02/01/39 25,000 28,653
=============================================================================
BREWERS-0.64%
Anheuser-Busch InBev Worldwide Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
7.75%, 01/15/19(b) 20,000 23,491
=============================================================================
BROADCASTING-0.87%
COX Communications Inc.,
Sr. Unsec. Notes,
9.38%, 01/15/19(b) 25,000 31,581
=============================================================================
BUILDING PRODUCTS-0.26%
Ply Gem Industries Inc.,
Sr. Sec. Gtd. First & Second Lien Global Notes,
11.75%, 06/15/13 5,000 4,250
- -----------------------------------------------------------------------------
USG Corp.,
Sr. Unsec. Gtd. Notes,
9.75%, 08/01/14(b) 5,000 5,150
=============================================================================
9,400
=============================================================================
CABLE & SATELLITE-1.89%
British Sky Broadcasting Group PLC (United
Kingdom),
Sr. Unsec. Gtd. Unsub. Yankee Notes,
9.50%, 11/15/18(b) 25,000 32,232
- -----------------------------------------------------------------------------
Mediacom LLC/Mediacom Capital Corp.,
Sr. Notes,
9.13%, 08/15/19(b) 5,000 4,913
- -----------------------------------------------------------------------------
Sirius XM Radio Inc.,
Sr. Sec. Notes,
9.75%, 09/01/15(b) 5,000 5,037
- -----------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
8 AIM CORE PLUS BOND FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
CABLE & SATELLITE-(CONTINUED)
Time Warner Cable Inc.,
Sr. Unsec. Gtd. Unsub. Deb.,
6.75%, 06/15/39 $ 20,000 $ 21,433
- -----------------------------------------------------------------------------
XM Satellite Radio Inc.,
Sr. Sec. Notes,
11.25%, 06/15/13(b) 5,000 5,219
=============================================================================
68,834
=============================================================================
CASINOS & GAMING-0.41%
MGM Mirage Inc.,
Sr. Unsec. Gtd. Unsub. Notes,
8.50%, 09/15/10 15,000 14,794
=============================================================================
COMMUNICATIONS EQUIPMENT-0.74%
Corning Inc.,
Sr. Unsec. Unsub. Notes,
6.63%, 05/15/19 25,000 26,986
=============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.12%
First Data Corp.,
Sr. Unsec. Gtd. Global Notes,
9.88%, 09/24/15 5,000 4,325
=============================================================================
DIVERSIFIED BANKS-1.03%
Wachovia Corp.,
Series G, Sr. Unsec. Medium-Term Notes,
5.50%, 05/01/13 35,000 37,415
=============================================================================
DIVERSIFIED CHEMICALS-0.14%
Olin Corp.,
Sr. Unsec. Unsub. Notes,
8.88%, 08/15/19 5,000 5,190
=============================================================================
DIVERSIFIED SUPPORT SERVICES-0.26%
Iron Mountain Inc.,
Sr. Unsec. Gtd. Sub. Notes,
6.63%, 01/01/16 10,000 9,463
=============================================================================
DRUG RETAIL-0.73%
Rite Aid Corp.,
Sr. Sec. Notes,
9.75%, 06/12/16(b) 25,000 26,500
=============================================================================
ELECTRIC UTILITIES-1.98%
DCP Midstream LLC,
Notes,
9.70%, 12/01/13(b) 20,000 22,999
- -----------------------------------------------------------------------------
Indiana Michigan Power Co.,
Sr. Notes,
7.00%, 03/15/19 25,000 28,642
- -----------------------------------------------------------------------------
Virginia Electric & Power Co.,
Sr. Unsec. Notes,
5.00%, 06/30/19 20,000 20,698
=============================================================================
72,339
=============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.70%
Belden Inc.,
Sr. Gtd. Sub. Notes,
9.25%, 06/15/19(b) 25,000 25,375
=============================================================================
ELECTRONIC MANUFACTURING SERVICES-0.13%
Jabil Circuit, Inc.,
Sr. Notes,
7.75%, 07/15/16 5,000 4,938
=============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-0.14%
Clean Harbors Inc.,
Sr. Sec. Notes,
7.63%, 08/15/16(b) 5,000 5,013
=============================================================================
HEALTH CARE EQUIPMENT-1.45%
Covidien International Finance S.A. (Luxembourg),
Sr. Unsec. Gtd. Unsub. Global Yankee Notes,
6.00%, 10/15/17 25,000 27,512
- -----------------------------------------------------------------------------
St. Jude Medical Inc.,
Sr. Unsec. Notes,
3.75%, 07/15/14 25,000 25,473
=============================================================================
52,985
=============================================================================
HEALTH CARE FACILITIES-0.94%
HCA, Inc.,
Sr. Sec. Gtd. Global Notes,
9.25%, 11/15/16 15,000 15,262
- -----------------------------------------------------------------------------
Sr. Sec. Gtd. Notes,
7.88%, 02/15/20(b) 10,000 9,800
- -----------------------------------------------------------------------------
Tenet Healthcare Corp.,
Sr. Unsec. Notes,
7.38%, 02/01/13 10,000 9,250
=============================================================================
34,312
=============================================================================
HEALTH CARE SERVICES-1.04%
Express Scripts Inc.,
Sr. Unsec. Global Notes,
6.25%, 06/15/14 25,000 27,510
- -----------------------------------------------------------------------------
US Oncology Inc.,
Sr. Sec. Notes,
9.13%, 08/15/17(b) 10,000 10,375
=============================================================================
37,885
=============================================================================
HOTELS, RESORTS & CRUISE LINES-0.56%
Hyatt Hotels Corp.,
Sr. Unsec. Unsub. Notes,
5.75%, 08/15/15(b) 20,000 20,374
=============================================================================
HOUSEHOLD PRODUCTS-0.57%
Procter & Gamble Co. (The),
Sr. Unsec. Global Notes,
3.50%, 02/15/15 20,000 20,725
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM CORE PLUS BOND FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-0.79%
NRG Energy, Inc.,
Sr. Unsec. Gtd. Notes,
7.38%, 02/01/16 $ 15,000 $ 14,400
- -----------------------------------------------------------------------------
Sr. Unsec. Gtd. Unsub. Notes,
7.38%, 01/15/17 15,000 14,362
=============================================================================
28,762
=============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.21%
AT&T Inc.,
Sr. Unsec. Unsub. Global Notes,
6.70%, 11/15/13 20,000 22,753
- -----------------------------------------------------------------------------
France Telecom S.A. (France),
Sr. Unsec. Unsub. Global Yankee Notes,
5.38%, 07/08/19 20,000 21,239
=============================================================================
43,992
=============================================================================
MOVIES & ENTERTAINMENT-0.70%
Cinemark USA Inc.,
Sr. Gtd. Notes,
8.63%, 06/15/19(b) 25,000 25,406
=============================================================================
MULTI-LINE INSURANCE-0.58%
American Financial Group Inc.,
Sr. Notes,
9.88%, 06/15/19 20,000 21,174
=============================================================================
OIL & GAS EQUIPMENT & SERVICES-0.13%
Bristow Group, Inc.,
Sr. Unsec. Gtd. Global Notes,
7.50%, 09/15/17 5,000 4,775
=============================================================================
OIL & GAS EXPLORATION & PRODUCTION-2.20%
Anadarko Petroleum Corp.,
Sr. Unsec. Unsub. Global Notes,
5.75%, 06/15/14 25,000 26,690
- -----------------------------------------------------------------------------
Chesapeake Energy Corp.,
Sr. Unsec. Gtd. Global Notes,
6.38%, 06/15/15 5,000 4,562
- -----------------------------------------------------------------------------
Cimarex Energy Co.,
Sr. Unsec. Gtd. Notes,
7.13%, 05/01/17 25,000 23,375
- -----------------------------------------------------------------------------
McMoRan Exploration Co.,
Sr. Unsec. Gtd. Notes,
11.88%, 11/15/14 5,000 4,875
- -----------------------------------------------------------------------------
Quicksilver Resources Inc.,
Sr. Notes,
11.75%, 01/01/16 10,000 10,700
- -----------------------------------------------------------------------------
Range Resources Corp.,
Sr. Unsec. Gtd. Sub. Notes,
7.50%, 10/01/17 10,000 9,850
=============================================================================
80,052
=============================================================================
OIL & GAS REFINING & MARKETING-0.22%
United Refining Co.,
Series 2, Sr. Unsec. Gtd. Global Notes,
10.50%, 08/15/12 10,000 8,063
=============================================================================
OIL & GAS STORAGE & TRANSPORTATION-1.10%
Spectra Energy Capital LLC,
Sr. Unsec. Gtd. Notes,
5.65%, 03/01/20 20,000 20,389
- -----------------------------------------------------------------------------
Williams Partners L.P./Williams Partners Finance
Corp.,
Sr. Unsec. Global Notes,
7.25%, 02/01/17 20,000 19,550
=============================================================================
39,939
=============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-1.60%
Bank of America Corp.,
Sr. Unsec. Unsub. Global Notes,
6.50%, 08/01/16 20,000 20,771
- -----------------------------------------------------------------------------
Citigroup Inc.,
Sr. Unsec. Global Notes,
8.50%, 05/22/19 10,000 10,940
- -----------------------------------------------------------------------------
General Electric Capital Corp.,
Sr. Unsec. Unsub. Global Notes,
5.90%, 05/13/14 25,000 26,800
=============================================================================
58,511
=============================================================================
PACKAGED FOODS & MEATS-1.67%
H.J. Heinz Finance Co.,
Sr. Unsec. Gtd. Notes,
7.13%, 08/01/39(b) 20,000 23,106
- -----------------------------------------------------------------------------
Kraft Foods Inc.,
Sr. Unsec. Global Notes,
6.13%, 08/23/18 25,000 27,486
- -----------------------------------------------------------------------------
Smithfield Foods Inc.,
Sr. Sec. Gtd. Notes,
10.00%, 07/15/14(b) 10,000 10,250
=============================================================================
60,842
=============================================================================
PAPER PACKAGING-0.15%
Sealed Air Corp.,
Sr. Notes,
7.88%, 06/15/17(b) 5,000 5,363
=============================================================================
PAPER PRODUCTS-1.00%
Clearwater Paper Corp.,
Sr. Unsec. Notes,
10.63%, 06/15/16(b) 25,000 27,250
- -----------------------------------------------------------------------------
Domtar Corp.,
Sr. Unsec. Gtd. Global Notes,
5.38%, 12/01/13 10,000 9,350
=============================================================================
36,600
=============================================================================
PHARMACEUTICALS-0.75%
GlaxoSmithKline Capital Inc.,
Sr. Unsec. Gtd. Global Notes,
5.65%, 05/15/18 25,000 27,383
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM CORE PLUS BOND FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -----------------------------------------------------------------------------
PUBLISHING-0.10%
Nielsen Finance LLC/Co.,
Sr. Unsec. Gtd. Sub. Disc. Global Notes,
12.50%, 08/01/16(c) $ 5,000 $ 3,575
=============================================================================
RESEARCH & CONSULTING SERVICES-0.67%
Erac USA Finance Co.,
Unsec. Gtd. Notes,
5.80%, 10/15/12(b) 25,000 24,396
=============================================================================
TRADING COMPANIES & DISTRIBUTORS-0.14%
RSC Equipment Rental Inc.,
Sr. Sec. Notes,
10.00%, 07/15/17(b) 5,000 5,225
=============================================================================
TRUCKING-0.26%
Hertz Corp. (The),
Sr. Unsec. Gtd. Global Notes,
8.88%, 01/01/14 10,000 9,625
=============================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.91%
SBA Telecommunications Inc.,
Sr. Gtd. Notes,
8.25%, 08/15/19(b) 10,000 10,175
- -----------------------------------------------------------------------------
Sprint Capital Corp.,
Sr. Unsec. Gtd. Unsub. Global Notes,
6.88%, 11/15/28 25,000 18,375
- -----------------------------------------------------------------------------
Sprint Nextel Corp.,
Sr. Notes,
8.38%, 08/15/17 5,000 4,800
=============================================================================
33,350
=============================================================================
Total Bonds & Notes (Cost $1,237,201) 1,301,148
=============================================================================
U.S. GOVERNMENT SPONSORED MORTGAGE-BACKED SECURITIES-35.12%
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC)-18.14%
Pass Through Ctfs.,
5.50%, 01/01/34 299,358 313,514
- -----------------------------------------------------------------------------
Pass Through Ctfs., TBA,
5.00%, 10/01/39(d) 340,000 347,597
=============================================================================
661,111
=============================================================================
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)-16.98%
Pass Through Ctfs., TBA,
4.50%, 09/01/24 to 09/01/39(d) 350,000 356,531
- -----------------------------------------------------------------------------
5.00%, 09/01/24(d) 100,000 104,234
- -----------------------------------------------------------------------------
6.00%, 09/01/39(d) 150,000 157,852
=============================================================================
618,617
=============================================================================
Total U.S. Government Sponsored Mortgage-
Backed Securities (Cost $1,269,750) 1,279,728
=============================================================================
U.S. TREASURY SECURITIES-19.87%
U.S. TREASURY BILLS-0.82%
0.21%, 12/17/09(c)(e) 30,000 29,987
=============================================================================
U.S. TREASURY NOTES-14.39%
4.50%, 04/30/12 300,000 324,797
- -----------------------------------------------------------------------------
2.25%, 05/31/14 200,000 199,531
=============================================================================
524,328
=============================================================================
U.S. TREASURY BONDS-4.66%
5.38%, 02/15/31 145,000 169,673
=============================================================================
Total U.S. Treasury Securities (Cost
$713,892) 723,988
=============================================================================
ASSET-BACKED SECURITIES-9.52%
BA Credit Card Trust,
Series 2006-B4, Class B4, Floating Rate Pass
Through Ctfs.,
0.35%, 03/15/12(f) 40,000 39,911
- -----------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities,
Series 2004-PWR6, Class A4, Pass Through Ctfs.,
4.52%, 11/11/41(f) 25,000 24,028
- -----------------------------------------------------------------------------
Series 2004-PWR6, Class A6, Pass Through Ctfs.,
4.83%, 11/11/41(f) 25,000 24,084
- -----------------------------------------------------------------------------
Series 2006-T22, Class A2, Pass Through Ctfs.,
5.63%, 04/12/38 30,000 30,195
- -----------------------------------------------------------------------------
Citigroup Mortgage Loan Trust Inc.,
Series 2004-UST1, Class A4, Pass Through Ctfs.,
3.38%, 08/25/34 40,276 38,879
- -----------------------------------------------------------------------------
GS Mortgage Securities Corp. II,
Series 2005 GG4, Class A4A, Pass Through Ctfs.,
4.75%, 07/10/39 55,000 51,064
- -----------------------------------------------------------------------------
Morgan Stanley Capital I,
Series 2005-HQ7, Class A4, Pass Through Ctfs.,
5.38%, 11/14/42(f) 20,000 19,369
- -----------------------------------------------------------------------------
Series 2005-T17, Class A4, Pass Through Ctfs.,
