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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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: 8/31/08
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================================================================================
Item 1. Reports to Stockholders.
[INVESCO AIM LOGO] AIM FLOATING RATE FUND
- SERVICE MARK - Annual Report to Shareholders o August 31, 2008
[MOUNTAIN GRAPHIC]
2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Long-Term Fund Performance
8 Supplemental Information
9 Schedule of Investments
22 Financial Statements
26 Notes to Financial Statements
32 Financial Highlights
34 Auditor's Report
35 Fund Expenses
36 Approval of Investment Advisory Agreement
40 Tax Information
41 Results of Proxy
42 Trustees and Officers
Dear Shareholder:
In previous reports, I've talked with you about short-term market volatility. I'd like to take this
opportunity to update you on recent market developments and provide some perspective and encouragement to
fellow long-term investors.
[TAYLOR
PHOTO] MARKET OVERVIEW
About a year ago or so, we saw warning signs of increasing economic ills -- a weakening housing market,
rising inflation and slowing job growth, among others. Nonetheless, U.S. equity markets were performing
Philip Taylor relatively well. But as the year progressed, the housing market deteriorated, energy prices rose,
unemployment increased and the credit crunch grew more widespread.
In response, the U.S. Federal Reserve cut short-term interest rate targets to stimulate economic growth and
expand market liquidity.(1) Congress and the president worked together to enact an economic stimulus plan, one facet of which was to
provide more than 112 million taxpayers with $92 billion in tax rebates.(2) Historically, actions such as these have stimulated
economic growth. Unfortunately, other factors were simultaneously at work behind the scenes, and the market began to reveal the
strain of those factors.
HOW WE GOT HERE
The market stresses we saw over the past year were the result of years of lax lending associated with the recent housing boom.
Mortgage loans of questionable quality were bundled into hard-to-value securities that were sold to, and traded among, financial
institutions. The value of those securities declined; more institutions sought to sell them and fewer institutions were willing to
buy them. As a result, financial institutions' access to credit declined and the value of their holdings declined -- preventing
normal trading among banks and other financial institutions.
In October 2008, Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to
purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in
the last half century.
INVESTING IN A VOLATILE MARKET
Whether or not markets recover in the short term, the kind of volatility we've seen of late is a good reminder that in times of
market uncertainty, it's wise to stay true to three timeless investing principles:
o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. I urge you to stick to your
investment plan and stay focused on your long-term goals.
o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of
complementary asset classes may potentially cushion your portfolio against excessive volatility.
o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes
viewing market volatility as a matter of course, not a reason to panic.
That leads me to a fourth principle we believe may be critical to your success: Work with a trusted financial advisor. An
experienced advisor who knows your goals and situation can be your most valuable asset, particularly during times of market
volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course.
Recent market volatility has been disconcerting for everyone. Remember, however, that many of history's significant buying
opportunities were the result of short-term economic crises that, in their time, were considered unprecedented. I believe current
market volatility and uncertainty may represent a buying opportunity for patient, long-term investors. Invesco Aim's portfolio
managers are working diligently on your behalf to capitalize on this situation.
OUR NEW BRAND IDENTITY
While market conditions are obviously at the top of everyone's mind, there are some significant changes I want to share with you: We
have a new name and a new brand -- Invesco Aim.
Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers with $450 billion
in assets under management as of August 31, 2008. Invesco has 5,300 employees in 13 investment centers worldwide serving clients in
100 countries. This provides you:
o Diversified investment strategies from distinct management teams around the globe.
o A range of investment products to help you achieve your financial goals.
o The peace of mind professional asset management and a diversified investment portfolio can provide.
While our name may have changed, our commitment to putting shareholders first, helping clients achieve their investment goals and
providing excellent customer service will never change.
If you have questions about this report or your account, please contact one of our client service representatives at 800 959
4246.
Thank you for your continued confidence, and we look forward to serving you.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
October 20, 2008
(1) U.S. Federal Reserve Board;
(2) U.S. Department of the Treasury
2 AIM FLOATING RATE FUND
Dear Fellow Shareholders:
As I write this letter, turbulent financial markets are causing considerable investor anxiety, reminding us
again that markets are cyclical and the correction of excess is often painful, at least in the short term.
Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment
[CROCKETT discipline. We continue to put your interests first in the effort to improve investment performance,
PHOTO] contain shareholder costs and uphold the highest ethical standards.
We remain enthusiastic about the global reach and investment expertise that Invesco, a leading independent
Bruce Crockett global investment management company, brings to the management of AIM Funds as the parent company of the
advisors. The diverse investment strategies deployed throughout the worldwide network of Invesco investment
centers has helped strengthen the management of many AIM Funds. The rebranding of the Funds' management company as Invesco Aim was
followed by the launch of an upgraded, investor-friendly website (invescoaim.com); a new mountain logo using a Himalayan peak to
symbolize stability, endurance, strength and longevity; and a new ad campaign. Emphasizing Invesco Aim's focus and investment
quality, the ads will appear in financial publications such as Barron's and Investment News through the end of 2008.
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."
We have recently completed another active proxy voting season during which we acted on your behalf to double the number of votes
in favor of separating the roles of chairman and CEO at the companies whose shares your Funds hold. We also continued to support the
movement for shareholders to have a bigger role in approving executive compensation, initiatives known as "say on pay." Like
virtually all other mutual fund complexes, AIM Funds abstain from voting on social issues as a matter of policy, and I would be
interested to hear your thoughts on this policy.
As always, you are welcome to email your questions or comments to me at bruce@brucecrockett.com. The dialogue that has been
established in this way has been instructive for your Board, and we want it to continue. Although the production schedule for Fund
annual reports and prospectuses allows me to write these letters of general report and response just twice a year, please be assured
that your comments are received, welcomed and heard in the interim.
We look forward to hearing from you and to representing you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
October 20, 2008
3 AIM FLOATING RATE FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= o Recovery and loan-to-value. These
PERFORMANCE SUMMARY factors focus on further examination of
the default probability and the rate of
For the fiscal year ended August 31, 2008, Class A Shares of AIM Floating Rate Fund, recovery associated with loans.
excluding sales charges, underperformed the Fund's broad market and style-specific
indexes. The Fund invests in lower rated fixed-income instruments, primarily senior The portfolio is constructed using a
secured corporate loans, and this asset class generally underperformed investment-grade conservative bias to help limit credit
bonds, represented by the Lehman Brothers U.S. Aggregate Bond Index. The Fund also risk, while focusing on optimization of
underperformed its style-specific index due to exposure to bank loans in the return relative to appropriate benchmarks.
broadcasting and media industry, as media companies were challenged by Internet-based We constantly monitor the holdings in the
advertising providers. Your Fund's long-term performance appears later in this report. portfolio and conduct daily, weekly and
monthly meetings with portfolio managers
FUND VS. INDEXES and analysts, as well as with firms and
loan sponsors.
Total returns, 8/31/07 to 8/31/08, at net asset value (NAV). Performance shown does not
include applicable contingent deferred sales charges (CDSC) or front-end sales charges, Our proprietary systems generate "alert
which lists" that trigger immediate reviews of
credits when they fall below price
Class A Shares -1.69% targets, are rated BB or lower or are
Class C Shares -2.31 performing off plan. The active sell
Class R Shares -1.81 discipline considers two key factors for
Lehman Brothers U.S. Aggregate Bond Index(triangle) (Broad Market Index) 5.86 each portfolio position:
S&P/LSTA Leveraged Loan Index(square) (Style-Specific Index) -0.19
Lipper Loan Participation Funds Category Average(triangle) (Peer Group) -1.00 o Company objective. Will unfavorable
(triangle)Lipper Inc.; (square)Invesco Aim, Standard & Poor's industry trends, poor performance or
======================================================================================= lack of access to capital cause a
company to underperform?
HOW WE INVEST o Asset quality. Considerations may
include valuations of hard and o Investment objective. Has the earnings
We believe a highly diversified pool of intangible assets, how easily those potential or price potential been met
bank loans from the broadest spectrum of assets can be converted to cash and or exceeded, or do better relative
issuers and consisting of the highest appropriateness to leverage those valuation opportunities exist in the
credit quality available in line with assets. market?
portfolio objectives may provide an
attractive return and may offer potential o Divisibility. This factor focuses on MARKET CONDITIONS AND YOUR FUND
for high current income. operating and corporate structures,
ability to divide easily and Weakness in the housing market, sharply
Our credit analysts review all holdings efficiently, examination of non-core higher energy and food prices, a widening
and prospective holdings. assets and valuation of multiple brand credit crunch and slowing consumer
names. spending were among the factors that
Key consideration is given to the contributed to general economic weakness
following: o Sponsors. Considerations include a for much of the fiscal year.
firm's track record of quality
o Management. Factors include direct transactions, access to additional The U.S. Federal Reserve Board (the
operating experience in managing this capital and control or ownership of the Fed) moved aggressively throughout the
business, management depth and sponsoring firm. fiscal year to attempt to stimulate
incentives and track record operating economic growth and enhance liquidity. In
in a leveraged environment. o Cash flow. We examine a firm's sales seven separate actions, the central bank
and earnings breakdown by product, lowered the federal funds target rate from
o Industry position and dynamics. Factors divisions and subsidiaries. We look at 5.25% to 2.00%.(1)
include a company's industry position, the predictability of corporate
life cycle phase of the industry, earnings and the cash requirement of Since July 2007, the bank loan market
barriers to entry and current industry the business and conduct an examination has experienced the most volatile period
capacity and utilization. of the business cycles, seasonality, in the history of this asset class. Strong
international pressures and so forth. demand from institutional buyers led to
a rampant expansion of the loan market
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP 10 FIXED INCOME ISSUERS* Total Net Assets $261.4 million
By credit quality rating based on total 1. Cequel Communication 2.2% Total Number of Holdings* 374
investments 2. Alpha III 2.2 ==========================================
3. Charter Communications, Inc. 2.1
B 0.7% 4. Asurion Corp. 2.0 The Fund's holdings are subject to change,
Baa2 0.4 5. Level 3 Communications, Inc. 1.9 and there is no assurance that the Fund
Baa3 1.6 6. Pinnacle Foods Group, Inc. 1.7 will continue to hold any particular
Ba1 5.9 7. Freescale Semiconductor, Inc. 1.7 security.
Ba2 17.9 8. ARAMARK Corp. 1.7
Ba3 26.4 9. Hexion Specialty Chemicals, Inc. 1.6 * Excluding money market fund holdings.
B1 21.5 10. Bally Tech Alliance 1.5
B2 14.8 ==========================================
B3 0.8
Caa1 1.4
NR 1.9
Equity 0.7
Money Market Funds 6.0
==========================================
4 AIM FLOATING RATE FUND
and encouraged highly leveraged buyout Relief Program. In addition, the Fed -- in As always, we appreciate your continued
transactions along with higher risk loan concert with other world banks -- lowered participation in AIM Floating Rate Fund.
provisions for buyers. Consequently, the short-term interest rates from 2.0% to
bank loan market absorbed a 1.5% on October 8, 2008.(1) (1) U.S. Federal Reserve
disproportionate amount of risk relative
to the other sectors of the bond market. During the fiscal year, the Fund (2) Lehman Brothers Inc.
suffered along with the market. While we
Due to a sudden technical deterioration slightly decreased the Fund's exposure to (3) JP Morgan
in the U.S. credit markets, arrangers of lower credit quality issues (B-rated and
bank loans had considerable difficulty lower) in favor of higher quality loans The views and opinions expressed in
clearing deals underwritten during the (BB-rated), we continued holding lower management's discussion of Fund
past two years through the market. An quality credits, including second lien performance are those of Invesco Aim
ample supply of issued loans combined with securities. While higher quality loans Advisors, Inc. These views and opinions
weak demand put downward pressure on loan outperformed lower quality ones, less are subject to change at any time based on
prices in the market. As loan prices liquid loan issues, such as second-lien factors such as market and economic
plummeted, total returns in the bank loan securities, significantly underperformed conditions. These views and opinions may
market became volatile and turned sharply the broad bank loan market during the not be relied upon as investment advice or
negative during the second half of 2007 period. As a result, the Fund's second recommendations, or as an offer for a
and the first two months of 2008.(2) lien holdings detracted from relative particular security. The information is
performance. not a complete analysis of every aspect of
Despite a sizable recovery in the any market, country, industry, security or
second-quarter 2008, the bank loan market The primary detractors from relative the Fund. Statements of fact are from
continued to experience pressure during performance were our holdings in chemical sources considered reliable, but Invesco
the rest of the period.(2) Contributing to and advertising-related businesses Aim Advisors, Inc. makes no representation
the softening loan market conditions were (newspapers, radio, television and yellow or warranty as to their completeness or
an ever tightening credit environment and pages). While credit fundamentals in the accuracy. Although historical performance
slowing U.S. economic environment. The chemical industry remained solid, a is no guarantee of future results, these
pace of loan defaults gradually increased slowing global economy, rapid escalation insights may help you understand our
throughout the fiscal year, setting a in raw material costs and uncertainties investment management philosophy.
record high in terms of both annual about environmental liabilities were the
dollars involved and number of defaults by biggest challenges for chemical producers See important Fund and index disclosures
the end of August.(3) during the period. In the media and later in this report.
advertising industry, traditional
Market volatility increased companies were struggling with slower TOM EWALD
significantly after the close of the growth in advertising as many innovative Portfolio manager, is lead
Fund's fiscal year. To put some context businesses shifted toward Internet-based [EWALD manager of AIM Floating
around the recent financial events: The marketing and sales strategies. PHOTO] Rate Fund. Mr. Ewald
markets have shown serious strain for more joined Invesco in 2000 as
than a year, largely the result of years In the media sector, our position in a credit analyst and was
of lax credit practices associated with GATEHOUSE MEDIA, a newspaper publisher, promoted to portfolio
the housing boom. Mortgage loans of was negative for relative performance. The manager of certain other funds in 2001.
questionable quality were often bundled company was hurt by the economic downturn Prior to joining Invesco, Mr. Ewald was a
into hard-to-understand securities and and increased inflationary pressure on portfolio manager at another firm. Mr.
sold to various financial institutions. newsprint pricing and a shift away from Ewald earned an A.B. from Harvard College
The complexity and obscure structure of newspaper classified advertising in favor and an M.B.A. from the Darden School of
these securities hid an Achilles' heel of of the Internet. Business at the University of Virginia.
our financial system, creating a liquidity
crisis of historic severity. Now those Conversely, the Fund benefited from our GREG STOECKLE
securities remain on the financial underweight exposure to the automotive Portfolio manager, is
institutions' balance sheets -- eroding industry and no exposure to airline loans. [STOECKLE manager of AIM Floating
capital, driving down profits and Higher oil prices were a major challenge PHOTO] Rate Fund. Mr. Stoeckle
preventing normal trading among banks and for the airline and automotive industries. joined Invesco in 1999 and
other financial institutions due to the has held several senior
participating financial institutions' The Fund's exposure to bank loans in loan group. He began his
stability being in question. After the the wireless industry and the health care investment career in 1987 as a credit
close of the fiscal year, this situation sector were positive for returns. By analyst for another firm. Mr. Stoeckle
came to a head as some of these industry, wireless companies had the earned a B.S. from Ursinus College and an
institutions began running out of the strongest gains. The health care sector M.B.A from Saint Joseph's University.
capital needed to operate their businesses performed well due to its defensive
and found investors unwilling to supply characteristics in an uncertain economic
fresh capital. Compounding the problem is environment.
growing concern over future economic
prospects. In the wireless industry, our position
in ALLTEL, a mobile phone company, was
To ensure the orderly functioning of positive for performance. The Fund
the credit markets and thereby preventing purchased Alltel's loan issues at a deep
a more severe economic downturn, in early discount to par. During the period, the
October Congress enacted a $700 billion market value of Alltel's bank loans
rescue plan -- the Troubled Assets increased in response to the acquisition
announcement by Verizon Wireless.
5 AIM FLOATING RATE FUND
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee This chart, which is a logarithmic the investment. In other words, the space
comparable future results. chart, presents the fluctuations in the between $5,000 and $10,000 is the same
value of the Fund and its indexes. We size as the space between $10,000 and
The data shown in the chart include believe that a logarithmic chart is more $20,000.
reinvested distributions, applicable sales effective than other types of charts in
charges and Fund expenses including illustrating changes in value during the
management fees. Performance of an index early years shown in the chart. The
of funds reflects fund expenses and vertical axis, the one that indicates the
management fees; performance of a market dollar value of an investment, is
index does not. Performance shown in the constructed with each segment representing
chart and table(s) does not reflect a percent change in the value of the
deduction of taxes a shareholder would pay investment. In this chart, each segment
on Fund distributions or sale of Fund represents a doubling, or 100% change, in
shares. the value of
6 AIM FLOATING RATE FUND
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT - CLASS A SHARES (OLDEST SHARE CLASS)
Index data from 4/30/97, Fund data from 5/1/97
LIPPER LOAN
AIM FLOATING RATE S&P/LSTA LEHMAN BROTHERS PARTICIPATION
FUND- LEVERAGED LOAN U.S. AGGREGATE FUNDS CATEGORY
DATE CLASS A SHARES INDEX(2) BOND INDEX(1) AVERAGE(1)
4/30/97 $10000 $10000 $10000
5/97 $ 9812 10060 10095 10070
6/97 9872 10142 10214 10133
7/97 9935 10195 10490 10198
8/97 10009 10258 10400 10260
9/97 10070 10298 10554 10322
10/97 10143 10333 10707 10392
11/97 10202 10377 10756 10452
12/97 10266 10456 10864 10532
1/98 10330 10524 11004 10597
2/98 10386 10596 10996 10650
3/98 10437 10682 11033 10708
4/98 10495 10759 11091 10769
5/98 10545 10827 11196 10840
6/98 10605 10879 11291 10906
7/98 10672 10891 11315 10969
8/98 10737 10850 11499 11020
9/98 10680 10769 11769 11050
10/98 10699 10844 11706 11103
11/98 10725 10950 11773 11160
12/98 10806 11005 11808 11239
1/99 10878 11043 11892 11308
2/99 10909 11026 11685 11366
3/99 10969 10954 11750 11435
4/99 11018 11022 11787 11507
5/99 11083 11159 11684 11565
6/99 11146 11247 11646 11633
7/99 11215 11317 11597 11698
8/99 11238 11320 11591 11738
9/99 11270 11231 11725 11795
10/99 11315 11248 11769 11845
11/99 11346 11319 11768 11913
12/99 11401 11407 11711 11977
1/00 11474 11505 11673 12052
2/00 11531 11558 11814 12136
3/00 11557 11496 11970 12157
4/00 11605 11533 11935 12217
5/00 11652 11627 11930 12299
6/00 11732 11712 12178 12386
7/00 11781 11806 12289 12473
8/00 11852 11842 12467 12543
9/00 11883 11874 12545 12596
10/00 11903 11871 12628 12614
11/00 11934 11914 12835 12617
12/00 11973 11976 13073 12678
1/01 12000 12105 13286 12756
2/01 12112 12225 13402 12816
3/01 12075 12229 13469 12801
4/01 12031 12211 13414 12750
5/01 12022 12350 13494 12842
6/01 12059 12363 13545 12854
====================================================================================================================================
(1) Lipper Inc.
(2) Invesco Aim, Standard & Poor's
====================================================================================================================================
[MOUNTAIN CHART]
7/01 12045 12458 13848 12921
8/01 12069 12550 14007 12995
9/01 12022 12342 14170 12847
10/01 11834 12221 14467 12718
11/01 11802 12371 14267 12825
12/01 11794 12476 14177 12918
1/02 11904 12539 14291 13007
2/02 11927 12502 14430 12970
3/02 12067 12651 14190 13102
4/02 12166 12798 14465 13204
5/02 12213 12811 14588 13233
6/02 12245 12685 14714 13126
7/02 12151 12571 14891 12943
8/02 12098 12530 15143 12876
9/02 12115 12538 15388 12849
10/02 12005 12390 15318 12712
11/02 12003 12564 15314 12864
12/02 12118 12714 15630 13019
1/03 12220 12869 15644 13130
2/03 12256 12925 15860 13175
3/03 12258 12976 15848 13269
4/03 12404 13129 15979 13488
5/03 12524 13272 16277 13673
6/03 12640 13433 16244 13843
7/03 12715 13523 15698 13920
8/03 12725 13553 15802 13970
9/03 12805 13682 16221 14109
10/03 12858 13807 16069 14242
11/03 12939 13896 16108 14348
12/03 12974 13982 16272 14449
1/04 13090 14103 16403 14607
2/04 13159 14147 16580 14635
3/04 13181 14198 16704 14686
4/04 13260 14267 16270 14755
5/04 13279 14284 16205 14754
6/04 13349 14372 16296 14850
7/04 13396 14419 16458 14904
8/04 13434 14445 16772 14937
9/04 13596 14505 16817 14991
10/04 13668 14578 16958 15070
11/04 13754 14643 16823 15157
12/04 13799 14704 16978 15230
1/05 13861 14764 17084 15286
2/05 13967 14843 16984 15383
3/05 14002 14905 16896 15412
4/05 14006 14894 17125 15398
5/05 13983 14903 17310 15409
6/05 14069 14999 17405 15516
7/05 14173 15113 17246 15636
8/05 14275 15204 17467 15724
9/05 14315 15265 17287 15785
10/05 14361 15312 17151 15810
11/05 14407 15370 17226 15871
12/05 14489 15451 17390 15954
1/06 14573 15558 17391 16070
2/06 14682 15656 17449 16179
3/06 14786 15751 17278 16279
4/06 14876 15828 17246 16373
5/06 14936 15868 17228 16401
6/06 14946 15912 17264 16435
7/06 15032 16002 17498 16525
8/06 15116 16101 17766 16643
9/06 15179 16187 17922 16725
10/06 15298 16295 18040 16849
11/06 15399 16381 18250 16953
12/06 15505 16497 18144 17082
1/07 15629 16641 18136 17236
====================================================================================================================================
====================================================================================================================================
[MOUNTAIN CHART]
2/07 15741 16756 18416 17368
3/07 15792 16823 18417 17440
4/07 15877 16923 18516 17547
5/07 15987 17026 18376 17661
6/07 16001 17064 18321 17668
7/07 15419 16492 18474 17034
8/07 15440 16531 18700 17047
9/07 15697 16854 18842 17357
10/07 15847 17015 19012 17495
11/07 15611 16779 19353 17192
12/07 15652 16831 19408 17216
1/08 15051 16288 19734 16652
2/08 14542 15880 19761 16176
3/08 14533 15865 19829 16134
4/08 15048 16452 19787 16732
5/08 15322 16607 19642 16912
6/08 15366 16648 19626 16897
7/08 15205 16521 19610 16724
8/08 15176 16500 19796 16689
====================================================================================================================================
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/08, including maximum As of 6/30/08, the most recent calendar
applicable sales charges quarter-end, including maximum applicable
sales charges
CLASS A SHARES CLASS A SHARES
Inception (5/1/97) 3.75% Inception (5/1/97) 3.92%
10 Years 3.26 10 Years 3.51
5 Years 3.08 5 Years 3.47
1 Year -4.12 1 Year -6.33
CLASS C SHARES CLASS C SHARES
Inception (3/31/00) 2.94% Inception (3/31/00) 3.16%
5 Years 3.23 5 Years 3.61
1 Year -3.23 1 Year -5.26
CLASS R SHARES CLASS R SHARES
10 Years 3.48% 10 Years 3.74%
5 Years 3.50 5 Years 3.90
1 Year -1.81 1 Year -3.98
========================================== ==========================================
AS OF THE CLOSE OF BUSINESS ON APRIL 13, RECENT FUND PROSPECTUS AS OF THE DATE OF
2006, THE FUND REORGANIZED FROM A THIS REPORT FOR CLASS A, CLASS C AND CLASS
CLOSED-END FUND TO AN OPEN-END FUND. R SHARES WAS 1.42%, 1.92% AND 1.67%. THE
EXPENSE RATIOS PRESENTED ABOVE MAY VARY
CLASS A AND C SHARE RETURNS PRIOR TO FROM THE EXPENSE RATIOS PRESENTED IN OTHER
APRIL 13, 2006, ARE THE HISTORICAL SECTIONS OF THIS REPORT THAT ARE BASED ON
PERFORMANCE OF THE CLOSED-END FUND'S CLASS EXPENSES INCURRED DURING THE PERIOD
B AND C SHARES, RESPECTIVELY. COVERED BY THIS REPORT.
THE INCEPTION DATE FOR CLASS R SHARES CLASS A SHARE PERFORMANCE REFLECTS THE
IS APRIL 13, 2006; RETURNS SINCE THAT DATE MAXIMUM 2.50% SALES CHARGE AND CLASS C
ARE HISTORICAL RETURNS. ALL OTHER RETURNS SHARE PERFORMANCE REFLECTS THE APPLICABLE
ARE BLENDED RETURNS OF HISTORICAL CLASS R CONTINGENT DEFERRED SALES CHARGE (CDSC)
SHARES AND RESTATED PERFORMANCE OF THE FOR THE PERIOD INVOLVED. THE CDSC ON CLASS
CLOSED-END FUND'S CLASS B SHARES (FOR THE C SHARES IS 1% FOR THE FIRST YEAR AFTER
PERIODS PRIOR TO THE INCEPTION DATE OF THE PURCHASE. CLASS R SHARES DO NOT HAVE A
OPEN-END FUND'S CLASS R SHARES) AT NAV AND FRONT-END SALES CHARGE; RETURNS ARE SHOWN
REFLECT THE HIGHER ANNUAL MANAGEMENT FEES AT NET ASSET VALUE AND DO NOT REFLECT A
AND 0.25% ANNUAL 12B-1 FEES APPLICABLE TO 0.75% CDSC WHICH MAY BE IMPOSED ON A TOTAL
THE CLOSED-END FUND'S CLASS B SHARES. THE REDEMPTION OF RETIREMENT PLAN ASSETS
CLOSED-END FUND'S CLASS B SHARE INCEPTION WITHIN THE FIRST YEAR.
DATE IS MAY 1, 1997.
THE PERFORMANCE OF THE FUND'S SHARE
THE PERFORMANCE DATA QUOTED REPRESENT CLASSES WILL DIFFER PRIMARILY DUE TO
PAST PERFORMANCE AND CANNOT GUARANTEE DIFFERENT SALES CHARGE STRUCTURES AND
COMPARABLE FUTURE RESULTS; CURRENT CLASS EXPENSES.
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE
VISIT INVESCOAIM. COM FOR THE MOST RECENT A REDEMPTION FEE OF 2% WILL BE IMPOSED
MONTH-END PERFORMANCE. PERFORMANCE FIGURES ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF
REFLECT FUND EXPENSES, THE REINVESTMENT OF THE FUND WITHIN 30 DAYS OF PURCHASE.
DISTRIBUTIONS, AND CHANGES IN NET ASSET EXCEPTIONS TO THE REDEMPTION FEE ARE
VALUE. INVESTMENT RETURN AND PRINCIPAL LISTED IN THE FUND'S PROSPECTUS.
WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN
OR LOSS WHEN YOU SELL SHARES. HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES IN THE PAST,
THE TOTAL ANNUAL FUND OPERATING EXPENSE PERFORMANCE WOULD HAVE BEEN LOWER.
RATIO SET FORTH IN THE MOST
7 AIM FLOATING RATE FUND
AIM FLOATING RATE FUND'S INVESTMENT OBJECTIVES ARE TO PROVIDE A HIGH CURRENT INCOME AND, SECONDARILY, PRESERVATION OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of August 31, 2008, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
ABOUT SHARE CLASSES ties that are less liquid than those o The S&P/LSTA LEVERAGED LOAN INDEX
rated on national exchanges. tracks the current outstanding balance
o As of the close of business on April and spread over the London Interbank
13, 2006, AIM Floating Rate Fund o There is no guarantee that the Offered Rate (LIBOR) for fully funded
reorganized from a Closed-End Fund to investment techniques and risk analyses term loans.
an Open-End Fund. Information presented used by the Fund's portfolio managers
for Class A shares prior to the will produce the desired results. o The LIPPER LOAN PARTICIPATION FUNDS
reorganization includes financial data CATEGORY AVERAGE represents an average
for Class B shares of the Closed-End o The prices of securities held by the of all of the funds in the Lipper Loan
Fund. Information presented for Class C Fund may decline in response to market Participation Funds category. These
shares prior to the reorganization risks. funds invest primarily in participation
includes financial data for Class C interests in collateralized senior
shares of the Closed-End Fund. o Nondiversification increases the risk corporate loans that have floating or
that the value of the Fund's shares may variable rates.
o On July 27, 2006, all Class B1 shares vary more widely, and the Fund may be
converted Class A shares. subject to greater investment and o The Fund is not managed to track the
credit risk than if the Fund invested performance of any particular index,
o Class R shares are available only to more broadly. including the indexes defined here, and
certain retirement plans. Please see consequently, the performance of the
the prospectus for more information. o The ability of an issuer of a floating Fund may deviate significantly from the
rate loan or debt security to repay performance of the indexes.
PRINCIPAL RISKS OF INVESTING IN THE FUND principal prior to maturity can limit
the potential for gains by the Fund. o A direct investment cannot be made in
o Credit risk is the risk of loss on an an index. Unless otherwise indicated,
investment due to the deterioration of o To the extent that the Fund is index results include reinvested
an issuer's financial health. Such a concentrated in securities of issuers dividends, and they do not reflect
deterioration of financial health may in the banking and financial services sales charges. Performance of an index
result in a reduction of the credit industries, the Fund's performance will of funds reflects fund expenses;
rating of the issuer's securities and depend on the overall condition of performance of a market index does not.
may lead to the issuer's inability to those industries. The value of these
honor its contractual obligations, securities can be sensitive to changes OTHER INFORMATION
including making timely payment of in government regulation and interest
interest and principal rates and economic downturns in the o The returns shown in the management's
United States and abroad. discussion of Fund performance are
o Foreign securities have additional based on net asset values calculated
risks, including exchange rate changes, o The Fund may invest in senior-secured, for shareholder transactions. Generally
political and economic upheaval, the floating rate loans and debt securities accepted accounting principles require
relative lack of information, that require collateral. There is a adjustments to be made to the net
relatively low market liquidity, and risk that the value of the collateral assets of the Fund at period end for
the potential lack of strict financial may not be sufficient to cover the financial reporting purposes, and as
and accounting controls and standards. amount owed, collateral securing a loan such, the net asset values for
may be found invalid, and collateral shareholder transactions and the
o Interest rate risk refers to the risk may be used to pay other outstanding returns based on those net asset values
that bond prices generally fall as obligations of the borrower under may differ from the net asset values
interest rates rise; conversely, bond applicable law or may be difficult to and returns reported in the Financial
prices generally rise as interest rates sell. There is also the risk that the Highlights.
fall. collateral may be difficult to
liquidate or that a majority of the o Industry classifications used in this
o The Fund may use enhanced investment collateral may be illiquid. report are generally according to the
techniques such as leveraging and Global Industry Classification
derivatives. Leveraging entails risks ABOUT INDEXES USED IN THIS REPORT Standard, which was developed by and is
such as magnifying changes in the value the exclusive property and a service
of the portfolio's securities. o The LEHMAN BROTHERS U.S. AGGREGATE BOND mark of MSCI Inc. and Standard &
Derivatives are subject to counterparty INDEX covers U.S. investment-grade Poor's.
risk--the risk that the other party fixed-rate bonds with components for
will not complete the transaction with government and corporate securities,
the Fund. mortgage pass-throughs, and
asset-backed securities.
o A majority of the Fund's assets are
likely to be invested in loans and
securi-
=======================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS,
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. ==========================================
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. FUND NASDAQ SYMBOLS
======================================================================================= Class A Shares AFRAX
Class C Shares AFRCX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares AFRRX
==========================================
8 AIM FLOATING RATE FUND
SCHEDULE OF INVESTMENTS(a)
August 31, 2008
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
SENIOR SECURED FLOATING RATE INTERESTS-97.41%(b)(c)
ADVERTISING-0.49%
Valassis Communications, Inc.
Delay Draw Term Loan
4.56%, 03/02/14(d) $ 380,394 $ 349,487
- -------------------------------------------------------------------------------
Term Loan B
4.56%, 03/02/14(d) 1,147,258 940,751
===============================================================================
1,290,238
===============================================================================
AEROSPACE & DEFENSE-2.19%
Aero Technology Supply
Term Loan B
6.04%, 10/16/14(d) 827,872 556,744
- -------------------------------------------------------------------------------
Alion Science & Technology Corp.
Term Loan
5.17-5.49%, 02/06/13(d) 1,757,342 1,388,296
- -------------------------------------------------------------------------------
Dubai Aerospace Enterprise
Term Loan B1
6.55%, 09/29/14(d) 270,718 252,445
- -------------------------------------------------------------------------------
Term Loan B2
6.41-6.55%, 09/29/14(d) 268,224 250,119
- -------------------------------------------------------------------------------
Hawker Beechcraft Corp.
Syn LOC
4.80%, 03/26/14(d) 58,307 54,289
- -------------------------------------------------------------------------------
Term Loan
4.80%, 03/26/14(d) 930,872 866,730
- -------------------------------------------------------------------------------
McKechnie Aerospace
First Lien Term Loan
4.47%, 05/11/14(d) 561,926 520,133
- -------------------------------------------------------------------------------
Second Lien Term Loan
7.47%, 05/11/15(d) 141,300 114,453
- -------------------------------------------------------------------------------
Sequa Corp.
Term Loan B
5.72-7.25%, 12/03/14(d) 392,033 373,053
- -------------------------------------------------------------------------------
TransDigm Group Inc.
Term Loan
4.80%, 06/23/13(d) 218,605 210,953
- -------------------------------------------------------------------------------
Vought Aircraft Industries, Inc.
Add On Term Loan
7.50%, 12/22/11(d) 742,000 734,580
- -------------------------------------------------------------------------------
Wesco Aircraft Hardware Corp.
Term Loan
5.06%, 09/29/13(d) 413,329 396,279
===============================================================================
5,718,074
===============================================================================
ALTERNATIVE CARRIERS-1.99%
Iridium LLC/Capital Corp.
First Lien Term Loan A
7.05%, 06/30/10(d) 181,078 179,268
- -------------------------------------------------------------------------------
Second Lien Term Loan
11.05%, 07/27/12(d) 149,800 149,051
- -------------------------------------------------------------------------------
Level 3 Communications, Inc.
Term Loan
4.71-5.04%, 03/13/14(d) 5,403,226 4,878,664
===============================================================================
5,206,983
===============================================================================
ALUMINUM-0.24%
Noranda Aluminum
Term Loan B
4.81%, 05/18/14(d) 666,662 626,662
===============================================================================
APPAREL RETAIL-0.06%
Mothers Work Inc.
Term Loan B
4.97-5.29%, 03/13/13(d) 198,961 157,179
===============================================================================
AUTO PARTS & EQUIPMENT-2.32%
Dayco Products LLC
Second Lien
11.14-11.68%, 12/31/11(d) 1,284,407 513,763
- -------------------------------------------------------------------------------
Term Loan B
7.14-7.72%, 06/21/11(d) 305,113 211,291
- -------------------------------------------------------------------------------
Delphi Corp.
Intermediate Term Loan C
8.50%, 12/31/08(d) 934,103 772,581
- -------------------------------------------------------------------------------
Sub. Term Loan C
8.50%, 12/31/08(d) 95,131 78,681
- -------------------------------------------------------------------------------
Federal-Mogul Corp.
Term Loan B
4.41-4.44%, 12/27/14(d) 1,915,236 1,474,732
- -------------------------------------------------------------------------------
Term Loan C
4.41%, 12/27/15(d) 414,378 329,430
- -------------------------------------------------------------------------------
Goodyear Tire & Rubber Co. (The)
Second Lien
4.54%, 04/30/10(d) 1,150,000 1,049,375
- -------------------------------------------------------------------------------
Pep Boys-Manny, Moe & Jack (The)
Term Loan B
4.65%, 01/27/11(d) 41,519 38,301
- -------------------------------------------------------------------------------
Tower Automotive
Term Loan
6.75-7.06%, 07/31/13(d) 1,068,239 854,591
- -------------------------------------------------------------------------------
Veyance Tech
First Lien Delay Draw Term Loan
4.97%, 07/31/14(d) 109,053 95,421
- -------------------------------------------------------------------------------
First Lien Term Loan
5.30%, 07/31/14(d) 723,698 633,236
===============================================================================
6,051,402
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
BROADCASTING & CABLE TV-10.75%
Cequel Communication
First Lien Term Loan
4.79-6.00%, 11/05/13(d) $2,735,204 $ 2,553,143
- -------------------------------------------------------------------------------
Second Lien Term Loan A
7.30%, 03/31/15(d) 3,630,067 3,179,938
- -------------------------------------------------------------------------------
Charter Communications, Inc.
Term Loan Refinance
4.67-4.80%, 03/06/14(d) 6,417,443 5,605,457
- -------------------------------------------------------------------------------
Citadel Communication Corp.
Term Loan B
4.10-4.44%, 06/12/14(d) 2,167,286 1,739,247
- -------------------------------------------------------------------------------
CSC Holdings
Incremental Term Loan B
4.21%, 03/29/13(d) 1,497,954 1,424,554
- -------------------------------------------------------------------------------
CW Media Holdings
Term Loan B
6.05%, 02/16/15(d) 598,120 586,158
- -------------------------------------------------------------------------------
Discovery Communications Holdings
Term Loan
4.80%, 05/14/14(d) 2,064,876 2,012,738
- -------------------------------------------------------------------------------
Gray Television Inc.
Term Loan B
3.97-4.29%, 12/31/14(d) 182,394 151,387
- -------------------------------------------------------------------------------
Hargray Communications Group, Inc.
Term Loan B
5.05%, 06/27/14(d) 113,675 104,012
- -------------------------------------------------------------------------------
Hargray Communications Group, Inc. (DPC
Acquisition Inc.)
Term Loan B
5.05%, 06/27/14(d) 36,627 33,514
- -------------------------------------------------------------------------------
Hargray Communications Group, Inc. (HPC
Acquisition Inc.)
Term Loan B
5.05%, 06/27/14(d) 6,279 5,745
- -------------------------------------------------------------------------------
Insight Communications Co., Inc.
Term Loan B
4.47%, 04/06/14(d) 1,164,360 1,118,150
- -------------------------------------------------------------------------------
Ion Media Network (Paxson)
Term Loan
6.04%, 01/15/12(d) 2,801,171 2,268,949
- -------------------------------------------------------------------------------
Local TV LLC
Term Loan B
4.80-4.87%, 05/07/13(d) 923,870 803,767
- -------------------------------------------------------------------------------
Mediacom Communications Corp.
Term Loan D
4.22-4.23%, 01/31/15(d) 1,960,150 1,808,238
- -------------------------------------------------------------------------------
Term Loan E
6.50%, 01/03/16(d) 478,974 477,927
- -------------------------------------------------------------------------------
NextMedia Operating, Inc.
Delay Draw Term Loan
6.47%, 11/15/12(d) 251,762 219,033
- -------------------------------------------------------------------------------
Second Lien Term Loan
10.47%, 11/15/13(d) 221,652 175,105
- -------------------------------------------------------------------------------
Term Loan A
6.47%, 11/15/12(d) 617,705 537,404
- -------------------------------------------------------------------------------
New Vision Television
Second Lien
9.19%, 11/01/14(d) 450,000 324,000
- -------------------------------------------------------------------------------
Term Loan
5.69%, 11/01/13(d) 33,787 29,733
- -------------------------------------------------------------------------------
Term Loan B
5.69%, 11/01/13(d) 164,713 144,947
- -------------------------------------------------------------------------------
NTL Investment Holding Ltd.
Term Loan B-4
4.80%, 09/03/12(d) 282,965 266,341
- -------------------------------------------------------------------------------
Univision Communications Inc.
Second Lien Term Loan
4.97%, 03/29/09(d) 806,452 763,441
- -------------------------------------------------------------------------------
Term Loan
4.72-5.05%, 09/29/14(d) 363,673 291,746
- -------------------------------------------------------------------------------
WaveDivision Holdings, LLC
Term Loan B
5.40-5.45%, 06/30/14(d) 385,254 357,323
- -------------------------------------------------------------------------------
WideOpenWest Finance, LLC
First Lien Term Loan
5.30-5.31%, 06/28/14(d) 1,298,470 1,123,176
===============================================================================
28,105,173
===============================================================================
BUILDING PRODUCTS-1.82%
Building Materials Corp. of America
Term Loan B
5.44-5.56%, 02/22/14(d) 1,452,678 1,246,277
- -------------------------------------------------------------------------------
Champion Window Manufacturing Inc.
Term Loan
4.97%, 05/13/13(d) 478,926 296,934
- -------------------------------------------------------------------------------
Masonite International Corp.
Canada Term Loan
4.63-5.05%, 04/05/13(d) 1,438,318 1,224,968
- -------------------------------------------------------------------------------
U.S. Term Loan
4.63-5.05%, 04/05/13(d) 1,452,276 1,236,856
- -------------------------------------------------------------------------------
United Subcontractors, Inc.
Term Loan B
5.79-6.14%, 12/27/12(d) 1,358,649 760,843
===============================================================================
4,765,878
===============================================================================
CASINOS & GAMING-4.47%
Bally Tech Alliance
Term Loan
0%, 09/04/08(d)(e) 2,250,000 2,216,250
- -------------------------------------------------------------------------------
Term Loan
6.12%, 09/04/09(d) 1,615,854 1,598,685
- -------------------------------------------------------------------------------
BLB Investors, LLC
First Lien Term Loan
6.72-7.19%, 07/18/11(d) 886,830 658,471
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
CASINOS & GAMING-(CONTINUED)
Cannery Casino
Delay Draw Term Loan
4.93-5.05%, 05/18/13(d) $1,143,655 $ 1,082,183
- -------------------------------------------------------------------------------
Second Lien Term Loan
7.06%, 05/18/14(d) 84,000 76,860
- -------------------------------------------------------------------------------
Term Loan B
5.06%, 05/18/13(d) 591,985 560,166
- -------------------------------------------------------------------------------
Green Valley Ranch
First Lien Term Loan B
4.47-4.80%, 02/16/14(d) 220,903 169,212
- -------------------------------------------------------------------------------
Second Lien Term Loan
5.72%, 08/16/14(d) 369,000 185,423
- -------------------------------------------------------------------------------
Harrah's Operating Company, Inc.
First Term Loan B1
5.80%, 01/28/15(d) 1,380,981 1,210,948
- -------------------------------------------------------------------------------
First Term Loan B2
5.80%, 01/28/15(d) 421,346 369,047
- -------------------------------------------------------------------------------
First Term Loan B3
5.80%, 01/28/15(d) 344,557 301,846
- -------------------------------------------------------------------------------
Las Vegas Sands Corp.
Delay Draw Term Loan 1
4.56%, 05/23/14(d) 438,600 373,208
- -------------------------------------------------------------------------------
Delay Draw Term Loan 2
0%, 05/23/14(d)(e) 466,625 397,055
- -------------------------------------------------------------------------------
Term Loan B
4.56%, 05/23/14(d) 1,809,470 1,539,695
- -------------------------------------------------------------------------------
Yonkers Racing Corp.
Term Loan
10.50%, 08/12/11(d) 963,528 946,666
===============================================================================
11,685,715
===============================================================================
COAL & CONSUMABLE FUELS-0.40%
Oxbow Carbon LLC
Delay Draw Term Loan
4.80%, 05/08/14(d) 157,247 146,240
- -------------------------------------------------------------------------------
Term Loan B
4.47-5.50%, 05/08/14(d) 969,604 901,732
===============================================================================
1,047,972
===============================================================================
COMMERCIAL PRINTING-0.82%
Cenveo, Inc.
Delay Draw Term Loan
4.55%, 06/21/13(d) 29,071 27,127
- -------------------------------------------------------------------------------
Term Loan C
4.55%, 06/21/13(d) 864,851 807,014
- -------------------------------------------------------------------------------
Xsys Flink Ink Corp.
Term Loan B5
4.88%, 12/31/12(d) 795,787 641,935
- -------------------------------------------------------------------------------
Xsys (BASF Inks)
Term Loan C1
4.88%, 12/31/13(d) 813,772 656,443
===============================================================================
2,132,519
===============================================================================
COMMODITY CHEMICALS-1.74%
Lyondell Petrochemical
Credit Linked Notes (Acquired 12/20/05; Cost
$2,200,000)
5.50%, 12/20/09(f)(h) 2,200,000 2,096,318
- -------------------------------------------------------------------------------
Term Loan A
5.96%, 12/20/13(d) 494,063 412,542
- -------------------------------------------------------------------------------
Term Loan B1
04/30/15(d)(f)(g) 827,056 677,399
- -------------------------------------------------------------------------------
Term Loan B3
7.00%, 12/20/14(d) 1,130,585 926,138
- -------------------------------------------------------------------------------
Univar OPCO
Term Loan B
5.80%, 10/10/14(d) 476,800 436,967
===============================================================================
4,549,364
===============================================================================
COMMUNICATIONS EQUIPMENT-0.27%
General Communication Inc.
Term Loan
6.72%, 08/31/12(d) 423,725 415,250
- -------------------------------------------------------------------------------
Trilogy Choice One
Term Loan C
6.81-8.00%, 06/30/12(d) 339,588 298,838
===============================================================================
714,088
===============================================================================
COMPUTER HARDWARE-0.10%
Quantum Corp.
Term Loan B
6.30%, 07/12/14(d) 290,000 255,200
===============================================================================
CONSTRUCTION & AGRICULTURAL MACHINERY-0.98%
Manitowoc Company, Inc. (The)
Term Loan B
07/15/14(d)(g) 2,549,968 2,543,593
===============================================================================
CONSTRUCTION MATERIALS-0.08%
Hillman Group (The)
Term Loan B
5.50-5.81%, 03/31/11(d) 228,732 215,008
===============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-0.92%
Affiliated Computer Services, Inc.
Delay Draw Term Loan
4.46-4.47%, 03/20/13(d) 201,932 194,792
- -------------------------------------------------------------------------------
Term Loan B
4.47%, 03/20/13(d) 44,471 42,898
- -------------------------------------------------------------------------------
First Data Corp.
Term Loan B1
5.22-5.55%, 09/24/14(d) 69,150 63,369
- -------------------------------------------------------------------------------
Term Loan B2
5.22-5.55%, 09/24/14(d) 1,560,722 1,430,743
- -------------------------------------------------------------------------------
Term Loan B3
5.55%, 09/24/14(d) 720,830 660,332
===============================================================================
2,392,134
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
DIVERSIFIED CHEMICALS-0.37%
Celanese US Holdings LLC
Prefunded LOC
2.46%, 04/02/14(d) $ 365,939 $ 344,701
- -------------------------------------------------------------------------------
Term Loan
4.28%, 04/02/14(d) 355,443 334,815
- -------------------------------------------------------------------------------
Rockwood Specialties
Term Loan E
4.30%, 07/30/12(d) 97,738 93,655
- -------------------------------------------------------------------------------
Texas Petrochemicals L.P.
Term Loan B
5.38%, 06/27/13(d) 221,233 205,747
===============================================================================
978,918
===============================================================================
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES-1.84%
Aspect Software, Inc.
First Lien Term Loan
5.81%, 07/11/11(d) 278,869 260,742
- -------------------------------------------------------------------------------
Bankruptcy Management Solutions, Inc.
First Lien Term Loan
6.47%, 07/28/12(d) 62,880 57,850
- -------------------------------------------------------------------------------
Second Lien Term Loan
8.72%, 07/28/13(d) 36,025 25,578
- -------------------------------------------------------------------------------
Brock Holdings III, Inc.
Term Loan B
4.63-6.00%, 02/26/14(d) 458,200 430,708
- -------------------------------------------------------------------------------
Central Parking Corp.
Second Lien Term Loan
7.31%, 11/22/14(d) 25,522 22,970
- -------------------------------------------------------------------------------
Syn LOC
2.26%, 05/22/14(d) 63,036 57,993
- -------------------------------------------------------------------------------
Term Loan B
4.92-5.05%, 05/22/14(d) 150,528 138,486
- -------------------------------------------------------------------------------
Merrill Corp.
Term Loan
4.72-5.05%, 05/15/11(d) 930,105 723,156
- -------------------------------------------------------------------------------
N.E.W. Customer Service
Term Loan B
5.20-5.31%, 05/22/14(d) 1,921,128 1,722,612
- -------------------------------------------------------------------------------
Nuance Communications, Inc.
Revolver Loan
0%, 04/01/12(d)(e) 121,000 104,060
- -------------------------------------------------------------------------------
Term Loan B
4.72%, 04/01/13(d) 355,810 329,124
- -------------------------------------------------------------------------------
Production Resources, Inc.
Term Loan B
6.00%, 08/15/14(d) 1,018,603 937,115
===============================================================================
4,810,394
===============================================================================
DRUG RETAIL-0.52%
General Nutrition Centers, Inc.
Term Loan B
5.04-5.06%, 09/16/13(d) 1,280,587 1,153,595
- -------------------------------------------------------------------------------
MAPCO Express, Inc.
Term Loan
5.42-5.55%, 04/28/11(d) 119,822 112,033
- -------------------------------------------------------------------------------
Pantry, Inc. (The)
Delay Draw Term Loan
4.22%, 05/15/14(d) 22,638 20,318
- -------------------------------------------------------------------------------
Term Loan B
4.22%, 05/15/14(d) 79,105 70,997
===============================================================================
1,356,943
===============================================================================
EDUCATION SERVICES-0.09%
Bright Horizons Family Solutions, Inc.
Term Loan B
7.50%, 05/28/15(d) 249,750 245,379
===============================================================================
ELECTRIC UTILITIES-6.50%
AES Corp.
Euro Syn LOC
7.01%, 03/29/10(d) 750,714 732,884
- -------------------------------------------------------------------------------
Syn LOC
7.01%, 03/29/10(d) 2,370,498 2,314,199
- -------------------------------------------------------------------------------
Bicent Power LLC
Second Lien Term Loan
6.81%, 07/10/14(d) 250,400 206,893
- -------------------------------------------------------------------------------
Calpine Corp.
First Priority Term Loan
5.69%, 03/29/14(d) 2,738,036 2,542,951
- -------------------------------------------------------------------------------
Dynegy Holdings Inc.
Loan C
3.96%, 04/02/13(d) 1,702,128 1,548,936
- -------------------------------------------------------------------------------
Term Loan B
3.96%, 04/02/13(d) 295,638 273,157
- -------------------------------------------------------------------------------
Energy Investor Funds (USPF Holdings)
Term Loan
4.21%, 04/11/14(d) 226,245 207,014
- -------------------------------------------------------------------------------
FirstLight Power Resources, Inc.
Second Lien Term Loan
7.31%, 05/01/14(d) 315,000 285,863
- -------------------------------------------------------------------------------
Kelson Holdings, LLC
Term Loan
6.06%, 03/08/13(d) 1,494,000 1,442,084
- -------------------------------------------------------------------------------
NE Energy, Inc.
Syn LOC
5.31%, 11/01/13(d) 92,351 84,963
- -------------------------------------------------------------------------------
Term Loan B
5.31%, 11/01/13(d) 675,754 621,693
- -------------------------------------------------------------------------------
NRG Energy Inc.
Syn LOC
2.70%, 02/01/13(d) 695,897 659,169
- -------------------------------------------------------------------------------
Term Loan B
4.30%, 02/01/13(d) 1,409,183 1,334,809
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
ELECTRIC UTILITIES-(CONTINUED)
NSG Holdings II, LLC
Syn LOC
4.28%, 06/15/14(d) $ 38,265 $ 35,395
- -------------------------------------------------------------------------------
Term Loan
4.28%, 06/15/14(d) 223,521 206,757
- -------------------------------------------------------------------------------
Texas Competitive Electric Holdings Co.
Delay Draw Term Loan
10/10/14(d)(f)(g) 504,390 460,256
- -------------------------------------------------------------------------------
0%, 10/10/14(d)(e) 199,151 181,725
- -------------------------------------------------------------------------------
5.96-6.30%, 10/10/14(d) 2,086,130 1,903,593
- -------------------------------------------------------------------------------
Term Loan B1
5.96-6.30%, 10/10/14(d) 776,974 723,140
- -------------------------------------------------------------------------------
Term Loan B2
5.96-6.30%, 10/10/14(d) 403,550 376,086
- -------------------------------------------------------------------------------
Term Loan B3
5.96-6.30%, 10/10/14(d) 31,176 28,994
- -------------------------------------------------------------------------------
TPF Generation Holdings, LLC
Second Lien Term Loan
7.05%, 12/15/14(d) 267,000 239,855
- -------------------------------------------------------------------------------
Syn LOC D
2.70%, 12/15/13(d) 97,672 93,839
- -------------------------------------------------------------------------------
Syn Revolver Deposit
2.70%, 12/15/11(d) 30,618 29,417
- -------------------------------------------------------------------------------
Term Loan
4.80%, 12/15/13(d) 482,051 463,131
===============================================================================
16,996,803
===============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.22%
Aeroflex Inc.
Term Loan B1
6.06%, 08/15/14(d) 320,161 300,952
- -------------------------------------------------------------------------------
Crown Castle International Corp.
Term Loan B
4.30%, 03/06/14(d) 285,585 267,081
===============================================================================
568,033
===============================================================================
ELECTRONIC MANUFACTURING SERVICES-0.08%
Sorenson Communications, Inc.
First Lien Term Loan
4.97-5.30%, 08/16/13(d) 231,353 219,352
===============================================================================
ENVIRONMENTAL & FACILITIES SERVICES-0.09%
Allied Waste Industries Inc.
Term Loan
3.97-3.98%, 03/28/14(d) 31,946 31,178
- -------------------------------------------------------------------------------
Covanta Holding Corp.
Syn LOC
2.58%, 02/09/14(d) 84,652 80,420
- -------------------------------------------------------------------------------
Term Loan B
4.25-4.31%, 02/09/14(d) 131,003 124,453
===============================================================================
236,051
===============================================================================
FOOD DISTRIBUTORS-5.58%
Advanced Food Co.
Delay Draw Term Loan
4.56%, 03/16/14(d) 99,500 88,555
- -------------------------------------------------------------------------------
Second Lien Term Loan
7.06%, 03/16/14(d) 1,233,357 1,036,020
- -------------------------------------------------------------------------------
Term Loan B
4.56%, 03/16/14(d) 1,152,083 1,025,354
- -------------------------------------------------------------------------------
ARAMARK Corp.
Syn LOC
2.44%, 01/26/14(d) 278,024 263,323
- -------------------------------------------------------------------------------
Term Loan B
4.68%, 01/26/14(d) 4,376,280 4,144,884
- -------------------------------------------------------------------------------
Pinnacle Foods Group, Inc. (Aurora Foods)
Revolver Loan
0%, 04/02/13(d)(e) 1,000,000 870,000
- -------------------------------------------------------------------------------
Term Loan B
5.22-5.56%, 04/02/14(d) 3,946,544 3,598,755
- -------------------------------------------------------------------------------
Wm. Wrigley Jr. Co.
Term Loan B
7.75%, 10/06/14(d) 3,533,333 3,547,216
===============================================================================
14,574,107
===============================================================================
FOOD RETAIL-0.13%
Outback Steakhouse
Revolving Credit Loan
2.60%, 06/14/13(d) 19,307 14,722
- -------------------------------------------------------------------------------
Term Loan
5.13%, 06/14/14(d) 383,400 292,343
- -------------------------------------------------------------------------------
Quizno's Corp. (The)
First Lien Term Loan B
4.81%, 05/05/13(d) 47,528 40,082
===============================================================================
347,147
===============================================================================
FOREST PRODUCTS-1.06%
Boise Cascade Holdings, LLC
Second Lien Term Loan
11.00%, 02/22/15(d) 189,000 177,660
- -------------------------------------------------------------------------------
Georgia-Pacific Corp.
Add On Term Loan B
4.45-4.55%, 12/29/12(d) 644,703 608,726
- -------------------------------------------------------------------------------
Term Loan B
4.22-4.55%, 12/21/12(d) 2,097,307 1,980,269
===============================================================================
2,766,655
===============================================================================
HEALTH CARE DISTRIBUTORS-0.13%
Warner Chilcott PLC
Term Loan B
4.47-4.80%, 01/18/12(d) 252,900 245,060
- -------------------------------------------------------------------------------
Term Loan C
4.80%, 01/18/12(d) 98,477 95,424
===============================================================================
340,484
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT-0.42%
Advanced Medical Optics, Inc.
Term Loan B
4.42-4.63%, 04/02/14(d) $ 287,623 $ 262,456
- -------------------------------------------------------------------------------
CONMED Corp.
Term Loan
3.97%, 04/13/13(d) 217,037 211,068
- -------------------------------------------------------------------------------
Orthofix International N.V.
Term Loan B
4.56%, 09/22/13(d) 616,814 569,011
- -------------------------------------------------------------------------------
Sunrise Medical Inc.
Term Loan B1
6.75-7.06%, 05/13/10(d) 63,589 42,605
===============================================================================
1,085,140
===============================================================================
HEALTH CARE FACILITIES-3.29%
Community Health System
Delay Draw Term Loan
0%, 07/25/14(d)(e) 161,735 152,858
- -------------------------------------------------------------------------------
Term Loan B
4.72-5.06%, 07/25/14(d) 3,156,279 2,983,044
- -------------------------------------------------------------------------------
HCA, Inc.
Term Loan A
4.80%, 11/19/12(d) 273,884 255,923
- -------------------------------------------------------------------------------
Term Loan B
5.05%, 11/18/13(d) 414,751 388,397
- -------------------------------------------------------------------------------
Health Management Associates Inc.
Term Loan B
4.55%, 02/28/14(d) 2,223,030 2,035,309
- -------------------------------------------------------------------------------
IASIS Healthcare Corp.
Delay Draw Term Loan
4.47%, 03/14/14(d) 715,421 671,304
- -------------------------------------------------------------------------------
LOC
2.39%, 03/14/14(d) 190,779 179,014
- -------------------------------------------------------------------------------
Term Loan B
4.47%, 03/14/14(d) 2,067,627 1,940,122
===============================================================================
8,605,971
===============================================================================
HEALTH CARE SERVICES-2.34%
AGA Medical Corp.
Term Loan B
4.70-4.81%, 04/28/13(d) 119,216 112,659
- -------------------------------------------------------------------------------
Amerigroup Corp.
Syn LOC
4.50%, 03/23/12(d) 207,048 195,660
- -------------------------------------------------------------------------------
CRC Health Corp.
Add On Term Loan B
5.05%, 02/06/13(d) 400,271 356,241
- -------------------------------------------------------------------------------
Genoa Healthcare LLC
Term Loan B
6.75-7.75%, 08/10/12(d) 89,639 85,942
- -------------------------------------------------------------------------------
Second Lien Term Loan
11.50%, 02/10/13(d) 132,000 126,720
- -------------------------------------------------------------------------------
inVentiv Health, Inc.
Term Loan B
4.56%, 07/06/14(d) 533,744 490,377
- -------------------------------------------------------------------------------
Royalty Pharma AG
Term Loan B
5.05%, 04/16/13(d) 1,111,578 1,104,630
- -------------------------------------------------------------------------------
Skilled Healthcare LLC
Term Loan
4.66-5.14%, 06/15/12(d) 363,750 338,288
- -------------------------------------------------------------------------------
Sun Healthcare Group, Inc.
Delay Draw Term Loan
4.80-5.04%, 4/19/14(d) 68,760 63,775
- -------------------------------------------------------------------------------
Syn LOC
2.70%, 04/19/14(d) 89,827 83,315
- -------------------------------------------------------------------------------
Term Loan B
4.80-4.81%, 04/19/14(d) 415,782 385,638
- -------------------------------------------------------------------------------
Trizetto Group, Inc.
Term Loan B
6.96%, 08/04/15(d) 759,000 753,307
- -------------------------------------------------------------------------------
US Oncology, Inc.
Term Loan B
5.55%, 08/20/11(d) 637,428 613,525
- -------------------------------------------------------------------------------
Viant, Inc.
Term Loan B
5.05%, 06/25/14(d) 1,606,130 1,413,395
===============================================================================
6,123,472
===============================================================================
HEALTH CARE SUPPLIES-2.40%
APP Pharmaceuticals, Inc
Term Loan B
5.00%, 11/13/13(d) 2,948,591 2,926,477
- -------------------------------------------------------------------------------
Accellent Corp.
Term Loan B
4.95-5.31%, 11/22/12(d) 3,034,991 2,739,079
- -------------------------------------------------------------------------------
Fresenius Medical Care AG & Co. KGaA
Term Loan B
4.17-4.19%, 03/31/13(d) 170,178 165,203
- -------------------------------------------------------------------------------
Mylan Laboratories
Term Loan B
5.75-6.06%, 10/02/14(d) 446,148 440,890
===============================================================================
6,271,649
===============================================================================
HOMEBUILDING-0.14%
Headwaters, Inc.
First Lien Term Loan B1
6.97%, 04/30/11(d) 371,875 355,141
===============================================================================
HOTELS, RESORTS & CRUISE LINES-0.41%
American Gaming Systems
Delay Draw Term Loan
5.47%, 05/14/13(d) 91,032 63,723
- -------------------------------------------------------------------------------
Term Loan B
5.47%, 05/14/13(d) 650,635 455,445
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
HOTELS, RESORTS & CRUISE LINES-(CONTINUED)
Centaur Gaming
Delay Draw Term Loan
0%, 10/30/12(d)(e) $ 76,724 $ 69,819
- -------------------------------------------------------------------------------
Second Lien
13.80%,10/30/13(d) 115,641 89,622
- -------------------------------------------------------------------------------
Term Loan B
8.80%,10/30/12(d) 360,604 328,150
- -------------------------------------------------------------------------------
Ginn Club & Resort
Revolving Credit Loan
5.87-9.50%, 06/08/11(d)(i) 49,078 19,631
- -------------------------------------------------------------------------------
First Lien Term Loan B
9.50%, 06/08/11(d)(i) 105,289 42,116
- -------------------------------------------------------------------------------
Second Lien Term Loan
13.50%, 06/08/12(d)(i) 127,556 9,886
===============================================================================
1,078,392
===============================================================================
HOUSEHOLD PRODUCTS-1.99%
AMSCAN Holdings
Term Loan B
4.72-5.06%, 05/25/13(d) 368,667 323,505
- -------------------------------------------------------------------------------
Jarden Corp.
Term Loan B-1
4.55%, 01/24/12(d) 592,171 559,108
- -------------------------------------------------------------------------------
Nice-Pak Products Inc.
Term Loan
5.80-6.13%, 06/18/14(d) 406,890 362,132
- -------------------------------------------------------------------------------
Prestige Brands International, Inc.
Term Loan B
4.71-5.04%, 04/06/11(d) 33,251 32,503
- -------------------------------------------------------------------------------
Rent-A-Center
Term Loan B
4.54-4.57%, 06/30/12(d) 886,587 837,824
- -------------------------------------------------------------------------------
Sally Beauty Holdings, Inc.
Term Loan B
4.72-5.06%, 11/16/13(d) 666,909 631,584
- -------------------------------------------------------------------------------
Spectrum Brands, Inc.
LOC
2.31%, 03/30/13(d) 141,430 121,512
- -------------------------------------------------------------------------------
Term Loan B
6.67-6.80%, 03/30/13(d) 2,719,197 2,336,244
===============================================================================
5,204,412
===============================================================================
HUMAN RESOURCE & EMPLOYMENT SERVICES-0.53%
AMN Healthcare Services, Inc.
Term Loan B
4.55%, 11/02/11(d) 97,640 94,955
- -------------------------------------------------------------------------------
Koosharem Corp.
Second Term Loan
9.75%, 12/31/14(d) 298,800 134,460
- -------------------------------------------------------------------------------
Term Loan
5.79%, 07/12/14(d) 735,289 424,630
- -------------------------------------------------------------------------------
Kronos Inc.
First Lien Term Loan
5.05%, 06/11/14(d) 811,471 738,439
===============================================================================
1,392,484
===============================================================================
INDUSTRIAL CONGLOMERATES-0.10%
CONTECH Construction Products, Inc.
Term Loan B
4.47-4.49%, 01/31/13(d) 40,376 33,210
- -------------------------------------------------------------------------------
Dresser Inc.
Term Loan B
4.72-5.06%, 05/04/14(d) 240,984 224,115
===============================================================================
257,325
===============================================================================
INDUSTRIAL MACHINERY-1.21%
Gleason Corp.
First Lien Term Loan
4.44-4.56%, 06/30/13(d) 123,749 116,324
- -------------------------------------------------------------------------------
Itron Inc.
Term Loan
4.22%, 04/18/14(d) 145,223 140,866
- -------------------------------------------------------------------------------
Pro Mach, Inc.
Term Loan
5.06%, 12/14/11(d) 586,500 545,445
- -------------------------------------------------------------------------------
Rexnord Corp.
Add on Term Loan
4.79%, 07/19/13(d) 95,834 90,084
- -------------------------------------------------------------------------------
Sr. Unsec. Term Loan
9.68%, 03/02/13(d) 2,323,014 2,183,634
- -------------------------------------------------------------------------------
Term Loan B
5.29%, 07/19/13(d) 102,746 96,710
===============================================================================
3,173,063
===============================================================================
INSURANCE BROKERS-0.25%
Swett & Crawford Group, Inc. (The)
First Lien Term Loan
5.04%, 04/03/14(d) 386,113 281,862
- -------------------------------------------------------------------------------
Second Lien Term Loan
8.29%, 10/03/14(d) 105,200 73,640
- -------------------------------------------------------------------------------
USI Holdings Corp.
Term Loan B
5.56%, 05/05/14(d) 322,608 295,993
===============================================================================
651,495
===============================================================================
INTEGRATED OIL & GAS-0.40%
Western Refining, Inc.
Term Loan B
7.75%, 05/30/14(d) 1,201,203 1,035,537
===============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-1.19%
Cavalier Telephone Inc.
Term Loan B
10.50-11.25%, 12/31/12(d) 966,339 695,764
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
15 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
INTEGRATED TELECOMMUNICATION SERVICES-(CONTINUED)
Country Road Communications, Inc.
First Lien Term Loan
5.67%, 07/15/12(d) $ 250,054 $ 246,928
- -------------------------------------------------------------------------------
Second Lien Term Loan
10.42%, 07/15/13(d) 571,429 554,286
- -------------------------------------------------------------------------------
Integra Telecom, Inc.
Term Loan B
7.05-7.06%, 08/31/13(d) 305,690 278,178
- -------------------------------------------------------------------------------
PAETEC Communications, Inc.
Add On Term Loan
4.97%, 02/28/13(d) 374,120 340,449
- -------------------------------------------------------------------------------
Term Loan
4.97%, 02/28/13(d) 1,095,654 997,045
===============================================================================
3,112,650
===============================================================================
INTERNET SOFTWARE & SERVICES-0.57%
Language Line LLC
Term Loan B1
6.06%, 06/10/11(d) 790,501 743,071
- -------------------------------------------------------------------------------
Network Solutions, LLC
Term Loan B
4.97-5.31%, 03/07/14(d) 880,991 731,222
===============================================================================
1,474,293
===============================================================================
INVESTMENT BANKING & BROKERAGE-0.57%
Gartmore Investment Ltd.
U.S. Term Loan
4.55%, 05/11/14(d) 877,222 775,611
- -------------------------------------------------------------------------------
JG Wentworth LLC
Term Loan
5.05%, 04/04/14(d) 942,671 725,857
===============================================================================
1,501,468
===============================================================================
IT CONSULTING & OTHER SERVICES-0.44%
L-1 Identity Solutions, Inc.