4.52%, 12/13/41 30,000 29,834
- -----------------------------------------------------------------------------
Series 2005-T19, Class A4A, Pass Through Ctfs.,
4.89%, 06/12/47 30,000 28,731
- -----------------------------------------------------------------------------
TIAA Seasoned Commercial Mortgage Trust,
Series 2007-C4, Class A2,
5.79%, 08/15/39(f) 25,000 25,340
- -----------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust,
Series 2005-C21, Class A4, Pass Through Ctfs.,
5.38%, 10/15/44(f) 20,000 19,751
- -----------------------------------------------------------------------------
Wells Fargo Mortgage Backed Securities Trust,
Series 2004-K, Class 1A2, Floating Rate Pass
Through Ctfs.,
4.47%, 07/25/34(f) 16,992 15,839
=============================================================================
Total Asset-Backed Securities (Cost $338,947) 347,025
=============================================================================
MONEY MARKET FUNDS-32.88%
Liquid Assets Portfolio-Institutional Class(g) 599,182 599,182
- -----------------------------------------------------------------------------
Premier Portfolio-Institutional Class(g) 599,182 599,182
=============================================================================
Total Money Market Funds (Cost $1,198,364) 1,198,364
=============================================================================
TOTAL INVESTMENTS-133.10% (Cost $4,758,154) 4,850,253
=============================================================================
OTHER ASSETS LESS LIABILITIES-(33.10)% (1,206,175)
=============================================================================
NET ASSETS-100.00% $ 3,644,078
_____________________________________________________________________________
=============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11 AIM CORE PLUS BOND FUND
Investment Abbreviations:
<Table>
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
TBA - To Be Announced
Unsec. - Unsecured
Unsub. - Unsubordinated
</Table>
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 August 31, 2009 was $403,337, which represented 11.07% of the Fund's
Net Assets.
(c) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(d) Security purchased on forward commitment basis. This security is subject
to dollar roll transactions. See Note 1J.
(e) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1K and Note 4.
(f) Interest or dividend rate is redetermined periodically. Rate shown is the
rate in effect on August 31, 2009.
(g) The money market fund and the Fund are affiliated by having the same
investment advisor.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM CORE PLUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2009
<Table>
ASSETS:
Investments, at value (Cost $3,559,790) $3,651,889
- ------------------------------------------------------------------------------
Investments in affiliated money market funds, at value and cost 1,198,364
==============================================================================
Total investments, at value (Cost $4,758,154) 4,850,253
==============================================================================
Receivables for:
Investments sold 655,632
- ------------------------------------------------------------------------------
Fund shares sold 42,900
- ------------------------------------------------------------------------------
Dividends and interest 28,608
- ------------------------------------------------------------------------------
Other assets 66,039
==============================================================================
Total assets 5,643,432
______________________________________________________________________________
==============================================================================
LIABILITIES:
Payables for:
Investments purchased 1,925,639
- ------------------------------------------------------------------------------
Fund shares reacquired 32
- ------------------------------------------------------------------------------
Dividends 125
- ------------------------------------------------------------------------------
Variation margin 1,484
- ------------------------------------------------------------------------------
Accrued fees to affiliates 16,456
- ------------------------------------------------------------------------------
Accrued other operating expenses 55,618
==============================================================================
Total liabilities 1,999,354
==============================================================================
Net assets applicable to shares outstanding $3,644,078
______________________________________________________________________________
==============================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $3,513,804
- ------------------------------------------------------------------------------
Undistributed net investment income 42,860
- ------------------------------------------------------------------------------
Undistributed net realized gain 5,646
- ------------------------------------------------------------------------------
Unrealized appreciation 81,768
==============================================================================
$3,644,078
______________________________________________________________________________
==============================================================================
NET ASSETS:
Class A $2,881,515
______________________________________________________________________________
==============================================================================
Class B $ 205,455
______________________________________________________________________________
==============================================================================
Class C $ 222,552
______________________________________________________________________________
==============================================================================
Class R $ 105,418
______________________________________________________________________________
==============================================================================
Class Y $ 125,520
______________________________________________________________________________
==============================================================================
Institutional Class $ 103,618
______________________________________________________________________________
==============================================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES
AUTHORIZED:
Class A 280,114
______________________________________________________________________________
==============================================================================
Class B 19,973
______________________________________________________________________________
==============================================================================
Class C 21,633
______________________________________________________________________________
==============================================================================
Class R 10,248
______________________________________________________________________________
==============================================================================
Class Y 12,201
______________________________________________________________________________
==============================================================================
Institutional Class 10,073
______________________________________________________________________________
==============================================================================
Class A:
Net asset value per share $ 10.29
- ------------------------------------------------------------------------------
Maximum offering price per share
(Net asset value of $10.29 divided by 95.25%) $ 10.80
______________________________________________________________________________
==============================================================================
Class B:
Net asset value and offering price per share $ 10.29
______________________________________________________________________________
==============================================================================
Class C:
Net asset value and offering price per share $ 10.29
______________________________________________________________________________
==============================================================================
Class R:
Net asset value and offering price per share $ 10.29
______________________________________________________________________________
==============================================================================
Class Y:
Net asset value and offering price per share $ 10.29
______________________________________________________________________________
==============================================================================
Institutional Class:
Net asset value and offering price per share $ 10.29
______________________________________________________________________________
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM CORE PLUS BOND FUND
STATEMENT OF OPERATIONS
For the period June 3, 2009 (commencement date) through August 31, 2009
<Table>
INVESTMENT INCOME:
Interest $ 32,330
- ----------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 1,669
==============================================================================================
Total investment income 33,999
==============================================================================================
EXPENSES:
Advisory fees 3,547
- ----------------------------------------------------------------------------------------------
Administrative services fees 12,329
- ----------------------------------------------------------------------------------------------
Custodian fees 9
- ----------------------------------------------------------------------------------------------
Distribution fees:
Class A 1,592
- ----------------------------------------------------------------------------------------------
Class B 359
- ----------------------------------------------------------------------------------------------
Class C 360
- ----------------------------------------------------------------------------------------------
Class R 125
- ----------------------------------------------------------------------------------------------
Transfer agent fees -- A, B, C, R and Y 475
- ----------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 24
- ----------------------------------------------------------------------------------------------
Registration and filing fees 20,650
- ----------------------------------------------------------------------------------------------
Reports to shareholders 7,750
- ----------------------------------------------------------------------------------------------
Professional services fees 52,886
- ----------------------------------------------------------------------------------------------
Other 1,999
==============================================================================================
Total expenses 102,105
==============================================================================================
Less: Fees waived and expenses reimbursed (94,996)
==============================================================================================
Net expenses 7,109
==============================================================================================
Net investment income 26,890
==============================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities 22,358
- ----------------------------------------------------------------------------------------------
Futures contracts (16,957)
==============================================================================================
5,401
==============================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities 92,099
- ----------------------------------------------------------------------------------------------
Futures contracts (10,331)
==============================================================================================
81,768
==============================================================================================
Net realized and unrealized gain 87,169
==============================================================================================
Net increase in net assets resulting from operations $114,059
______________________________________________________________________________________________
==============================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14 AIM CORE PLUS BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
For the period June 3, 2009 (commencement date) through August 31, 2009
<Table>
<Caption>
2009
- -----------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 26,890
- -----------------------------------------------------------------------------------------------
Net realized gain 5,401
- -----------------------------------------------------------------------------------------------
Change in net unrealized appreciation 81,768
===============================================================================================
Net increase in net assets resulting from operations 114,059
===============================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (17,512)
- -----------------------------------------------------------------------------------------------
Class B (887)
- -----------------------------------------------------------------------------------------------
Class C (934)
- -----------------------------------------------------------------------------------------------
Class R (616)
- -----------------------------------------------------------------------------------------------
Class Y (885)
- -----------------------------------------------------------------------------------------------
Institutional Class (736)
===============================================================================================
Total distributions from net investment income (21,570)
===============================================================================================
SHARE TRANSACTIONS-NET:
Class A 2,807,678
- -----------------------------------------------------------------------------------------------
Class B 200,964
- -----------------------------------------------------------------------------------------------
Class C 217,869
- -----------------------------------------------------------------------------------------------
Class R 102,542
- -----------------------------------------------------------------------------------------------
Class Y 121,790
- -----------------------------------------------------------------------------------------------
Institutional Class 100,746
===============================================================================================
Net increase in net assets resulting from share transactions 3,551,589
===============================================================================================
Net increase in net assets 3,644,078
===============================================================================================
NET ASSETS:
Beginning of year --
===============================================================================================
End of year (includes undistributed net investment income of $42,860) $3,644,078
_______________________________________________________________________________________________
===============================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
August 31, 2009
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Core Plus Bond Fund (the "Fund") is a series portfolio of AIM Counselor
Series Trust (the "Trust"). The Trust is a Delaware statutory trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of seven separate
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.
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 waiver shares may be subject to contingent deferred
sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC.
Class R, Class Y and Institutional Class shares are sold at net asset value.
Under certain circumstances, Class R shares are subject to a CDSC. Generally,
Class B shares will automatically convert to Class A shares on or about the
month-end which is at least eight years after the date of purchase.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as
15 AIM CORE PLUS BOND FUND
institution-size trading in similar groups of securities, developments
related to specific securities, dividend rate, yield, quality, type of
issue, coupon rate, maturity, individual trading characteristics and other
market data. Short-term obligations, including commercial paper, having 60
days or less to maturity are recorded at amortized cost which approximates
value. Debt securities are subject to interest rate and credit risks. In
addition, all debt securities involve some risk of default with respect to
interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. Futures contracts are valued at the
final settlement price set by an exchange on which they are principally
traded. Listed options are valued at the mean between the last bid and ask
prices from the exchange on which they are principally traded. Options not
listed on an exchange are valued by an independent source at the mean
between the last bid and ask prices. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
Investments in open-end and closed-end registered investment companies
that do not trade on an exchange are valued at the end of day net asset
value per share. Investments in open-end and closed-end registered
investment companies that trade on an exchange are valued at the last
sales price or official closing price as of the close of the customary
trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote provided by an
independent pricing service. Evaluated quotes provided by the pricing
service are valued based on a model which may include end of day net
present values, spreads, ratings, industry, and company performance.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and make the closing price unreliable,
the Fund may fair value the security. If the event is likely to have
affected the closing price of the security, the security will be valued at
fair value in good faith using procedures approved by the Board of
Trustees. Adjustments to closing prices to reflect fair value may also be
based on a screening process of an independent pricing service to indicate
the degree of certainty, based on historical data, that the closing price
in the principal market where a foreign security trades is not the current
value as of the close of the NYSE. Foreign securities meeting the approved
degree of certainty that the price is not reflective of current value will
be priced at the indication of fair value from the independent pricing
service. Multiple factors may be considered by the independent pricing
service in determining adjustments to reflect fair value and may include
information relating to sector indices, American Depositary Receipts and
domestic and foreign index futures. Foreign securities may have additional
risks including exchange rate changes, potential for sharply devalued
currencies and high inflation, political and economical upheaval, the
relative lack of issuer information, relatively low market liquidity and
the potential lack of strict financial and accounting controls and
standards.
Securities for which market prices are not provided by any of the above
methods may be valued based upon quotes furnished by independent sources.
The last bid price may be used to value equity securities and Corporate
Loans. The mean between the last bid and asked prices may be used to value
debt obligations other than Corporate Loans.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers following procedures
approved by the Board of Trustees. Issuer specific events, market trends,
bid/ask quotes of brokers and information providers and other market data
may be reviewed in the course of making a good faith determination of a
security's fair value.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Paydown gains and losses on mortgage and asset-backed securities are
recorded as adjustments to interest income. Dividend income 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 realized and unrealized gain
(loss) from investment securities reported in the Statement of Operations
and the Statement of Changes in Net Assets and the realized and unrealized
net 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 advisor.
The Fund allocates realized and unrealized capital gains and losses to a
class based on the relative net assets of each class. The Fund allocates
income to a class based on the relative value of the settled shares of
each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
advisor 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
16 AIM CORE PLUS BOND FUND
evaluated for making this determination are the country in which the
issuer maintains 50% or more of its assets, the type of security,
financial guarantees and enhancements, the nature of the collateral and
the sponsor organization. Country of issuer and/or credit risk exposure
has been determined to be the United States of America, unless otherwise
noted.
D. DISTRIBUTIONS -- Distributions from income are declared daily and paid
monthly. Distributions from net realized capital gain, if any, are
generally paid annually and recorded on ex-dividend date. The Fund may
elect to treat a portion of the proceeds from redemptions as distributions
for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such
class. Transfer agency fees and expenses and other shareholder
recordkeeping fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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, which is
generally 45 days from the period-end date.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust is indemnified
against certain liabilities that may arise out of performance of their
duties to the Fund. Additionally, in the normal course of business, the
Fund enters into contracts, including the Fund's servicing agreements,
that contain a variety of indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future
claims that may be made against the Fund that have not yet occurred. The
risk of material loss as a result of such indemnification claims is
considered remote.
I. OTHER RISKS -- The Funds may invest in obligations issued by agencies and
instrumentalities of the U.S. Government that may vary in the level of
support they receive from the government. The government may choose not to
provide financial support to government sponsored agencies or
instrumentalities if it is not legally obligated to do so. In this case,
if the issuer defaulted, the underlying fund holding securities of such
issuer might not be able to recover its investment from the U.S.
Government. Many securities purchased by the Fund are not guaranteed by
the U.S. Government.
J. DOLLAR ROLL AND FORWARD COMMITMENT TRANSACTIONS -- The Fund may engage in
dollar roll and forward commitment transactions with respect to mortgage-
backed securities issued by GNMA, FNMA and FHLMC. These transactions are
often conducted on a to be announced ("TBA") basis. In a TBA mortgage-
backed transaction, the seller does not specify the particular securities
to be delivered. Rather, a Fund agrees to accept any security that meets
specified terms, such as an agreed upon issuer, coupon rate and terms of
the underlying mortgages. TBA mortgage-backed transactions generally
settle once a month on a specific date.
In a dollar roll transaction, the Fund sells a mortgage-backed security
held in the Fund to a financial institution such as a bank or broker-
dealer, and simultaneously agrees to purchase a substantially similar
security (same type, coupon and maturity) from the institution at an
agreed upon price and future date. The mortgage-backed securities to be
purchased will bear the same coupon as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. Based on the typical structure of dollar roll transactions by
the Fund, the dollar roll transactions are accounted for as financing
transactions in which the Fund receives compensation as either a "fee" or
a "drop". "Fee" income which is agreed upon amongst the parties at the
commencement of the dollar roll and the "drop" which is the difference
between the selling price and the repurchase price of the mortgage-backed
securities are amortized to income. During the period between the sale and
purchase settlement dates, the Fund will not be entitled to receive
interest and principal payments on securities purchased and not yet
settled. Proceeds of the sale may be invested in short-term instruments,
and the income from these investments, together with any additional fee
income received on the sale, could generate income for the Fund exceeding
the yield on the security sold. Dollar roll transactions are considered
borrowings under the 1940 Act.
Forward commitment transactions involve commitments by the Fund to
acquire or sell TBA mortgage-backed securities from/to a financial
institution, such as a bank or broker-dealer at a specified future date
and amount. The TBA mortgage-backed security is marked to market until
settlement and the unrealized appreciation or depreciation is recorded in
the statement of operations.
At the time the Fund enters into the dollar roll or forward commitment
transaction, mortgage-backed securities or other liquid assets held by the
Fund having a dollar value equal to the purchase price or in an amount
sufficient to honor the forward commitment will be segregated.
Dollar roll transactions involve the risk that the market value of the
securities retained by the Fund may decline below the price of the
securities that the Fund has sold but is obligated to purchase under the
agreement. In the event that the buyer of securities in a dollar roll
transaction files for bankruptcy or becomes insolvent, the Fund's use of
the proceeds from the sale of the securities may be restricted pending a
determination by the other party, or its trustee or receiver, whether to
enforce the Fund's obligation to purchase the securities. The return
earned by the Fund with the proceeds of the dollar roll transaction may
not exceed the return on the securities sold.
Forward commitment transactions involve the risk that a counter-party to
the transaction may fail to complete the transaction. If this occurs, the
Fund may lose the opportunity to purchase or sell the security at the
agreed upon price. Settlement dates of forward commitment transactions may
be a month
17 AIM CORE PLUS BOND FUND
or more after entering into these transactions and as a result the market
values of the securities may vary from the purchase or sale prices.
Therefore, forward commitment transactions may increase the Fund's overall
interest rate exposure.
K. 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.
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.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). Under the terms of the
investment advisory agreement, the Fund pays an advisory fee to the Advisor
based on the annual rate of the Fund's average daily net assets as follows:
<Table>
<Caption>
AVERAGE NET ASSETS RATE
- -------------------------------------------------------------------
First $500 million 0.45%
- -------------------------------------------------------------------
Next $500 million 0.425%
- -------------------------------------------------------------------
Next $1.5 billion 0.40%
- -------------------------------------------------------------------
Next $2.5 billion 0.375%
- -------------------------------------------------------------------
Over $5 billion 0.35%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund between the Advisor and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan)
Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.),
Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco
Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the
"Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees
paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide
discretionary investment management services to the Fund based on the percentage
of assets allocated to such Sub-Advisor(s).
The Advisor has contractually agreed 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 0.90%, 1.65%, 1.65%, 1.15%, 0.65% and
0.65% of average daily net assets, respectively, through at least June 30, 2010.
In determining the advisor'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 to exceed the numbers reflected above: (i)
interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary
items or non-routine items; (v) expenses related to a merger or reorganization,
as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has
incurred but did not actually pay because of an expense offset arrangement.
Currently, in addition to the expense reimbursement arrangement with Invesco
Ltd. ("Invesco") described more fully below, the expense offset arrangements
from which the Fund may benefit are in the form of credits that the Fund
receives from banks where the Fund or its transfer agent has deposit accounts in
which it holds uninvested cash. Those credits are used to pay certain expenses
incurred by the Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2010,
to waive the advisory fee payable by the Fund in an amount equal to 100% of the
net advisory fees the Advisor receives from the affiliated money market funds on
investments by the Fund of uninvested cash in such affiliated money market
funds.
For the period June 3, 2009 (commencement date) to August 31, 2009, the
Advisor waived advisory fees and reimbursed Fund level expenses of $94,496 and
reimbursed class level expenses of $397, $22, $22, $16, $19 and $24 for Class A,
Class B, Class C, Class R, Class Y and Institutional Class shares in proportion
to the relative net assets of such classes.
The Trust has entered into a master administrative services agreement with
Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain
administrative costs incurred in providing accounting services to the Fund. For
the period June 3, 2009 (commencement date) to August 31, 2009, 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 Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has
agreed to pay IAIS a fee for providing transfer agency and shareholder services
to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the
course of providing such services. IAIS may make payments to intermediaries that
provide omnibus account services, sub-accounting services and/or networking
services. All fees payable by IAIS 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
June 3, 2009 (commencement date) to August 31, 2009, expenses incurred under the
agreement are shown in the Statement of Operations as transfer agent fees.
18 AIM CORE PLUS BOND FUND
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") 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 IADI 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 period June 3, 2009 (commencement date) to August 31, 2009,
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 June 3, 2009 (commencement
date) to August 31, 2009, IADI advised the Fund that IADI retained $145 in
front-end sales commissions from the sale of Class A shares and $0 from Class A,
Class B, Class C and Class R shares, respectively, for CDSC imposed on
redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--ADDITIONAL VALUATION INFORMATION
Generally Accepted Accounting Principles (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 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 the end
of the reporting period, August 31, 2009. 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.