Term Loan
7.50%, 08/05/13(d) 527,800 526,481
- -------------------------------------------------------------------------------
SunGuard Data Systems Inc.
U.S. Term Loan
4.55%, 02/28/14(d) 676,826 635,201
===============================================================================
1,161,682
===============================================================================
LEISURE FACILITIES-1.27%
24 Hour Fitness Worldwide Inc.
Term Loan B
4.97-5.17%, 06/08/12(d) 1,270,750 1,181,798
- -------------------------------------------------------------------------------
AMF Group
First Lien Term Loan B
5.19-5.63%, 06/08/13(d) 432,432 337,297
- -------------------------------------------------------------------------------
Second Lien Term Loan
8.95%, 12/08/13(d) 177,143 132,857
- -------------------------------------------------------------------------------
Greektown Casino LLC
Delay Draw Term Loan A
0%, 06/01/09(d)(e) 505,626 505,626
- -------------------------------------------------------------------------------
9.75%, 06/01/09(d) 387,774 387,774
- -------------------------------------------------------------------------------
Premier Parks Inc.
Term Loan
4.73-5.05%, 04/30/15(d) 640,289 548,018
- -------------------------------------------------------------------------------
Universal City Development Partners
Term Loan B
5.80-6.00%, 06/09/11(d) 231,364 228,472
===============================================================================
3,321,842
===============================================================================
LEISURE PRODUCTS-1.80%
Cinemark USA, Inc.
Term Loan
4.53-4.93%, 10/05/13(d) 1,721,964 1,626,026
- -------------------------------------------------------------------------------
Golden Nugget, Inc.
Second Lien Term Loan
5.73%, 12/31/14(d) 214,000 130,540
- -------------------------------------------------------------------------------
Panavision Inc.
First Lien Term Loan
5.97-6.31%, 03/30/11(d) 36,739 30,493
- -------------------------------------------------------------------------------
Second Lien Term Loan
10.30%, 03/30/12(d) 9,500 7,125
- -------------------------------------------------------------------------------
Sabre Holdings Corp.
Term Loan
4.47-4.80%, 09/30/14(d) 3,412,832 2,598,967
- -------------------------------------------------------------------------------
True Temper Sports Inc.
Second Lien Term Loan
8.30%, 06/30/11(d) 104,000 93,600
- -------------------------------------------------------------------------------
Term Loan
6.03-6.06%, 03/15/11(d) 250,555 225,500
===============================================================================
4,712,251
===============================================================================
MARINE-0.18%
US Shipping LLC
Term Loan
6.30%, 08/06/12(d) 571,151 479,767
===============================================================================
MARINE PORTS & SERVICES-0.13%
Fleetcor Technologies, Inc
Tranche 1
4.71%, 04/30/13(d) 197,460 184,625
- -------------------------------------------------------------------------------
Tranche 2
4.71%, 04/30/13(d) 161,928 151,402
===============================================================================
336,027
===============================================================================
METAL & GLASS CONTAINERS-0.83%
Berry Plastics Corp.
Term Loan C
4.66-4.80%, 04/03/15(d) 1,652,945 1,414,507
- -------------------------------------------------------------------------------
MAUSER Corp.
Term Loan B2
4.84%, 06/13/15(d) 500,000 371,667
- -------------------------------------------------------------------------------
Term Loan C2
5.09%, 06/13/16(d) 500,000 371,666
===============================================================================
2,157,840
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
16 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
MOVIES & ENTERTAINMENT-3.69%
Alpha III
Second Lien Term Loan D
6.63%, 06/30/14(d) $2,500,000 $ 2,114,583
- -------------------------------------------------------------------------------
Term Loan B1
4.72%, 12/31/13(d) 2,285,714 2,078,286
- -------------------------------------------------------------------------------
Term Loan B2
4.72%, 12/31/13(d) 1,571,429 1,428,821
- -------------------------------------------------------------------------------
LodgeNet Entertainment Corp.
Term Loan
4.81%, 04/04/14(d) 1,332,395 1,179,169
- -------------------------------------------------------------------------------
NEP II, Inc.
Term Loan B
5.05%, 02/16/14(d) 412,377 371,139
- -------------------------------------------------------------------------------
Warner Music Group
Term Loan
4.47-4.81%, 02/28/11(d) 1,881,187 1,764,397
- -------------------------------------------------------------------------------
Zuffa LLC
Term Loan
4.56%, 06/19/15(d) 846,407 706,750
===============================================================================
9,643,145
===============================================================================
OIL & GAS DRILLING-1.17%
Niska/CR Gas & Storage
Canada Term Loan
4.53%, 05/13/13(d) 279,395 259,488
- -------------------------------------------------------------------------------
Delay Draw Term Loan
4.84%, 05/13/13(d) 30,609 28,428
- -------------------------------------------------------------------------------
Term Loan
4.84%, 05/13/11(d) 18,504 17,185
- -------------------------------------------------------------------------------
U.S. Term Loan
4.41%, 05/13/13(d) 45,186 41,967
- -------------------------------------------------------------------------------
Ram Energy Inc.
Term Loan
10.00%, 11/28/12(d) 755,911 746,462
- -------------------------------------------------------------------------------
Resolute Natural Resources Corp.
Second Lien Term Loan
7.30%, 06/27/13(d) 541,176 460,000
- -------------------------------------------------------------------------------
Venoco, Inc.
Second Lien Term Loan
6.81%, 05/07/14(d) 1,596,405 1,492,639
===============================================================================
3,046,169
===============================================================================
OIL & GAS EQUIPMENT & SERVICES-0.93%
CCS Corp.
Delay Draw Term Loan
0%, 11/14/14(d)(e) 821,097 714,354
- -------------------------------------------------------------------------------
Term Loan B
5.47%, 11/14/14(d) 925,148 742,431
- -------------------------------------------------------------------------------
Petroleum Geo-Services A.S.A.
Term Loan
4.55%, 06/29/15(d) 213,069 206,411
- -------------------------------------------------------------------------------
Sem Group L.P.
U.S. Term Loan B2
4.90%, 03/16/11(d)(i) 333,621 274,403
- -------------------------------------------------------------------------------
Targa Resources, Inc.
Syn LOC
2.68%, 10/31/12(d) 26,247 25,171
- -------------------------------------------------------------------------------
Term Loan
4.47-4.80%, 10/31/12(d) 29,629 28,414
- -------------------------------------------------------------------------------
Volnay S.A.
Term Loan
4.80-4.81%, 01/12/14(d) 452,235 439,799
===============================================================================
2,430,983
===============================================================================
OIL & GAS EXPLORATION & PRODUCTION-0.05%
Helix Energy Solutions Group, Inc.
Term Loan B
4.47-4.79%, 07/01/13(d) 135,560 131,041
===============================================================================
OIL & GAS STORAGE & TRANSPORTATION-0.69%
Energy Transfer Equity, LP
Term Loan B
4.55%, 02/08/12(d) 1,849,584 1,791,400
===============================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-0.41%
Conseco, Inc.
Term Loan
4.47%, 10/10/13(d) 1,275,046 1,064,663
===============================================================================
PACKAGED FOODS & MEATS-0.48%
Birds Eye Foods Inc.
Term Loan B
4.56%, 03/22/13(d) 173,681 164,997
- -------------------------------------------------------------------------------
Dole Foods Co., Inc.
Prefunded LOC
2.66%, 04/12/13(d) 93,875 86,159
- -------------------------------------------------------------------------------
Term Loan B
4.50-6.00%, 04/12/13(d) 210,008 192,748
- -------------------------------------------------------------------------------
Term Loan C
4.50-6.00%, 04/12/13(d) 872,074 800,401
===============================================================================
1,244,305
===============================================================================
PAPER PACKAGING-0.05%
Verso Papers Holding, LLC
Term Loan
4.55%, 08/01/13(d) 128,043 120,040
===============================================================================
PAPER PRODUCTS-0.03%
Xerium S.A.
U.S. Term Loan
8.30%, 05/18/12(d) 89,140 77,774
===============================================================================
PERSONAL PRODUCTS-1.89%
American Safety Razor Co.
Second Lien Term Loan
8.72-8.89%, 01/31/14(d) 183,000 164,700
- -------------------------------------------------------------------------------
Term Loan
4.97-5.30%, 07/31/13(d) 201,572 189,477
- -------------------------------------------------------------------------------
Hanesbrands Inc.
Second Lien Term Loan
6.55%, 03/05/14(d) 2,909,829 2,834,357
- -------------------------------------------------------------------------------
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
17 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
PERSONAL PRODUCTS-(CONTINUED)
HVHC, Inc.
Term Loan B
5.05%, 08/01/13(d) $1,402,049 $ 1,279,370
- -------------------------------------------------------------------------------
Topps Company Inc.
Term Loan
5.23%, 10/12/14(d) 568,083 471,509
===============================================================================
4,939,413
===============================================================================
PHARMACEUTICALS-0.50%
Nycomed US Inc.
Term Loan B
12/29/14(d)(f)(g) 500,000 381,389
- -------------------------------------------------------------------------------
6.09%, 12/29/14(d) 250,000 190,694
- -------------------------------------------------------------------------------
Term Loan C
12/29/15(d)(f)(g) 500,000 381,390
- -------------------------------------------------------------------------------
6.09%, 12/29/14(d) 250,000 190,694
- -------------------------------------------------------------------------------
Quintiles Transnational Corp.
Second Lien Term Loan
6.81%, 03/31/14(d) 74,764 70,839
- -------------------------------------------------------------------------------
Term Loan B
4.81%, 03/31/13(d) 104,581 99,352
===============================================================================
1,314,358
===============================================================================
PUBLISHING-4.61%
American Media, Inc.
Term Loan B
5.97%, 01/30/13(d) 1,987,678 1,778,972
- -------------------------------------------------------------------------------
CanWest MediaWorks Inc.
Term Loan B
4.81%, 07/13/14(d) 112,738 104,001
- -------------------------------------------------------------------------------
Caribe Information Investment Inc.
Term Loan
4.72-5.04%, 03/31/13(d) 74,174 66,014
- -------------------------------------------------------------------------------
Dex Media West LLC
Term Loan B
7.00%, 10/24/14(d) 2,284,546 2,088,932
- -------------------------------------------------------------------------------
Endurance Business Media, Inc.
Second Lien Term Loan
9.72%, 01/26/14(d) 59,090 44,760
- -------------------------------------------------------------------------------
Term Loan
5.22%, 07/26/13(d) 114,880 89,894
- -------------------------------------------------------------------------------
F & W Publications, Inc.
Second Lien Term Loan
7.05%, 08/05/13(d) 357,143 160,714
- -------------------------------------------------------------------------------
Gatehouse Media, Inc.
Delay Draw Term Loan
4.80-4.81%, 08/28/14(d) 790,661 424,980
- -------------------------------------------------------------------------------
Term Loan
4.93%, 08/28/14(d) 24,385 12,802
- -------------------------------------------------------------------------------
Term Loan B
4.81%, 08/28/14(d) 2,131,101 1,145,467
- -------------------------------------------------------------------------------
Getty Images, Inc.
Term Loan
7.25%, 07/02/15(d) 1,091,000 1,089,296
- -------------------------------------------------------------------------------
Hanley Wood LLC
Term Loan
4.71-4.72%, 03/08/14(d) 328,350 254,882
- -------------------------------------------------------------------------------
Idearc, Inc. (Verizon)
Term Loan B
4.47-4.80%, 11/17/14(d) 3,782,400 2,647,680
- -------------------------------------------------------------------------------
Local Insight Regatta Holdings, Inc.
Term Loan
7.75%, 04/23/15(d) 578,718 511,200
- -------------------------------------------------------------------------------
MediaNews Group
Term Loan B
5.17%, 12/30/10(d) 1,150,912 880,448
- -------------------------------------------------------------------------------
Reader's Digest Association Inc.
Term Loan B
4.46-4.68%, 03/02/14(d) 449,390 362,882
- -------------------------------------------------------------------------------
Yell Group Ltd.
Term Loan B1
4.47%, 10/27/12(d) 429,750 373,346
===============================================================================
12,036,270
===============================================================================
RAILROADS-0.53%
RailAmerica Inc.
Canada Term Loan
6.79%, 08/14/09(d) 85,243 84,817
- -------------------------------------------------------------------------------
Term Loan
6.79%, 08/14/09(d) 1,316,781 1,310,197
===============================================================================
1,395,014
===============================================================================
REAL ESTATE MANAGEMENT & DEVELOPMENT-0.77%
Kyle Acquisition Group, LLC
Three Year Term Loan
8.00%, 07/20/09(d)(i) 888,170 273,112
- -------------------------------------------------------------------------------
Lake Las Vegas Resort
DIP Facilities Loan
11.97%, 07/17/09(d) 664,569 664,569
- -------------------------------------------------------------------------------
Mezzanie Loan
15.00%, 10/01/09(d) 4,128 619
- -------------------------------------------------------------------------------
Revolver Loan
16.10%, 12/22/12(d) 268,336 40,250
- -------------------------------------------------------------------------------
Tranches 1 & 2
16.10%, 12/22/12(d) 2,298,269 344,741
- -------------------------------------------------------------------------------
RE/MAX International, Inc.
Term Loan B
6.29%, 12/17/12(d) 610,011 524,610
- -------------------------------------------------------------------------------
Yellowstone Mountain Club, LLC
Term Loan
4.84%, 09/30/10(d) 204,667 170,215
===============================================================================
2,018,116
===============================================================================
REAL ESTATE INVESTMENT-0.04%
Capital Automotive
Term Loan B
4.22%, 12/15/10(d) 110,918 104,518
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
18 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
RESTAURANTS-0.03%
Sbarro Inc.
Term Loan B
4.97%, 01/31/14(d) $ 97,822 $ 79,481
===============================================================================
SEMICONDUCTORS-1.69%
Freescale Semiconductor, Inc.
Term Loan B
4.21%, 12/01/13(d) 4,961,302 4,426,414
===============================================================================
SPECIALIZED CONSUMER SERVICES-0.91%
Booz Allen Hamilton, Inc.
Term Loan B
7.50%, 07/31/15(d) 930,000 930,388
- -------------------------------------------------------------------------------
Jacobson Corp.
Term Loan B
4.97%, 06/19/14(d) 325,710 243,468
- -------------------------------------------------------------------------------
LPL Holdings Inc.
Term Loan D
4.47-4.80%, 06/28/13(d) 312,291 293,554
- -------------------------------------------------------------------------------
ServiceMaster Company (The)
Delay Draw Term Loan
5.24%, 07/29/14(d) 59,708 47,737
- -------------------------------------------------------------------------------
Term Loan B
5.24-5.56%, 07/29/14(d) 1,064,925 851,406
===============================================================================
2,366,553
===============================================================================
SPECIALIZED FINANCE-0.12%
Citco Group Ltd. (The)
Term Loan B
4.88%, 06/30/14(d) 138,900 123,968
- -------------------------------------------------------------------------------
E.A.Viner International Co.
First Lien Term Loan B
5.81%, 07/31/13(d) 47,914 45,039
- -------------------------------------------------------------------------------
Nuveen Investments, LLC
Term Loan
5.47%, 11/13/14(d) 170,587 157,537
===============================================================================
326,544
===============================================================================
SPECIALTY CHEMICALS-3.61%
Cognis Deutschland
Term Loan C
4.81%, 09/15/13(d) 799,515 726,060
- -------------------------------------------------------------------------------
Hexion Specialty Chemicals, Inc.
Revolver Credit
0%, 05/31/11(d)(e) 213,360 170,688
- -------------------------------------------------------------------------------
6.00%, 05/31/11(d) 167,640 134,112
- -------------------------------------------------------------------------------
Syn LOC
2.51%, 05/05/13(d) 90,774 78,227
- -------------------------------------------------------------------------------
Term Loan C1
5.06%, 05/05/13(d) 1,850,741 1,594,943
- -------------------------------------------------------------------------------
Term Loan C2
5.06%, 05/05/13(d) 402,034 346,467
- -------------------------------------------------------------------------------
Term Loan C4
4.94-5.06%, 05/05/13(d) 635,180 547,389
- -------------------------------------------------------------------------------
Term Loan C5
5.06%, 05/05/13(d) 114,922 99,038
- -------------------------------------------------------------------------------
Term Loan C7
5.06%, 05/05/13(d) 1,235,520 1,064,754
- -------------------------------------------------------------------------------
Huntsman ICI Chemicals LLC
Term Loan B
4.22%, 04/19/14(d) 2,457,297 2,314,636
- -------------------------------------------------------------------------------
Ineos Group Ltd.
Term Loan A4
4.72-4.88%, 12/16/12(d) 106,632 92,770
- -------------------------------------------------------------------------------
Term Loan B2
4.88%, 12/16/13(d) 1,235,864 1,044,305
- -------------------------------------------------------------------------------
Term Loan C2
5.38%, 12/16/14(d) 1,235,858 1,044,301
- -------------------------------------------------------------------------------
MacDermid Inc.
Term Loan B
4.80%, 04/12/14(d) 201,936 185,781
===============================================================================
9,443,471
===============================================================================
SPECIALTY STORES-1.05%
Eye Care Centers of America, Inc.
Term Loan
4.97-5.31%, 03/01/12(d) 327,972 311,526
- -------------------------------------------------------------------------------
FTD Group, Inc.
Term Loan B
7.50%, 08/26/14(d) 1,094,400 1,083,456
- -------------------------------------------------------------------------------
Mattress Firm
Term Loan B
4.72%, 01/18/14(d) 310,741 212,858
- -------------------------------------------------------------------------------
Michaels Stores, Inc.
Term Loan
4.75%, 10/31/13(d) 724,442 558,500
- -------------------------------------------------------------------------------
PETCO Animal Supplies, Inc.
Term Loan
4.72-5.05%, 10/26/13(d) 546,939 497,714
- -------------------------------------------------------------------------------
Savers, Inc.
Canada Term Loan
5.55%, 08/11/12(d) 37,442 34,821
- -------------------------------------------------------------------------------
U.S. Term Loan
5.55%, 08/11/12(d) 40,959 38,092
===============================================================================
2,736,967
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
19 AIM FLOATING RATE FUND
<Table>
<Caption>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------------------
SYSTEMS SOFTWARE-1.56%
Dealer Comp-rey
First Lien Term Loan
4.80%, 10/26/12(d) $ 801,105 $ 735,014
- -------------------------------------------------------------------------------
Second Lien Term Loan
8.30%, 10/26/13(d) 1,687,408 1,560,853
- -------------------------------------------------------------------------------
Skillsoft PLC
Term Loan B
6.30%, 05/14/13(d) 214,794 204,054
- -------------------------------------------------------------------------------
Verint Systems, Inc.
Term Loan
5.71%, 05/25/14(d) 1,741,542 1,580,450
===============================================================================
4,080,371
===============================================================================
TECHNOLOGY DISTRIBUTORS-0.18%
Macrovision Corp.
Term Loan B
7.25%, 05/02/13(d) 471,000 470,411
===============================================================================
TEXTILES-0.15%
GTM Holdings Inc.
First Lien Term Loan
8.50%, 10/30/13(d) 503,828 403,062
===============================================================================
TRADING COMPANIES DISTRIBUTORS-0.01%
Brenntag A.G
Term Loan B2
5.07%, 01/18/14(d) 19,732 18,153
- -------------------------------------------------------------------------------
U.S. Acquired Term Loan
5.07%, 01/18/14(d) 1,579 1,453
===============================================================================
19,606
===============================================================================
WIRELESS TELECOMMUNICATION SERVICES-5.55%
Alltel Corp.
Term Loan B1
4.97%, 05/16/15(d) 1,925,452 1,902,187
- -------------------------------------------------------------------------------
Asurion Corp.
First Lien Term Loan
5.46-5.80%, 07/03/14(d) 5,466,667 5,125,000
- -------------------------------------------------------------------------------
Global Tel*Link
Acquisition Syn Deposit Commitment
2.70%, 02/14/13(d) 114,683 106,655
- -------------------------------------------------------------------------------
Syn LOC
2.70%, 02/14/13(d) 28,670 26,663
- -------------------------------------------------------------------------------
Term Loan
6.30%, 02/14/13(d) 487,791 453,645
- -------------------------------------------------------------------------------
MetroPCS Communications, Inc.
Term Loan B
4.75-5.06%, 11/03/13(d) 2,437,230 2,327,832
- -------------------------------------------------------------------------------
NuVox, Inc.
Term Loan
6.03%, 05/31/14(d) 1,718,368 1,581,972
- -------------------------------------------------------------------------------
RCN Corp.
Add on Term Loan
5.06%, 05/25/14(d) 1,502,135 1,329,390
- -------------------------------------------------------------------------------
Term Loan
5.06%, 05/25/14(d) 1,198,681 1,060,833
- -------------------------------------------------------------------------------
Virgin Mobile USA
Term Loan
7.30%, 12/14/10(d) 699,297 601,395
===============================================================================
14,515,572
===============================================================================
Total Senior Secured Floating Rate Interests
(Cost $284,248,466) 254,615,010
===============================================================================
FLOATING RATE NOTES-1.32%
COMMUNICATION EQUIPMENT-0.79%
Qwest Corp.
Sr. Unsec. Floating Rate Global Notes
6.03%, 06/15/13(d)(j) 2,250,000 2,077,875
===============================================================================
HEAVY ELECTRICAL EQUIPMENT-0.17%
Sanmina-SCI Corp.
Gtd. Floating Rate Notes
5.53%, 06/15/10(d)(j) 437,000 434,815
===============================================================================
METAL & GLASS CONTAINERS-0.29%
Berry Plastics Holding Corp.
Sec. Sub. Floating Rate Global Notes
6.65%, 09/15/14(d)(j) 996,000 751,980
===============================================================================
PAPER PACKAGING-0.07%
Verso Paper Holdings, LLC
Series B, Sr. Sec. Gtd. Floating Rate Global
Notes
6.55%, 08/01/14(d)(j) 228,000 192,660
===============================================================================
Total Floating Rate Notes (Cost $3,919,628) 3,457,330
===============================================================================
<Caption>
SHARES
DOMESTIC COMMON STOCKS-0.77%
ENVIRONMENTAL & FACILITIES SERVICES-0.77%
Safety-Kleen Holdco, Inc.
(Acquired 12/24/03; Cost $2,062,077)(f)(k)(l)(m) 102,803 2,004,659
===============================================================================
MONEY MARKET FUNDS-6.37%
Liquid Assets Portfolio-Institutional Class(n) 8,318,653 8,318,653
- -------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(n) 8,318,653 8,318,653
===============================================================================
Total Money Market Funds (Cost $16,637,306) 16,637,306
===============================================================================
TOTAL INVESTMENTS-105.87% (Cost $306,867,477) 276,714,305
===============================================================================
OTHER ASSETS LESS LIABILITIES-(5.87)% (15,343,510)
===============================================================================
NET ASSETS-100.00% $261,370,795
_______________________________________________________________________________
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
20 AIM FLOATING RATE FUND
Investment Abbreviations:
<Table>
DIP - Debtor-in-possession
Gtd. - Guaranteed
LOC - Letter of Credit
REIT - Real Estate Investment Trust
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Syn LOC - Synthetic Letter of Credit
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Industry classifications used in this report are generally according to
the Global Industry Classification Standard, which was developed by and is
the exclusive property and a service mark of MSCI Inc. and Standard &
Poor's.
(b) Senior secured corporate loans and senior secured debt securities are, at
present, may not be readily marketable, not registered under the
Securities Act of 1933, as amended and may be subject to contractual and
legal restrictions on sale. Senior secured corporate loans and senior
secured debt securities in the Fund's portfolio generally have variable
rates which adjust to a base, such as the London Inter-Bank Offered Rate
("LIBOR"), on set dates, typically every 30 days but not greater than one
year; and/or have interest rates that float at a margin above a widely
recognized base lending rate such as the Prime Rate of a designated U.S.
bank.
(c) Senior secured floating rate interests often require prepayments from
excess cash flow or permit the borrower to repay at its election. The
degree to which borrowers repay, whether as a contractual requirement or
at their election, cannot be predicted with accuracy. As a result, the
actual remaining maturity may be substantially less than the stated
maturities shown. However, it is anticipated that the senior secured
floating rate interests will have an expected average life of three to
five years.
(d) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an
independent pricing service. The aggregate value of these securities at
August 31, 2008 was $255,976,022 which represented 97.94% of the Fund's
Net Assets. See Note 1A.
(e) All or a portion of this holding is subject to unfunded loan commitments.
See Note 6.
(f) Security considered to be illiquid at August 31, 2008. The Fund is limited
to investing 15% of net assets in illiquid securities at the time of
purchase. The aggregate value of these securities considered illiquid at
August 31, 2008 was $6,001,411, which represented 2.30% of the Fund's Net
Assets.
(g) This floating rate interest will settle after August 31, 2008, at which
time the interest rate will be determined.
(h) Securities fair valued in good faith in accordance with the procedures
established by the Board of Trustees. The aggregate value of this security
at August 31, 2008 was 0.80% of the Fund's Net Assets. See Note 1A.
(i) Defaulted security. Currently, the issuer is in default with respect to
interest payments. The aggregate value of these securities at August 31,
2008 was $619,148, which represented 0.24% of the Fund's Net Assets.
(j) Interest rate is redetermined periodically. Rate shown is the rate in
effect on August 31, 2008.
(k) Security purchased or received in a transaction exempt from registration
under the Securities Act of 1933, as amended. The security may be resold
pursuant to an exemption from registration under the 1933 Act, typically
to qualified institutional buyers. The value of this security at August
31, 2008 was 0.77% of the Fund's Net Assets. Unless otherwise indicated,
this security is not considered to be illiquid.
(l) Acquired as a part of a bankruptcy restructuring.
(m) Non-income producing security.
(n) 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.
21 AIM FLOATING RATE FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
<Table>
ASSETS:
Investments, at value (Cost
$290,230,171) $260,076,999
- ------------------------------------------------------
Investments in affiliated money market
funds (Cost $16,637,306) 16,637,306
======================================================
Total investments (Cost
$306,867,477) 276,714,305
======================================================
Receivables for:
Investments sold 7,363,337
- ------------------------------------------------------
Fund shares sold 510,269
- ------------------------------------------------------
Dividends and Interest 1,867,442
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 21,000
- ------------------------------------------------------
Other assets 29,798
======================================================
Total assets 286,506,151
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Investments purchased 23,836,793
- ------------------------------------------------------
Fund shares reacquired 656,827
- ------------------------------------------------------
Dividends 298,902
- ------------------------------------------------------
Accrued fees to affiliates 107,846
- ------------------------------------------------------
Accrued other operating expenses 192,185
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 42,803
======================================================
Total liabilities 25,135,356
======================================================
Net assets applicable to shares
outstanding $261,370,795
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $354,289,957
- ------------------------------------------------------
Undistributed net investment income 130,711
- ------------------------------------------------------
Undistributed net realized gain (loss) (62,896,701)
- ------------------------------------------------------
Unrealized appreciation (depreciation) (30,153,172)
======================================================
$261,370,795
______________________________________________________
======================================================
NET ASSETS:
Class A $141,803,065
______________________________________________________
======================================================
Class C $ 68,452,176
______________________________________________________
======================================================
Class R $ 329,586
______________________________________________________
======================================================
Institutional Class $ 50,785,968
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 17,749,825
______________________________________________________
======================================================
Class C 8,591,608
______________________________________________________
======================================================
Class R 41,196
______________________________________________________
======================================================
Institutional Class 6,355,510
______________________________________________________
======================================================
Class A:
Net asset value per share $ 7.99
- ------------------------------------------------------
Maximum offering price per share
(Net asset value of $7.99 divided
by 97.50%) $ 8.19
______________________________________________________
======================================================
Class C:
Net asset value and offering price
per share $ 7.97
______________________________________________________
======================================================
Class R:
Net asset value and offering price
per share $ 8.00
______________________________________________________
======================================================
Institutional Class:
Net asset value and offering price
per share $ 7.99
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
22 AIM FLOATING RATE FUND
STATEMENT OF OPERATIONS
For the year ended August 31, 2008
<Table>
INVESTMENT INCOME:
Interest $ 21,610,153
- ------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 267,605
================================================================================================
Total investment income 21,877,758
================================================================================================
EXPENSES:
Advisory fees 1,840,374
- ------------------------------------------------------------------------------------------------
Administrative services fees 95,121
- ------------------------------------------------------------------------------------------------
Custodian fees 35,173
- ------------------------------------------------------------------------------------------------
Distribution fees:
Class A 398,271
- ------------------------------------------------------------------------------------------------
Class C 559,689
- ------------------------------------------------------------------------------------------------
Class R 1,351
- ------------------------------------------------------------------------------------------------
Line of credit expenses 162,014
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- A, C and R 250,229
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 4,121
- ------------------------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 24,157
- ------------------------------------------------------------------------------------------------
Professional services fees 493,046
- ------------------------------------------------------------------------------------------------
Other 218,041
================================================================================================
Total expenses 4,081,587
================================================================================================
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (26,356)
================================================================================================
Net expenses 4,055,231
================================================================================================
Net investment income 17,822,527
================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from investment securities (8,789,508)
================================================================================================
Change in net unrealized appreciation (depreciation) of investment securities (15,023,407)
================================================================================================
Net realized and unrealized gain (loss) (23,812,915)
================================================================================================
Net increase (decrease) in net assets resulting from operations $ (5,990,388)
________________________________________________________________________________________________
================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
23 AIM FLOATING RATE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2008 and 2007
<Table>
<Caption>
2008 2007
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 17,822,527 $ 18,332,643
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (8,789,508) (1,576,830)
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (15,023,407) (15,183,532)
========================================================================================================
Net increase (decrease) in net assets resulting from operations (5,990,388) 1,572,281
========================================================================================================
Distributions to shareholders from net investment income:
Class A (10,276,946) (12,010,921)
- --------------------------------------------------------------------------------------------------------
Class C (4,417,057) (3,853,550)
- --------------------------------------------------------------------------------------------------------
Class R (15,598) (11,741)
- --------------------------------------------------------------------------------------------------------
Institutional Class (3,265,088) (2,348,810)
========================================================================================================
Total distributions from net investment income (17,974,689) (18,225,022)
========================================================================================================
Share transactions-net:
Class A (45,207,351) 54,828,863
- --------------------------------------------------------------------------------------------------------
Class C (6,368,997) 40,663,685
- --------------------------------------------------------------------------------------------------------
Class R 68,270 212,514
- --------------------------------------------------------------------------------------------------------
Institutional Class 6,499,785 26,073,209
========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (45,008,293) 121,778,271
========================================================================================================
Net increase (decrease) in net assets (68,973,370) 105,125,530
========================================================================================================
NET ASSETS:
Beginning of year 330,344,165 225,218,635
========================================================================================================
End of year (including undistributed net investment income of $130,711
and $277,510, respectively) $261,370,795 $330,344,165
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
24 AIM FLOATING RATE FUND
STATEMENT OF CASH FLOWS
For the year ended August 31, 2008
<Table>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations $ (5,990,388)
================================================================================================
ADJUSTMENTS TO RECONCILE NET DECREASE IN NET ASSETS TO NET CASH PROVIDED BY OPERATIONS:
Purchases of investments (190,875,304)
- ------------------------------------------------------------------------------------------------
Proceeds from disposition of investments and principal payments 246,819,016
- ------------------------------------------------------------------------------------------------
Decrease in receivables and other assets 1,641,250
- ------------------------------------------------------------------------------------------------
Amortization of premiums and accretion of discounts on investment securities (413,523)
- ------------------------------------------------------------------------------------------------
Increase in accrued expenses and other payables 29,071
- ------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) on investment securities 15,023,407
- ------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities 8,789,508
================================================================================================
Net cash provided by operating activities 75,023,037
================================================================================================
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Dividends paid to shareholders (5,109,848)
- ------------------------------------------------------------------------------------------------
Proceeds from shares of beneficial interest sold 93,489,246
- ------------------------------------------------------------------------------------------------
Decrease in payable to custodian (38,655)
- ------------------------------------------------------------------------------------------------
Disbursements from shares of beneficial interest reacquired (151,267,060)
================================================================================================
Net cash provided by (used in) financing activities (62,926,317)
================================================================================================
Net increase in cash and cash equivalents 12,096,720
================================================================================================
Cash and cash equivalents at beginning of period 4,540,586
================================================================================================
Cash and cash equivalents at end of period $ 16,637,306
================================================================================================
NON-CASH FINANCING ACTIVITIES:
Value of shares of beneficial interest issued in reinvestment of dividends
paid to shareholders $ 13,105,134
________________________________________________________________________________________________
================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for line of credit expenses was $181,361
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
25 AIM FLOATING RATE FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2008
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Floating Rate 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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest.
The Fund currently offers four different classes of shares: Class A, Class C,
Class R and Institutional Class. Class A shares are sold with a front-end sales
charge unless certain waived criteria are met and under certain circumstances
load waiver shares may be subject to contingent deferred sales charges ("CDSC").
Class C shares are sold with a CDSC. Class R shares and Institutional Class
shares are sold at net asset value. Under certain circumstances, Class R shares
are subject to a CDSC. Matters affecting each portfolio or class will be voted
on exclusively by the shareholders of such portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objectives are to provide a high level of current income
and, secondarily, preservation of capital.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Senior secured floating rate loans and senior
secured floating rate debt securities are fair valued using an evaluated
quote provided by an independent pricing service. Evaluated quotes
provided by the pricing service may reflect appropriate factors such as
ratings, tranche type, industry, company performance, spread, individual
trading characteristics, institution-size trading in similar groups of
securities and other market data.
Securities, including restricted securities, are valued according to the
following policy. A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales 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 (but not securities reported on the NASDAQ
Stock Exchange) are valued based on the prices furnished by independent
pricing services, in which case the securities may be considered fair
valued, or by market makers. Each security reported on the NASDAQ Stock
Exchange is valued at the NASDAQ Official Closing Price ("NOCP") as of the
close of the customary trading session on the valuation date or absent a
NOCP, at the closing bid price.
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 the ask prices from the exchange on
which they are principally traded. Options not listed on an exchange are
valued by an independent source at the mean between the last bid and ask
prices. For purposes of determining net asset value per share, futures and
option contracts generally are valued 15 minutes after the close of the
customary trading session of the New York Stock Exchange ("NYSE").
Investments in open-end and closed-end registered investment companies
that do not trade on an exchange are valued at the end of day net asset
value per share. Investments in open-end and closed-end registered
investment companies that trade on an exchange are valued at the last
sales price or official closing price as of the close of the customary
trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and may 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
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
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.
26 AIM FLOATING RATE FUND
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transaction
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 the settlement
date. Facility fees received may be amortized over the life of the loan.
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 as 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 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.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) 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 that contain a variety of indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet
occurred. The risk of material loss as a result of such indemnification
claims is considered remote.
I. OTHER RISKS -- The Fund may invest all or substantially of its assets in
senior secured floating rate loans, senior secured debt securities or
other securities rated below investment grade. These securities are
generally considered to have speculative characteristics and are subject
to greater risk of loss of principal and interest than higher rated
securities. The value of lower quality debt securities and floating rate
loans can be more volatile due to increased sensitivity to adverse issuer,
political, regulatory, market or economic developments.
The Fund invests in corporate loans from U.S. or non-U.S. companies (the
"Borrowers"). The investment of the Fund in a corporate loan may take the
form of participation interests or assignments. If the Fund purchases a
participation interest from a syndicate of lenders ("Lenders") or one of
the participants in the syndicate ("Participant"), one or more of which
administers the loan on behalf of all the Lenders (the "Agent Bank"), the
Fund would be required to rely on the Lender that sold the participation
interest not only for the enforcement of the Fund's rights against the
Borrower but also for the receipt and processing of payments due to the
Fund under the corporate loans. As such, the Fund is subject to the credit
risk of the Borrower and the Participant. Lenders and Participants
interposed between the Fund and a Borrower, together with Agent Banks, are
referred to as "Intermediate Participants".
J. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained
by the Fund to offset transaction costs and other expenses associated with
short-term redemptions and exchanges. The fee, subject to certain
exceptions, is imposed on certain redemptions, including exchanges of
shares held less than 30 days. The redemption fee is recorded as an
increase in shareholder capital and is allocated among the share classes
based on the relative net assets of each class.
27 AIM FLOATING RATE FUND
K. CASH AND CASH EQUIVALENTS -- For the purposes of the Statement of Cash
Flows the Fund defines Cash and Cash Equivalents as cash (including
foreign currency), money market funds and other investments held in lieu
of cash and excludes investments made with cash collateral received.
L. SECURITIES PURCHASED ON A WHEN-ISSUED AND DELAYED DELIVERY BASIS -- The
Fund may purchase and sell interests in Corporate Loans and Corporate Debt
Securities and other portfolio securities on a when-issued and delayed
delivery basis, with payment and delivery scheduled for a future date. No
income accrues to the Fund on such interests or securities in connection
with such transactions prior to the date the Fund actually takes delivery
of such interests or securities. These transactions are subject to market
fluctuations and are subject to the risk that the value at delivery may be
more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of acquiring such
securities, they may sell such securities prior to the settlement date.
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 0.65%
- -------------------------------------------------------------------
Next $4.5 billion 0.60%
- -------------------------------------------------------------------
Next $5 billion 0.575%
- -------------------------------------------------------------------
Over $10 billion 0.55%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a new master sub-advisory agreement approved by
shareholders of the Fund, effective May 1, 2008, 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).
Previously, the Advisor had entered in a sub-advisory agreement with Invesco
Senior Secured Management, Inc. ("ISSM"). Under the terms of a sub-advisory
agreement, the Advisor paid ISSM 40% of the amount of the Advisor's compensation
on the sub-advised assets annually. This agreement terminated on May 1, 2008.
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 C, Class R and
Institutional Class shares to 1.50%, 2.00%, 1.75% and 1.25% of average daily net
assets, respectively at least through June 30, 2009. 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; and (v)
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. These credits are used
to pay certain expenses incurred by the Fund. The Advisor did not waive fees
and/or reimburse expenses during the period under this expense limitation.
Further, the Advisor has contractually agreed, through at least June 30, 2009,
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 year ended August 31, 2008, the Advisor waived advisory fees of
$9,954.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the year ended
August 31, 2008, Invesco reimbursed expenses of the Fund in the amount of
$5,332.
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 year ended August 31, 2008, 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 year
ended August 31, 2008, expenses incurred under the agreement are shown in the
Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class
C, Class R and Institutional Class shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to
the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's
average daily net assets of Class A shares, 0.75% of the average daily net
assets of Class C shares and 0.50% of the average daily net assets of Class R
shares. Of the Plan payments, up to 0.25% of the average daily net assets of
each class of shares may be paid to furnish continuing personal shareholder
services to
28 AIM FLOATING RATE FUND
customers who purchase and own shares of such classes. Any amounts not paid as a
service fee under the Plans would constitute an asset-based sales charge. Rules
of the Financial Industry Regulatory Authority ("FINRA") impose a cap on the
total sales charges, including asset-based sales charges that may be paid by any
class of shares of the Fund. For the year ended August 31, 2008, expenses
incurred under the Plans are shown in the Statement of Operations as
distribution fees.
Front-end sales commissions and CDSC (collectively the "sales charges") are
not recorded as expenses of the Fund. Front-end sales commissions are deducted
from proceeds from the sales of Fund shares prior to investment in Class A
shares of the Fund. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended August 31, 2008, IADI
advised the Fund that IADI retained $23,496 in front-end sales commissions from
the sale of Class A shares and $27,723, $63,665 and $0 from Class A, Class C and
Class R shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2008, the Fund received credits from these arrangements, which
resulted in the reduction of the Fund's total expenses of $11,070.
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various 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 year ended August 31, 2008, the Fund paid legal fees of $3,059 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 5--BORROWINGS
The Fund is a party to a committed line of credit facility with a syndicate
administered by JPMorgan Chase Bank. The Fund may borrow up to the lesser of (i)
$50,000,000, or (ii) the limits set by its prospectus for borrowings. The Fund
is charged a commitment fee of 0.05% on the unused balance of the committed
line. During the year ended August 31, 2008, the Fund had average borrowings for
the 122 days the borrowings were outstanding of $9,522,131, with a weighted
average interest rate of 4.36% and interest expense of $138,499.
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with State Street Bank and Trust Company, the custodian bank. 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.
NOTE 6--UNFUNDED LOAN COMMITMENTS
As of August 31, 2008, the Fund had unfunded loan commitments of $5,382,435,
which could be extended at the option of the borrower, pursuant to the following
loan agreements with the following borrowers:
<Table>
<Caption>
UNFUNDED
BORROWER COMMITMENTS
- ---------------------------------------------------------------------------------------------------------
Bally Tech Alliance Term Loan $2,216,250
- ---------------------------------------------------------------------------------------------------------
CCS Corp. Delay Draw Term Loan 714,354
- ---------------------------------------------------------------------------------------------------------
Centaur Gaming Delay Draw Term Loan 69,819
- ---------------------------------------------------------------------------------------------------------
Community Health System Delay Draw Term Loan 152,858
- ---------------------------------------------------------------------------------------------------------
Greektown Casino LLC Delay Draw Term Loan 505,626
- ---------------------------------------------------------------------------------------------------------
Hexion Specialty Chemicals, Inc. Revolver Loan 170,688
- ---------------------------------------------------------------------------------------------------------
Las Vegas Sands Corp. Delay Draw Term Loan 397,055
- ---------------------------------------------------------------------------------------------------------
Nuance Communications, Inc. Revolver Loan 104,060
- ---------------------------------------------------------------------------------------------------------
Pinnacle Foods Group, Inc. (Aurora Foods) Revolver Loan 870,000
- ---------------------------------------------------------------------------------------------------------
Texas Competitive Electric Holdings Co. Delay Draw Term Loan 181,725
=========================================================================================================
$5,382,435
_________________________________________________________________________________________________________
=========================================================================================================
</Table>
29 AIM FLOATING RATE FUND
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended August 31, 2008
and 2007 was as follows:
<Table>
<Caption>
2008 2007
- -------------------------------------------------------------------------------------
Distributions paid from ordinary income $17,974,689 $18,225,022
_____________________________________________________________________________________
=====================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2008, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2008
- --------------------------------------------------------------------------------
Undistributed ordinary income $ 173,116
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) -- investments (30,666,293)
- --------------------------------------------------------------------------------
Temporary book/tax differences (42,405)
- --------------------------------------------------------------------------------
Capital loss carryforward (54,172,673)
- --------------------------------------------------------------------------------
Post-October capital loss deferral (8,210,907)
- --------------------------------------------------------------------------------
Shares of beneficial interest 354,289,957
================================================================================
Total net assets $261,370,795
________________________________________________________________________________
================================================================================
</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 wash sales.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
August 31, 2009 $10,188,057
- -----------------------------------------------------------------------------------------------
August 31, 2010 21,273,718
- -----------------------------------------------------------------------------------------------
August 31, 2011 10,298,295
- -----------------------------------------------------------------------------------------------
August 31, 2012 2,745,717
- -----------------------------------------------------------------------------------------------
August 31, 2013 5,482,284
- -----------------------------------------------------------------------------------------------
August 31, 2014 2,498,917
- -----------------------------------------------------------------------------------------------
August 31, 2016 1,685,685
===============================================================================================
Total capital loss carryforward $54,172,673
_______________________________________________________________________________________________
===============================================================================================
</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 year ended August 31, 2008 was $186,997,507 and
$227,198,736, 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 $ 651,619
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (31,317,912)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(30,666,293)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $307,380,598.
</Table>
30 AIM FLOATING RATE FUND
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of proxy costs, on August
31, 2008, undistributed net investment income was increased by $5,363 and shares
of beneficial interest decreased by $5,363. This reclassification had no effect
on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
--------------------------------------------------------------
2008(a) 2007
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 5,930,178 $ 49,487,900 15,632,471 $141,742,534
- --------------------------------------------------------------------------------------------------------------------------
Class C 3,459,058 28,780,327 6,756,210 61,144,110
- --------------------------------------------------------------------------------------------------------------------------
Class R 8,867 66,178 29,874 269,881
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class 1,731,143 14,334,499 2,833,402 25,745,014
==========================================================================================================================
Issued as reinvestment of dividends:
Class A 815,548 6,773,699 837,317 7,536,389
- --------------------------------------------------------------------------------------------------------------------------
Class C 379,132 3,166,936 330,246 2,963,539
- --------------------------------------------------------------------------------------------------------------------------
Class R 1,581 12,804 1,291 11,601
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class 381,534 3,151,695 253,496 2,281,192
==========================================================================================================================
Reacquired:(b)
Class A (12,128,519) (101,468,950) (10,549,550) (94,450,060)
- --------------------------------------------------------------------------------------------------------------------------
Class C (4,669,761) (38,316,260) (2,625,854) (23,443,964)
- --------------------------------------------------------------------------------------------------------------------------
Class R (1,339) (10,712) (7,693) (68,968)
- --------------------------------------------------------------------------------------------------------------------------
Institutional Class (1,311,463) (10,986,409) (218,519) (1,952,997)
==========================================================================================================================
(5,404,041) $ (45,008,293) 13,272,691 $121,778,271
__________________________________________________________________________________________________________________________
==========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 18% of the
outstanding shares of the Fund. IADI has an agreement with these entities
to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates
may make payments to these entities, which are considered to be related to
the Fund, for providing services to the Fund, Invesco Aim and/or Invesco
Aim affiliates including but not limited to services such as securities
brokerage, distribution, third party record keeping and account servicing.
The Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
In addition, 18% of the outstanding shares of the Fund are owned by
affiliated mutual funds. Affiliated mutual funds are other mutual funds
that are also advised by Invesco Aim.
(b) Net of redemption fees of $18,720 and $37,781 which were allocated among
the classes based on relative net assets of each class for the years ended
August 31, 2008 and 2007, respectively.
31 AIM FLOATING RATE FUND
NOTE 11--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
------------------------------------------ DISTRIBUTIONS
NET GAINS (LOSSES) ----------------------------------------
NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD(a)
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
08/31/08 $8.67 $0.53(d) $(0.68) $(0.15) $(0.53) $ -- $(0.53) $7.99
Year ended
08/31/07 9.06 0.60(d) (0.39) 0.21 (0.60) -- (0.60) 8.67
Eight months
ended 8/31/06 9.04 0.37(d) 0.02 0.39 (0.37) -- (0.37) 9.06
Year ended
12/31/05 9.02 0.43 0.01 0.44 (0.42) -- (0.42) 9.04
Year ended
12/31/04 8.77 0.30 0.25 0.55 (0.29) (0.01) (0.30) 9.02
Year ended
12/31/03 8.51 0.33 0.25 0.58 (0.32) -- (0.32) 8.77
- --------------------------------------------------------------------------------------------------------------------------------
CLASS C
Year ended
08/31/08 8.65 0.48(d) (0.68) (0.20) (0.48) -- (0.48) 7.97
Year ended
08/31/07 9.04 0.56(d) (0.39) 0.17 (0.56) -- (0.56) 8.65
Eight months
ended 8/31/06 9.02 0.34(d) 0.02 0.36 (0.34) -- (0.34) 9.04
Year ended
12/31/05 8.99 0.40 0.03 0.43 (0.40) -- (0.40) 9.02
Year ended
12/31/04 8.75 0.27 0.25 0.52 (0.27) (0.01) (0.28) 8.99
Year ended
12/31/03 8.49 0.31 0.25 0.56 (0.30) -- (0.30) 8.75
- --------------------------------------------------------------------------------------------------------------------------------
CLASS R
Year ended
08/31/08 8.66 0.51(d) (0.66) (0.15) (0.51) -- (0.51) 8.00
Year ended
08/31/07 9.06 0.58(d) (0.40) 0.18 (0.58) -- (0.58) 8.66
Year ended
08/31/06(h) 9.11 0.21(d) (0.05) 0.16 (0.21) -- (0.21) 9.06
- --------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Year ended
08/31/08 8.67 0.56(d) (0.68) (0.12) (0.56) -- (0.56) 7.99
Year ended
08/31/07 9.06 0.63(d) (0.39) 0.24 (0.63) -- (0.63) 8.67
Year ended
08/31/06(h) 9.11 0.23(d) (0.05) 0.18 (0.23) -- (0.23) 9.06
________________________________________________________________________________________________________________________________
================================================================================================================================
<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 (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(b) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- -----------------------------------------------------------------------------------------------------------
CLASS A
Year ended
08/31/08 (1.80)% $141,803 1.36%(e)(f) 1.37%(e)(f) 6.36%(e) 66%
Year ended
08/31/07 2.28 220,449 1.29(f) 1.30(f) 6.65 117
Eight months
ended 8/31/06 4.32 155,953 1.58(f)(g) 1.86(f)(g) 6.06(g) 54
Year ended
12/31/05 5.00 159,206 2.04(f) 2.17(f) 4.69 56
Year ended
12/31/04 6.36 190,814 1.65(f) 1.69(f) 3.31 82
Year ended
12/31/03 6.94 221,964 1.48 1.48 3.80 72
- -----------------------------------------------------------------------------------------------------------
CLASS C
Year ended
08/31/08 (2.31) 68,452 1.86(e)(f) 1.87(e)(f) 5.86(e) 66
Year ended
08/31/07 1.76 81,479 1.79(f) 1.80(f) 6.15 117
Eight months
ended 8/31/06 4.05 44,853 1.97(f)(g) 2.36(f)(g) 5.67(g) 54
Year ended
12/31/05 4.85 47,624 2.29(f) 2.67(f) 4.44 56
Year ended
12/31/04 5.98 34,518 1.89(f) 2.19(f) 3.07 82
Year ended
12/31/03 6.68 20,793 1.73 1.98 3.55 72
- -----------------------------------------------------------------------------------------------------------
CLASS R
Year ended
08/31/08 (1.81) 330 1.61(e)(i) 1.62(e)(i) 6.11(e) 66
Year ended
08/31/07 1.91 278 1.54(i) 1.55(i) 6.40 117
Year ended
08/31/06(h) 1.80 78 1.53(g)(i) 1.53(g)(i) 6.11(g) 54
- -----------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Year ended
08/31/08 (1.46) 50,786 1.01(e)(i) 1.02(e)(i) 6.71(e) 66
Year ended
08/31/07 2.62 48,138 0.95(i) 0.96(i) 6.99 117
Year ended
08/31/06(h) 2.00 24,335 0.98(g)(i) 0.98(g)(i) 6.66(g) 54
___________________________________________________________________________________________________________
===========================================================================================================
</Table>
(a) Includes redemption fees added to shares of beneficial interest which were
less than $0.005 per share.
(b) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges and is not annualized for
periods less than one year, if applicable.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Calculated using average shares outstanding.
(e) Ratios are based on average daily net assets (000's omitted) of $159,308,
$74,625, $270 and $48,931 for Class A, Class C, Class R, and Institutional
Class shares, respectively.
(f) Ratio includes line of credit expenses of 0.06%, 0.02%, 0.21% (annualized),
0.54% and 0.15% for the years ended August 31, 2008, August 31, 2007, the
eight months ended August 31, 2006, and the years ended December 31, 2005
and December 31, 2004, respectively.
(g) Annualized.
(h) Commencement date of April 13, 2006.
(i) Ratio includes line of credit expenses of 0.06%, 0.02%, and 0.01%
(annualized) for the years ended August 31, 2008, August 31, 2007, and the
period ended August 31, 2006, respectively.
32 AIM FLOATING RATE FUND
NOTE 12--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
PENDING LITIGATION AND REGULATORY INQUIRIES
AIM Floating Rate Fund, along with numerous unrelated funds and financial
institutions, has been named as a defendant in two private civil lawsuits filed
in the United States Bankruptcy Court, Southern District of New York (Enron
Corp. v. J.P. Morgan Securities, Inc., et al., Case No. 01-16034(AJG) and
Adelphia Communications Corp. and its Affiliate Debtors in Possession and
Official Committee of Unsecured Creditors of Adelphia v. Bank of America,
individually and as Agent for various Banks Party to Credit Agreements, et al.,
Case No. 02-41729). These lawsuits seek, respectively, avoidance of certain
payments made by Enron Corp. and avoidance of certain loans to Adelphia
Communications Corp. The Enron lawsuit alleges that payments made to the Fund
and other creditors to prepay and/or redeem certain commercial paper prior to
its maturity were preferential transfers. The amount sought to be recovered from
the Fund in the Enron lawsuit is the aggregate amount of the repurchases of
Enron's commercial paper from the fund during the 90 days prior to the filing by
Enron of a bankruptcy petition (approximately $10 million) plus interest and
Enron's court costs. On September 19, 2008, a group of defendants, including the
Fund, reached a settlement in principal with Enron that is subject to approval
by the Bankruptcy Court for approximately 13% of Enron's demand; and on that
date, the Fund booked a settlement reserve for such amount. The Adelphia lawsuit
alleges that the purchasers of Adelphia's bank debt knew, or should have known,
that the loan proceeds would not benefit Adelphia, but instead would be used to
enrich Adelphia insiders. The amount sought to be recovered from the Fund in the
Adelphia lawsuit is not specified. On June 17, 2008, the Court in the Adelphia
lawsuit granted, in its entirety, the Motion to Dismiss filed by a group of
defendants that includes the Fund and dismissed all of Adelphia's claims against
it. Adelphia has the right to appeal this ruling.
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to Invesco Aim and IADI (Order No. 05-
1318). The WVASC makes findings of fact that Invesco Aim and IADI entered into
certain arrangements permitting market timing of the AIM Funds and failed to
disclose these arrangements in the prospectuses for such Funds, and conclusions
of law to the effect that Invesco Aim and IADI violated the West Virginia
securities laws. The WVASC orders Invesco Aim and IADI to cease any further
violations and seeks to impose monetary sanctions, including restitution to
affected investors, disgorgement of fees, reimbursement of investigatory,
administrative and legal costs and an "administrative assessment," to be
determined by the Commissioner. Initial research indicates that these damages
could be limited or capped by statute. By agreement with the Commissioner of
Securities, Invesco Aim's time to respond to that Order has been indefinitely
suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, Invesco Funds Group,
Inc. ("IFG"), Invesco Aim, IADI and/or related entities and individuals,
depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, various corrective measures under ERISA, rescission
of certain AIM Funds' advisory agreements and/or distribution plans and recovery
of all fees paid. The case pending in Illinois State Court regarding fair value
pricing was dismissed with prejudice on May 6, 2008.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various Invesco Aim- and IFG-related
parties: (i) a Consolidated Amended Class Action Complaint purportedly brought
on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund
Derivative Complaint purportedly brought on behalf of the AIM Funds and fund
registrants; and (iii) an Amended Class Action Complaint for Violations of ERISA
purportedly brought on behalf of participants in the Invesco 401(k) plan. Based
on orders issued by the MDL Court, all claims asserted against the AIM Funds
that have been transferred to the MDL Court have been dismissed, although
certain Funds remain nominal defendants in the Consolidated Amended Fund
Derivative Complaint. On September 15, 2006, the MDL Court granted the Invesco
defendants' motion to dismiss the Amended Class Action Complaint for Violations
of ERISA and dismissed such Complaint. Plaintiff appealed this ruling. On June
16, 2008, the Fourth Circuit Court of Appeals reversed the dismissal and
remanded this lawsuit back to the MDL Court for further proceedings.
IFG, Invesco Aim, IADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, Invesco Aim and IADI have advised the Fund that they are providing
full cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, Invesco Aim and/or related entities and individuals in the
future.
At the present time, except with respect to the settlement of the Enron
litigation, management of Invesco Aim and the Fund are unable to estimate the
impact, if any, that the outcome of the Pending Litigation and Regulatory
Inquiries described above may have on Invesco Aim, IADI or the Fund.
33 AIM FLOATING RATE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Floating Rate 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 Floating Rate Fund (one of the
funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2008, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, its cash flows for the year then ended and the financial highlights
for each of the periods indicated, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 2008 by correspondence with the
custodian and intermediate participants, provide a reasonable basis for our
opinion.
PRICEWATERHOUSECOOPERS LLP
October 20, 2008
Houston, Texas
34 AIM FLOATING RATE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $1,043.80 $7.40 $1,017.90 $7.30 1.44%
- ---------------------------------------------------------------------------------------------------
C 1,000.00 1,041.20 9.95 1,015.38 9.83 1.94
- ---------------------------------------------------------------------------------------------------
R 1,000.00 1,041.20 8.67 1,016.64 8.57 1.69
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
35 AIM FLOATING RATE FUND
Supplement to Annual Report dated 8/31/08
==========================================
AIM FLOATING RATE FUND AVERAGE ANNUAL TOTAL RETURNS The total annual Fund operating expense
ratio set forth in the most recent Fund
INSTITUTIONAL CLASS SHARES For periods ended 8/31/08 prospectus as of the date of this
10 Years 3.61% supplement for Institutional Class shares
The following information has been 5 Years 3.76 was 1.08%. The expense ratios presented
prepared to provide Institutional Class 1 Year -1.46 above may vary from the expense ratios
shareholders with a performance overview presented in other sections of the actual
specific to their holdings. Institutional AVERAGE ANNUAL TOTAL RETURNS report that are based on expenses incurred
Class shares are offered exclusively to during the period covered by the report.
institutional investors, including defined For periods ended 6/30/08, most recent
contribution plans that meet certain calendar quarter-end Had the advisor not waived fees and/ or
criteria. reimbursed expenses in the past,
10 Years 3.87% performance would have been lower.
5 Years 4.16
1 Year -3.51 A redemption fee of 2% will be imposed
========================================== on certain redemptions or exchanges out of
the Fund within 30 days of purchase.
Institutional Class shares' inception date Exceptions to the redemption fee are
is April 13, 2006. Returns since that date listed in the Fund's prospectus.
are historical returns. All other returns
are blended returns of historical Please note that past performance is
Institutional Class share performance and not indicative of future results. More
restated Class A share performance (for recent returns may be more or less than
periods prior to the inception date of those shown. All returns assume
Institutional Class shares) at net asset reinvestment of distributions at NAV.
value (NAV) and reflect the Rule 12b-1 Investment return and principal value will
fees applicable to Class A shares. Class A fluctuate so your shares, when redeemed,
shares' inception date is May 1, 1997. may be worth more or less than their
original cost. See full report for
Institutional Class shares have no information on comparative benchmarks.
sales charge; therefore, performance is at Please consult your Fund prospectus for
NAV. Performance of Institutional Class more information. For the most current
shares will differ from performance of month-end performance, please call 800 451
other share classes primarily due to 4246 or visit invescoaim.com.
differing sales charges and class
expenses.
==========================================
NASDAQ SYMBOL AFRIX
==========================================
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 [INVESCO AIM LOGO]
- SERVICE MARK -
This material is for institutional investor use only and may not be quoted, reproduced
or shown to the public, nor used in written form as sales literature for public use.
invescoaim.com FLR-INS-1 Invesco Aim Distributors, Inc.
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. 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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ------------------------------------------------------------------------------------------------
Institutional $1,000.00 $1,044.30 $5.65 $1,019.61 $5.58 1.10%
- ------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
AIM FLOATING RATE FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM renewal process, the Trustees receive from one another and attributed different
Counselor Series Trust is required under comparative performance and fee data weight to the various factors. The
the Investment Company Act of 1940 to regarding the AIM Funds prepared by an Trustees recognized that the advisory
approve annually the renewal of the AIM independent company, Lipper, Inc. arrangements and resulting advisory fees
Floating Rate Fund (the Fund) investment (Lipper), under the direction and for the Fund and the other AIM Funds are
advisory agreement with Invesco Aim supervision of the independent Senior the result of years of review and
Advisors, Inc. (Invesco Aim). During Officer who also prepares a separate negotiation between the Trustees and
contract renewal meetings held on June analysis of this information for the Invesco Aim, that the Trustees may focus
18-19, 2008, the Board as a whole and the Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of
disinterested or "independent" Trustees, recommendations to the Investments these arrangements in some years than in
voting separately, approved the Committee regarding the performance, fees others, and that the Trustees'
continuance of the Fund's investment and expenses of their assigned funds. The deliberations and conclusions in a
advisory agreement for another year, Investments Committee considers each particular year may be based in part on
effective July 1, 2008. In doing so, the Sub-Committee's recommendations and makes their deliberations and conclusions of
Board determined that the Fund's its own recommendations regarding the these same arrangements throughout the
investment advisory agreement is in the performance, fees and expenses of the AIM year and in prior years.
best interests of the Fund and its Funds to the full Board. The Investments
shareholders and that the compensation to Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF
Invesco Aim under the Fund's investment Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION
advisory agreement is fair and reasonable. its annual recommendation to the Board
whether to approve the continuance of each The discussion below serves as a
The independent Trustees met separately AIM Fund's investment advisory agreement summary of the Senior Officer's
during their evaluation of the Fund's and sub-advisory agreements for another independent written evaluation with
investment advisory agreement with year. respect to the Fund's investment advisory
independent legal counsel from whom they agreement as well as a discussion of the
received independent legal advice, and the The independent Trustees are assisted material factors and related conclusions
independent Trustees also received in their annual evaluation of the Fund's that formed the basis for the Board's
assistance during their deliberations from investment advisory agreement by the approval of the Fund's investment advisory
the independent Senior Officer, a independent Senior Officer. One agreement and sub-advisory agreements.
full-time officer of the AIM Funds who responsibility of the Senior Officer is to Unless otherwise stated, information set
reports directly to the independent manage the process by which the AIM Funds' forth below is as of June 19, 2008 and
Trustees. proposed management fees are negotiated does not reflect any changes that may have
during the annual contract renewal process occurred since that date, including but
THE BOARD'S FUND EVALUATION PROCESS The to ensure that they are negotiated in a not limited to changes to the Fund's
Board's Investments Committee has manner that is at arms' length and performance, advisory fees, expense
established three Sub-Committees that are reasonable. Accordingly, the Senior limitations and/or fee waivers.
responsible for overseeing the management Officer must either supervise a
of a number of the series portfolios of competitive bidding process or prepare an I. Investment Advisory Agreement
the AIM Funds. This Sub-Committee independent written evaluation. The Senior
structure permits the Trustees to focus on Officer has recommended that an A. Nature, Extent and Quality of
the performance of the AIM Funds that have independent written evaluation be provided Services Provided by Invesco Aim
been assigned to them. The Sub-Committees and, at the direction of the Board, has
meet throughout the year to review the prepared an independent written The Board reviewed the advisory
performance of their assigned funds, and evaluation. services provided to the Fund by Invesco
the Sub-Committees review monthly and Aim under the Fund's investment advisory
quarterly comparative performance During the annual contract renewal agreement, the performance of Invesco Aim
information and periodic asset flow data process, the Board considered the factors in providing these services, and the
for their assigned funds. These materials discussed below under the heading "Factors credentials and experience of the officers
are prepared under the direction and and Conclusions and Summary of Independent and employees of Invesco Aim who provide
supervision of the independent Senior Written Fee Evaluation" in evaluating the these services. The Board's review of the
Officer. Over the course of each year, the fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide
Sub-Committees meet with portfolio investment advisory agreement and these services included the Board's
managers for their assigned funds and sub-advisory agreements at the contract consideration of Invesco Aim's portfolio
other members of management and review renewal meetings and at their meetings and product review process, various back
with these individuals the performance, throughout the year as part of their office support functions provided by
investment objective(s), policies, ongoing oversight of the Fund. The Fund's Invesco Aim and its affiliates, and
strategies and limitations of these funds. investment advisory agreement and Invesco Aim's equity and fixed income
sub-advisory agreements were considered trading operations. The Board concluded
In addition to their meetings separately, although the Board also that the nature, extent and quality of the
throughout the year, the Sub-Committees considered the common interests of all of advisory services provided to the Fund by
meet at designated contract renewal the AIM Funds in their deliberations. The Invesco Aim were appropriate and that
meetings each year to conduct an in-depth Board considered all of the information Invesco Aim currently is providing
review of the performance, fees and provided to them and did not identify any satisfactory advisory services in
expenses of their assigned funds. During particular factor that was controlling. accordance with the terms of the Fund's
the contract Each Trustee may have evaluated the investment advisory agreement. In
information provided differently addition, based on their ongoing meetings
throughout the year with the Fund's
portfolio manager or
36 AIM FLOATING RATE FUND continued
managers, the Board concluded that these noted that Invesco Aim acknowledges the effect this expense limitation would have
individuals are competent and able to Fund's underperformance because of shorter on the Fund's estimated total expenses.
continue to carry out their term performance results and continues to
responsibilities under the Fund's monitor the Fund. The Board also After taking account of the Fund's
investment advisory agreement. considered the steps Invesco Aim has taken contractual advisory fee rate, as well as
over the last several years to improve the the comparative advisory fee information
In determining whether to continue the quality and efficiency of the services and the expense limitation discussed
Fund's investment advisory agreement, the that Invesco Aim provides to the AIM above, the Board concluded that the Fund's
Board considered the prior relationship Funds. The Board concluded that Invesco advisory fees were fair and reasonable.
between Invesco Aim and the Fund, as well Aim continues to be responsive to the
as the Board's knowledge of Invesco Aim's Board's focus on fund performance. D. Economies of Scale and Breakpoints
operations, and concluded that it was Although the independent written
beneficial to maintain the current evaluation of the Fund's Senior Officer The Board considered the extent to which
relationship, in part, because of such only considered Fund performance through there are economies of scale in Invesco
knowledge. The Board also considered the the most recent calendar year, the Board Aim's provision of advisory services to
steps that Invesco Aim and its affiliates also reviewed more recent Fund performance the Fund. The Board also considered
have taken over the last several years to and this review did not change their whether the Fund benefits from such
improve the quality and efficiency of the conclusions. economies of scale through contractual
services they provide to the AIM Funds in breakpoints in the Fund's advisory fee
the areas of investment performance, C. Advisory Fees and Fee Waivers schedule or through advisory fee waivers
product line diversification, or expense limitations. The Board noted
distribution, fund operations, shareholder The Board compared the Fund's contractual that the Fund's contractual advisory fee
services and compliance. The Board advisory fee rate to the contractual schedule includes three breakpoints but
concluded that the quality and efficiency advisory fee rates of funds in the Fund's that, due to the Fund's asset level at the
of the services Invesco Aim and its Lipper expense group that are not managed end of the past calendar year and the way
affiliates provide to the AIM Funds in by Invesco Aim, at a common asset level in which the breakpoints have been
each of these areas generally have and as of the end of the past calendar structured, the Fund has yet to benefit
improved, and support the Board's approval year. The Board noted that the Fund's from the breakpoints. Based on this
of the continuance of the Fund's contractual advisory fee rate was at the information, the Board concluded that the
investment advisory agreement. median contractual advisory fee rate of Fund's advisory fees would reflect
funds in its expense group. The Board also economies of scale at higher asset levels.