<Table>
<Caption>
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
- -------------------------------------------------------------------------------------------------------------------------
Equity Securities $1,198,364 $ -- $-- $1,198,364
- -------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Debt Securities -- 723,988 -- 723,988
- -------------------------------------------------------------------------------------------------------------------------
U.S. Government Sponsored Mortgage-Backed Debt
Securities -- 1,279,728 -- 1,279,728
- -------------------------------------------------------------------------------------------------------------------------
Corporate Debt Securities -- 1,301,148 -- 1,301,148
- -------------------------------------------------------------------------------------------------------------------------
Asset-Backed Securities -- 347,025 -- 347,025
=========================================================================================================================
$4,850,253
=========================================================================================================================
Other Investments* (10,331) -- -- (10,331)
=========================================================================================================================
Total Investments $1,188,033 $3,651,889 $-- $4,839,922
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
* Other Investments include futures which are included at unrealized
appreciation/(depreciation).
NOTE 4--DERIVATIVE INVESTMENTS
Effective June 3, 2009 (commencement date), the Fund has adopted the provisions
of FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities. The standard is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position and financial performance. The adoption of this provision has no impact
on the results of operations reported in the financial statements.
19 AIM CORE PLUS BOND FUND
VALUE OF DERIVATIVE INSTRUMENTS AT PERIOD-END
The Table below summarizes the value of the Fund's derivative instruments,
detailed by primary risk exposure, held as of August 31, 2009:
<Table>
<Caption>
VALUE
------------------------
RISK EXPOSURE/ DERIVATIVE TYPE ASSETS LIABILITIES
- ------------------------------------------------------------------------------------------------------
Interest rate risk
Futures contracts(a) $230,500 $(476,578)
______________________________________________________________________________________________________
======================================================================================================
</Table>
(a) Includes cumulative appreciation (depreciation) of futures contracts. Only
current day's variation margin receivable (payable) is reported within the
Statement of Assets & Liabilities.
EFFECT OF DERIVATIVE INSTRUMENTS FOR THE PERIOD JUNE 3, 2009 (COMMENCEMENT DATE)
TO AUGUST 31, 2009
The table below summarizes the gains (losses) on derivative instruments,
detailed by primary risk exposure, recognized in earnings during the period:
<Table>
<Caption>
LOCATION OF GAIN (LOSS) ON
STATEMENT OF OPERATIONS
FUTURES*
- ------------------------------------------------------------------------------------------------------
Realized Gain (Loss)
Interest rate risk $(16,957)
======================================================================================================
Change in Unrealized Appreciation (Depreciation)
Interest rate risk (10,331)
======================================================================================================
Total $(27,288)
______________________________________________________________________________________________________
======================================================================================================
</Table>
* The average value of outstanding futures contracts during the period was
$(202,654).
<Table>
<Caption>
UNREALIZED
NUMBER OF MONTH/ APPRECIATION
CONTRACT CONTRACTS COMMITMENT VALUE (DEPRECIATION)
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury 5 Year Notes 2 December-2009/Long $ 230,500 $ 925
==========================================================================================================================
U.S. Treasury 10 Year Notes 3 September-2009/Short (355,641) (6,850)
- --------------------------------------------------------------------------------------------------------------------------
U.S. Long Bonds 1 September-2009/Short (120,937) (4,406)
==========================================================================================================================
(476,578) (11,256)
==========================================================================================================================
Total $(246,078) $(10,331)
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
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 AIM 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 period June 3, 2009 (commencement date) to August 31, 2009, the
Fund paid legal fees of $89 for services rendered by Kramer, Levin, Naftalis &
Frankel LLP as counsel to the Independent Trustees. A member of that firm is a
Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund 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 The State Street Bank and Trust Company, the
custodian bank. To compensate the custodian bank for such overdrafts, the
overdrawn Fund may either (i) leave funds as a compensating balance in the
account so the custodian bank can be compensated by earning the additional
interest; or (ii) compensate by paying the custodian bank at a rate agreed upon
by the custodian bank and Invesco Aim, 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.
20 AIM CORE PLUS BOND FUND
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE PERIOD JUNE 3,
2009 (COMMENCEMENT DATE) TO AUGUST 31, 2009:
<Table>
<Caption>
2009
- ---------------------------------------------------------------------------------------------
Ordinary income $21,570
_____________________________________________________________________________________________
=============================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
<Table>
<Caption>
2009
- -----------------------------------------------------------------------------------------------
Undistributed ordinary income $ 42,859
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation -- investments 89,775
- -----------------------------------------------------------------------------------------------
Capital loss carryforward (2,360)
- -----------------------------------------------------------------------------------------------
Shares of beneficial interest 3,513,804
===============================================================================================
Total net assets $3,644,078
_______________________________________________________________________________________________
===============================================================================================
</Table>
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is due to differences in the timing of recognition of gains and
losses on investments for tax and book purposes. The Fund's net unrealized
appreciation (depreciation) difference is attributable primarily to futures
contracts and dollar roll transactions.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2009 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
August 31, 2017 $2,360
_______________________________________________________________________________________________
===============================================================================================
</Table>
* 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 period June 3, 2009 (commencement date) to August 31, 2009
was $3,226,711 and $675,157, 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.
<Table>
<Caption>
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS
- ---------------------------------------------------------------------------------------------
Aggregate unrealized appreciation of investment securities $92,286
- ---------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,511)
=============================================================================================
Net unrealized appreciation of investment securities $89,775
_____________________________________________________________________________________________
=============================================================================================
Cost of investments for tax purposes is $4,760,478.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of stock issuance cost,
dollar rolls and paydowns, on August 31, 2009, undistributed net investment
income was increased by $37,540, undistributed net realized gain was increased
by $245 and shares of beneficial interest decreased by $37,785. This
reclassification had no effect on the net assets of the Fund.
21 AIM CORE PLUS BOND FUND
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
SUMMARY OF SHARE ACTIVITY
- ---------------------------------------------------------------------------------------------------------
JUNE 3, 2009
(COMMENCEMENT DATE) TO
AUGUST 31, 2009
--------------------------------
SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
Sold:
Class A 278,669 $2,792,778
- ---------------------------------------------------------------------------------------------------------
Class B 19,908 200,294
- ---------------------------------------------------------------------------------------------------------
Class C 21,543 216,941
- ---------------------------------------------------------------------------------------------------------
Class R 10,188 101,926
- ---------------------------------------------------------------------------------------------------------
Class Y 12,115 120,905
- ---------------------------------------------------------------------------------------------------------
Institutional Class 10,001 100,010
=========================================================================================================
Issued as reinvestment of dividends:
Class A 1,708 17,512
- ---------------------------------------------------------------------------------------------------------
Class B 75 774
- ---------------------------------------------------------------------------------------------------------
Class C 91 933
- ---------------------------------------------------------------------------------------------------------
Class R 60 616
- ---------------------------------------------------------------------------------------------------------
Class Y 86 885
- ---------------------------------------------------------------------------------------------------------
Institutional Class 72 736
=========================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 10 104
- ---------------------------------------------------------------------------------------------------------
Class B (10) (104)
=========================================================================================================
Reacquired:
Class A (273) (2,716)
- ---------------------------------------------------------------------------------------------------------
Class B - -
- ---------------------------------------------------------------------------------------------------------
Class C (1) (5)
- ---------------------------------------------------------------------------------------------------------
Class R - -
- ---------------------------------------------------------------------------------------------------------
Class Y - -
- ---------------------------------------------------------------------------------------------------------
Institutional Class - -
=========================================================================================================
Net increase in share activity 354,242 $3,551,589
_________________________________________________________________________________________________________
=========================================================================================================
</Table>
22 AIM CORE PLUS BOND FUND
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding for the period.
<Table>
<Caption>
NET GAINS
NET ASSET ON SECURITIES DIVIDENDS
VALUE, NET (BOTH TOTAL FROM FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT VALUE, END TOTAL
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME OF PERIOD RETURN(b)
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A
Three months ended 08/31/09(d) $10.00 $0.09 $0.27 $0.36 $(0.07) $10.29 3.58%
- -------------------------------------------------------------------------------------------------------------------------------
CLASS B
Three months ended 08/31/09(d) 10.00 0.07 0.27 0.34 (0.05) 10.29 3.39
- -------------------------------------------------------------------------------------------------------------------------------
CLASS C
Three months ended 08/31/09(d) 10.00 0.07 0.27 0.34 (0.05) 10.29 3.39
- -------------------------------------------------------------------------------------------------------------------------------
CLASS R
Three months ended 08/31/09(d) 10.00 0.08 0.27 0.35 (0.06) 10.29 3.51
- -------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Three months ended 08/31/09(d) 10.00 0.09 0.27 0.36 (0.07) 10.29 3.64
- -------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Three months ended 08/31/09(d) 10.00 0.09 0.27 0.36 (0.07) 10.29 3.64
- -------------------------------------------------------------------------------------------------------------------------------
<Caption>
RATIO OF RATIO OF
EXPENSES EXPENSES
TO AVERAGE TO AVERAGE NET RATIO OF NET
NET ASSETS ASSETS WITHOUT INVESTMENT
NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME
END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
(000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- -------------------------------------------------------------------------------------------------------------------------
CLASS A
Three months ended 08/31/09(d) $2,882 0.84%(e) 12.89%(e) 3.47%(e) 43%
- -------------------------------------------------------------------------------------------------------------------------
CLASS B
Three months ended 08/31/09(d) 205 1.59(e) 13.64(e) 2.72(e) 43
- -------------------------------------------------------------------------------------------------------------------------
CLASS C
Three months ended 08/31/09(d) 223 1.59(e) 13.64(e) 2.72(e) 43
- -------------------------------------------------------------------------------------------------------------------------
CLASS R
Three months ended 08/31/09(d) 105 1.09(e) 13.14(e) 3.22(e) 43
- -------------------------------------------------------------------------------------------------------------------------
CLASS Y
Three months ended 08/31/09(d) 126 0.59(e) 12.64(e) 3.72(e) 43
- -------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Three months ended 08/31/09(d) 104 0.59(e) 12.68(e) 3.72(e) 43
- -------------------------------------------------------------------------------------------------------------------------
</Table>
(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, if applicable
and is not annualized for periods less than one year.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Commencement date of June 3, 2009.
(e) Ratios are annualized and based on average daily net assets (000's
omitted) of $2,582, $146, $146, $101, $121 and $101 for Class A, Class B,
Class C, Class R, Class Y and Institutional Class shares, respectively.
23 AIM CORE PLUS BOND FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Core Plus Bond Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Core Plus Bond Fund (one of the
funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2009, the results of its operations, the changes in its
net assets and the financial highlights for the period June 3, 2009
(commencement date) through August 31, 2009, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at August 31, 2009 by
correspondence with the custodian and brokers, provides a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 16, 2009
Houston, Texas
24 AIM CORE PLUS BOND 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
actual ending account value and expenses of Class A, Class B, Class C, Class R
and Class Y shares in the below example are based on an investment of $1,000
invested on June 3, 2009 (commencement date) and held through August 31, 2009.
The hypothetical ending account value and expenses in the below example are
based on an investment of $1,000 invested at the beginning of the period and
held for the entire period March 1, 2009 through August 31, 2009.
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, June 3, 2009 (commencement
date) through August 31, 2009. Because the actual ending account value and
expense information in the example is not based upon a six month period, the
ending account value and expense information may not provide a meaningful
comparison to mutual funds that provide such information for a full six month
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.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
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 (03/01/09) (08/31/09)(1) PERIOD(2) (08/31/09) PERIOD(3) RATIO
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $1,035.80 $2.11 $1,020.97 $4.28 0.84%
- ---------------------------------------------------------------------------------------------------
B 1,000.00 1,033.90 3.99 1,017.19 8.08 1.59
- ---------------------------------------------------------------------------------------------------
C 1,000.00 1,033.90 3.99 1,017.19 8.08 1.59
- ---------------------------------------------------------------------------------------------------
R 1,000.00 1,035.10 2.73 1,019.71 5.55 1.09
- ---------------------------------------------------------------------------------------------------
Y 1,000.00 1,036.40 1.48 1,022.23 3.01 0.59
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period June 3, 2009 (commencement date) through August 31,
2009, 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 90
(June 3, 2009 (commencement date) through August 31, 2009)/365. Because
Class A, Class B, Class C, Class R and Class Y 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
184/365 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 B, Class C, Class R and Class Y shares of the Fund and other
funds because such data is based on a full six month period.
25 AIM CORE PLUS BOND FUND
Supplement to Annual Report dated 8/31/09
AIM CORE PLUS BOND FUND
<Table>
INSTITUTIONAL CLASS SHARES ------------------------------------------ Please note that past performance is
AVERAGE CUMULATIVE TOTAL RETURNS not indicative of future results. More
The following information has been For periods ended 8/31/09 recent returns may be more or less than
prepared to provide Institutional Class those shown. All returns assume
shareholders with a performance overview Inception (6/3/09) 3.64% reinvestment of distributions at NAV.
specific to their holdings. Institutional ------------------------------------------ Investment return and principal value will
Class shares are offered exclusively to fluctuate so your shares, when redeemed,
institutional investors, including defined ------------------------------------------ may be worth more or less than their
contribution plans that meet certain AVERAGE CUMULATIVE TOTAL RETURNS original cost. See full report for
criteria. information on comparative benchmarks.
For periods ended 6/30/09, the most recent Please consult your Fund prospectus for
calendar quarter-end more information. For the most current
month-end performance, please call
Inception (6/3/09) 0.10% 800 451 4246 or visit invescoaim.com.
------------------------------------------
(1) Total annual operating expenses less
Institutional Class shares have no sales any contractual fee waivers and/or
charge; therefore, performance is at net expense reimbursements by the advisor
asset value (NAV). Performance of in effect through at least June 30,
Institutional Class shares will differ 2010. See current prospectus for more
from performance of other share classes information.
primarily due to differing sales charges
and class expenses.
The net annual Fund operating expense
ratio set forth in the most recent Fund
prospectus as of the date of this
supplement for Institutional Class shares
was 0.65%.(1) The total annual Fund
operating expense ratio set forth in the
most recent Fund prospectus as of the date
of this supplement for Institutional Class
shares was 2.30%. The expense ratios
presented above may vary from the expense
ratios presented in other sections of the
actual report that are based on expenses
incurred during the period covered by the
report.
Had the advisor not waived fees and/or
reimbursed expenses, performance would
have been lower.
- ------------------------------------------
NASDAQ SYMBOL CPIIX
Over for information on your Fund's expenses.
- ---------------------------------------------------------------------------------------
THIS SUPPLEMENT 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.
FOR INSTITUTIONAL INVESTOR USE ONLY -- NOT FOR USE WITH THE PUBLIC THIS MATERIAL IS FOR
INSTITUTIONAL INVESTOR USE ONLY AND MAY NOT BE QUOTED, REPRODUCED, SHOWN TO THE PUBLIC [INVESCO AIM LOGO]
OR USED IN WRITTEN FORM AS SALES LITERATURE FOR PUBLIC USE. - service mark -
invescoaim.com CPB-INS-1 Invesco Aim Distributors, Inc.
</Table>
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
actual ending account value and expenses of Institutional Class shares in the
below example are based on an investment of $1,000 invested on June 3, 2009
(commencement date) and held through August 31, 2009. The hypothetical ending
account value and expenses in the below example are based on an investment of
$1,000 invested at the beginning of the period and held for the entire period
March 1, 2009 through August 31, 2009.
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, June 3, 2009 (commencement
date) through August 31, 2009. Because the actual ending account value and
expense information in the example is not based upon a six month period, the
ending account value and expense information may not provide a meaningful
comparison to mutual funds that provide such information for a full six month
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. 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.
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------
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 (03/01/09) (08/31/09)(1) PERIOD(2) (08/31/09) PERIOD(3) RATIO
- -----------------------------------------------------------------------------------------------------------
Institutional $1,000.00 $1,036.40 $1.48 $1,022.23 $3.01 0.59%
- -----------------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period June 3, 2009 (commencement date) through August 31,
2009, 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 90
(June 3, 2009 (commencement date) through August 31, 2009)/365. Because
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
184/365 to reflect a one-half year period. The hypothetical ending account
value and expenses may be used to compare ongoing costs of investing in
Institutional Class shares of the Fund and other funds because such data is
based on a full six month period.
AIM CORE PLUS BOND FUND
<Table>
- ------------------------------------------------------------------------------------------------------------------------------------
INITIAL APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Board of Trustees (the Board) of AIM considered the factors discussed below in are appropriate. The Board noted that the
Counselor Series Trust is required under evaluating the fairness and reasonableness Affiliated Sub-Advisers, which have
the Investment Company Act of 1940 to of the Fund's investment advisory offices and personnel that are
approve the AIM Core Plus Bond Fund (the agreement and sub-advisory contracts. The geographically dispersed in financial
Fund) investment advisory agreement with discussion serves as a summary of the centers around the world, have been formed
Invesco Aim Advisors, Inc. (Invesco Aim) discussion of the material factors and in part for the purpose of researching and
and the Master Intergroup Sub-Advisory related conclusions that formed the basis compiling information and making
Contract for Mutual Funds (the for the Board's approval of the Fund's recommendations on the markets and
sub-advisory contracts) with Invesco Asset investment advisory agreement and economies of various countries and
Management Deutschland GmbH, Invesco Asset sub-advisory contracts. The Board securities of companies located in such
Management Limited, Invesco Asset considered all of the information provided countries or on various types of
Management (Japan) Limited, Invesco to them and did not identify any investments and investment techniques, and
Australia Limited, Invesco Global Asset particular factor that was controlling. providing investment advisory services.
Management (N.A.), Inc., Invesco Hong Kong Each Trustee may have evaluated the The Board noted that investment decisions
Limited, Invesco Institutional (N.A.), information provided differently from for the Fund will be made by IINA. The
Inc. (IINA), Invesco Senior Secured another Trustee and attributed different Board concluded that the sub-advisory
Management, Inc. and Invesco Trimark Ltd. weight to the various factors. contracts will benefit the Fund and its
(collectively, the Affiliated shareholders by permitting Invesco Aim to
Sub-Advisers). During meetings held on FACTORS AND CONCLUSIONS AND SUMMARY OF utilize the additional resources and
April 28-29, 2009, the Board as a whole EVALUATION OF INVESTMENT ADVISORY talent of the Affiliated Sub-Advisers in
and the disinterested or "independent" AGREEMENT AND SUB-ADVISORY CONTRACTS managing the Fund.
Trustees, voting separately, approved an
amendment to the Fund's investment A. Nature, Extent and Quality of C. Fund Performance
advisory agreement and an amendment to the Services Provided by Invesco Aim
sub-advisory contracts to add the Fund. In The Board did not consider the performance
doing so, the Board determined that the The Board reviewed the advisory services of the Fund because the Fund is new and
Fund's investment advisory agreement and to be provided to the Fund by Invesco Aim has no performance history.
the sub-advisory contracts are in the best under the Fund's investment advisory
interests of the Fund and its shareholders agreement and the credentials and D. Advisory and Sub-Advisory Fees and
and that the compensation to Invesco Aim experience of the officers and employees Fee Waivers
and the Affiliated Sub-Advisers under the of Invesco Aim who will provide these
Fund's investment advisory agreement and services. The Board's review of the The Board considered the contractual
sub-advisory contracts is fair and qualifications of Invesco Aim to provide advisory fee rate and the proposed fee
reasonable. these services included the Board's waivers and expense limitations that will
consideration of Invesco Aim's portfolio be in place for the fund through June 30,
THE BOARD'S EVALUATION PROCESS and product review process, various back 2010. The Board also considered the
office support functions provided by services to be provided by the Affiliated
The Board's Investments Committee has Invesco Aim and its affiliates, and Sub-Advisers pursuant to the sub-advisory
established three Sub-Committees that are Invesco Aim's global trading operations. contracts and the services to be provided
responsible for overseeing the management The Board concluded that the nature, by Invesco Aim pursuant to the Fund's
of a number of the series portfolios of extent and quality of the advisory investment advisory agreement, as well as
the AIM Funds. The Fund will be assigned services to be provided to the Fund by the allocation of fees between Invesco Aim
to one of the Sub-Committees. This Invesco Aim are appropriate. and the Affiliated Sub-Advisers pursuant
Sub-Committee structure permits the to the sub-advisory contracts. The Board
Trustees to focus on the performance of In determining whether to approve the noted that the sub-advisory fees have no
the AIM Funds that have been assigned to Fund's investment advisory agreement, the direct effect on the Fund or its
them. The Sub-Committees meet throughout Board considered the prior relationship shareholders, as they are paid by Invesco
the year to review the performance of between Invesco Aim and the AIM Funds, as Aim to the Affiliated Sub-Advisers, and
their assigned funds, and the well as the Board's knowledge of Invesco that Invesco Aim and the Affiliated
Sub-Committees review monthly and Aim's operations, and concluded that it Sub-Advisers are affiliates.
quarterly comparative performance was beneficial to maintain the
information and periodic asset flow data relationship for the Fund, in part, After taking account of the Fund's
for their assigned funds. Over the course because of such knowledge. contractual advisory fee rate, the
of each year, the Sub-Committees meet with contractual sub-advisory fee rate, the
portfolio managers for their assigned B. Nature, Extent and Quality of underlying funds fees and expenses and
funds and other members of management and Services Provided by Affiliated other relevant factors, the Board
review with these individuals the Sub-Advisors concluded that the Fund's advisory and
performance, investment objective(s), sub-advisory fees were fair and
policies, strategies and limitations of The Board reviewed the services to be reasonable.
these funds. provided by the Affiliated Sub-Advisers
under the sub-advisory contracts and the E. Economies of Scale and Breakpoints
In determining to approve the Fund's credentials and experience of the officers
investment advisory agreement and and employees of the Affiliated The Board considered the extent to which
sub-advisory contracts, the Board Sub-Advisers who will provide these there are economies of scale in Invesco
services. The Board concluded that the Aim's provision of advisory services to
nature, extent and quality of the services the Fund. The Board also considered
to be provided by the Affiliated whether the Fund benefits from such
Sub-Advisers economies of scale through contractual
breakpoints in the Fund's advisory fee
schedule. The
26 AIM CORE PLUS BOND FUND continued
</Table>
<Table>
Board noted that the Fund's contractual other AIM Funds and the organizational
advisory fee schedule provides for structure employed by Invesco Aim and its
breakpoints, but that the Fund is being affiliates to provide these services. The
newly launched and has not reached a size Board also considered that these services
for the breakpoints to have any effect. will be provided to the Fund pursuant to
The Board noted that the Fund shares written contracts that are reviewed and
directly in economies of scale through approved on an annual basis by the Board.
lower fees charged by third party service The Board concluded that Invesco Aim and
providers based on the combined size of its affiliates were providing these
all of the AIM Funds and affiliates. services in a satisfactory manner and in
accordance with the terms of their
F. Profitability and Financial contracts, and were qualified to provide
Resources these services to the Fund.