B. Fund Performance reviewed the methodology used by Lipper in The Board also noted that the Fund shares
determining contractual fee rates. directly in economies of scale through
The Board compared the Fund's performance lower fees charged by third party service
during the past one and three and five The Board also compared the Fund's providers based on the combined size of
calendar years to the performance of funds effective fee rate (the advisory fee after all of the AIM Funds and affiliates.
in the Fund's performance group that are any advisory fee waivers and before any
not managed by Invesco Aim, and against expense limitations/waivers) to the total E. Profitability and Financial
the performance of all funds in the advisory fees paid by separately managed Resources of Invesco Aim
S&P/LSTA Leveraged Loan Index. The Board accounts/wrap accounts advised by an
also reviewed the criteria used by Invesco Invesco Aim affiliate. The Board noted The Board reviewed information from
Aim to identify the funds in the Fund's that the Fund's rate was below the rates Invesco Aim concerning the costs of the
performance group for inclusion in the for the separately managed accounts/wrap advisory and other services that Invesco
Lipper reports and the methodology used by accounts. The Board considered that Aim and its affiliates provide to the Fund
Lipper to identify the performance management of the separately managed and the profitability of Invesco Aim and
universe. The Board noted that the Fund's accounts/wrap accounts by the Invesco Aim its affiliates in providing these
performance was in the fourth quintile of affiliate involves different levels of services. The Board also reviewed
its performance group for the one year services and different operational and information concerning the financial
period and the first quintile for the regulatory requirements than Invesco Aim's condition of Invesco Aim and its
three year period (the first quintile management of the Fund. The Board affiliates. The Board also reviewed with
being the best performing funds and the concluded that these differences are Invesco Aim the methodology used to
fifth quintile being the worst performing appropriately reflected in the fee prepare the profitability information. The
funds). The Board noted that the Fund's structure for the Fund. Board considered the overall profitability
performance was in the first quintile of of Invesco Aim, as well as the
its Lipper performance universe for the The Board noted that Invesco Aim has profitability of Invesco Aim in connection
five year period (the Fund's Lipper contractually agreed to waive fees and/ or with managing the Fund. The Board noted
performance universe was used to assess limit expenses of the Fund through at that Invesco Aim continues to operate at a
investment performance for the five year least June 30, 2009 in an amount necessary net profit, although increased expenses in
period because the Fund's performance to limit total annual operating expenses recent years have reduced the
group for that period was too small for an to a specified percentage of average daily profitability of Invesco Aim and its
appropriate evaluation of investment net assets for each class of the Fund. The affiliates. The Board concluded that the
performance). The Board noted that the Board considered the contractual nature of Fund's fees were fair and reasonable, and
Fund's performance was below the this fee waiver and noted that it remains that the level of profits realized by
performance of the Index for the one, in effect until at least June 30, 2009. Invesco Aim and its affiliates from
three and five year periods. The Board The Board also the providing services to the Fund was not
excessive in light of the nature, quality
and extent of the services provided. The
37 AIM FLOATING RATE FUND continued
Board considered whether Invesco Aim is expenses. The Board also noted that filiated Sub-Advisers, which have offices
financially sound and has the resources research obtained through soft dollar and personnel that are geographically
necessary to perform its obligations under arrangements may be used by Invesco Aim in dispersed in financial centers around the
the Fund's investment advisory agreement, making investment decisions for the Fund world, have been formed in part for the
and concluded that Invesco Aim has the and may therefore benefit Fund purpose of researching and compiling
financial resources necessary to fulfill shareholders. The Board concluded that information and making recommendations on
these obligations. Invesco Aim's soft dollar arrangements the markets and economies of various
were appropriate. The Board also concluded countries and securities of companies
F. Independent Written Evaluation of that, based on their review and located in such countries or on various
the Fund's Senior Officer representations made by Invesco Aim, these types of investments and investment
arrangements were consistent with techniques, and providing investment
The Board noted that, at their direction, regulatory requirements. advisory services. The Board concluded
the Senior Officer of the Fund, who is that the sub-advisory agreements will
independent of Invesco Aim and Invesco The Board considered the fact that the benefit the Fund and its shareholders by
Aim's affiliates, had prepared an Fund's uninvested cash and cash collateral permitting Invesco Aim to utilize the
independent written evaluation to assist from any securities lending arrangements additional resources and talent of the
the Board in determining the may be invested in money market funds Affiliated Sub-Advisers in managing the
reasonableness of the proposed management advised by Invesco Aim pursuant to Fund.
fees of the AIM Funds, including the Fund. procedures approved by the Board. The
The Board noted that they had relied upon Board noted that Invesco Aim will receive B. Fund Performance
the Senior Officer's written evaluation advisory fees from these affiliated money
instead of a competitive bidding process. market funds attributable to such The Board did view Fund performance as a
In determining whether to continue the investments, although Invesco Aim has relevant factor in considering whether to
Fund's investment advisory agreement, the contractually agreed to waive through at approve the sub-advisory agreements for
Board considered the Senior Officer's least June 30, 2009, the advisory fees the Fund, as one of the Affiliated
written evaluation. payable by the Fund in an amount equal to Sub-Advisers currently manages the Fund's
100% of the net advisory fees Invesco Aim assets. The Board compared the Fund's
G. Collateral Benefits to Invesco Aim receives from the affiliated money market performance during the past one, three and
and its Affiliates funds with respect to the Fund's five calendar years to the performance of
investment of uninvested cash, but not funds in the Fund's performance group that
The Board considered various other cash collateral. The Board considered the are not managed by Invesco Aim, and
benefits received by Invesco Aim and its contractual nature of this fee waiver and against the performance of all funds in
affiliates resulting from Invesco Aim's noted that it remains in effect until at the S&P/LSTA Leveraged Loan Index. The
relationship with the Fund, including the least June 30, 2009. The Board concluded Board noted that the Fund's performance
fees received by Invesco Aim and its that the Fund's investment of uninvested was in the fourth quintile of its
affiliates for their provision of cash and cash collateral from any performance group for the one year period
administrative, transfer agency and securities lending arrangements in the and the first quintile for the three year
distribution services to the Fund. The affiliated money market funds is in the period (the first quintile being the best
Board considered the performance of best interests of the Fund and its performing funds and the fifth quintile
Invesco Aim and its affiliates in shareholders. being the worst performing funds) .The
providing these services and the Board noted that the Fund's performance
organizational structure employed by II. Sub-Advisory Agreements was in the first quintile of its Lipper
Invesco Aim and its affiliates to provide performance universe for the five year
these services. The Board also considered A. Nature, Extent and Quality of period (the Fund's Lipper performance
that these services are provided to the Services Provided by Affiliated universe was used to assess investment
Fund pursuant to written contracts which Sub-Advisors performance for the five year period
are reviewed and approved on an annual because the Fund's performance group for
basis by the Board. The Board concluded The Board reviewed the services to be that period was too small for an
that Invesco Aim and its affiliates were provided by Invesco Trimark Ltd., Invesco appropriate evaluation of investment
providing these services in a satisfactory Asset Management Deutschland, GmbH, performance). The Board noted that the
manner and in accordance with the terms of Invesco Asset Management Limited, Invesco Fund's performance was below the
their contracts, and were qualified to Asset Management (Japan) Limited, Invesco performance of the Index for the one,
continue to provide these services to the Australia Limited, Invesco Global Asset three and five year periods. The Board
Fund. Management (N.A.), Inc., Invesco Hong Kong also considered the steps Invesco Aim has
Limited, Invesco Institutional (N.A.), taken over the last several years to
The Board considered the benefits Inc. and Invesco Senior Secured improve the quality and efficiency of the
realized by Invesco Aim as a result of Management, Inc. (collectively, the services that Invesco Aim provides to the
portfolio brokerage transactions executed "Affiliated Sub-Advisers") under the AIM Funds. The Board concluded that
through "soft dollar" arrangements. Under sub-advisory agreements and the Invesco Aim continues to be responsive to
these arrangements, portfolio brokerage credentials and experience of the officers the Board's focus on fund performance.
commissions paid by the Fund and/or other and employees of the Affiliated
funds advised by Invesco Aim are used to Sub-Advisers who will provide these C. Sub-Advisory Fees
pay for research and execution services. services. The Board concluded that the
The Board noted that soft dollar nature, extent and quality of the services The Board considered the services to be
arrangements shift the payment obligation to be provided by the Affiliated provided by the Affiliated Sub-Advisers
for the research and execution services Sub-Advisers were appropriate. The Board pursuant to the sub-advisory agreements
from Invesco Aim to the funds and noted that the Af-
therefore may reduce Invesco Aim's
38 AIM FLOATING RATE FUND continued
and the services to be provided by
Invesco Aim pursuant to the Fund's
investment advisory agreement, as well as
the allocation of fees between Invesco Aim
and the Affiliated Sub-Advisers pursuant
to the sub-advisory agreements. The Board
noted that the sub-advisory fees have no
direct effect on the Fund or its
shareholders, as they are paid by Invesco
Aim to the Affiliated Sub-Advisers, and
that Invesco Aim and the Affiliated
Sub-Advisers are affiliates. After taking
account of the Fund's contractual
sub-advisory fee rate, as well as other
relevant factors, the Board concluded that
the Fund's sub-advisory fees were fair and
reasonable.
D. Financial Resources of the
Affiliated Sub-Advisers
The Board considered whether each
Affiliated Sub-Adviser is financially
sound and has the resources necessary to
perform its obligations under its
respective sub-advisory agreement, and
concluded that each Affiliated Sub-Adviser
has the financial resources necessary to
fulfill these obligations.
39 AIM FLOATING RATE FUND
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2008:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
Qualified Dividend Income* 0%
Corporate Dividends Received Deduction* 0%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
<Table>
<Caption>
NON-RESIDENT ALIEN SHAREHOLDERS
Qualified Interest Income** 0%
</Table>
** The above percentage is based on income dividends paid to shareholders
during the Fund's fiscal year.
ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2007 was 4.82%.
40 AIM FLOATING RATE FUND
PROXY RESULTS
A Special Meeting ("Meeting") of Shareholders of AIM Floating Rate Fund, an
investment portfolio of AIM Counselor Series Trust, a Delaware statutory trust
("Trust"), was held on February 29, 2008 and was adjourned with respect to
certain proposals, until March 28, 2008. The Meeting on March 28, 2008 was held
for the following purposes:
(1) Elect 13 trustees to the Board of Trustees of the Trust, each of whom will
serve until his or her successor is elected and qualified.
(2) Approve an amendment to the Trust's Agreement and Declaration of Trust that
would permit the Board of Trustees of the Trust to terminate the Trust, the
Fund, and each other series portfolio of the Trust, or a share class without
a shareholder vote.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHELD/
MATTERS VOTES FOR ABSTENTIONS**
- -----------------------------------------------------------------------------------------------------------------------
(1)* Bob R. Baker................................................................... 80,004,783 1,692,073
Frank S. Bayley................................................................ 80,042,468 1,654,388
James T. Bunch................................................................. 80,071,331 1,625,525
Bruce L. Crockett.............................................................. 80,047,680 1,649,176
Albert R. Dowden............................................................... 80,044,519 1,652,337
Jack M. Fields................................................................. 80,054,678 1,642,178
Martin L. Flanagan............................................................. 80,013,733 1,683,123
Carl Frischling................................................................ 80,026,567 1,670,289
Prema Mathai-Davis............................................................. 80,025,589 1,671,267
Lewis F. Pennock............................................................... 80,059,672 1,637,184
Larry Soll, Ph.D. ............................................................. 80,040,389 1,656,467
Raymond Stickel, Jr. .......................................................... 80,056,699 1,640,157
Philip A. Taylor............................................................... 80,034,136 1,662,720
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(2)* Approve an amendment to the Trust's Agreement and
Declaration of Trust that would permit the Board
of Trustees of the Trust to terminate the Trust,
the Fund, and each other series portfolio of the
Trust, or a share class without a shareholder
vote............................................. 55,885,613 10,011,477 2,110,683 13,689,083
</Table>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Counselor Series Trust.
** Includes Broker Non-Votes.
41 AIM FLOATING RATE 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 103 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. 2007 Executive Director, Chief Executive Officer and President, None
Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global
Trustee investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Director, Chairman,
Chief Executive Officer and President, IVZ Inc. (holding
company); INVESCO North American Holdings, Inc. (holding
company); and, INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of Funds--Registered
Trademark--; Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President,
Invesco Holding Company Limited (parent of Invesco Aim and a
global investment management firm); Chairman, Investment
Company Institute; President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief Financial
Officer, Franklin Resources, Inc. (global investment
management organization)
- --------------------------------------------------------------------------------------------------------------------------------
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 President, Invesco Trimark Dealer Inc. (formerly AIM Mutual
Executive Officer Fund Dealer Inc.) (registered broker dealer), 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
register transfer agent) and AIM GP Canada Inc. (general
partner for a limited partnership); 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, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (formerly AIM Canada Holdings
Inc.) (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund 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 (formerly AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services) (registered investment advisor
and registered transfer agent); Trustee, President and
Principal Executive Officer of The AIM Family of Funds--
Registered Trademark-- (other than AIM Treasurer's Series
Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds--
Registered Trademark-- (AIM Treasurer's Series Trust and
Short-Term Investments Trust only); and Manager, Invesco
PowerShares Capital Management LLC
Formerly: Director and President, AIM Trimark Corporate
Class Inc. and AIM Trimark Canada Fund Inc.; Director and
President, Invesco Trimark Ltd./Invesco Trimark Ltee
(formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise
Services); Senior Managing Director, Invesco Holding Company
Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (registered broker dealer); President and Principal
Executive Officer, The AIM Family of Funds--Registered
Trademark-- (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.; and Director, Trimark Trust (federally
regulated Canadian Trust Company)
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited
Trustee and Chair consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
- --------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- --------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired
Trustee
Formerly: Partner, law firm of Baker & McKenzie; and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Policy
Trustee firm) Studies, Inc. and
Van Gilder Insurance
Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business None
Trustee corporations, including the Boss Group Ltd. (private
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company); Annuity and Life Re
(Holdings), Ltd. (reinsurance 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.; 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)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company); and Discovery Global
Education Fund (non-profit)
- --------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds) (15
portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA of the USA 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
Trustee
Formerly: Partner, Deloitte & Touche; and Director, Mainstay None
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.
42 AIM FLOATING RATE FUND
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 of N/A
Senior Vice President and Funds--Registered Trademark--
Senior Officer
Formerly: Director of Compliance and Assistant 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 Counsel, N/A
Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc.
Legal Officer and Secretary 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--Registered
Trademark--; 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, Senior Vice President, General Counsel
and Secretary, 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 President, The N/A
Vice President AIM Family of Funds--Registered Trademark--
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--Registered
Trademark--; 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; and Senior Vice President and Compliance
Director, Delaware Investments Family of Funds
- --------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A
Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited,
IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO North American Holdings,
Inc.; and Vice President, The AIM Family of Funds--Registered
Trademark--
Formerly: 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--Registered Trademark--; Director and Vice
President, INVESCO Distributors, Inc. and Chief Executive Officer
and President, INVESCO Funds Group, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sheri S. Morris -- 1964 2008 Vice President, Treasurer and Principal Financial Officer, The N/A
Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Assistant Vice
and Principal Financial President, Invesco Aim Advisors, Inc., Invesco Aim Capital
Officer Management, Inc. and Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of Funds--Registered Trademark--
- --------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash Management N/A
Vice President Group; 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, The AIM Family of Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust and Short-Term Investments
Trust); and President and Principal Executive Officer, The AIM
Family of Funds--Registered Trademark-- (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--Registered
Trademark-- (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 Advisors, N/A
Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim
Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc.,
Invesco Aim Private Asset Management, Inc. and The AIM Family of
Funds--Registered Trademark--
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.; Senior N/A
Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief
Compliance Officer, The AIM Family of Funds--Registered
Trademark--, 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, Invesco Aim Distributors, PricewaterhouseCoopers
Suite 100 Inc. Inc. LLP
Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
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 State Street Bank and
& Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company
2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street
Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Americas
New York, NY 10036-2714
43 AIM FLOATING RATE FUND
====================================================================================================================================
EDELIVERY
INVESCOAIM.COM/EDELIVERY
REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via email. Once your quarterly
statements, tax forms, fund reports, and prospectuses are available, we will send you an email notification containing links to
these documents. For security purposes, you will need to log in to your account to view your statements and tax forms.
WHY SIGN UP? HOW DO I SIGN UP?
Register for eDelivery to: It's easy. Just follow these simple steps:
- - save your Fund the cost of printing and postage. 1. Log in to your account.
- - reduce the amount of paper you receive. 2. Click on the "Service Center" tab.
- - gain access to your documents faster by not waiting for the 3. Select "Register for eDelivery" and complete the consent
mail. process.
- - view your documents online anytime at your convenience.
- - save the documents to your personal computer or print them
out for your records.
This service is provided by Invesco Aim Investment Services, Inc.
====================================================================================================================================
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, 2008, 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, 2009, 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 [INVESCO AIM LOGO]
individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco - SERVICE MARK -
Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco
Asset Management (Japan) Ltd., Invesco Hong Kong Ltd., Invesco Australia Limited, Invesco Asset Management
Limited and Invesco Asset Management Deutschland GmbH are affiliated investment advisors that serve as
subadvisors to many of the products and services represented by Invesco Aim. Invesco Aim Distributors, Inc. is
the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds
represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
invescoaim.com FLR-AR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM MULTI-SECTOR FUND
- SERVICE MARK - Annual Report to Shareholders o August 31, 2008
[MOUNTAIN GRAPHIC]
2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Long-Term Fund Performance
8 Supplemental Information
9 Schedule of Investments
12 Financial Statements
15 Notes to Financial Statements
21 Financial Highlights
23 Auditor's Report
24 Fund Expenses
25 Approval of Investment Advisory Agreement
28 Tax Information
29 Results of Proxy
30 Trustees and Officers
Dear Shareholder:
In previous reports, I've talked with you about short-term market volatility. I'd like to take this
opportunity to update you on recent market developments and provide some perspective and encouragement to
[TAYLOR fellow long-term investors.
PHOTO]
MARKET OVERVIEW
Philip Taylor
About a year ago or so, we saw warning signs of increasing economic ills -- a weakening housing market,
rising inflation and slowing job growth, among others. Nonetheless, U.S. equity markets were performing
relatively well. But as the year progressed, the housing market deteriorated, energy prices rose,
unemployment increased and the credit crunch grew more widespread.
In response, the U.S. Federal Reserve cut short-term interest rate targets to stimulate economic growth and expand market
liquidity.(1) Congress and the president worked together to enact an economic stimulus plan, one facet of which was to provide more
than 112 million taxpayers with $92 billion in tax rebates.(2) Historically, actions such as these have stimulated economic growth.
Unfortunately, other factors were simultaneously at work behind the scenes, and the market began to reveal the strain of those
factors.
HOW WE GOT HERE
The market stresses we saw over the past year were the result of years of lax lending associated with the recent housing boom.
Mortgage loans of questionable quality were bundled into hard-to-value securities that were sold to, and traded among, financial
institutions. The value of those securities declined; more institutions sought to sell them and fewer institutions were willing to
buy them. As a result, financial institutions' access to credit declined and the value of their holdings declined -- preventing
normal trading among banks and other financial institutions.
In October 2008, Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to
purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in
the last half century.
INVESTING IN A VOLATILE MARKET
Whether or not markets recover in the short term, the kind of volatility we've seen of late is a good reminder that in times of
market uncertainty, it's wise to stay true to three timeless investing principles:
o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. I urge you to stick to your
investment plan and stay focused on your long-term goals.
o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of
complementary asset classes may potentially cushion your portfolio against excessive volatility.
o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes
viewing market volatility as a matter of course, not a reason to panic.
That leads me to a fourth principle we believe may be critical to your success: Work with a trusted financial advisor. An
experienced advisor who knows your goals and situation can be your most valuable asset, particularly during times of market
volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course.
Recent market volatility has been disconcerting for everyone. Remember, however, that many of history's significant buying
opportunities were the result of short-term economic crises that, in their time, were considered unprecedented. I believe current
market volatility and uncertainty may represent a buying opportunity for patient, long-term investors. Invesco Aim's portfolio
managers are working diligently on your behalf to capitalize on this situation.
OUR NEW BRAND IDENTITY
While market conditions are obviously at the top of everyone's mind, there are some significant changes I want to share with you: We
have a new name and a new brand -- Invesco Aim.
Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers with $450 billion
in assets under management as of August 31, 2008. Invesco has 5,300 employees in 13 investment centers worldwide serving clients in
100 countries. This provides you:
o Diversified investment strategies from distinct management teams around the globe.
o A range of investment products to help you achieve your financial goals.
o The peace of mind professional asset management and a diversified investment portfolio can provide.
While our name may have changed, our commitment to putting shareholders first, helping clients achieve their investment goals and
providing excellent customer service will never change.
If you have questions about this report or your account, please contact one of our client service representatives at 800 959
4246.
Thank you for your continued confidence, and we look forward to serving you.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
October 20, 2008
(1) U.S. Federal Reserve Board;
(2) U.S. Department of the Treasury
2 AIM MULTI-SECTOR FUND
Dear Fellow Shareholders:
As I write this letter, turbulent financial markets are causing considerable investor anxiety, reminding us
[CROCKETT again that markets are cyclical and the correction of excess is often painful, at least in the short term.
PHOTO] Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment
discipline. We continue to put your interests first in the effort to improve investment performance,
Bruce Crockett contain shareholder costs and uphold the highest ethical standards.
We remain enthusiastic about the global reach and investment expertise that Invesco, a leading independent
global investment management company, brings to the management of AIM Funds as the parent company of the advisors. The diverse
investment strategies deployed throughout the worldwide network of Invesco investment centers has helped strengthen the management
of many AIM Funds. The rebranding of the Funds' management company as Invesco new mountain logo using a Himalayan peak to symbolize
stability, endurance, strength and longevity; and a new ad campaign. Emphasizing Invesco Aim's focus and investment quality, the ads
will appear in financial publications such as Barron's and Investment News through the end of 2008.
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."
We have recently completed another active proxy voting season during which we acted on your behalf to double the number of votes
in favor of separating the roles of chairman and CEO at the companies whose shares your Funds hold. We also continued to support the
movement for shareholders to have a bigger role in approving executive compensation, initiatives known as "say on pay." Like
virtually all other mutual fund complexes, AIM Funds abstain from voting on social issues as a matter of policy, and I would be
interested to hear your thoughts on this policy.
As always, you are welcome to email your questions or comments to me at bruce@brucecrockett.com. The dialogue that has been
established in this way has been instructive for your Board, and we want it to continue. Although the production schedule for Fund
annual reports and prospectuses allows me to write these letters of general report and response just twice a year, please be assured
that your comments are received, welcomed and heard in the interim.
We look forward to hearing from you and to representing you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
October 20, 2008
3 AIM MULTI-SECTOR FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= market volatility increased as evidence of
PERFORMANCE SUMMARY a pending recession was compounded by
mounting inflationary pressures.
For the fiscal year ended August 31, 2008, AIM Multi-Sector Fund, at net asset value,
outperformed the S&P 500 Index, the Fund's broad market and style-specific index, which In seven separate actions beginning in
consists of 10 sectors.(triangle) The Fund invests at least 80% of its assets ap- September 2007, the U.S. Federal Re- serve
proximately equally in only five of these 10 market sectors: energy, financial Board (the Fed) lowered the federal funds
services, health care, information technology (IT) and "leisure" (represented by the target rate from 5.25% to 2.00% in an
consumer discretionary sector). The Fund was able to outperform its benchmark due to effort to inject liquidity into the
security selection and relative overweights in the energy and health care sectors. weakening credit markets.(2) The collapse
of Bear Stearns (not a Fund holding) and
Your Fund's long-term performance appears later in this report. difficulties encountered by government-
sponsored mortgage suppliers Freddie Mac
FUND VS. INDEXES (not a Fund holding) and Fannie Mae proved
that the housing market and financials
Total returns, 8/31/07 to 8/31/08, at net asset value (NAV). Performance shown does not sector continued to struggle. In response,
in- clude applicable contingent deferred sales charges (CDSC) or front-end sales the Fed utilized a variety of monetary
charges, which would have reduced performance. policy tools to help alleviate the strain
on financial markets.
Class A Shares -8.22%
Class B Shares -8.89 Gross domestic product (GDP) in-
Class C Shares -8.89 creased at an annual rate of 2.8% in the
S&P 500 Index(triangle) (Broad Market/Style-Specific Index) -11.13 second quarter of 2008, buoyed in part by
Lipper Multi-Cap Core Funds Index(triangle) (Peer Group Index) -10.83 government tax rebates.(3) Indeed, this
(triangle)Lipper Inc. level is higher than the 0.9% annualized
======================================================================================= increase in the first quarter of 2008.(3)
In- flation, measured by a seasonally
HOW WE INVEST year-end to return the sectors to their adjusted Consumer Price Index, increased
approximate equal weightings. at an annual rate of 5.4% year over year
Your Fund invests the bulk of its assets as of August 2008.(4) The advance in the
in stocks from five market sectors: We consider selling a stock when we price index was mostly attributable to
energy, financial services, health care, see: increases in the cost of energy.
IT and "leisure" (represented by the Unemployment also trended higher during
consumer discretionary sector). Fund o Fundamental deterioration in the the fiscal year and ended August at a rate
assets are divided more or less equally company. of 6.1%.4
among securities of companies from each
sector in which the Fund invests. Fund o More attractive investment Market volatility increased
manag- ers act independently within opportunities. significantly after the close of the
sectors. At any given time, 20% of the Fund's fiscal year. To put some context
Fund's assets are not required to be o Inability of the company to capitalize around the recent financial events: The
invested in the five previously mentioned on market opportunity. markets have shown serious strain for more
sectors. than a year, largely the result of years
o A questionable change in manage- ment's of lax credit practices associated with
We use fundamental and quantitative strategic direction. the housing boom. Mortgage loans of ques-
analysis to identify market leading tionable quality were often bundled into
companies with competitive positioning and MARKET CONDITIONS AND YOUR FUND hard-to-understand securities and sold to
strong anticipated growth relative to various financial institutions. The com-
their peers. We focus on companies that Many factors contributed to the nega- tive plexity and obscure structure of these
exhibit strong return on capital, cash performance of most major market indexes securities hid an Achilles' heel of our
flow, sustainable growth and superior for the year ended August 31, 2008.(1) The financial system, creating a liquidity
business strategies that make them market chief catalyst was undoubt- edly the crisis of historic severity.
leaders. ongoing subprime loan crisis and its
far-reaching effects on overall credit Now those securities remain on the
In the resulting portfolio, each sector availability. Additionally, record high financial institutions' balance sheets -
has approximately 20 to 25 holdings. The crude oil prices, falling home values and
Fund is rebalanced annually at fiscal the declining U.S. dollar placed
significant pressure on the purchasing
power of the U.S. consumer. Late in the
fiscal year, consumer confidence fell and
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector 1. Omnicom Group Inc. 2.5%
1. Oil & Gas Exploration & 2. News Corp.-Class A 1.8
Financials 19.3% Production 6.9% 3. Google Inc.-Class A 1.7
Information Technology 18.8 2. Integrated Oil & Gas 6.3 4. Capital One Financial Corp. 1.6
Health Care 18.6 3. Biotechnology 5.6 5. Citigroup Inc. 1.6
Energy 18.0 4. Movies & Entertainment 4.2 6. Comcast Corp.-Class A 1.5
Consumer Discretionary 17.2 5. Communications Equipment 4.2 7. JPMorgan Chase & Co. 1.5
Consumer Staples 3.9 ========================================== 8. Cablevision Systems
Utilities 0.9 Corp.-Class A 1.4
Telecommunication Services 0.8 ========================================== 9. Walt Disney Co. (The) 1.4
U.S. Treasury Bills and Money Total Net Assets $724.3 million 10. American Medical Systems
Market Funds Total Number of Holdings* 108 Holdings, Inc. 1.4
Plus Other Assets Less ========================================== ==========================================
Liabilities 2.5
==========================================
The Fund's holdings are subject to change, and there is no assurance that the Fund will
continue to hold any particular security.
* Excluding money market fund holdings.
4 AIM MULTI-SECTOR FUND
eroding capital, driving down profits and Dakota Bakken Oil field, benefited from MARK GREENBERG
preventing normal trading among banks and its unusual position as an oil-levered
other financial institutions due to the E&P and the rise of crude prices. Chartered Financial Analyst, senior
participating financial institutions' Southwestern Energy has the largest land portfolio manager, is lead manager of AIM
stability being in question. After the position in the Fayetteville Shale in Multi-Sector Fund with respect to the
close of the fiscal year, this situation northwest Arkansas and was particularly Fund's investments in the leisure sec-
came to a head as some of these successful at increasing production in tor. He has been associated with Invesco
institutions began running out of the the unconventional gas shale. Although our Aim and/or its affiliates since 1996. Mr.
capital needed to operate their businesses investment thesis for each of these Greenberg attended City University in
and found investors unwilling to supply companies remained, we have trimmed these London, England, and earned his B.S.B.A.
fresh capital. Compounding the problem is positions due to current valuations. in economics with a specialization in
growing concern over future economic finance from Marquette University.
prospects. The top detractor from Fund perform-
ance during the fiscal year was FANNIE JOHN SEGNER
To ensure the orderly functioning of MAE, the publicly traded government
the credit markets and thereby preventing sponsored entity (GSE) which provides Senior portfolio manager, is lead manag-
a more severe economic downturn, in early funds to mortgage lenders and ultimately er of AIM Multi-Sector Fund with respect
October Congress enacted a $700 billion home buyers by issuing and guaranteeing to the Fund's investments in the energy
rescue plan -- the Troubled Assets Relief mortgage-related securities. Fannie Mae sector. He has been associated with In-
Program. In addition, the Fed -- in suffered as a result of home prices vesco Aim and/or its affiliates since
concert with other world banks -- low- falling while mortgage delinquencies and 1997. Mr. Segner earned his bachelor's
ered short-term interest rates from 2.0% foreclosures rose. We continued to hold degree in civil engineering from the
to 1.5% on October 8, 2008.(2) the stock at the close of the fiscal year, University of Alabama and holds an M.B.A.
although after such significant losses, it with a concentration in finance from The
For the fiscal year, financial represented only a small percentage of the University of Texas at Austin.
services, telecommunication services and Fund.
consumer discretionary were the weakest MICHAEL SIMON
performing sectors of the S&P 500 Index. Within the consumer discretionary
Conversely, consumer staples, energy and sector, CROCS, the popular footwear Chartered Financial Analyst, senior
materials -- mostly sectors the Fund does manufacturer, was among the top detractors portfolio manager, is lead manager of AIM
not invest in -- were the best performing from Fund performance. Concerns over Multi-Sector Fund with respect to the
sectors. Security selection in the energy rising inventories and decreasing Fund's investments in the financial
and health care sectors, as well as revenues, particularly during a period of services sector. He began his investment
overweights in these sectors, were the economic weakness, caused volatility to career in 1989 and joined Invesco Aim in
main drivers of Fund performance. increase for the stock. We sold our 2001. Mr. Simon earned a B.A. in finance
Detractors from Fund performance pri- position during the period as our from Texas Christian University and an
marily were a result of stock selection investment thesis for owning Crocs M.B.A. with high honors from the Gradu-
and overweight in the consumer deteriorated. ate School of Business at the University
discretionary sector, as well as security of Chicago.
selection and an underweight in consumer The Fund continues to offer exposure to
staples, relative to the S&P 500 Index. five dynamic sectors we believe offer the DEREK TANER
best growth potential, yet relatively low
Increased world demand and high oil correlation to each other. Additionally, Chartered Financial Analyst, portfolio
prices helped to drive energy stocks, as the Fund's structure provides poten- manager, is lead manager of AIM Multi-
energy was among the strongest per- tially lower volatility than a single Sector Fund with respect to the Fund's
forming sectors in the S&P 500 Index sector given our annual rebalancing and investments in the health care sector. He
during the fiscal year. Among the top correlation considerations. began his investment career in 1993 and
contributors to Fund performance were two joined Invesco Aim in 2005. Mr. Taner
companies focused on exploration and As always, we thank you for your con- earned a B.S. in business administration
production, CONTINENTAL RESOURCES and tinued investment in AIM Multi-Sector with an emphasis in accounting and finance
SOUTHWESTERN ENERGY. Continental Fund. and an M.B.A. from the Haas School of
Resources, one of the earliest and largest Business at the University of California
drilling leaseholders in the North 1 Lipper Inc.; 2 U.S. Federal Reserve; 3 (Berkeley).
Bureau of Economic Analysis; 4 Bureau of
========================================== Labor Statistics WARREN TENNANT
S&P 500 INDEX WEIGHTINGS AND RETURNS
By sector, 8/31/07 - 8/31/08 The views and opinions expressed in Chartered Financial Analyst, portfolio
management's discussion of Fund manager, is lead manager of AIM Multi-
SECTOR WEIGHTING(1) RETURN(2) performance are those of Invesco Aim Sector Fund with respect to the Fund's
Consumer Advisors, Inc. These views and opinions investments in the technology sector. He
Discretionary are subject to change at any time based on has been associated with Invesco Aim
("Leisure") 8.48% -16.60% factors such as market and economic and/or its affiliates since 2000. Mr. Ten-
Consumer Staples 11.36 6.63 conditions. These views and opinions may nant earned both a B.B.A. in finance and
Energy 13.80 5.17 not be relied upon as investment advice or an M.B.A. from The University of Texas at
Financials 15.11 -34.75 recommendations, or as an offer for a Austin.
Health Care 12.72 -3.53 particular security. The information is
Industrials 11.46 -10.42 not a complete analysis of every aspect of Assisted by the Basic Value, Diversified
Information 16.53 -8.89 any market, country, industry, security or Dividend, Energy/Gold/Utilities, Global
Technology the Fund. Statements of fact are from Health Care, Leisure and Technology Teams
Materials 3.69 2.14 sources considered reliable, but Invesco
Telecommunication 3.19 -19.98 Aim Advisors, Inc. makes no representation
Services or warranty as to their completeness or
Utilities 3.65 0.22 accuracy. Although historical performance
is no guarantee of future results, these
Sources: 1 Invesco Aim, Standard & Poor's; insights may help you understand our
2 Lipper Inc. investment management philosophy.
==========================================
See important Fund and index disclosures
later in this report.
5 AIM MULTI-SECTOR FUND
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee an index of funds reflects fund expenses shown in the chart. The vertical axis, the
comparable future results. and management fees; performance of a one that indicates the dollar value of an
market index does not. Performance shown investment, is constructed with each seg-
The data shown in the chart include in the chart and table(s) does not reflect ment representing a percent change in the
reinvested distributions, applicable sales deduction of taxes a shareholder would pay value of the investment. In this chart,
charges, Fund expenses and management on Fund distributions or sale of Fund each segment represents a doubling, or
fees. Results for Class B shares are shares. 100% change, in the value of the invest-
calculated as if a hypothetical sharehold- ment. In other words, the space between
er had liquidated his entire investment in This chart, which is a logarithmic $5,000 and $10,000 is the same size as the
the Fund at the close of the reporting chart, presents the fluctuations in the space between $10,000 and $20,000, and so
period and paid the applicable contin- value of the Fund and its indexes. We on.
gent deferred sales charges. Index results believe that a logarithmic chart is more
include reinvested dividends, but they do effective than other types of charts in
not reflect sales charges. Performance of illustrating changes in value during the
early years
continued from page 8
o The returns shown in the manage- ment's on those net asset values may differ
discussion of Fund performance are from the net asset values and returns
based on net asset values calculated reported in the Financial Highlights.
for shareholder transactions. Gener-
ally accepted accounting principles o Industry classifications used in this
require adjustments to be made to the report are generally according to the
net assets of the Fund at period end Global Industry Classification
for financial reporting purposes, and Standard, which was developed by and is
as such, the net asset values for the exclusive property and a service
sharehold- er transactions and the mark of MSCI Inc. and Standard &
returns based Poor's.
6 AIM MULTI-SECTOR FUND
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- CLASS A, B AND C SHARES (OLDEST SHARE CLASSES)
Index data from 8/31/02, Fund data from 9/3/02
AIM AIM AIM Lipper
Multi-Sector Multi-Sector Multi-Sector Multi-Cap
Fund- Class A Fund- Class B Fund- Class C S&P 500 Core Funds
Date Shares Shares Shares Index(1) Index(1)
8/31/02 $ 10000 $ 10000
9/02 $ 9160 $ 9687 $ 9687 8914 9080
10/02 9727 10281 10281 9698 9655
11/02 10155 10728 10728 10268 10243
12/02 9701 10247 10247 9665 9655
1/03 9657 10194 10194 9413 9492
2/03 9563 10087 10087 9271 9328
3/03 9638 10167 10167 9361 9358
4/03 10274 10827 10827 10132 10086
5/03 11093 11686 11673 10665 10768
6/03 11143 11733 11727 10801 10929
7/03 11281 11867 11854 10992 11140
8/03 11533 12127 12113 11206 11482
9/03 11300 11867 11860 11087 11330
10/03 11917 12507 12500 11714 12004
11/03 12087 12681 12674 11817 12192
12/03 12665 13279 13272 12436 12678
1/04 12998 13618 13611 12664 12976
2/04 13246 13867 13867 12840 13177
3/04 13128 13742 13735 12647 13028
4/04 12828 13418 13411 12448 12753
5/04 12887 13473 13473 12619 12906
6/04 13245 13839 13832 12864 13192
7/04 12691 13253 13246 12438 12651
8/04 12633 13184 13184 12488 12642
9/04 13167 13736 13729 12624 12912
10/04 13422 13991 13992 12816 13107
11/04 14106 14695 14688 13335 13765
12/04 14511 15110 15104 13788 14249
1/05 14229 14812 14806 13452 13924
2/05 14898 15499 15495 13735 14206
3/05 14536 15116 15112 13492 13983
4/05 14202 14755 14757 13237 13602
5/05 14891 15471 15467 13657 14159
6/05 15226 15805 15801 13677 14315
7/05 15922 16521 16517 14185 14922
8/05 16168 16762 16758 14056 14854
9/05 16262 16854 16850 14170 14987
10/05 15895 16457 16461 13933 14677
11/05 16530 17108 17106 14460 15242
12/05 16787 17365 17363 14465 15420
1/06 17708 18304 18304 14848 15993
2/06 17388 17964 17963 14888 15929
3/06 17640 18210 18209 15074 16284
4/06 18090 18665 18665 15276 16486
5/06 17400 17943 17941 14837 15915
6/06 17393 17928 17926 14856 15868
7/06 17230 17740 17738 14948 15678
8/06 17421 17928 17926 15303 16049
9/06 17749 18255 18252 15697 16393
10/06 18185 18696 18694 16208 17003
====================================================================================================================================
(1) Lipper Inc.
====================================================================================================================================
[MOUNTAIN CHART]
11/06 18778 19289 19287 16516 17406
12/06 18926 19432 19429 16748 17601
1/07 19135 19636 19633 17001 17984
2/07 18878 19357 19354 16669 17747
3/07 19107 19578 19575 16855 17934
4/07 19840 20325 20315 17602 18632
5/07 20630 21116 21113 18215 19329
6/07 20380 20846 20843 17913 19162
7/07 19950 20400 20395 17358 18549
8/07 20054 20487 20483 17618 18669
9/07 20983 21440 21435 18276 19319
10/07 21614 22055 22050 18567 19709
11/07 20380 20789 20776 17790 18823
12/07 20337 20729 20724 17667 18651
1/08 19052 19407 19402 16608 17604
2/08 18863 19199 19194 16069 17140
3/08 18486 18807 18803 15999 16899
4/08 19699 20030 20027 16778 17748
5/08 20512 20845 20842 16995 18183
6/08 19154 19453 19449 15564 16733
7/08 18158 18429 18426 15433 16489
8/08 18417 18565 18658 15656 16646
====================================================================================================================================
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/08, the most recent calendar
As of 8/31/08, including maximum quarter-end, including maximum applicable
applicable sales charges sales charges
CLASS A SHARES CLASS A SHARES
Inception (9/3/02) 10.73% Inception (9/3/02) 11.82%
5 Years 8.56 5 Years 10.19
1 Year -13.26 1 Year -11.19
CLASS B SHARES CLASS B SHARES
Inception (9/3/02) 10.88% Inception (9/3/02) 12.01%
5 Years 8.72 5 Years 10.37
1 Year -13.23 1 Year -11.14
CLASS C SHARES CLASS C SHARES
Inception (9/3/02) 10.97% Inception (9/3/02) 12.10%
5 Years 9.02 5 Years 10.64
1 Year -9.76 1 Year -7.59
========================================== ==========================================
THE PERFORMANCE DATA QUOTED REP RESENT CLASS A SHARE PERFORMANCE REFLECTS THE
PAST PERFORMANCE AND CANNOT GUARANTEE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
COMPARABLE FUTURE RESULTS; CURRENT AND CLASS C SHARE PER FORMANCE REFLECTS
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE THE APPLICABLE CONTINGENT DEFERRED SALES
VISIT INVESCOAIM. COM FOR THE MOST RECENT CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
MONTH-END PERFORMANCE. PERFORMANCE FIGURES CDSC ON CLASS B SHARES DECLINES FROM 5%
REFLECT REINVESTED DISTRIBUTIONS, CHANGES BEGINNING AT THE TIME OF PURCHASE TO 0% AT
IN NET ASSET VALUE AND THE EFFECT OF THE THE BEGINNING OF THE SEVENTH YEAR. THE
MAXIMUM SALES CHARGE UNLESS OTHERWISE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
STATED. INVESTMENT RETURN AND PRINCIPAL YEAR AFTER PURCHASE.
VALUE WILL FLUCTUATE SO THAT YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE PERFORMANCE OF THE FUND'S SHARE
CLASSES WILL DIFFER PRIMARILY DUE TO
THE TOTAL ANNUAL FUND OPERATING EXPENSE DIFFERENT SALES CHARGE STRUCTURES AND
RATIO SET FORTH IN THE MOST RECENT FUND CLASS EXPENSES.
PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR CLASS A, CLASS B AND CLASS C SHARES HAD THE ADVISOR NOT WAIVED FEES AND/OR
WAS 1.23%, 1.98% AND 1.98%, RESPECTIVELY. REIMBURSED EXPENSES IN THE PAST,
THE EXPENSE RATIOS PRESENTED ABOVE MAY PERFORMANCE WOULD HAVE BEEN LOWER.
VARY FROM THE EXPENSE RATIOS PRESENTED IN
OTHER SECTIONS OF THIS REPORT THAT ARE
BASED ON EXPENSES INCURRED DURING THE
PERIOD COVERED BY THIS REPORT.
7 AIM MULTI-SECTOR FUND
AIM MULTI-SECTOR FUND'S INVESTMENT OBJECTIVE IS CAPITAL GROWTH.
o Unless otherwise stated, information presented in this report is as of August 31, 2008, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
ABOUT SHARE CLASSES relative lack of information, significant effect on the Fund's net
relatively low market liquidity, and asset value when one of the sectors is
o Effective September 30, 2003, only the potential lack of strict financial performing more poorly than the
previously established qualified plans and accounting controls and standards. other(s). Active rebalancing of the
are eligible to purchase Class B shares Fund among the sectors may result in
of any AIM fund. o The leisure sector depends on consumer increased transaction costs.
discretionary spending, which generally
PRINCIPAL RISKS OF INVESTING IN THE FUND falls during economic downturns. ABOUT INDEXES USED IN THIS REPORT
o The businesses in which the Fund o There is no guarantee that the o The S&P 500--REGISTERED TRADEMARK--
invests may be adversely affected by investment techniques and risk analyses INDEX is a market
foreign government, federal or state used by the Fund's portfolio managers capitalization-weighted index covering
regulations on energy production, will produce the desired results. all major areas of the U.S. economy. It
distribution and sale. Short-term is not the 500 largest companies, but
fluctuations in commodity prices may o The prices of securities held by the rather the most widely held 500
influence Fund returns and increase Fund may decline in response to market companies chosen with respect to market
price fluctuations of the Fund's risks. size, liquidity, and their industry.
shares.
o Small- and mid-capitalization companies o The LIPPER MULTI-CAP CORE FUNDS INDEX
o Prices of equity securities change in tend to be more vulnerable to adverse is an equally weighted representation
response to many factors including the developments and more volatile than of the largest funds in the Lipper
historical and prospective earnings of larger companies. Investments in these Multi-Cap Core Funds category. These
the issuer, the value of its assets, sized companies may involve special funds typically have an average
general economic conditions, interest risks, including those associated with priceto- earnings ratio, price-to-book
rates, investor perceptions and market dependence on a small management group, ratio, and three-year sales-per-share
liquidity. little or no operating history, little growth value, compared to the S&P
or no track record of success, limited Composite 1500 Index.
o The financial services sector is product lines, less publicly available
subject to extensive government information, illiquidity, restricted o The Fund is not managed to track the
regulation, which may change resale or less frequent trading. performance of any particular index,
frequently. The profitability of including the indexes defined here, and
businesses in this sector depends o The Fund's investments are concentrated consequently, the performance of the
heavily on the availability and cost of in a comparatively narrow segment of Fund may deviate significantly from the
money and may fluctuate significantly the economy. Consequently, the Fund may performance of the indexes.
in response to changes to interest tend to be more volatile than other
rates and general economic conditions. mutual funds, and the value of the o A direct investment cannot be made in
Fund's investments may tend to rise and an index. Unless otherwise indicated,
o The value of the Fund's shares is fall more rapidly. index results include reinvested
particularly vulnerable to factors dividends, and they do not reflect
affecting the health care industry, o Many of the products and services sales charges. Performance of an index
such as substantial government offered in technology-related of funds reflects fund expenses;
regulation that may affect the demand industries are subject to rapid performance of a market index does not.
for products and services offered by obsolescence, which may lower the value
health care companies. Also, the of the securities of the companies in OTHER INFORMATION
products and services offered by health this sector.
care companies may be subject to rapid o The Chartered Financial
obsolescence caused by scientific o Start-up companies or earlier stage Analyst--REGISTERED TRADEMARK--
advances and technological innovations, companies, such as venture capital (CFA--REGISTERED TRADEMARK--)
which can cause Fund shares to rise and companies, generally have limited designation is a globally recognized
fall more than the value of shares of a operating histories, no present market standard for measuring the competence
fund that invests more broadly. for their technologies or products and and integrity of investment
no history of earnings or financial professionals.
o Foreign securities have additional services.
risks, including exchange rate changes, continued on page 6
political and economic upheaval, the o The Fund's investments in different,
independently managed sectors creates
allocation risk, which is the risk that
the allocation of investments among the
sectors may have a more
=======================================================================================
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.
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares IAMSX
======================================================================================= Class B Shares IBMSX
Class C Shares ICMSX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
8 AIM MULTI-SECTOR FUND
SCHEDULE OF INVESTMENTS(a)
August 31, 2008
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-97.51%
ADVERTISING-3.36%
Omnicom Group Inc. 432,181 $ 18,320,153
- --------------------------------------------------------------------------------
WPP Group PLC (United Kingdom)(b) 614,650 6,001,162
================================================================================
24,321,315
================================================================================
APPAREL RETAIL-1.24%
Abercrombie & Fitch Co.-Class A(c) 171,441 8,992,081
================================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.68%
Polo Ralph Lauren Corp. 64,536 4,896,992
================================================================================
APPLICATION SOFTWARE-2.87%
Adobe Systems Inc.(d) 205,841 8,816,170
- --------------------------------------------------------------------------------
Amdocs Ltd.(d) 214,869 6,486,895
- --------------------------------------------------------------------------------
Autodesk, Inc.(d) 155,067 5,509,531
================================================================================
20,812,596
================================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.05%
Federated Investors, Inc.-Class B 111,842 3,739,996
- --------------------------------------------------------------------------------
State Street Corp. 57,628 3,899,687
================================================================================
7,639,683
================================================================================
BIOTECHNOLOGY-5.62%
Amgen Inc.(d) 139,870 8,790,829
- --------------------------------------------------------------------------------
BioMarin Pharmaceutical Inc.(c)(d) 163,604 4,931,025
- --------------------------------------------------------------------------------
Celgene Corp.(d) 100,551 6,968,184
- --------------------------------------------------------------------------------
Genzyme Corp.(d) 90,033 7,049,584
- --------------------------------------------------------------------------------
Gilead Sciences, Inc.(d) 150,584 7,932,765
- --------------------------------------------------------------------------------
Rigel Pharmaceuticals, Inc.(c)(d) 30,556 722,955
- --------------------------------------------------------------------------------
United Therapeutics Corp.(d) 40,461 4,294,126
================================================================================
40,689,468
================================================================================
BREWERS-1.10%
Companhia de Bebidas das Americas-ADR (Brazil)(c) 65,852 3,556,666
- --------------------------------------------------------------------------------
Heineken N.V. (Netherlands)(b)(c) 93,607 4,393,428
================================================================================
7,950,094
================================================================================
BROADCASTING & CABLE TV-2.93%
Cablevision Systems Corp.-Class A 318,821 10,288,354
- --------------------------------------------------------------------------------
Comcast Corp.-Class A 514,705 10,901,452
================================================================================
21,189,806
================================================================================
COAL & CONSUMABLE FUELS-0.93%
CONSOL Energy Inc. 99,000 6,703,290
================================================================================
COMMUNICATIONS EQUIPMENT-4.19%
Cisco Systems, Inc.(d) 379,546 9,128,081
- --------------------------------------------------------------------------------
Corning Inc. 325,600 6,687,824
- --------------------------------------------------------------------------------
Nokia-ADR (Finland) 200,166 5,038,178
- --------------------------------------------------------------------------------
Qualcomm Inc. 120,150 6,325,898
- --------------------------------------------------------------------------------
Research In Motion Ltd. (Canada)(d) 25,890 3,148,224
================================================================================
30,328,205
================================================================================
COMPUTER HARDWARE-2.66%
Apple Inc.(d) 58,741 9,958,362
- --------------------------------------------------------------------------------
Hewlett-Packard Co. 198,499 9,313,573
================================================================================
19,271,935
================================================================================
COMPUTER STORAGE & PERIPHERALS-0.84%
EMC Corp.(d) 400,626 6,121,565
================================================================================
CONSUMER FINANCE-2.03%
American Express Co. 78,600 3,118,848
- --------------------------------------------------------------------------------
Capital One Financial Corp.(c) 262,545 11,588,736
================================================================================
14,707,584
================================================================================
DEPARTMENT STORES-0.59%
Kohl's Corp.(d) 87,241 4,289,640
================================================================================
DISTILLERS & VINTNERS-0.98%
Diageo PLC (United Kingdom)(b) 384,779 7,120,260
================================================================================
DIVERSIFIED BANKS-0.67%
Wachovia Corp.(c) 306,160 4,864,882
================================================================================
DIVERSIFIED CAPITAL MARKETS-0.66%
UBS AG-(Switzerland)(c)(d) 217,851 4,768,758
================================================================================
DRUG RETAIL-0.97%
CVS Caremark Corp. 192,000 7,027,200
================================================================================
GAS UTILITIES-0.90%
Questar Corp. 126,000 6,538,140
================================================================================
HEALTH CARE DISTRIBUTORS-0.13%
Celesio A.G. (Germany) 24,094 924,263
================================================================================
HEALTH CARE EQUIPMENT-3.18%
American Medical Systems Holdings, Inc.(c)(d) 565,425 10,064,565
- --------------------------------------------------------------------------------
Medtronic, Inc. 138,206 7,546,048
- --------------------------------------------------------------------------------
Smith & Nephew PLC (United Kingdom)(b) 448,666 5,404,259
================================================================================
23,014,872
================================================================================
HEALTH CARE SERVICES-2.41%
DaVita, Inc.(d) 149,650 8,588,413
- --------------------------------------------------------------------------------
Express Scripts, Inc.(d) 120,890 8,874,535
================================================================================
17,462,948
================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM MULTI-SECTOR FUND
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
HOME ENTERTAINMENT SOFTWARE-1.26%
Activision Blizzard Inc.(d) 234,838 $ 7,707,383
- --------------------------------------------------------------------------------
Nintendo Co., Ltd. (Japan)(b) 3,000 1,417,997
================================================================================
9,125,380
================================================================================
HOTELS, RESORTS & CRUISE LINES-1.93%
Carnival Corp.(e) 130,163 4,823,841
- --------------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 253,349 9,183,901
================================================================================
14,007,742
================================================================================
INSURANCE BROKERS-1.49%
Marsh & McLennan Cos., Inc. 225,845 7,211,231
- --------------------------------------------------------------------------------
National Financial Partners Corp.(c) 175,845 3,546,794
================================================================================
10,758,025
================================================================================
INTEGRATED OIL & GAS-6.30%
BP PLC-ADR (United Kingdom)(c) 127,000 7,319,010
- --------------------------------------------------------------------------------
Hess Corp. 72,000 7,539,120
- --------------------------------------------------------------------------------
Murphy Oil Corp. 89,000 6,989,170
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 125,000 9,920,000
- --------------------------------------------------------------------------------
Petroleo Brasileiro S.A.-ADR (Brazil) 138,000 7,278,120
- --------------------------------------------------------------------------------
Total S.A.-ADR (France) 92,000 6,612,960
================================================================================
45,658,380
================================================================================
INTERNET SOFTWARE & SERVICES-2.47%
eBay Inc.(d) 221,936 5,532,865
- --------------------------------------------------------------------------------
Google Inc.-Class A(d) 26,708 12,373,549
================================================================================
17,906,414
================================================================================
INVESTMENT BANKING & BROKERAGE-2.02%
Merrill Lynch & Co., Inc. 257,283 7,293,973
- --------------------------------------------------------------------------------
Morgan Stanley 179,015 7,309,183
================================================================================
14,603,156
================================================================================
LIFE & HEALTH INSURANCE-0.83%
StanCorp Financial Group, Inc. 122,063 5,982,308
================================================================================
LIFE SCIENCES TOOLS & SERVICES-3.44%
Applied Biosystems, Inc. 194,087 7,082,235
- --------------------------------------------------------------------------------
Invitrogen Corp.(d) 123,012 5,223,089
- --------------------------------------------------------------------------------
Pharmaceutical Product Development, Inc. 206,041 8,406,473
- --------------------------------------------------------------------------------
Thermo Fisher Scientific, Inc.(d) 69,004 4,178,882
================================================================================
24,890,679
================================================================================
MANAGED HEALTH CARE-0.47%
UnitedHealth Group Inc. 112,620 3,429,279
================================================================================
MOVIES & ENTERTAINMENT-4.25%
News Corp.-Class A 933,371 13,216,534
- --------------------------------------------------------------------------------
Time Warner Inc. 453,957 7,431,276
- --------------------------------------------------------------------------------
Walt Disney Co. (The) 314,215 10,164,855
================================================================================
30,812,665
================================================================================
MULTI-LINE INSURANCE-0.60%
Hartford Financial Services Group, Inc. (The) 69,200 4,365,136
================================================================================
OIL & GAS EQUIPMENT & SERVICES-2.88%
Helix Energy Solutions Group Inc.(d) 220,000 6,769,400
- --------------------------------------------------------------------------------
National-Oilwell Varco Inc.(d) 91,000 6,709,430
- --------------------------------------------------------------------------------
Weatherford International Ltd.(d) 192,000 7,407,360
================================================================================
20,886,190
================================================================================
OIL & GAS EXPLORATION & PRODUCTION-6.92%
Apache Corp. 66,000 7,549,080
- --------------------------------------------------------------------------------
Bill Barrett Corp.(d) 165,000 6,497,700
- --------------------------------------------------------------------------------
Continental Resources, Inc.(d) 141,000 7,073,970
- --------------------------------------------------------------------------------
Devon Energy Corp. 77,000 7,857,850
- --------------------------------------------------------------------------------
Plains Exploration & Production Co.(d) 124,000 6,683,600
- --------------------------------------------------------------------------------
Southwestern Energy Co.(d) 200,000 7,674,000
- --------------------------------------------------------------------------------
Talisman Energy Inc. (Canada) 385,000 6,772,150
================================================================================
50,108,350
================================================================================
OIL & GAS STORAGE & TRANSPORTATION-0.94%
Williams Cos., Inc. (The) 220,000 6,795,800
================================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-3.68%
Bank of America Corp. 148,682 4,629,958
- --------------------------------------------------------------------------------
Citigroup Inc.(c) 598,407 11,363,749
- --------------------------------------------------------------------------------
JPMorgan Chase & Co. 276,976 10,660,806
================================================================================
26,654,513
================================================================================
PHARMACEUTICALS-3.40%
Novartis AG-ADR (Switzerland) 76,359 4,248,615
- --------------------------------------------------------------------------------
Roche Holding AG (Switzerland)(b) 37,535 6,327,647
- --------------------------------------------------------------------------------
Schering-Plough Corp. 319,277 6,193,974
- --------------------------------------------------------------------------------
Wyeth 181,131 7,839,349
================================================================================
24,609,585
================================================================================
PROPERTY & CASUALTY INSURANCE-1.05%
XL Capital Ltd.-Class A(c) 378,165 7,601,117
================================================================================
REGIONAL BANKS-2.71%
Fifth Third Bancorp 429,878 6,783,475
- --------------------------------------------------------------------------------
Popular, Inc.(c) 273,600 2,229,840
- --------------------------------------------------------------------------------
SunTrust Banks, Inc.(c) 133,459 5,590,597
- --------------------------------------------------------------------------------
Zions Bancorp.(c) 188,563 5,061,031
================================================================================
19,664,943
================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM MULTI-SECTOR FUND
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
RESTAURANTS-0.59%
McDonald's Corp. 69,365 $ 4,304,098
================================================================================
SEMICONDUCTOR EQUIPMENT-0.71%
ASML Holding N.V.-New York Shares (Netherlands) 84,400 1,996,060
- --------------------------------------------------------------------------------
MEMC Electronic Materials, Inc.(d) 64,750 3,178,578
================================================================================
5,174,638
================================================================================
SEMICONDUCTORS-1.77%
Broadcom Corp.-Class A(d) 223,304 5,372,694
- --------------------------------------------------------------------------------
Intel Corp. 327,300 7,485,351
================================================================================
12,858,045
================================================================================
SOFT DRINKS-0.88%
PepsiCo, Inc. 93,233 6,384,596
================================================================================
SPECIALIZED CONSUMER SERVICES-0.53%
H&R Block, Inc. 150,045 3,832,149
================================================================================
SPECIALIZED FINANCE-1.73%
CIT Group, Inc.(c) 461,733 4,760,467
- --------------------------------------------------------------------------------
Moody's Corp.(c) 190,732 7,755,163
================================================================================
12,515,630
================================================================================
SPECIALTY STORES-1.07%
PetSmart, Inc. 287,086 7,742,709
================================================================================
SYSTEMS SOFTWARE-1.99%
Microsoft Corp. 344,897 9,412,239
- --------------------------------------------------------------------------------
Oracle Corp.(d) 227,029 4,978,746
================================================================================
14,390,985
================================================================================
THRIFTS & MORTGAGE FINANCE-0.78%
Fannie Mae(c) 404,700 2,768,148
- --------------------------------------------------------------------------------
Washington Mutual, Inc.(c) 704,247 2,852,200
================================================================================
5,620,348
================================================================================
WIRELESS TELECOMMUNICATION SERVICES-0.83%
American Tower Corp.-Class A(d) 144,965 5,991,403
================================================================================
Total Common Stocks & Other Equity Interests
(Cost $703,251,924) 706,309,840
================================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.03%
U.S. TREASURY BILLS-0.03%
1.81%, 01/15/09(f)(g)(h) (Cost $198,611) $ 200,000 198,677
================================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-2.29%
Liquid Assets Portfolio-Institutional Class(i) 8,293,824 8,293,824
- --------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(i) 8,293,825 8,293,825
================================================================================
Total Money Market Funds (Cost $16,587,649) 16,587,649
================================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-99.83% (Cost $720,038,184) 723,096,166
================================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-7.03%
Liquid Assets Portfolio-Institutional Class (Cost
$50,929,284)(i)(j) 50,929,284 50,929,284
================================================================================
TOTAL INVESTMENTS-106.86% (Cost $770,967,468) 774,025,450
================================================================================
OTHER ASSETS LESS LIABILITIES-(6.86)% (49,701,278)
================================================================================
NET ASSETS-100.00% $724,324,172
________________________________________________________________________________
================================================================================
</Table>
Investment Abbreviations:
<Table>
ADR - American Depositary Receipt
</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) In accordance with the procedures established by the Board of Trustees,
the foreign security is fair valued using adjusted closing market prices.
The aggregate value of these securities at August 31, 2008 was
$30,664,753, which represented 4.23% of the Fund's Net Assets. See Note
1A.
(c) All or a portion of this security was out on loan at August 31, 2008.
(d) Non-income producing security.
(e) Each unit represents one common share and one trust share.
(f) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an
independent pricing service. The value of this security at August 31, 2008
represented 0.03% of the Fund's Net Assets. See Note 1A.
(g) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(h) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1L and Note 8.
(i) The money market fund and the Fund are affiliated by having the same
investment advisor.
(j) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1I.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11 AIM MULTI-SECTOR FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
<Table>
ASSETS:
Investments, at value (Cost
$703,450,535)* $706,508,517
- ------------------------------------------------------
Investments in affiliated money market
funds (Cost $67,516,933) 67,516,933
======================================================
Total investments (Cost
$770,967,468) 774,025,450
======================================================
Foreign currencies, at value (Cost
$819) 764
- ------------------------------------------------------
Receivables for:
Investments sold 1,188,707
- ------------------------------------------------------
Fund shares sold 1,010,312
- ------------------------------------------------------
Dividends 931,905
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 17,284
- ------------------------------------------------------
Other assets 67,383
======================================================
Total assets 777,241,805
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Fund shares reacquired 1,319,032
- ------------------------------------------------------
Collateral upon return of securities
loaned 50,929,284
- ------------------------------------------------------
Variation margin 45,140
- ------------------------------------------------------
Accrued fees to affiliates 430,738
- ------------------------------------------------------
Accrued other operating expenses 147,191
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 46,248
======================================================
Total liabilities 52,917,633
======================================================
Net assets applicable to shares
outstanding $724,324,172
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $704,451,954
- ------------------------------------------------------
Undistributed net investment income 1,077,999
- ------------------------------------------------------
Undistributed net realized gain 15,653,620
- ------------------------------------------------------
Unrealized appreciation 3,140,599
======================================================
$724,324,172
______________________________________________________
======================================================
NET ASSETS:
Class A $418,873,835
______________________________________________________
======================================================
Class B $ 68,525,612
______________________________________________________
======================================================
Class C $ 80,439,068
______________________________________________________
======================================================
Institutional Class $156,485,657
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 16,538,228
______________________________________________________
======================================================
Class B 2,823,835
______________________________________________________
======================================================
Class C 3,316,218
______________________________________________________
======================================================
Institutional Class 6,063,075
______________________________________________________
======================================================
Class A:
Net asset value per share $ 25.33
- ------------------------------------------------------
Maximum offering price per share
(Net asset value of $25.33 divided
by 94.50%) $ 26.80
______________________________________________________
======================================================
Class B:
Net asset value and offering price
per share $ 24.27
______________________________________________________
======================================================
Class C:
Net asset value and offering price
per share $ 24.26
______________________________________________________
======================================================
Institutional Class:
Net asset value and offering price
per share $ 25.81
______________________________________________________
======================================================
</Table>
* At August 31, 2008, securities with an aggregate value of $49,668,598 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM MULTI-SECTOR FUND
STATEMENT OF OPERATIONS
For the year ended August 31, 2008
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $216,698) $ 9,993,524
- ------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes securities lending income
of $215,387) 1,774,097
================================================================================================
Total investment income 11,767,621
================================================================================================
EXPENSES:
Advisory fees 5,410,151
- ------------------------------------------------------------------------------------------------
Administrative services fees 216,234
- ------------------------------------------------------------------------------------------------
Custodian fees 60,120
- ------------------------------------------------------------------------------------------------
Distribution fees:
Class A 1,182,957
- ------------------------------------------------------------------------------------------------
Class B 795,577
- ------------------------------------------------------------------------------------------------
Class C 902,241
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B and C 1,368,979
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 2,599
- ------------------------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 40,157
- ------------------------------------------------------------------------------------------------
Other 413,017
================================================================================================
Total expenses 10,392,032
================================================================================================
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (91,095)
================================================================================================
Net expenses 10,300,937
================================================================================================
Net investment income 1,466,684
================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (includes net gains from securities sold to affiliates
of $128,799) 29,878,759
- ------------------------------------------------------------------------------------------------
Foreign currencies (226,306)
================================================================================================
29,652,453
================================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (100,368,956)
- ------------------------------------------------------------------------------------------------
Foreign currencies (335)
- ------------------------------------------------------------------------------------------------
Futures contracts 81,408
================================================================================================
(100,287,883)
================================================================================================
Net realized and unrealized gain (loss) (70,635,430)
================================================================================================
Net increase (decrease) in net assets resulting from operations $ (69,168,746)
________________________________________________________________________________________________
================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM MULTI-SECTOR FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2008 and 2007
<Table>
<Caption>
2008 2007
- ---------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income (loss) $ 1,466,684 $ (1,735,684)
- ---------------------------------------------------------------------------------------------------------
Net realized gain 29,652,453 30,488,449
- ---------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (100,287,883) 64,126,680
=========================================================================================================
Net increase (decrease) in net assets resulting from operations (69,168,746) 92,879,445
=========================================================================================================
Distributions to shareholders from net investment income:
Class A -- (1,695,277)
- ---------------------------------------------------------------------------------------------------------
Class B -- (55,140)
- ---------------------------------------------------------------------------------------------------------
Class C -- (52,629)
- ---------------------------------------------------------------------------------------------------------
Institutional Class (152,613) (656,187)
=========================================================================================================
Total distributions from net investment income (152,613) (2,459,233)
=========================================================================================================
Distributions to shareholders from net realized gains:
Class A (22,809,049) (4,621,137)
- ---------------------------------------------------------------------------------------------------------
Class B (4,051,667) (1,009,431)
- ---------------------------------------------------------------------------------------------------------
Class C (4,556,738) (963,469)
- ---------------------------------------------------------------------------------------------------------
Institutional Class (7,701,731) (1,192,461)
=========================================================================================================
Total distributions from net realized gains (39,119,185) (7,786,498)
=========================================================================================================
Share transactions-net:
Class A (27,022,573) 149,253,465
- ---------------------------------------------------------------------------------------------------------
Class B (7,727,099) 3,527,478
- ---------------------------------------------------------------------------------------------------------
Class C (1,401,455) 15,542,400
- ---------------------------------------------------------------------------------------------------------
Institutional Class 13,901,069 61,816,728
=========================================================================================================
Net increase (decrease) in net assets resulting from share
transactions (22,250,058) 230,140,071
=========================================================================================================
Net increase (decrease) in net assets (130,690,602) 312,773,785
=========================================================================================================
NET ASSETS:
Beginning of year 855,014,774 542,240,989
=========================================================================================================
End of year (including undistributed net investment income (loss) of
$1,077,999 and $(25,370), respectively) $ 724,324,172 $855,014,774
_________________________________________________________________________________________________________
=========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14 AIM MULTI-SECTOR FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2008
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Multi-Sector 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 six separate portfolios, each
authorized to issue an unlimited number of shares of beneficial interest.
The Fund currently offers four different classes of shares: Class A, Class B,
Class C 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. Institutional Class
shares are sold at net asset value. 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. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objective is capital growth.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. Futures contracts are valued at the
final settlement price set by an exchange on which they are principally
traded. Listed options are valued at the mean between the last bid and the
ask prices from the exchange on which they are principally traded. Options
not listed on an exchange are valued by an independent source at the mean
between the last bid and ask prices. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
Investments in open-end and closed-end registered investment companies
that do not trade on an exchange are valued at the end of day net asset
value per share. Investments in open-end and closed-end registered
investment companies that trade on an exchange are valued at the last
sales price or official closing price as of the close of the customary
trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and may 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
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers following procedures
approved by the Board of Trustees. Issuer specific events, market trends,
bid/ask quotes of brokers and information providers and other market data
may be reviewed in the course of making a good faith determination of a
security's fair value.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
15 AIM MULTI-SECTOR FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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 income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
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 evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such
class. Transfer agency fees and expenses and other shareholder
recordkeeping fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) 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 that contain a variety of indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet
occurred. The risk of material loss as a result of such indemnification
claims is considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any
loss on the collateral invested. Dividends received on cash collateral
investments for securities lending transactions, which are net of
compensation to counterparties, is included in Dividends from affiliates
on the Statement of Operations. The aggregate value of securities out on
loan is shown as a footnote on the Statement of Assets and Liabilities, if
any.