The Board reviewed information from The Board considered the benefits
Invesco Aim concerning the costs of the realized by Invesco Aim and the Affiliated
advisory and other services that Invesco Sub-Advisers as a result of portfolio
Aim and its affiliates provide to the Fund brokerage transactions executed through
and the profitability of Invesco Aim and "soft dollar" arrangements. The Board
its affiliates in providing these noted that soft dollar arrangements shift
services. The Board also reviewed the payment obligation for research and
information concerning the financial execution services from Invesco Aim and
condition of Invesco Aim and its the Affiliated Sub-Advisers to the funds
affiliates. The Board considered the and therefore may reduce Invesco Aim's and
overall profitability of Invesco Aim, as the Affiliated Sub-Advisers' expenses. The
well as the profitability of Invesco Aim Board concluded that Invesco Aim's and the
in connection with managing the Fund. The Affiliated Sub-Advisers' soft dollar
Board noted that Invesco Aim continues to arrangements are appropriate. The Board
operate at a net profit, although recent also concluded that, based on their review
economic factors have reduced the and representations made by the Chief
profitability of Invesco Aim and its Compliance Officer of Invesco Aim, these
affiliates. The Board concluded that the arrangements are consistent with
Fund's fees were fair and reasonable, and regulatory requirements.
that the level of profits realized by
Invesco Aim and its affiliates from The Board considered the fact that the
providing services to the Fund are not Fund's uninvested cash and cash collateral
anticipated to be excessive in light of from any securities lending arrangements
the nature, quality and extent of the may be invested in money market funds
services provided. The Board considered advised by Invesco Aim pursuant to
whether Invesco Aim is financially sound procedures approved by the Board. The
and has the resources necessary to perform Board noted that Invesco Aim will receive
its obligations under the Fund's advisory fees from these affiliated money
investment advisory agreement, and market funds attributable to such
concluded that Invesco Aim has the investments, although Invesco Aim has
financial resources necessary to fulfill contractually agreed to waive through at
these obligations. The Board also least June 30, 2010, the advisory fees
considered whether each Affiliated payable by the Fund in an amount equal to
Sub-Adviser is financially sound and has 100% of the net advisory fee Invesco Aim
the resources necessary to perform its receives from the affiliated money market
obligations under its respective funds with respect to the Fund's
sub-advisory contract, and concluded that investment in the affiliated money market
each Affiliated Sub-Adviser has the funds of uninvested cash, but not cash
financial resources necessary to fulfill collateral. The Board concluded that the
these obligations. Fund's investment of uninvested cash and
cash collateral from any securities
G. Collateral Benefits to Invesco Aim lending arrangements in the affiliated
and its Affiliates money market funds is in the best
interests of the Fund and its
The Board considered various other shareholders.
benefits received by Invesco Aim and its
affiliates resulting from Invesco Aim's
relationship with the Fund, including the
fees received by Invesco Aim and its
affiliates for their provision of
administrative, transfer agency and
distribution services to the Fund. The
Board considered the performance of
Invesco Aim and its affiliates in
providing these services to
27 AIM CORE PLUS BOND FUND
</Table>
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for period June 3, 2009 (commencement
date) through August 31, 2009:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
----------------------------
Qualified Dividend Income* 0.00%
Corporate Dividends Received Deduction* 0.00%
U.S. Treasury Obligations* 6.39%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the period.
28 AIM CORE PLUS BOND FUND
TRUSTEES AND OFFICERS
The address of each trustee and officer of AIM Counselor Series Trust (the
"Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each
trustee oversees 105 portfolios in the AIM Funds complex. The trustees serve for
the life of the Trust, subject to their earlier death, incapacitation,
resignation, retirement or removal as more specifically provided in the Trust's
organizational documents. Each officer serves for a one year term or until their
successors are elected and qualified. Column two below includes length of time
served with predecessor entities, if any.
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED PERSONS
- ------------------------------------------------------------------------------------------------------------------------------------
Martin L. Flanagan(1) -- 1960 2007 Executive Director, Chief Executive Officer and President, None
Trustee Invesco Ltd. (ultimate parent of Invesco Aim and a global
investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Trustee, The AIM
Family of Funds(R); Vice Chairman, Investment Company
Institute; and Member of Executive Board, SMU Cox School of
Business
Formerly: Director, Chairman, Chief Executive Officer and
President, IVZ Inc. (holding company), INVESCO Group
Services, Inc. (service provider) and Invesco North American
Holdings, Inc. (holding company); Director, Chief Executive
Officer and President, Invesco Holding Company Limited
(parent of Invesco Aim and a global investment management
firm); Director, Invesco Ltd. and Chairman, Investment
Company Institute
- ------------------------------------------------------------------------------------------------------------------------------------
Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None
Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and
Principal Executive Officer President, Invesco Aim Advisors, Inc. and 1371 Preferred
Inc. (holding company); Director, Chairman, Chief Executive
Officer and President, Invesco Aim Management Group, Inc.
(financial services holding company) and Invesco Aim Capital
Management, Inc. (registered investment advisor); Director
and President, INVESCO Funds Group, Inc. (registered
investment advisor and registered transfer agent) and AIM GP
Canada Inc. (general partner for limited partnerships);
Director, Invesco Aim Distributors, Inc. (registered broker
dealer); Director and Chairman, Invesco Aim Investment
Services, Inc. (registered transfer agent) and INVESCO
Distributors, Inc. (registered broker dealer); Director,
President and Chairman, INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (holding company); Chief
Executive Officer, AIM Trimark Corporate Class Inc.
(corporate mutual fund company) and AIM Trimark Canada Fund
Inc. (corporate mutual fund company); Director and Chief
Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee
(registered investment advisor and registered transfer
agent) and Invesco Trimark Dealer Inc. (registered broker
dealer); Trustee, President and Principal Executive Officer,
The AIM Family of Funds(R) (other than AIM Treasurer's
Series Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds(R) (AIM
Treasurer's Series Trust and Short-Term Investments Trust
only); and Manager, Invesco PowerShares Capital Management
LLC
Formerly: President, Invesco Trimark Dealer Inc.; Director
and President, AIM Trimark Corporate Class Inc. and AIM
Trimark Canada Fund Inc.; Director and President, Invesco
Trimark Ltd./Invesco Trimark Ltee; Senior Managing Director,
Invesco Holding Company Limited; Trustee and Executive Vice
President, Tax-Free Investments Trust; Director and
Chairman, Fund Management Company (former registered broker
dealer); President and Principal Executive Officer, The AIM
Family of Funds(R) (AIM Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free Investments Trust only);
President, AIM Trimark Global Fund Inc. and AIM Trimark
Canada Fund Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited (insurance
Trustee and Chair consulting company) company); Captaris, Inc.
(unified messaging
provider); and
Investment Company
Institute
- ------------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired None
Trustee
Formerly: Director, Badgley Funds, Inc.
(registered investment company) (2 portfolios)
- ------------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Board of Governors,
Trustee firm) Western Golf
Association/Evans
Scholars Foundation and
Executive Committee,
United States Golf
Association
- ------------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business Board of Nature's
Trustee corporations, including the Boss Group Ltd. (private Sunshine Products, Inc.
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company), and Homeowners of America
Holding Corporation/Homeowners of America Insurance Company
(property casualty company)
Formerly: Director, CompuDyne Corporation (provider of
product and services to the public security market);
Director, President and Chief Executive Officer, Volvo Group
North America, Inc.; Director, Annuity and Life Re
(Holdings), Ltd. (reinsurance company); Senior Vice
President, AB Volvo; Director of various public and private
corporations
- ------------------------------------------------------------------------------------------------------------------------------------
Jack M. Fields -- 1952 2003 Chief Executive Officer, Twenty First Century Group, Inc. Administaff
Trustee (government affairs company); and Owner and Chief Executive
Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate
entertainment), Discovery Global Education Fund (non-profit)
and Cross Timbers Quail Research Ranch (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company)
- ------------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Tang
Trustee Funds (16 portfolios)
- ------------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Lewis F. Pennock -- 1942 2003 Partner, law firm of Pennock & Cooper None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Larry Soll -- 1942 1997 Retired None
Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Raymond Stickel, Jr. -- 1944 2005 Retired None
Trustee
Formerly: Director, Mainstay VP Series Funds, Inc.
(25 portfolios)
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Mr. Flanagan is considered an interested person of the Trust because he is
an officer of the advisor to the Trust, and an officer and a director of
Invesco Ltd., ultimate parent of the advisor to the Trust.
(2) Mr. Taylor is considered an interested person of the Trust because he is an
officer and a director of the advisor to, and a director of the principal
underwriter of, the Trust.
T-1
TRUSTEES AND OFFICERS - (CONTINUED)
<Table>
<Caption>
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER
POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S)
TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family N/A
Senior Vice President and of Funds(R) Formerly: Director of Compliance and Assistant
Senior Officer General Counsel, ICON Advisers, Inc.; Financial Consultant,
Merrill Lynch; General Counsel and Director of Compliance,
ALPS Mutual Funds, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General N/A
Senior Vice President, Chief Counsel, Invesco Aim Management Group, Inc., Invesco Aim
Legal Officer and Secretary Advisors, Inc. and Invesco Aim Capital Management, Inc.;
Director, Senior Vice President and Secretary, Invesco Aim
Distributors, Inc.; Director, Vice President and Secretary,
Invesco Aim Investment Services, Inc. and INVESCO
Distributors, Inc.; Director and Vice President, INVESCO
Funds Group, Inc.; Senior Vice President, Chief Legal
Officer and Secretary, The AIM Family of Funds(R); and
Manager, Invesco PowerShares Capital Management LLC
Formerly: Director, Vice President and Secretary, Fund
Management Company; Vice President, Invesco Aim Capital
Management, Inc.; Chief Operating Officer and General
Counsel, Liberty Ridge Capital, Inc. (an investment
adviser); Vice President and Secretary, PBHG Funds (an
investment company); Vice President and Secretary, PBHG
Insurance Series Fund (an investment company); Chief
Operating Officer, General Counsel and Secretary, Old Mutual
Investment Partners (a broker-dealer); General Counsel and
Secretary, Old Mutual Fund Services (an administrator);
General Counsel and Secretary, Old Mutual Shareholder
Services (a shareholder servicing center); Executive Vice
President, General Counsel and Secretary, Old Mutual
Capital, Inc. (an investment adviser); and Vice President
and Secretary, Old Mutual Advisors Funds (an investment
company)
- ------------------------------------------------------------------------------------------------------------------------------------
Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice N/A
Vice President President, The AIM Family of Funds(R)
Formerly: Senior Vice President, Invesco Aim Management
Group, Inc.; Senior Vice President and Chief Compliance
Officer, Invesco Aim Advisors, Inc. and The AIM Family of
Funds(R); Vice President and Chief Compliance Officer,
Invesco Aim Capital Management, Inc. and Invesco Aim
Distributors, Inc.; Vice President, Invesco Aim Investment
Services, Inc. and Fund Management Company
- ------------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, N/A
Vice President Invesco Ltd.; Director, Invesco Holding Company Limited and
INVESCO Funds Group, Inc.; Director and Executive Vice
President, IVZ, Inc., Invesco Group Services, Inc., Invesco
North American Holdings, Inc. and Invesco Investments
(Bermuda) Ltd.; and Vice President, The AIM Family of
Funds(R)
Formerly: Senior Managing Director and Secretary, Invesco
North American Holdings, Inc.; Vice President and Secretary,
IVZ, Inc. and Invesco Group Services, Inc.; Senior Managing
Director and Secretary, Invesco Holding Company Limited;
Director, Senior Vice President, Secretary and General
Counsel, Invesco Aim Management Group, Inc. and Invesco Aim
Advisors, Inc.; Senior Vice President, Invesco Aim
Distributors, Inc.; Director, General Counsel and Vice
President, Fund Management Company; Vice President, Invesco
Aim Capital Management, Inc. and Invesco Aim Investment
Services, Inc.; Senior Vice President, Chief Legal Officer
and Secretary, The AIM Family of Funds(R); Director and Vice
President, INVESCO Distributors, Inc.; and Chief Executive
Officer and President, INVESCO Funds Group, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Sheri Morris -- 1964 2003 Vice President, Treasurer and Principal Financial Officer, N/A
Vice President, Treasurer and The AIM Family of Funds(R); and Vice President, Invesco Aim
Principal Financial Officer Advisors, Inc., Invesco Aim Capital Management, Inc. and
Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer,
The AIM Family of Funds(R) and Assistant Vice President,
Invesco Aim Advisors, Inc., Invesco Aim Capital Management,
Inc. and Invesco Aim Private Asset Management, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash N/A
Vice President Management Group; Vice President, Invesco Institutional
(N.A.), Inc. (registered investment advisor); Director of
Cash Management and Senior Vice President, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.;
Executive Vice President, Invesco Aim Distributors, Inc.;
Senior Vice President, Invesco Aim Management Group, Inc.;
Vice President, Invesco Institutional (N.A.), Inc.