J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close
of the NYSE based on quotations posted by banks and major currency
dealers. Portfolio securities and other assets and liabilities denominated
in foreign currencies are translated into U.S. dollar amounts at date of
valuation. Purchases and sales of portfolio securities (net of foreign
taxes withheld on disposition) and income items denominated in foreign
currencies are translated into U.S. dollar amounts on the respective dates
of such transactions. The Fund does not separately account for the portion
of the results of operations resulting from changes in foreign exchange
rates on investments and the fluctuations arising from changes in market
prices of securities held. The combined results of changes in foreign
exchange rates and the fluctuation of market prices on investments (net of
estimated foreign tax withholding) are included with the net realized and
unrealized gain or loss from investments in the Statement of Operations.
Reported net realized foreign currency gains or losses arise from (i)
sales of foreign currencies, (ii) currency gains or losses realized
between the trade and settlement dates on securities transactions, and
16 AIM MULTI-SECTOR FUND
(iii) the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized
foreign currency gains and losses arise from changes in the fair values of
assets and liabilities, other than investments in securities at fiscal
period end, resulting from changes in exchange rates.
The Fund may invest in foreign securities which may be subject to
foreign taxes on income, gains on investments or currency repatriation, a
portion of which may be recoverable.
K. FOREIGN CURRENCY CONTRACTS -- A foreign currency contract is an obligation
to purchase or sell a specific currency for an agreed-upon price at a
future date. The Fund may enter into a foreign currency contract to
attempt to minimize the risk to the Fund from adverse changes in the
relationship between currencies. The Fund may also enter into a foreign
currency contract for the purchase or sale of a security denominated in a
foreign currency in order to "lock in" the U.S. dollar price of that
security. Fluctuations in the value of these contracts are recorded as
unrealized appreciation (depreciation) until the contracts are closed.
When these contracts are closed, realized gains (losses) are recorded.
Realized and unrealized gains and losses on these contracts are included
in the Statement of Operations. The Fund could be exposed to risk, which
may be in excess of the amount reflected in the Statement of Assets and
Liabilities, if counterparties to the contracts are unable to meet the
terms of their contracts or if the value of the foreign currency changes
unfavorably.
L. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). 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. Variation
margin payments are received or made depending upon whether unrealized
gains or losses are incurred. When the contracts are closed, 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. 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. Risks may exceed amounts recognized in the
Statement of Assets and Liabilities.
M. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
This practice does not apply to securities pledged as collateral for
securities lending transactions.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
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 $250 million 0.695%
- -------------------------------------------------------------------
Next $250 million 0.67%
- -------------------------------------------------------------------
Next $500 million 0.645%
- -------------------------------------------------------------------
Next $1.5 billion 0.62%
- -------------------------------------------------------------------
Next $2.5 billion 0.595%
- -------------------------------------------------------------------
Next $2.5 billion 0.57%
- -------------------------------------------------------------------
Next $2.5 billion 0.545%
- -------------------------------------------------------------------
Over $10 billion 0.52%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a master sub-advisory agreement approved by shareholders of
the Fund, effective May 1, 2008, 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, through at least June 30, 2009, 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 (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the year ended August 31, 2008, the Advisor waived advisory fees of
$55,104.
At the request of the Trustees of the Trust, Invesco Ltd. ("Invesco") agreed
to reimburse expenses incurred by the Fund in connection with market timing
matters in the AIM Funds, which may include legal, audit, shareholder reporting,
communications and trustee expenses. These expenses along with the related
expense reimbursement are included in the Statement of Operations. For the year
ended August 31, 2008, Invesco reimbursed expenses of the Fund in the amount of
$9,201.
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 year ended August 31, 2008, 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
17 AIM MULTI-SECTOR FUND
limitations approved by the Trust's Board of Trustees. For the year ended August
31, 2008, expenses incurred under the agreement are shown in the Statement of
Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class
B, Class C and Institutional Class shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A, Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to
the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's
average daily net assets of Class A shares and 1.00% of the average daily net
assets of Class B and Class C shares. Of the Plan payments, up to 0.25% of the
average daily net assets of each class of shares may be paid to furnish
continuing personal shareholder services to customers who purchase and own
shares of such classes. Any amounts not paid as a service fee under the Plans
would constitute an asset-based sales charge. Rules of the Financial Industry
Regulatory Authority ("FINRA") impose a cap on the total sales charges,
including asset-based sales charges that may be paid by any class of shares of
the Fund. For the year ended August 31, 2008, expenses incurred under the Plans
are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the "sales charges") are
not recorded as expenses of the Fund. Front-end sales commissions are deducted
from proceeds from the sales of Fund shares prior to investment in Class A
shares of the Fund. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended August 31, 2008, IADI
advised the Fund that IADI retained $119,391 in front-end sales commissions from
the sale of Class A shares and $1,718, $115,393 and $12,413 from Class A, Class
B and Class C shares, respectively, for CDSC imposed on redemptions by
shareholders.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS
The Fund is permitted to purchase or sell securities from or to certain other
AIM Funds under specified conditions outlined in procedures adopted by the Board
of Trustees of the Trust. The procedures have been designed to ensure that any
purchase or sale of securities by the Fund from or to another fund or portfolio
that is or could be considered an affiliate by virtue of having a common
investment advisor (or affiliated investment advisors), common Trustees and/or
common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined
under the procedures, each transaction is effected at the current market price.
Pursuant to these procedures, for the year ended August 31, 2008, the Fund
engaged in securities sales of $2,327,611, which resulted in net realized gains
of $128,799, and securities purchases of $3,063,233.
NOTE 4--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2008, the Fund received credits from these arrangements, which
resulted in the reduction of the Fund's total expenses of $26,790.
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 year ended August 31, 2008, the Fund paid legal fees of $4,108 for
services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Independent Trustees. A member of that firm is a Trustee of the Trust.
NOTE 6--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(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.
18 AIM MULTI-SECTOR FUND
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended August 31, 2008
and 2007 was as follows:
<Table>
<Caption>
2008 2007
- --------------------------------------------------------------------------------------------------------
Ordinary income $ 6,513,488 $ 4,759,869
- --------------------------------------------------------------------------------------------------------
Long-term capital gain 32,758,310 5,485,862
========================================================================================================
Total distributions $39,271,798 $10,245,731
________________________________________________________________________________________________________
========================================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2008, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2008
- ------------------------------------------------------------------------------------------------
Undistributed ordinary income $ 1,403,661
- ------------------------------------------------------------------------------------------------
Undistributed long-term gain 18,782,901
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation -- investments 10,109
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation -- other investments 1,209
- ------------------------------------------------------------------------------------------------
Temporary book/tax differences (44,324)
- ------------------------------------------------------------------------------------------------
Post-October currency loss deferral (281,338)
- ------------------------------------------------------------------------------------------------
Shares of beneficial interest 704,451,954
================================================================================================
Total net assets $724,324,172
________________________________________________________________________________________________
================================================================================================
</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
depreciation difference is attributable primarily to wash sales.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
The Fund does not have a capital loss carryforward at period-end.
NOTE 8--FUTURES CONTRACTS
<Table>
<Caption>
OPEN FUTURES CONTRACTS AT PERIOD-END
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTH/ VALUE UNREALIZED
CONTRACT CONTRACTS COMMITMENT 08/31/08 APPRECIATION
- -----------------------------------------------------------------------------------------------------------------------
Chicago Mercantile Exchange E-mini NASDAQ-100 74 September-08/Long $2,775,000 $81,408
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
NOTE 9--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2008 was $452,026,986 and
$491,538,735, 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 $ 92,166,801
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (92,156,692)
================================================================================================
Net unrealized appreciation of investment securities $ 10,109
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $774,015,341.
</Table>
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of foreign currency
transactions on August 31, 2008, undistributed net investment income was
decreased by $210,702, undistributed net realized gain was increased by $226,932
and shares of beneficial interest decreased by $16,230. This reclassification
had no effect on the net assets of the Fund.
19 AIM MULTI-SECTOR FUND
NOTE 11--SHARE INFORMATION
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- -------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------------------------------
2008(a) 2007
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
Sold:
Class A 3,807,565 $ 104,448,073 8,857,649 $ 246,329,341
- -------------------------------------------------------------------------------------------------------------------------
Class B 616,606 16,114,652 945,270 25,228,289
- -------------------------------------------------------------------------------------------------------------------------
Class C 558,328 14,810,636 1,173,932 31,617,738
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class 614,220 17,320,624 2,336,012 65,700,462
=========================================================================================================================
Issued as reinvestment of dividends:
Class A 781,183 21,599,713 214,975 5,918,251
- -------------------------------------------------------------------------------------------------------------------------
Class B 140,981 3,755,744 36,506 976,912
- -------------------------------------------------------------------------------------------------------------------------
Class C 161,954 4,312,829 35,743 956,140
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class 278,854 7,833,000 66,387 1,848,212
=========================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 339,068 9,189,273 192,233 5,408,042
- -------------------------------------------------------------------------------------------------------------------------
Class B (352,600) (9,189,273) (198,289) (5,408,042)
=========================================================================================================================
Reacquired:
Class A (5,981,685) (162,259,632) (3,874,344) (108,402,169)
- -------------------------------------------------------------------------------------------------------------------------
Class B (708,031) (18,408,222) (641,576) (17,269,681)
- -------------------------------------------------------------------------------------------------------------------------
Class C (793,160) (20,524,920) (629,576) (17,031,478)
- -------------------------------------------------------------------------------------------------------------------------
Institutional Class (414,377) (11,252,555) (191,475) (5,731,946)
=========================================================================================================================
(951,094) $ (22,250,058) 8,323,447 $ 230,140,071
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 29% of the
outstanding shares of the Fund. IADI has an agreement with these entities
to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates
may make payments to these entities, which are considered to be related to
the Fund, for providing services to the Fund, Invesco Aim and/or Invesco
Aim affiliates including but not limited to services such as securities
brokerage, distribution, third party record keeping and account servicing.
The Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
In addition, 20% of the outstanding shares of the Fund are owned by
affiliated mutual funds. Affiliated mutual funds are other mutual funds
that are also advised by Invesco Aim.
20 AIM MULTI-SECTOR FUND
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
--------------------------------------- DISTRIBUTIONS
NET GAINS ----------------------------------------
NET ASSET NET (LOSSES) DIVIDEND DISTRIBUTIONS
VALUE, INVESTMENT ON SECURITIES TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME (BOTH REALIZED INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) AND UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended 08/31/08 $28.93 $ 0.07(c) $(2.34) $(2.27) $ -- $(1.33) $(1.33) $25.33
Year ended 08/31/07 25.53 (0.04)(c) 3.88 3.84 (0.12) (0.32) (0.44) 28.93
Year ended 08/31/06 24.16 0.17(c) 1.69 1.86 -- (0.49) (0.49) 25.53
Year ended 08/31/05 19.37 (0.05)(c)(e) 5.40 5.35 -- (0.56) (0.56) 24.16
Year ended 08/31/04 18.32 (0.12) 1.84 1.72 -- (0.67) (0.67) 19.37
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
Year ended 08/31/08 27.97 (0.13)(c) (2.24) (2.37) -- (1.33) (1.33) 24.27
Year ended 08/31/07 24.79 (0.24)(c) 3.76 3.52 (0.02) (0.32) (0.34) 27.97
Year ended 08/31/06 23.64 (0.02)(c) 1.66 1.64 -- (0.49) (0.49) 24.79
Year ended 08/31/05 19.09 (0.20)(c)(e) 5.31 5.11 -- (0.56) (0.56) 23.64
Year ended 08/31/04 18.19 (0.24) 1.81 1.57 -- (0.67) (0.67) 19.09
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C
Year ended 08/31/08 27.96 (0.13)(c) (2.24) (2.37) -- (1.33) (1.33) 24.26
Year ended 08/31/07 24.78 (0.24)(c) 3.76 3.52 (0.02) (0.32) (0.34) 27.96
Year ended 08/31/06 23.63 (0.02)(c) 1.66 1.64 -- (0.49) (0.49) 24.78
Year ended 08/31/05 19.09 (0.20)(c)(e) 5.30 5.10 -- (0.56) (0.56) 23.63
Year ended 08/31/04 18.17 (0.22) 1.81 1.59 -- (0.67) (0.67) 19.09
- ------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Year ended 08/31/08 29.35 0.19(c) (2.37) (2.18) (0.03) (1.33) (1.36) 25.81
Year ended 08/31/07 25.83 0.09(c) 3.93 4.02 (0.18) (0.32) (0.50) 29.35
Year ended 08/31/06 24.33 0.29(c) 1.70 1.99 -- (0.49) (0.49) 25.83
Year ended 08/31/05 19.41 0.06(c)(e) 5.42 5.48 -- (0.56) (0.56) 24.33
Year ended
08/31/04(f) 19.94 (0.01) (0.52) (0.53) -- -- -- 19.41
______________________________________________________________________________________________________________________________
==============================================================================================================================
<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 (LOSS)
END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
TOTAL RETURN(A) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- --------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended 08/31/08 (8.22)% $418,874 1.21%(d) 1.22%(d) 0.24%(d) 58%
Year ended 08/31/07 15.13 508,895 1.23 1.29 (0.15) 44
Year ended 08/31/06 7.74 311,492 1.30 1.37 0.67 66
Year ended 08/31/05 28.01 99,721 1.53 1.59 (0.25)(e) 63
Year ended 08/31/04 9.47 38,578 1.85 1.88 (0.73) 161
- --------------------------------------------------------------------------------------------------------------------
CLASS B
Year ended 08/31/08 (8.89) 68,526 1.96(d) 1.97(d) (0.51)(d) 58
Year ended 08/31/07 14.26 87,469 1.98 2.04 (0.90) 44
Year ended 08/31/06 6.97 73,997 2.05 2.12 (0.08) 66
Year ended 08/31/05 27.15 24,953 2.20 2.26 (0.92)(e) 63
Year ended 08/31/04 8.70 11,233 2.56 2.59 (1.44) 161
- --------------------------------------------------------------------------------------------------------------------
CLASS C
Year ended 08/31/08 (8.89) 80,439 1.96(d) 1.97(d) (0.51)(d) 58
Year ended 08/31/07 14.27 94,760 1.98 2.04 (0.90) 44
Year ended 08/31/06 6.97 69,604 2.05 2.12 (0.08) 66
Year ended 08/31/05 27.10 29,981 2.20 2.26 (0.92)(e) 63
Year ended 08/31/04 8.82 16,424 2.52 2.56 (1.40) 161
- --------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Year ended 08/31/08 (7.81) 156,486 0.75(d) 0.76(d) 0.70(d) 58
Year ended 08/31/07 15.67 163,891 0.77 0.83 0.31 44
Year ended 08/31/06 8.23 87,147 0.83 0.90 1.14 66
Year ended 08/31/05 28.64 45,628 1.02 1.08 0.26(e) 63
Year ended
08/31/04(f) (2.66) 7,023 1.28(g) 1.28(g) (0.16)(g) 161
____________________________________________________________________________________________________________________
====================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges and is not annualized for
periods less than one year, if applicable.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(c) Calculated using average shares outstanding.
(d) Ratios are based on average daily net assets (000's omitted) of $473,183,
$79,558, $90,224 and $166,749 for Class A, Class B, Class C and
Institutional Class shares, respectively.
(e) Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets include a special cash dividend
received of $3.00 per share owned of Microsoft Corp. on December 2, 2004.
Net investment income (loss) per share and the ratio of net investment
income (loss) to average net assets excluding the special dividend are
$(0.06) and (0.30)%; $(0.21) and (0.97)%; $(0.21) and (0.97)% and $0.05 and
0.21% for Class A, Class B, Class C and Institutional Class shares,
respectively.
(f) Commencement date of May 3, 2004.
(g) Annualized.
NOTE 13--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to Invesco Aim and IADI (Order No. 05-
1318). The WVASC makes findings of fact that Invesco Aim and IADI entered into
certain arrangements permitting market timing of the AIM Funds and failed to
disclose these arrangements in the prospectuses for such Funds, and conclusions
of law to the effect that Invesco Aim and IADI violated the West Virginia
securities laws. The WVASC orders Invesco Aim and IADI to cease any further
violations and seeks to impose monetary sanctions, including restitution to
affected investors, disgorgement of fees, reimbursement of investigatory,
administrative and legal costs and an "administrative assessment," to be
determined by the Commissioner. Initial research indicates that these damages
could be limited or capped by statute. By agreement with the Commissioner of
Securities, Invesco Aim's time to respond to that Order has been indefinitely
suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, Invesco Funds Group,
Inc. ("IFG"), Invesco Aim, IADI and/or related entities and individuals,
depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, various corrective measures under ERISA, rescission
of certain AIM Funds' advisory agreements and/or distribution plans and recovery
of all fees paid. The case pending in Illinois State Court regarding fair value
pricing was dismissed with prejudice on May 6, 2008.
21 AIM MULTI-SECTOR FUND
NOTE 13--LEGAL PROCEEDINGS--(CONTINUED)
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various Invesco Aim- and IFG-related
parties: (i) a Consolidated Amended Class Action Complaint purportedly brought
on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund
Derivative Complaint purportedly brought on behalf of the AIM Funds and fund
registrants; and (iii) an Amended Class Action Complaint for Violations of ERISA
purportedly brought on behalf of participants in the Invesco 401(k) plan. Based
on orders issued by the MDL Court, all claims asserted against the AIM Funds
that have been transferred to the MDL Court have been dismissed, although
certain Funds remain nominal defendants in the Consolidated Amended Fund
Derivative Complaint. On September 15, 2006, the MDL Court granted the Invesco
defendants' motion to dismiss the Amended Class Action Complaint for Violations
of ERISA and dismissed such Complaint. Plaintiff appealed this ruling. On June
16, 2008, the Fourth Circuit Court of Appeals reversed the dismissal and
remanded this lawsuit back to the MDL Court for further proceedings.
IFG, Invesco Aim, IADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, Invesco Aim and IADI have advised the Fund that they are providing
full cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, Invesco Aim and/or related entities and individuals in the
future.
At the present time, management of Invesco Aim and the Fund are unable to
estimate the impact, if any, that the outcome of the Pending Litigation and
Regulatory Inquiries described above may have on Invesco Aim, IADI or the Fund.
22 AIM MULTI-SECTOR FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Multi-Sector 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 Multi-Sector (one of the funds
constituting AIM Counselor Series Trust, hereafter referred to as the "Fund") at
August 31, 2008, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 20, 2008
Houston, Texas
23 AIM MULTI-SECTOR FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $975.70 $6.06 $1,019.00 $6.19 1.22%
- ---------------------------------------------------------------------------------------------------
B 1,000.00 972.40 9.77 1,015.23 9.98 1.97
- ---------------------------------------------------------------------------------------------------
C 1,000.00 972.30 9.77 1,015.23 9.98 1.97
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
24 AIM MULTI-SECTOR FUND
Supplement to Annual Report dated 8/31/08
==========================================
AIM MULTI-SECTOR FUND AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is
not indicative of future results. More
INSTITUTIONAL CLASS SHARES For periods ended 8/31/08 recent returns may be more or less than
Inception (5/3/04) 8.88% those shown. All returns assume
The following information has been 1 Year -7.81% reinvestment of distributions at NAV.
prepared to provide Institutional Class ========================================== Investment return and principal value will
shareholders with a performance overview fluctuate so your shares, when redeemed,
specific to their holdings. Institutional ========================================== may be worth more or less than their
Class shares are offered exclusively to AVERAGE ANNUAL TOTAL RETURNS original cost. See full report for
institutional investors, including defined information on comparative benchmarks.
contribution plans that meet certain For periods ended 6/30/08, most recent Please consult your Fund prospectus for
criteria. calendar quarter-end more information. For the most current
month-end performance, please call 800 451
Inception (5/3/04) 10.29% 4246 or visit invescoaim.com.
1 Year -5.57%
==========================================
Institutional Class shares have no sales
charge; therefore, performance is at net
asset value (NAV). Performance of
Institutional Class shares will differ
from performance of other share classes
primarily due to differing sales charges
and class expenses.
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 0.77%. 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
in the past, have been lower.
==========================================
NASDAQ SYMBOL IIMSX
==========================================
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 [INVESCO AIM LOGO]
- SERVICE MARK -
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
invescoaim.com I-MSE-INS-1 Invesco Aim Distributors, Inc.
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. 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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- -----------------------------------------------------------------------------------------------------------
Institutional $1,000.00 $978.00 $3.73 $1,021.37 $3.81 0.75%
- -----------------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
AIM MULTI-SECTOR FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM renewal process, the Trustees receive from one another and attributed different
Counselor Series Trust is required under comparative performance and fee data weight to the various factors. The
the Investment Company Act of 1940 to regarding the AIM Funds prepared by an Trustees recognized that the advisory
approve annually the renewal of the AIM independent company, Lipper, Inc. arrangements and resulting advisory fees
Multi-Sector Fund (the Fund) investment (Lipper), under the direction and for the Fund and the other AIM Funds are
advisory agreement with Invesco Aim supervision of the independent Senior the result of years of review and
Advisors, Inc. (Invesco Aim). During Officer who also prepares a separate negotiation between the Trustees and
contract renewal meetings held on June analysis of this information for the Invesco Aim, that the Trustees may focus
18-19, 2008, the Board as a whole and the Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of
disinterested or "independent" Trustees, recommendations to the Investments these arrangements in some years than in
voting separately, approved the Committee regarding the performance, fees others, and that the Trustees'
continuance of the Fund's investment and expenses of their assigned funds. The deliberations and conclusions in a
advisory agreement for another year, Investments Committee considers each particular year may be based in part on
effective July 1, 2008. In doing so, the Sub-Committee's recommendations and makes their deliberations and conclusions of
Board determined that the Fund's its own recommendations regarding the these same arrangements throughout the
investment advisory agreement is in the performance, fees and expenses of the AIM year and in prior years.
best interests of the Fund and its Funds to the full Board. The Investments
shareholders and that the compensation to Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF
Invesco Aim under the Fund's investment Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION
advisory agreement is fair and reasonable. its annual recommendation to the Board
whether to approve the continuance of each The discussion below serves as a summary
The independent Trustees met separately AIM Fund's investment advisory agreement of the Senior Officer's independent
during their evaluation of the Fund's and sub-advisory agreements for another written evaluation with respect to the
investment advisory agreement with year. Fund's investment advisory agreement as
independent legal counsel from whom they well as a discussion of the material
received independent legal advice, and the The independent Trustees are assisted factors and related conclusions that
independent Trustees also received in their annual evaluation of the Fund's formed the basis for the Board's approval
assistance during their deliberations from investment advisory agreement by the of the Fund's investment advisory
the independent Senior Officer, a independent Senior Officer. One agreement and sub-advisory agreements.
full-time officer of the AIM Funds who responsibility of the Senior Officer is to Unless otherwise stated, information set
reports directly to the independent manage the process by which the AIM Funds' forth below is as of June 19, 2008 and
Trustees. proposed management fees are negotiated does not reflect any changes that may have
during the annual contract renewal process occurred since that date, including but
THE BOARD'S FUND EVALUATION PROCESS to ensure that they are negotiated in a not limited to changes to the Fund's
manner that is at arms' length and performance, advisory fees, expense
The Board's Investments Committee has reasonable. Accordingly, the Senior Of- limitations and/or fee waivers.
established three Sub-Committees that are ficer must either supervise a competitive
responsible for overseeing the management bidding process or prepare an independent I Investment Advisory Agreement
of a number of the series portfolios of written evaluation. The Senior Officer has
the AIM Funds. This Sub- Committee recommended that an independent written A. Nature, Extent and Quality of
structure permits the Trustees to focus on evaluation be provided and, at the Services Provided by Invesco Aim
the performance of the AIM Funds that have direction of the Board, has prepared an The Board reviewed the advisory
been assigned to them. The Sub-Committees independent written evaluation. services provided to the Fund by Invesco
meet throughout the year to review the Aim under the Fund's investment advisory
performance of their assigned funds, and During the annual contract renewal agreement, the performance of Invesco Aim
the Sub-Committees review monthly and process, the Board considered the factors in providing these services, and the
quarterly comparative performance discussed below under the heading "Factors credentials and experience of the officers
information and periodic asset flow data and Conclusions and Summary of Independent and employees of Invesco Aim who provide
for their assigned funds. These materials Written Fee Evaluation" in evaluating the these services. The Board's review of the
are prepared under the direction and fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide
supervision of the independent Senior investment advisory agreement and these services included the Board's
Officer. Over the course of each year, the sub-advisory agreements at the contract consideration of Invesco Aim's portfolio
Sub-Committees meet with portfolio renewal meetings and at their meetings and product review process, various back
managers for their assigned funds and throughout the year as part of their office support functions provided by
other members of management and review ongoing oversight of the Fund. The Fund's Invesco Aim and its affiliates, and
with these individuals the performance, investment advisory agreement and Invesco Aim's equity and fixed income
investment objective(s), policies, sub-advisory agreements were considered trading operations. The Board concluded
strategies and limitations of these funds. separately, although the Board also that the nature, extent and quality of the
considered the common interests of all of advisory services provided to the Fund by
In addition to their meetings the AIM Funds in their deliberations. The Invesco Aim were appropriate and that
throughout the year, the Sub-Committees Board considered all of the information Invesco Aim currently is providing
meet at designated contract renewal provided to them and did not identify any satisfactory advisory services in
meetings each year to conduct an in-depth particular factor that was controlling. accordance with the terms of the Fund's
review of the performance, fees and Each Trustee may have evaluated the investment advisory agreement. In
expenses of their assigned funds. During information provided differently addition, based on their ongoing meetings
the contract throughout the year with the Fund's
portfolio manager or
continued
25 AIM MULTI-SECTOR FUND
managers, the Board concluded that these recent calendar year, the Board also schedule includes seven breakpoints and
individuals are competent and able to reviewed more recent Fund performance and that the level of the Fund's advisory
continue to carry out their this review did not change their fees, as a percentage of the Fund's net
responsibilities under the Fund's conclusions. assets, has decreased as net assets
investment advisory agreement. increased because of the breakpoint. Based
C. Advisory Fees and Fee Waivers on this information, the Board concluded
In determining whether to continue the that the Fund's advisory fees
Fund's investment advisory agreement, the The Board compared the Fund's contractual appropriately reflect economies of scale
Board considered the prior relationship advisory fee rate to the contractual at current asset levels. The Board also
between Invesco Aim and the Fund, as well advisory fee rates of funds in the Fund's noted that the Fund shares directly in
as the Board's knowledge of Invesco Aim's Lipper expense group that are not managed economies of scale through lower fees
operations, and concluded that it was by Invesco Aim, at a common asset level charged by third party service providers
beneficial to maintain the current and as of the end of the past calendar based on the combined size of all of the
relationship, in part, because of such year. The Board noted that the Fund's AIM Funds and affiliates.
knowledge. The Board also considered the contractual advisory fee rate was below
steps that Invesco Aim and its affiliates the median contractual advisory fee rate E. Profitability and Financial
have taken over the last several years to of funds in its expense group. The Board Resources of Invesco Aim
improve the quality and efficiency of the also reviewed the methodology used by
services they provide to the AIM Funds in Lipper in determining contractual fee The Board reviewed information from
the areas of investment performance, rates. Invesco Aim concerning the costs of the
product line diversification, advisory and other services that Invesco
distribution, fund operations, shareholder The Board also compared the Fund's Aim and its affiliates provide to the Fund
services and compliance. The Board effective fee rate (the advisory fee after and the profitability of Invesco Aim and
concluded that the quality and efficiency any advisory fee waivers and before any its affiliates in providing these
of the services Invesco Aim and its expense limitations/waivers) to the services. The Board also reviewed
affiliates provide to the AIM Funds in advisory fee rates of other clients of information concerning the financial
each of these areas have generally Invesco Aim and its affiliates with condition of Invesco Aim and its
improved, and support the Board's approval investment strategies comparable to those affiliates. The Board also reviewed with
of the continuance of the Fund's of the Fund, including two mutual funds Invesco Aim the methodology used to
investment advisory agreement. advised by Invesco Aim. The Board noted prepare the profitability information. The
that the Fund's rate was below the rate Board considered the overall profitability
B. Fund Performance for one of the mutual funds and that the of Invesco Aim, as well as the
other mutual fund is an asset allocation profitability of Invesco Aim in connection
The Board compared the Fund's performance fund that is not charged any advisory fees with managing the Fund. The Board noted
during the past one, three and five by Invesco Aim pursuant to that fund's that Invesco Aim continues to operate at a
calendar years to the performance of funds advisory agreement. net profit, although increased expenses in
in the Fund's performance group that are recent years have reduced the
not managed by Invesco Aim, and against The Board noted that Invesco Aim has profitability of Invesco Aim and its
the performance of all funds in the Lipper not proposed any advisory fee waivers or affiliates. The Board concluded that the
Multi-Cap Core Funds Index. The Board also expense limitations for the Fund. The Fund's fees were fair and reasonable, and
reviewed the criteria used by Invesco Aim Board concluded that it was not necessary that the level of profits realized by
to identify the funds in the Fund's at this time to discuss with Invesco Aim Invesco Aim and its affiliates from
performance group for inclusion in the whether to implement any fee waivers or providing services to the Fund was not
Lipper reports. The Board noted that the expense limitations because the Fund's excessive in light of the nature, quality
Fund's performance was in the third total expenses for most classes were below and extent of the services provided. The
quintile of its performance group for the the median total expenses of the funds in Board considered whether Invesco Aim is
one and five year periods and in the the Fund's Lipper expense group that are financially sound and has the resources
second quintile for the three year period not managed by Invesco Aim. necessary to perform its obligations under
(the first quintile being the best the Fund's investment advisory agreement,
performing funds and the fifth quintile After taking account of the Fund's and concluded that Invesco Aim has the
being the worst performing funds). The contractual advisory fee rate, as well as financial resources necessary to fulfill
Board noted that the Fund's performance the comparative advisory fee information these obligations.
was above the performance of the Index for discussed above, the Board concluded that
the one, three and five year periods. The the Fund's advisory fees were fair and F. Independent Written Evaluation of
Board also considered the steps Invesco reasonable. the Fund's Senior Officer
Aim has taken over the last several years
to improve the quality and efficiency of D. Economies of Scale and Breakpoints The Board noted that, at their direction,
the services that Invesco Aim provides to the Senior Officer of the Fund, who is
the AIM Funds. The Board concluded that The Board considered the extent to which independent of Invesco Aim and Invesco
Invesco Aim continues to be responsive to there are economies of scale in Invesco Aim's affiliates, had prepared an
the Board's focus on fund performance. Aim's provision of advisory services to independent written evaluation to assist
Although the independent written the Fund. The Board also considered the Board in determining the
evaluation of the Fund's Senior Officer whether the Fund benefits from such reasonableness of the proposed management
only considered Fund performance through economies of scale through contractual fees of the AIM Funds, including the Fund.
the most breakpoints in the Fund's advisory fee The Board noted that they had relied upon
schedule or through advisory fee waivers the Senior Officer's written evaluation
or expense limitations. The Board noted instead of a competitive bidding process.
that the Fund's contractual advisory fee
continued
26 AIM MULTI-SECTOR FUND
In determining whether to continue the money market funds attributable to such B. Fund Performance
Fund's investment advisory agreement, the investments, although Invesco Aim has
Board considered the Senior Officer's contractually agreed to waive through at The Board did not view Fund performance as
written evaluation. least June 30, 2009, the advisory fees a relevant factor in considering whether
payable by the Fund in an amount equal to to approve the sub-advisory agreements for
G. Collateral Benefits to Invesco Aim 100% of the net advisory fees Invesco Aim the Fund, as no Affiliated Sub-Adviser
and its Affiliates receives from the affiliated money market currently manages any portion of the
funds with respect to the Fund's Fund's assets.
The Board considered various other investment of uninvested cash, but not
benefits received by Invesco Aim and its cash collateral. The Board considered the C. Sub-Advisory Fees
affiliates resulting from Invesco Aim's contractual nature of this fee waiver and
relationship with the Fund, including the noted that it remains in effect until at The Board considered the services to be
fees received by Invesco Aim and its least June 30, 2009. The Board concluded provided by the Affiliated Sub-Advisers
affiliates for their provision of that the Fund's investment of uninvested pursuant to the sub-advisory agreements
administrative, transfer agency and cash and cash collateral from any and the services to be provided by Invesco
distribution services to the Fund. The securities lending arrangements in the Aim pursuant to the Fund's investment
Board considered the performance of affiliated money market funds is in the advisory agreement, as well as the
Invesco Aim and its affiliates in best interests of the Fund and its allocation of fees between Invesco Aim and
providing these services and the shareholders. the Affiliated Sub-Advisers pursuant to
organizational structure employed by the sub-advisory agreements. The Board
Invesco Aim and its affiliates to provide II. Sub-Advisory Agreements noted that the sub-advisory fees have no
these services. The Board also considered direct effect on the Fund or its
that these services are provided to the A. Nature, Extent and Quality of shareholders, as they are paid by Invesco
Fund pursuant to written contracts which Services Provided by Affiliated Aim to the Affiliated Sub-Advisers, and
are reviewed and approved on an annual Sub-Advisers that Invesco Aim and the Affiliated
basis by the Board. The Board concluded Sub-Advisers are affiliates. After taking
that Invesco Aim and its affiliates were The Board reviewed the services to be account of the Fund's contractual
providing these services in a satisfactory provided by Invesco Trimark Ltd., Invesco sub-advisory fee rate, as well as other
manner and in accordance with the terms of Asset Management Deutschland, GmbH, relevant factors, the Board concluded that
their contracts, and were qualified to Invesco Asset Management Limited, Invesco the Fund's subadvisory fees were fair and
continue to provide these services to the Asset Management (Japan) Limited, Invesco reasonable.