(registered investment advisor); and Director, Invesco
Mortgage Capital Inc.; Vice President, The AIM Family of
Funds(R) (other than AIM Treasurer's Series Trust and
Short-Term Investments Trust); and President and Principal
Executive Officer, The AIM Family of Funds(R) (AIM
Treasurer's Series Trust and Short-Term Investments Trust
only)
Formerly: President and Principal Executive Officer,
Tax-Free Investments Trust; Director and President, Fund
Management Company; Chief Cash Management Officer and
Managing Director, Invesco Aim Capital Management, Inc.; and
Vice President, Invesco Aim Advisors, Inc. and The AIM
Family of Funds(R) (AIM Treasurer's Series Trust, Short-Term
Investments Trust and Tax-Free Investments Trust only)
- ------------------------------------------------------------------------------------------------------------------------------------
Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim N/A
Anti-Money Laundering Advisors, Inc., Invesco Aim Capital Management, Inc.,
Compliance Officer Invesco Aim Distributors, Inc., Invesco Aim Investment
Services, Inc., Invesco Aim Private Asset Management, Inc.
and The AIM Family of Funds(R)
Formerly: Anti-Money Laundering Compliance Officer, Fund
Management Company; and Manager of the Fraud Prevention
Department, Invesco Aim Investment Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; N/A
Chief Compliance Officer Senior Vice President and Chief Compliance Officer, Invesco
Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.;
Chief Compliance Officer, The AIM Family of Funds(R),
Invesco Global Asset Management (N.A.), Inc. (registered
investment advisor), Invesco Institutional (N.A.), Inc.,
(registered investment advisor), INVESCO Private Capital
Investments, Inc. (holding company), Invesco Private
Capital, Inc. (registered investment advisor) and Invesco
Senior Secured Management, Inc. (registered investment
advisor); and Vice President, Invesco Aim Distributors, Inc.
and Invesco Aim Investment Services, Inc.
Formerly: Vice President, Invesco Aim Capital Management,
Inc. and Fund Management Company; and Global Head of Product
Development, AIG-Global Investment Group, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
The Statement of Additional Information of the Trust includes additional
information about the Fund's Trustees and is available upon request, without
charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for
information on the Fund's sub-advisors.
<Table>
OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS
11 Greenway Plaza Invesco Aim Advisors, Inc. Invesco Aim Distributors, Inc. PricewaterhouseCoopers LLP
Suite 100 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
Houston, TX 77046-1173 Suite 100 Suite 100 Suite 2900
Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678
COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Stradley Ronon Stevens & INDEPENDENT TRUSTEES Invesco Aim Investment Services, Inc. State Street Bank and
Young, LLP Kramer, Levin, Naftalis & Frankel LLP P.O. Box 4739 Trust Company
2600 One Commerce Square 1177 Avenue of the Americas Houston, TX 77210-4739 225 Franklin
Philadelphia, PA 19103 New York, NY 10036-2714 Boston, MA 02110-2801
</Table>
T-2
<Table>
[GO PAPERLESS
GRAPHIC]
- ------------------------------------------------------------------------------------------------------------------------------------
GO PAPERLESS WITH EDELIVERY
Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all
about eeees:
o ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of o EFFICIENT. Stop waiting for regular mail. Your documents will
trees used to produce paper. be sent via email as soon as they're available.
o ECONOMICAL. Help reduce your fund's printing and delivery o EASY. Download, save and print files using your home computer
expenses and put more capital back in your fund's returns. with a few clicks of your mouse.
This service is provided by Invesco Aim Investment Services, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
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 Aim Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you
individual copies for each account within thirty 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 invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select
your Fund from the drop-down menu and click on Complete Quarterly Holdings. 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 202 942 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 811-09913 and 333-36074.
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 on the Invesco Aim
website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. 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, 2009,
is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy
Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov.
If used after January 20, 2010, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for
the most recent quarter-end. Invesco Aim- SERVICE MARK - is a service mark of Invesco Aim Management Group, Inc. Invesco Aim
Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital
Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment
advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for
information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds,
exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco
Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
It is anticipated that on or about the end of the fourth quarter of 2009, Invesco Aim Advisors, Inc.,
Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco Global Asset [INVESCO AIM LOGO]
Management (N.A.), Inc. will be merged into Invesco Institutional (N.A.), Inc., and the consolidated adviser - SERVICE MARK -
firm will be renamed Invesco Advisers, Inc. Additional information will be posted at invescoaim.com on or
about the end of the fourth quarter of 2009.
invescoaim.com CPB-AR-1 Invesco Aim Distributors, Inc.
</Table>
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the Registrant had
adopted a code of ethics (the "Code") that applies to the Registrant's
principal executive officer ("PEO") and principal financial officer
("PFO"). There were no amendments to the Code 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.
The Board of Trustees has determined that the Registrant has at least one
audit committee financial expert serving on its Audit Committee. The Audit
Committee financial expert is Raymond Stickel, Jr. Mr. Stickel is
"independent" within the meaning of that term as used in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
FEES BILLED BY PWC RELATED TO THE REGISTRANT
PWC billed the Registrant aggregate fees for services rendered to the
Registrant for the last two fiscal years as follows:
Percentage of Fees
Billed Applicable Percentage of Fees
to Non-Audit Billed Applicable to
Services Provided Non-Audit Services
Fees Billed for for fiscal year end Provided for fiscal
Services Rendered 2009 Pursuant to Fees Billed for year end 2008
to the Registrant Waiver of Services Rendered to Pursuant to Waiver
for fiscal year end Pre-Approval the Registrant for of Pre-Approval
2009 Requirement(1) fiscal year end 2008 Requirement(1)
------------------- ------------------- -------------------- --------------------
Audit Fees $296,296 N/A $259,468 N/A
Audit-Related Fees (2) $ 6,000 0% $ 0 0%
Tax Fees(3) $ 59,206 0% $ 64,876 0%
All Other Fees $ 0 0% $ 0 0%
-------- --------
Total Fees $361,502 0% $324,344 0%
PWC billed the Registrant aggregate non-audit fees of $65,206 for the fiscal
year ended 2009, and $64,876 for the fiscal year ended 2008, for non-audit
services rendered to the Registrant.
- ----------
(1) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Registrant at the
time of engagement, (ii) the aggregate amount of all such services provided
is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant to PWC during a fiscal year; and (iii) such services are
promptly brought to the attention of the Registrant's Audit Committee and
approved by the Registrant's Audit Committee prior to the completion of the
audit.
(2) Audit-Related Fees for the fiscal year ended August 31, 2009 includes fees
billed for completing agreed-upon procedures related to fund mergers.
(3) Tax fees for the fiscal year end August 31, 2009 includes fees billed for
reviewing tax returns and consultation services. Tax fees for the fiscal
year end August 31, 2008 includes fees billed for reviewing tax returns and
consultation services.
FEES BILLED BY PWC RELATED TO INVESCO AIM AND INVESCO AIM AFFILIATES
PWC billed Invesco Aim Advisers, Inc. ("Invesco Aim"), the Registrant's
adviser, and any entity controlling, controlled by or under common control with
Invesco Aim that provides ongoing services to the Registrant ("Invesco Aim
Affiliates") aggregate fees for pre-approved non-audit services rendered to
Invesco Aim and Invesco Aim Affiliates for the last two fiscal years as follows:
Fees Billed for Fees Billed for
Non-Audit Services Non-Audit Services
Rendered to Invesco Percentage of Fees Rendered to Invesco Percentage of Fees
Aim and Invesco Aim Billed Applicable to Aim and Invesco Aim Billed Applicable to
Affiliates for fiscal Non-Audit Services Affiliates for Non-Audit Services
year end 2009 That Provided for fiscal fiscal year end 2008 Provided for fiscal
Were Required year end 2009 That Were Required year end 2008
to be Pre-Approved Pursuant to Waiver to be Pre-Approved Pursuant to Waiver of
by the Registrant's of Pre-Approval by the Registrant's Pre-Approval
Audit Committee Requirement(1) Audit Committee Requirement(1)
--------------------- -------------------- -------------------- ---------------------
Audit-Related Fees $0 0% $0 0%
Tax Fees $0 0% $0 0%
All Other Fees $0 0% $0 0%
--- ---
Total Fees(2) $0 0% $0 0%
- ----------
(1) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Registrant at the
time of engagement, (ii) the aggregate amount of all such services provided
is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant, Invesco Aim and Invesco Aim Affiliates to PWC during a fiscal
year; and (iii) such services are promptly brought to the attention of the
Registrant's Audit Committee and approved by the Registrant's Audit
Committee prior to the completion of the audit.
(2) Including the fees for services not required to be pre-approved by the
registrant's audit committee, PWC billed Invesco Aim and Invesco Aim
Affiliates aggregate non-audit fees of $0 for the fiscal year ended 2009,
and $0 for the fiscal year ended 2008, for non-audit services rendered to
Invesco Aim and Invesco Aim Affiliates.
The Audit Committee also has considered whether the provision of non-audit
services that were rendered to Invesco Aim and Invesco Aim Affiliates that
were not required to be pre-approved pursuant to SEC regulations, if any,
is compatible with maintaining PWC's independence. To the extent that such
services were provided, the Audit Committee determined that the provision
of such services is compatible with PWC maintaining independence with
respect to the Registrant.
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the AIM Funds (the "Funds")
Last Amended September 18, 2006
STATEMENT OF PRINCIPLES
Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and
Exchange Commission ("SEC") ("Rules"), the Audit Committees of the Funds' (the
"Audit Committee") Board of Trustees (the "Board") are responsible for the
appointment, compensation and oversight of the work of independent accountants
(an "Auditor"). As part of this responsibility and to assure that the Auditor's
independence is not impaired, the Audit Committees pre-approve the audit and
non-audit services provided to the Funds by each Auditor, as well as all
non-audit services provided by the Auditor to the Funds' investment adviser and
to affiliates of the adviser that provide ongoing services to the Funds
("Service Affiliates") if the services directly impact the Funds' operations or
financial reporting. The SEC Rules also specify the types of services that an
Auditor may not provide to its audit client. The following policies and
procedures comply with the requirements for pre-approval and provide a mechanism
by which management of the Funds may request and secure pre-approval of audit
and non-audit services in an orderly manner with minimal disruption to normal
business operations.
Proposed services either may be pre-approved without consideration of specific
case-by-case services by the Audit Committees ("general pre-approval") or
require the specific pre-approval of the Audit Committees ("specific
pre-approval"). As set forth in these policies and procedures, unless a type of
service has received general pre-approval, it will require specific pre-approval
by the Audit Committees. Additionally, any fees exceeding 110% of estimated
pre-approved fee levels provided at the time the service was pre-approved will
also require specific approval by the Audit Committees before payment is made.
The Audit Committees will also consider the impact of additional fees on the
Auditor's independence when determining whether to approve any additional fees
for previously pre-approved services.
The Audit Committees will annually review and generally pre-approve the services
that may be provided by each Auditor without obtaining specific pre-approval
from the Audit Committee. The term of any general pre-approval runs from the
date of such pre-approval through September 30th of the following year, unless
the Audit Committees consider a different period and state otherwise. The Audit
Committees will add to or subtract from the list of general pre-approved
services from time to time, based on subsequent determinations.
The purpose of these policies and procedures is to set forth the guidelines to
assist the Audit Committees in fulfilling their responsibilities.
DELEGATION
The Audit Committees may from time to time delegate pre-approval authority to
one or more of its members who are Independent Trustees. All decisions to
pre-approve a service by a delegated member shall be reported to the Audit
Committee at its next quarterly meeting.
AUDIT SERVICES
The annual audit services engagement terms will be subject to specific
pre-approval of the Audit Committees. Audit services include the annual
financial statement audit and other procedures such as tax provision work that
is required to be performed by the independent auditor to be able to form an
opinion on the Funds' financial statements. The Audit Committee will obtain,
review and consider sufficient information concerning the proposed Auditor to
make a reasonable evaluation of the Auditor's qualifications and independence.
In addition to the annual Audit services engagement, the Audit Committees may
grant either general or specific pre-approval of other audit services, which are
those services that only the independent auditor reasonably can provide. Other
Audit services may include services such as issuing consents for the
inclusion of audited financial statements with SEC registration statements,
periodic reports and other documents filed with the SEC or other documents
issued in connection with securities offerings.
NON-AUDIT SERVICES
The Audit Committees may provide either general or specific pre-approval of any
non-audit services to the Funds and its Service Affiliates if the Audit
Committees believe that the provision of the service will not impair the
independence of the Auditor, is consistent with the SEC's Rules on auditor
independence, and otherwise conforms to the Audit Committee's general principles
and policies as set forth herein.
AUDIT-RELATED SERVICES
"Audit-related services" are assurance and related services that are reasonably
related to the performance of the audit or review of the Fund's financial
statements or that are traditionally performed by the independent auditor.
Audit-related services include, among others, accounting consultations related
to accounting, financial reporting or disclosure matters not classified as
"Audit services"; assistance with understanding and implementing new accounting
and financial reporting guidance from rulemaking authorities; and agreed-upon
procedures related to mergers, compliance with ratings agency requirements and
interfund lending activities.
TAX SERVICES
"Tax services" include, but are not limited to, the review and signing of the
Funds' federal tax returns, the review of required distributions by the Funds
and consultations regarding tax matters such as the tax treatment of new
investments or the impact of new regulations. The Audit Committee will
scrutinize carefully the retention of the Auditor in connection with a
transaction initially recommended by the Auditor, the major business purpose of
which may be tax avoidance or the tax treatment of which may not be supported in
the Internal Revenue Code and related regulations. The Audit Committee will
consult with the Funds' Treasurer (or his or her designee) and may consult with
outside counsel or advisors as necessary to ensure the consistency of Tax
services rendered by the Auditor with the foregoing policy.
No Auditor shall represent any Fund or any Service Affiliate before a tax court,
district court or federal court of claims.
Under rules adopted by the Public Company Accounting Oversight Board and
approved by the SEC, in connection with seeking Audit Committee pre-approval of
permissible Tax services, the Auditor shall:
1. Describe in writing to the Audit Committees, which writing may be in
the form of the proposed engagement letter:
a. The scope of the service, the fee structure for the
engagement, and any side letter or amendment to the
engagement letter, or any other agreement between the
Auditor and the Fund, relating to the service; and
b. Any compensation arrangement or other agreement, such as a
referral agreement, a referral fee or fee-sharing
arrangement, between the Auditor and any person (other than
the Fund) with respect to the promoting, marketing, or
recommending of a transaction covered by the service;
2. Discuss with the Audit Committees the potential effects of the
services on the independence of the Auditor; and
3. Document the substance of its discussion with the Audit Committees.
ALL OTHER AUDITOR SERVICES
The Audit Committees may pre-approve non-audit services classified as "All other
services" that are not categorically prohibited by the SEC, as listed in Exhibit
1 to this policy.
PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS
Pre-approval of estimated fees or established amounts for services to be
provided by the Auditor under general or specific pre-approval policies will be
set periodically by the Audit Committees. Any proposed fees exceeding 110% of
the maximum estimated pre-approved fees or established amounts for pre-approved
audit and non-audit services will be reported to the Audit Committees at the
quarterly Audit Committees meeting and will require specific approval by the
Audit Committees before payment is made. The Audit Committee will always factor
in the overall relationship of fees for audit and non-audit services in
determining whether to pre-approve any such services and in determining whether
to approve any additional fees exceeding 110% of the maximum pre-approved fees
or established amounts for previously pre-approved services.
PROCEDURES
On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit
Committees for general pre-approval, a list of non-audit services that the Funds
or Service Affiliates of the Funds may request from the Auditor. The list will
describe the non-audit services in reasonable detail and will include an
estimated range of fees and such other information as the Audit Committee may
request.
Each request for services to be provided by the Auditor under the general
pre-approval of the Audit Committees will be submitted to the Funds' Treasurer
(or his or her designee) and must include a detailed description of the services
to be rendered. The Treasurer or his or her designee will ensure that such
services are included within the list of services that have received the general
pre-approval of the Audit Committees. The Audit Committees will be informed at
the next quarterly scheduled Audit Committees meeting of any such services for
which the Auditor rendered an invoice and whether such services and fees had
been pre-approved and if so, by what means.
Each request to provide services that require specific approval by the Audit
Committees shall be submitted to the Audit Committees jointly by the Fund's
Treasurer or his or her designee and the Auditor, and must include a joint
statement that, in their view, such request is consistent with the policies and
procedures and the SEC Rules.
Each request to provide tax services under either the general or specific
pre-approval of the Audit Committees will describe in writing: (i) the scope of
the service, the fee structure for the engagement, and any side letter or
amendment to the engagement letter, or any other agreement between the Auditor
and the audit client, relating to the service; and (ii) any compensation
arrangement or other agreement between the Auditor and any person (other than
the audit client) with respect to the promoting, marketing, or recommending of a
transaction covered by the service. The Auditor will discuss with the Audit
Committees the potential effects of the services on the Auditor's independence
and will document the substance of the discussion.
Non-audit services pursuant to the de minimis exception provided by the SEC
Rules will be promptly brought to the attention of the Audit Committees for
approval, including documentation that each of the conditions for this
exception, as set forth in the SEC Rules, has been satisfied.
On at least an annual basis, the Auditor will prepare a summary of all the
services provided to any entity in the investment company complex as defined in
section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of
the engagement and the fees associated with those services.
The Audit Committees have designated the Funds' Treasurer to monitor the
performance of all services provided by the Auditor and to ensure such services
are in compliance with these policies and procedures. The Funds' Treasurer will
report to the Audit Committee on a periodic basis as to the results of such
monitoring. Both the Funds' Treasurer and management of AIM will immediately
report to the chairman of the Audit Committee any breach of these policies and
procedures that comes to the attention of the Funds' Treasurer or senior
management of AIM.
EXHIBIT 1 TO PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND
PROCEDURES
CONDITIONALLY PROHIBITED NON-AUDIT SERVICES (NOT PROHIBITED IF THE FUND CAN
REASONABLY CONCLUDE THAT THE RESULTS OF THE SERVICE WOULD NOT BE SUBJECT TO
AUDIT PROCEDURES IN CONNECTION WITH THE AUDIT OF THE FUND'S FINANCIAL
STATEMENTS)
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions, or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
CATEGORICALLY PROHIBITED NON-AUDIT SERVICES
- Management functions
- Human resources
- Broker-dealer, investment adviser, or investment banking services
- Legal services
- Expert services unrelated to the audit
- Any service or product provided for a contingent fee or a commission
- Services related to marketing, planning, or opining in favor of the
tax treatment of confidential transactions or aggressive tax position
transactions, a significant purpose of which is tax avoidance
- Tax services for persons in financial reporting oversight roles at the
Fund
- Any other service that the Public Company Oversight Board determines
by regulation is impermissible.
PwC advised the Funds' Audit Committee that PwC had identified following
matter for consideration under the SEC's auditor independence rules.
PwC became aware that certain aspects of investment advisory services
provided by a PwC network member Firm's Wealth Advisory Practice to its
clients (generally high net worth individuals not associated with Invesco)
were inconsistent with the SEC's auditor independence requirements of the
SEC. The technical violations occurred as a result of professionals of the
Wealth Advisory Practice making a single recommendation of an audit
client's product to its clients rather than also identifying one or more
suitable alternatives for the Wealth Advisory Practice's client to
consider. The Wealth Advisory Practice also received commissions from the
fund manager. With respect to Invesco and its affiliates, there were 33
cases of single product recommendation and 20 cases of commissions received
totaling approximately (pound)7,000. These violations occurred over a two
year period and ended in November 2007.
It should be noted that at no time did The Wealth Advisory Practice
recommend products on behalf Invesco and its affiliates. Additionally,
members of the audit engagement team were not aware of these violations or
services; the advice provided was based on an understanding of the
investment objectives of the clients of the Wealth Advisory Practice and
not to promote the Company and its affiliates, and the volume and nature of
the violations were insignificant. Although PwC received commissions, PwC
derived no economic benefit from the commission as any commissions received
were deducted from the time based fees charged to the investor client and
created no incentive for PwC to recommend the investment.
PwC advised the Audit Committee that it believes its independence had not
been adversely affected as it related to the audits of the Funds by this
matter. In reaching this conclusion, PwC noted that during the time of its
audits, the engagement team was not aware of the services provided and
noted the insignificance of the services provided. Based on the foregoing,
PwC did not believe this matter affected PwC's ability to act objectively
and impartially and to issue a report on financial statements as the Funds'
independent auditor,
and, believes that a reasonable investor with knowledge of all the facts
would agree with this conclusion.
Based upon PwC's review, discussion and representations above, the audit
committee, in its business judgment, concurred with PwC's conclusions in
relation to its independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Investments in securities of unaffiliated issuers is included as part
of the reports to stockholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 11. CONTROLS AND PROCEDURES.
(a) As of December 15, 2009, an evaluation was performed under the supervision
and with the participation of the officers of the Registrant, including the
PEO and PFO, to assess the effectiveness of the Registrant's disclosure
controls and procedures, as that term is defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the "Act"), as amended. Based on that
evaluation, the Registrant's officers, including the PEO and PFO, concluded
that, as of December 15, 2009, the Registrant's disclosure controls and
procedures were reasonably designed to ensure: (1) that information
required to be disclosed by the Registrant on Form N-CSR is recorded,
processed, summarized and reported within the time periods specified by the
rules and forms of the Securities and Exchange Commission; and (2) that
material information relating to the Registrant is made known to the PEO
and PFO as appropriate to allow timely decisions regarding required
disclosure.
(b) There have been no changes in the Registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to
materially affect, the Registrant's internal control over financial
reporting.
ITEM 12. EXHIBITS.
12(a)(1) Code of Ethics.
12(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940.
12(a)(3) Not applicable.
12(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company Act
of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Counselor Series Trust
By: /s/ Philip A. Taylor
------------------------------------
Philip A. Taylor
Principal Executive Officer
Date: January 29, 2010
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: January 29, 2010
By: /s/ Sheri Morris
------------------------------------
Sheri Morris
Principal Financial Officer
Date: January 29, 2010
EXHIBIT INDEX
12(a)(1) Code of Ethics.
12(a)(2) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(a) under the Investment Company Act
of 1940.
12(a)(3) Not applicable.
12(b) Certifications of principal executive officer and principal financial
officer as required by Rule 30a-2(b) under the Investment Company
Act of 1940.