Fund. Australia Limited, Invesco Global Asset
Management (N.A.), Inc., Invesco Hong Kong D. Financial Resources of the
The Board considered the benefits Limited, Invesco Institutional (N.A.), Affiliated Sub-Advisers
realized by Invesco Aim as a result of Inc. and Invesco Senior Secured
portfolio brokerage transactions executed Management, Inc. (collectively, the The Board considered whether each
through "soft dollar" arrangements. Under "Affiliated Sub-Advisers") under the Affiliated Sub-Adviser is financially
these arrangements, portfolio brokerage sub-advisory agreements and the sound and has the resources necessary to
commissions paid by the Fund and/or other credentials and experience of the officers perform its obligations under its
funds advised by Invesco Aim are used to and employees of the Affiliated respective sub-advisory agreement, and
pay for research and execution services. Sub-Advisers who will provide these concluded that each Affiliated Sub-Adviser
The Board noted that soft dollar services. The Board concluded that the has the financial resources necessary to
arrangements shift the payment obligation nature, extent and quality of the services fulfill these obligations.
for the research and execution services to be provided by the Affiliated
from Invesco Aim to the funds and Sub-Advisers were appropriate. The Board
therefore may reduce Invesco Aim's noted that the Af- filiated Sub-Advisers,
expenses. The Board also noted that which have offices and personnel that are
research obtained through soft dollar geographically dispersed in financial
arrangements may be used by Invesco Aim in centers around the world, have been formed
making investment decisions for the Fund in part for the purpose of researching and
and may therefore benefit Fund compiling information and making
shareholders. The Board concluded that recommendations on the markets and
Invesco Aim's soft dollar arrangements economies of various countries and
were appropriate. The Board also concluded securities of companies located in such
that, based on their review and countries or on various types of
representations made by Invesco Aim, these investments and investment techniques, and
arrangements were consistent with providing investment advisory services.
regulatory requirements. The Board concluded that the sub-advisory
agreements will benefit the Fund and its
The Board considered the fact that the shareholders by permitting Invesco Aim to
Fund's uninvested cash and cash collateral utilize the additional resources and
from any securities lending arrangements talent of the Affiliated Sub-Advisers in
may be invested in money market funds managing the Fund.
advised by Invesco Aim pursuant to
procedures approved by the Board. The
Board noted that Invesco Aim will receive
advisory fees from these affiliated
27 AIM MULTI-SECTOR FUND
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2008:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
Long-Term Capital Gain Dividends $32,758,311
Qualified Dividend Income* 84.69%
Corporate Dividends Received Deduction* 67.65%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarter ended November 30, 2007 was 19.04%.
28 AIM MULTI-SECTOR FUND
PROXY RESULTS
A Special Meeting ("Meeting") of Shareholders of AIM Multi-Sector Fund, an
investment portfolio of AIM Counselor Series Trust, a Delaware statutory trust
("Trust"), was held on February 29, 2008 and was adjourned with respect to
certain proposals, until March 28, 2008. The Meeting on March 28, 2008 was held
for the following purposes:
(1) Elect 13 trustees to the Board of Trustees of the Trust, each of whom will
serve until his or her successor is elected and qualified.
(2) Approve an amendment to the Trust's Agreement and Declaration of Trust that
would permit the Board of Trustees of the Trust to terminate the Trust, the
Fund, and each other series portfolio of the Trust, or a share class without
a shareholder vote.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHELD/
MATTERS VOTES FOR ABSTENTIONS**
- -----------------------------------------------------------------------------------------------------------------------
(1)* Bob R. Baker................................................................... 80,004,783 1,692,073
Frank S. Bayley................................................................ 80,042,468 1,654,388
James T. Bunch................................................................. 80,071,331 1,625,525
Bruce L. Crockett.............................................................. 80,047,680 1,649,176
Albert R. Dowden............................................................... 80,044,519 1,652,337
Jack M. Fields................................................................. 80,054,678 1,642,178
Martin L. Flanagan............................................................. 80,013,733 1,683,123
Carl Frischling................................................................ 80,026,567 1,670,289
Prema Mathai-Davis............................................................. 80,025,589 1,671,267
Lewis F. Pennock............................................................... 80,059,672 1,637,184
Larry Soll, Ph.D. ............................................................. 80,040,389 1,656,467
Raymond Stickel, Jr. .......................................................... 80,056,699 1,640,157
Philip A. Taylor............................................................... 80,034,136 1,662,720
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(2)* Approve an amendment to the Trust's Agreement and
Declaration of Trust that would permit the Board
of Trustees of the Trust to terminate the Trust,
the Fund, and each other series portfolio of the
Trust, or a share class without a shareholder
vote............................................. 55,885,613 10,011,477 2,110,683 13,689,083
</Table>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Counselor Series Trust.
** Includes Broker Non-Votes.
29 AIM MULTI-SECTOR 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 103 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. 2007 Executive Director, Chief Executive Officer and President, None
Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global
Trustee investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Director, Chairman,
Chief Executive Officer and President, IVZ Inc. (holding
company); INVESCO North American Holdings, Inc. (holding
company); and, INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of Funds--Registered
Trademark--; Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President,
Invesco Holding Company Limited (parent of Invesco Aim and a
global investment management firm); Chairman, Investment
Company Institute; President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief Financial
Officer, Franklin Resources, Inc. (global investment
management organization)
- --------------------------------------------------------------------------------------------------------------------------------
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 President, Invesco Trimark Dealer Inc. (formerly AIM Mutual
Executive Officer Fund Dealer Inc.) (registered broker dealer), 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
register transfer agent) and AIM GP Canada Inc. (general
partner for a limited partnership); 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, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (formerly AIM Canada Holdings
Inc.) (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund 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 (formerly AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services) (registered investment advisor
and registered transfer agent); Trustee, President and
Principal Executive Officer of The AIM Family of Funds--
Registered Trademark-- (other than AIM Treasurer's Series
Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds--
Registered Trademark-- (AIM Treasurer's Series Trust and
Short-Term Investments Trust only); and Manager, Invesco
PowerShares Capital Management LLC
Formerly: Director and President, AIM Trimark Corporate
Class Inc. and AIM Trimark Canada Fund Inc.; Director and
President, Invesco Trimark Ltd./Invesco Trimark Ltee
(formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise
Services); Senior Managing Director, Invesco Holding Company
Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (registered broker dealer); President and Principal
Executive Officer, The AIM Family of Funds--Registered
Trademark-- (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.; and Director, Trimark Trust (federally
regulated Canadian Trust Company)
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited
Trustee and Chair consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
- --------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- --------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired
Trustee
Formerly: Partner, law firm of Baker & McKenzie; and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Policy
Trustee firm) Studies, Inc. and
Van Gilder Insurance
Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business None
Trustee corporations, including the Boss Group Ltd. (private
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company); Annuity and Life Re
(Holdings), Ltd. (reinsurance 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.; 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)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company); and Discovery Global
Education Fund (non-profit)
- --------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds) (15
portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA of the USA 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
Trustee
Formerly: Partner, Deloitte & Touche; and Director, Mainstay None
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.
30 AIM MULTI-SECTOR FUND
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 of N/A
Senior Vice President and Funds--Registered Trademark--
Senior Officer
Formerly: Director of Compliance and Assistant 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 Counsel, N/A
Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc.
Legal Officer and Secretary 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--Registered
Trademark--; 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, Senior Vice President, General Counsel
and Secretary, 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 President, The N/A
Vice President AIM Family of Funds--Registered Trademark--
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--Registered
Trademark--; 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; and Senior Vice President and Compliance
Director, Delaware Investments Family of Funds
- --------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A
Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited,
IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO North American Holdings,
Inc.; and Vice President, The AIM Family of Funds--Registered
Trademark--
Formerly: 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--Registered Trademark--; Director and Vice
President, INVESCO Distributors, Inc. and Chief Executive Officer
and President, INVESCO Funds Group, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sheri S. Morris -- 1964 2008 Vice President, Treasurer and Principal Financial Officer, The N/A
Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Assistant Vice
and Principal Financial President, Invesco Aim Advisors, Inc., Invesco Aim Capital
Officer Management, Inc. and Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of Funds--Registered Trademark--
- --------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash Management N/A
Vice President Group; 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, The AIM Family of Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust and Short-Term Investments
Trust); and President and Principal Executive Officer, The AIM
Family of Funds--Registered Trademark-- (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--Registered
Trademark-- (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 Advisors, N/A
Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim
Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc.,
Invesco Aim Private Asset Management, Inc. and The AIM Family of
Funds--Registered Trademark--
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.; Senior N/A
Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief
Compliance Officer, The AIM Family of Funds--Registered
Trademark--, 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, Invesco Aim Distributors, PricewaterhouseCoopers
Suite 100 Inc. Inc. LLP
Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
Suite 100 Suite 100 Suite 2900
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COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN
Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and
& Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company
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31 AIM MULTI-SECTOR FUND
====================================================================================================================================
EDELIVERY
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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, 2008, 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, 2009, 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 [INVESCO AIM LOGO]
individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco - SERVICE MARK -
Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco
Asset Management (Japan) Ltd., Invesco Hong Kong Ltd., Invesco Australia Limited, Invesco Asset Management
Limited and Invesco Asset Management Deutschland GmbH are affiliated investment advisors that serve as
subadvisors to many of the products and services represented by Invesco Aim. Invesco Aim Distributors, Inc. is
the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds
represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
invescoaim.com I-MSE-AR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM SELECT REAL ESTATE INCOME FUND
- SERVICE MARK - Annual Report to Shareholders o August 31, 2008
[MOUNTAIN GRAPHIC]
2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Long-Term Fund Performance
8 Supplemental Information
9 Schedule of Investments
11 Financial Statements
14 Notes to Financial Statements
20 Financial Highlights
24 Auditor's Report
25 Fund Expenses
26 Approval of Investment Advisory Agreement
30 Tax Information
31 Results of Proxy
32 Trustees and Officers
Dear Shareholder:
In previous reports, I've talked with you about short-term market volatility. I'd like to take this
opportunity to update you on recent market developments and provide some perspective and encouragement to
[TAYLOR fellow long-term investors.
PHOTO]
MARKET OVERVIEW
About a year ago or so, we saw warning signs of increasing economic ills -- a weakening housing market,
rising inflation and slowing job growth, among others. Nonetheless, U.S. equity markets were performing
Philip Taylor relatively well. But as the year progressed, the housing market deteriorated, energy prices rose,
unemployment increased and the credit crunch grew more widespread.
In response, the U.S. Federal Reserve cut short-term interest rate targets to stimulate economic growth
and expand market liquidity.(1) Congress and the president worked together to enact an economic stimulus
plan, one facet of which was to provide more than 112 million taxpayers with $92 billion in tax rebates.(2) Historically, actions
such as these have stimulated economic growth. Unfortunately, other factors were simultaneously at work behind the scenes, and the
market began to reveal the strain of those factors.
HOW WE GOT HERE
The market stresses we saw over the past year were the result of years of lax lending associated with the recent housing boom.
Mortgage loans of questionable quality were bundled into hard-to-value securities that were sold to, and traded among, financial
institutions. The value of those securities declined; more institutions sought to sell them and fewer institutions were willing to
buy them. As a result, financial institutions' access to credit declined and the value of their holdings declined -- preventing
normal trading among banks and other financial institutions.
In October 2008, Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to
purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in
the last half century.
INVESTING IN A VOLATILE MARKET
Whether or not markets recover in the short term, the kind of volatility we've seen of late is a good reminder that in times of
market uncertainty, it's wise to stay true to three timeless investing principles:
o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. I urge you to stick to your
investment plan and stay focused on your long-term goals.
o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of
complementary asset classes may potentially cushion your portfolio against excessive volatility.
o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes
viewing market volatility as a matter of course, not a reason to panic.
That leads me to a fourth principle we believe may be critical to your success: Work with a trusted financial advisor. An
experienced advisor who knows your goals and situation can be your most valuable asset, particularly during times of market
volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course.
Recent market volatility has been disconcerting for everyone. Remember, however, that many of history's significant buying
opportunities were the result of short-term economic crises that, in their time, were considered unprecedented. I believe current
market volatility and uncertainty may represent a buying opportunity for patient, long-term investors. Invesco Aim's portfolio
managers are working diligently on your behalf to capitalize on this situation.
OUR NEW BRAND IDENTITY
While market conditions are obviously at the top of everyone's mind, there are some significant changes I want to share with you: We
have a new name and a new brand -- Invesco Aim.
Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers with $450 billion
in assets under management as of August 31, 2008. Invesco has 5,300 employees in 13 investment centers worldwide serving clients in
100 countries. This provides you:
o Diversified investment strategies from distinct management teams around the globe.
o A range of investment products to help you achieve your financial goals.
o The peace of mind professional asset management and a diversified investment portfolio can provide.
While our name may have changed, our commitment to putting shareholders first, helping clients achieve their investment goals and
providing excellent customer service will never change.
If you have questions about this report or your account, please contact one of our client service representatives at
800 959 4246.
Thank you for your continued confidence, and we look forward to serving you. Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
October 20, 2008
(1) U.S. Federal Reserve Board; 2 U.S. Department of the Treasury
2 AIM SELECT REAL ESTATE INCOME FUND
Dear Fellow Shareholders:
As I write this letter, turbulent financial markets are causing considerable investor anxiety, reminding us
again that markets are cyclical and the correction of excess is often painful, at least in the short term.
Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment
[CROCKETT discipline. We continue to put your interests first in the effort to improve investment performance,
PHOTO] contain shareholder costs and uphold the highest ethical standards.
We remain enthusiastic about the global reach and investment expertise that Invesco, a leading
independent global investment management company, brings to the management of AIM Funds as the parent
company of the advisors. The diverse investment strategies deployed throughout the worldwide network of
Bruce Crockett Invesco investment centers has helped strengthen the management of many AIM Funds. The rebranding of the
Funds' management company as Invesco Aim was followed by the launch of an upgraded, investor-friendly
website (invescoaim.com); a new mountain logo using a Himalayan peak to symbolize stability, endurance, strength and longevity; and
a new ad campaign. Emphasizing Invesco Aim's focus and investment quality, the ads will appear in financial publications such as
Barron's and Investment News through the end of 2008.
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."
We have recently completed another active proxy voting season during which we acted on your behalf to double the number of votes
in favor of separating the roles of chairman and CEO at the companies whose shares your Funds hold. We also continued to support the
movement for shareholders to have a bigger role in approving executive compensation, initiatives known as "say on pay." Like
virtually all other mutual fund complexes, AIM Funds abstain from voting on social issues as a matter of policy, and I would be
interested to hear your thoughts on this policy.
As always, you are welcome to email your questions or comments to me at bruce@brucecrockett.com. The dialogue that has been
established in this way has been instructive for your Board, and we want it to continue. Although the production schedule for Fund
annual reports and prospectuses allows me to write these letters of general report and response just twice a year, please be assured
that your comments are received, welcomed and heard in the interim.
We look forward to hearing from you and to representing you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
October 20, 2008
3 AIM SELECT REAL ESTATE INCOME FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= o Risk/return relationships change
PERFORMANCE SUMMARY significantly.
The U.S. real estate investment trust (REIT) market held up relatively well compared o Company fundamentals change (property
with other financial stocks and the broad market for the fiscal year ended August 31, type, geography or management changes).
2008. For the period, Class A shares of AIM Select Real Estate Income Fund at net asset
value (NAV) trailed the Fund's style-specific index, but outperformed its broad market o A more attractive investment
index as shown in the table below. The Fund outperformed its broad market index, the opportunity is identified.
S&P 500 Index, as investors returned to U.S. REITs following a significant sell off in
the first half of 2007. However, the Fund underperformed the FTSE NAREIT Equity REITs MARKET CONDITIONS AND YOUR FUND
Index, the equity portion of its style specific index, due primarily to stock selection
in diversified REITs and office REITs. Many factors contributed to the negative
performance of most major market indexes
Your Fund's long-term performance appears later in this report. for the fiscal year ended August 31,
2008.(1) The chief catalyst was primarily
FUND VS. INDEXES the ongoing subprime loan crisis and its
far-reaching effects on overall credit
Total returns, 8/31/07 to 8/31/08, at net asset value (NAV). Performance shown does not availability. Additionally, record high
include applicable contingent deferred sales charges (CDSC) or front-end sales charges, crude oil prices, falling home values and
which would have reduced performance. the weak U.S. dollar placed significant
pressure on the purchasing power of the
Class A Shares -7.36% U.S. consumer. Late in the fiscal year,
Class B Shares -8.12 consumer confidence fell and market
Class C Shares -8.01 volatility increased as evidence of a
S&P 500 Index(triangle) (Broad Market Index) -11.13 pending recession was compounded by
Custom Select Real Estate Income Index(square) (Style-Specific Index)** -6.86 mounting inflationary pressures.
FTSE NAREIT Equity REITs Index(triangle)(Former Style-Specific Index)** -7.04
Lipper Real Estate Funds Index(triangle) (Peer Group Index)* -6.31 In seven separate actions beginning in
September 2007, the U.S. Federal Reserve
(triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc., Bloomberg L.P. Board (the Fed) lowered the federal funds
target rate from 5.25% to 2.00% in an
* The Lipper Real Estate Funds Index's return for the fiscal year was affected by a effort to inject liquidity into the
mid-quarter reconstitution to remove global and international real estate funds from weakening credit markets.(2) The collapse
the index. Had the index been recalculated following the reconstitution, the index's of Bear Stearns and difficulties
return would have been lower. encountered by government-sponsored
mortgage suppliers Freddie Mac and Fannie
** The Fund has elected to use the Custom Select Real Estate Income Index as its Mae was evidence that the housing and
style-specific index instead of the FTSE NAREIT Equity REITs Index because it better financial sectors continued to struggle.
represents the Fund. In response, the Fed has used a variety of
======================================================================================= monetary policy tools to help alleviate
the strain on financial markets.
HOW WE INVEST o Favorable property market outlook.
Gross domestic product (GDP) increased
Your Fund holds primarily real o Reasonable valuations relative to peer at an annualized rate of 2.8% in the
estate-oriented securities. We focus on investment alternatives. second quarter of 2008, buoyed in part by
public companies whose value is driven by government tax rebates.(3) Indeed, this
tangible assets. Our goal is to create a We attempt to manage risk by allocating level was higher than the 0.9% annualized
fund that will provide attractive current between property related common stocks and growth rate for the first quarter of
income. We use a fundamentals-driven fixed income as well as diversifying by 2008.(3) Inflation, measured by a
investment process, including property property types and geographic location and seasonally adjusted Consumer Price Index,
market cycle analysis, property evaluation also limiting the size of any one holding. increased at an annual rate of 5.4% year
and management and structure review to over year as of August 2008.(4) The
identify securities with: We will consider selling a holding advance in the price index was mostly
when: attributable to increases in the cost of
o Attractive relative dividend yields. energy. Unemployment also trended higher
o Relative yields and/or valuation falls during the fiscal year and was 6.1% at the
below desired levels. end of August 2008.(4)
========================================== ========================================== Market volatility increased
PORTFOLIO COMPOSITION TOP 10 EQUITY HOLDINGS* significantly after the close of the
Fund's fiscal year. To put some context
By property type and other investments around the recent financial events: The
markets have shown serious strain for more
Regional Malls 17.6% 1. Health Care REIT, Inc. 4.7% than a year, largely the result of years
Health Care 14.6 2. CBL & Associates Properties, Inc. 4.3 of lax credit practices associated with
Office 13.4 3. Simon Property Group, Inc. 4.3 the housing boom. Mortgage loans of
Industrial/Office Mixed 7.7 4. Nationwide Health Properties, Inc. 3.6 questionable quality were often bundled
Apartments 7.5 5. Senior Housing Properties Trust 3.5 into hard-to-understand securities and
Lodging-Resorts 7.0 6. Mack-Cali Realty Corp. 3.5 sold to various financial institutions.
Self Storage Facilities 6.1 7. Liberty Property Trust 3.2 The complexity and
Shopping Centers 4.8 8. Brandywine Realty Trust 2.9
Mortgage Backed Securities 4.2 9. Host Hotels & Resorts Inc. 2.7
Freestanding 3.9 10. Essex Property Trust, Inc. 2.6
Diversified 3.6 ==========================================
Specialty 3.6
Industrial 3.3 ==========================================
Money Market Funds Plus Total Net Assets $127.3 million
Other Assets Less Liabilities 2.7
Total Number of Holdings* 65
========================================== ==========================================
The Fund's holdings are subject to change, and there is no assurance that the Fund will
continue to hold any particular security.
* Excluding money market fund holdings.
4 AIM SELECT REAL ESTATE INCOME FUND
obscure structure of these securities hid shopping centers and regional malls, JOE RODRIGUEZ, JR.
an Achilles' heel of our financial suffered as a result of increased Senior portfolio manager, is
system, creating a liquidity crisis of recession fears and concerns about a [RODRIGUEZ lead manager of AIM Select
historic severity. Now those securities potentially negative effect on consumer PHOTO] Real Estate Income Fund. He is
remain on the financial institutions' spending. As a result, General Growth head of real estate securities
balance sheets -- eroding capital, driving Properties was the largest detractor from for Invesco Real Estate, where he oversees
down profits and preventing normal trading Fund performance during the fiscal year. all phases of the unit, including
among banks and other financial The net operating income of a majority of securities research and administration.
institutions due to the participating regional malls comes from long-term He has served on the editorial boards of
financial institutions' stability being in contractual rents that must be paid the National Association of Real Estate
question. After the close of the fiscal regardless of store sales; therefore, we Investment Trusts (NAREIT) as well as the
year, this situation came to a head as believed it would require a sustained Institutional Real Estate Securities News-
some of these institutions began running downturn in consumer spending and retail letter. Mr. Rodriguez began his invest-
out of the capital needed to operate their sales before rental and earnings growth ment career in 1983 and joined Invesco in
businesses and found investors unwilling would be materially affected. 1990. He earned his B.B.A. in economics
to supply fresh capital. Compounding the and finance as well as his M.B.A. in
problem is growing concern over future A preferred stock investment in ISTAR finance from Baylor University.
economic prospects. FINANCIAL, a finance company focused on
commercial real estate, drove our MARK BLACKBURN
To ensure the orderly functioning of underperformance in the diversified REITs Chartered Financial Analyst,
the credit markets and thereby preventing sector and was among the top detractors [BLACKBURN portfolio manager, is manager
a more severe economic downturn, in early from Fund performance. The company was PHOTO] of AIM Select Real Estate
October Congress enacted a $700 billion negatively affected by general credit Income Fund. He joined Invesco
rescue plan -- the Troubled Assets Relief market concerns and a perceived increase in 1998. He earned a B.S. in accounting
Program. In addition, the Fed -- in in credit risk exposure following its from Louisiana State University and an
concert with other world banks -- lowered acquisition of Fremont General's (not a M.B.A. from Southern Methodist University.
short-term interest rates from 2.0% to Fund holding) commercial real estate Mr. Blackburn is a Certified Public
1.5% on October 8, 2008.(2) lending subsidiary. Accountant.
For the fiscal year, the U.S. REIT During the fiscal year, we increased PAUL CURBO
market, as measured by the FTSE NAREIT our exposure to health care and regional [CURBO Chartered Financial Analyst,
Equity REITs Index, produced a loss.(1) malls, given their defensive PHOTO] portfolio manager, is manager
However, real estate securities, which characteristics during periods of slower of AIM Select Real Estate
sustained significant losses in 2007, economic growth. Along these same lines, Income Fund. He joined Invesco in 1998.
fared better than the broad market for the we reduced our exposure to lodging, which Mr. Curbo earned a B.B.A. in finance from
fiscal year ended August 31, 2008.(1) Fund tends to be more affected by a slowdown in the University of Texas at Dallas.
performance varied considerably by sector, the economy.
with health care REITs and apartment REITs
contributing the most to absolute We remained committed to owning quality JAMES TROWBRIDGE
performance. Our overweight in health care real estate companies that we believe [TROWBRIDGE Portfolio manager, is manager
REITs and our security selection in mixed could benefit from relatively better PHOTO] of AIM Select Real Estate
use industrial/office REITs benefited Fund sector trends. We continued to manage risk Income Fund. He joined Invesco
performance relative to the FTSE NAREIT by holding a portfolio diversified by in 1989. Mr. Trowbridge earned his B.A. in
Equity REIT Index. Lodging/resorts and property type and geographic location. finance from Indiana University.
regional mall REITs detracted most from Lower leveraged companies with above
Fund performance on an absolute basis, average levels of dividend coverage Assisted by the Real Estate Team
while our security selection in remained favored in the portfolio.
diversified REITs and office REITs
detracted from benchmark-relative We thank you for your continued
performance. investment in AIM Select Real Estate
Income Fund.
Health care, which is generally a
defensive sector less directly linked to 1 Lipper Inc.; 2 U.S. Federal Reserve; 3
the overall economy, outperformed during Bureau of Economic Analysis; 4 Bureau of
the fiscal year. Indeed, our top Labor Statistics
contributors to performance during the
period were HEALTH CARE REIT, NATIONWIDE The views and opinions expressed in
HEALTH PROPERTIES and VENTAS. Each company management's discussion of Fund
has exposure to a wide array of health performance are those of Invesco Aim
care related real estate, including senior Advisors, Inc. These views and opinions
housing facilities, long-term care are subject to change at any time based on
facilities and medical office buildings. factors such as market and economic
conditions. These views and opinions may
Fund performance was also aided by a not be relied upon as investment advice or
temporary fee that was in effect from recommendations, or as an offer for a
March 12, 2007 through March 12, 2008. particular security. The information is
This fee helped offset costs associated not a complete analysis of every aspect of
with redemptions following the Fund's any market, country, industry, security or
open-end conversion. the Fund. Statements of fact are from
sources considered reliable, but Invesco
GENERAL GROWTH PROPERTIES, the third Aim Advisors, Inc. makes no representation
largest retail REIT that has exposure to or warranty as to their completeness or
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our
investment management philosophy.
See important Fund and index disclosures
later in this report.
5 AIM SELECT REAL ESTATE INCOME FUND
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee This chart, which is a logarithmic ment. In other words, the space between
comparable future results. chart, presents the fluctuations in the $5,000 and $10,000 is the same size as the
value of the Fund and its indexes. We space between $10,000 and $20,000, and so
The data shown in the chart include believe that a logarithmic chart is more on.
reinvested distributions, applicable sales effective than other types of charts in
charges and Fund expenses including illustrating changes in value during the
management fees. Performance of an index early years shown in the chart. The
of funds reflects fund expenses and vertical axis, the one that indicates the
management fees; performance of a market dollar value of an investment, is
index does not. Performance shown in the constructed with each segment representing
chart and table(s) does not reflect a percent change in the value of the
deduction of taxes a shareholder would pay investment. In this chart, each segment
on Fund distributions or sale of Fund represents a doubling, or 100% change, in
shares. the value of the invest-
continued from page 8
o A direct investment cannot be made in an o CPA--REGISTERED TRADEMARK-- and returns based on those net asset values
index. Unless otherwise indicated, index Certified Public Accountant--REGISTERED may differ from the net asset values and
results include reinvested dividends, TRADEMARK-- are trademarks owned by the returns reported in the Financial
and they do not reflect sales charges. American Institute of Certified Public Highlights.
Performance of an index of funds Accountants.
reflects fund expenses; performance of a
market index does not. o The returns shown in the management's o Property type classifications used in
discussion of Fund performance are based this report are generally according to
OTHER INFORMATION on net asset values calculated for the FTSE National Association of Real
shareholder transactions. Generally Estate Investment Trusts (NAREIT) Equity
o The Chartered Financial Analyst--REGIS- accepted accounting principles require REITs Index, which is exclusively owned
TERED TRADEMARK-- (CFA--REGISTERED adjustments to be made to the net assets by NAREIT.
TRADEMARK--) designation is a globally of the Fund at period end for financial
recognized standard for measuring the reporting purposes, and as such, the net
competence and integrity of investment asset values for shareholder
professionals. transactions and the
6 AIM SELECT REAL ESTATE INCOME FUND
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- CLASS A SHARES (OLDEST SHARE CLASS)
Fund and index data from 5/31/02
AIM Select Real FTSE NAREIT Custom Select
Estate Fund- Equity REITs Real Estate Lipper Real Estate
Date Class A Shares Index(1) Income Index(2) S&P 500 Index(1) Funds Index(1)
5/31/02 $ 9430 $10000 $10000 $10000 $10000
6/02 9661 10273 10198 9288 10220
7/02 9259 9736 9905 8564 9635
8/02 9226 9717 9998 8620 9656
9/02 8874 9344 9846 7684 9312
10/02 8334 8894 9525 8360 8902
11/02 8775 9313 9837 8851 9262
12/02 8799 9382 9994 8332 9361
1/03 8622 9110 9892 8114 9116
2/03 8802 9260 9967 7992 9257
3/03 8977 9446 10097 8069 9470
4/03 9561 9861 10441 8734 9882
5/03 10222 10457 10853 9193 10465
6/03 10704 10684 11075 9311 10713
7/03 11298 11256 11310 9475 11204
8/03 11187 11316 11368 9660 11325
9/03 11689 11701 11675 9557 11687
10/03 12128 11912 11851 10098 11947
11/03 12704 12431 12169 10186 12470
12/03 13320 12866 12482 10720 12844
1/04 14024 13423 12797 10917 13303
2/04 14306 13658 12946 11069 13595
3/04 15036 14412 13387 10902 14337
4/04 12606 12311 12097 10731 12452
5/04 13316 13188 12538 10878 13185
6/04 13585 13575 12773 11089 13590
7/04 13683 13620 12939 10722 13647
8/04 14657 14701 13610 10765 14597
9/04 14798 14692 13677 10882 14678
10/04 15477 15479 14104 11048 15353
11/04 15986 16146 14465 11495 16037
12/04 16577 16929 14892 11886 16971
1/05 15390 15508 14291 11596 15847
2/05 15746 15983 14556 11840 16311
3/05 15234 15736 14324 11631 16011
4/05 15894 16573 14816 11410 16656
5/05 16515 17147 15147 11773 17216
6/05 17277 18009 15614 11790 18017
7/05 18189 19294 16210 12228 19177
8/05 17483 18589 15954 12117 18513
9/05 17721 18699 15998 12215 18568
10/05 17126 18257 15713 12011 18136
11/05 17466 19026 16028 12465 18921
12/05 17314 18988 16094 12469 19053
1/06 18563 20375 16768 12799 20248
2/06 18802 20740 17009 12834 20553
3/06 19396 21787 17457 12994 21500
4/06 18659 20978 17054 13168 20940
5/06 17958 20381 16848 12790 20359
6/06 18820 21441 17343 12806 21242
7/06 19486 22164 17757 12885 21736
====================================================================================================================================
1 Lipper Inc.
2 Invesco Aim, Lipper Inc., Bloomberg L.P.
====================================================================================================================================
[MOUNTAIN CHART]
8/06 20581 23003 18229 13192 22480
9/06 20888 23428 18509 13531 22908
10/06 21771 24896 19192 13972 24215
11/06 22329 26053 19726 14237 25316
12/06 22362 25646 19656 14437 25047
1/07 23163 27805 20526 14655 26849
2/07 22838 27183 20306 14369 26317
3/07 22957 26534 20087 14530 25874
4/07 23049 26529 20111 15173 25983
5/07 22984 26543 20096 15702 26184
6/07 22182 24136 19136 15441 24069
7/07 20805 22252 17945 14963 22454
8/07 21560 23715 18425 15187 23383
9/07 22149 24760 18916 15754 24425
10/07 22310 25037 18928 16005 24927
11/07 20780 22766 17506 15336 22737
12/07 19955 21621 16691 15230 21665
1/08 20677 21400 17419 14316 21390
2/08 20257 20638 17019 13852 20693
3/08 20399 21924 17315 13792 21604
4/08 21433 23209 18109 14463 22857
5/08 21693 23388 18325 14650 22929
6/08 20142 20844 16837 13416 21111
7/08 19737 21568 16775 13304 21646
8/08 19975 22044 17161 13496 21907
====================================================================================================================================
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/08, including maximum As of 6/30/08, the most recent calendar
applicable sales charges quarter-end, including maximum applicable
sales charges
CLASS A SHARES
Inception (5/31/02) 11.70% CLASS A SHARES
5 Years 11.03 Inception (5/31/02) 12.20%
1 Year -12.47 5 Years 12.19
1 Year -14.18
CLASS B SHARES
Inception 11.54% CLASS B SHARES
5 Years 10.99 Inception 12.06%
1 Year -10.69 5 Years 12.15
1 Year -12.43
CLASS C SHARES
Inception 11.56% CLASS C SHARES
5 Years 11.16 Inception 12.06%
1 Year -8.53 5 Years 12.30
========================================== 1 Year -10.47
==========================================
ON MARCH 12, 2007, THE FUND REORGANIZED WERE MADE AT THE LOWER OF THE CLOSED-END
FROM A CLOSED-END FUND TO AN OPEN-END FUND'S NET ASSET VALUE OR MARKET PRICE),
FUND. CLASS A SHARE RETURNS PRIOR TO MARCH CHANGES IN NET ASSET VALUE AND THE EFFECT
12, 2007, ARE THE HISTORICAL RETURNS OF OF THE MAXIMUM SALES CHARGE UNLESS
THE CLOSED-END FUND'S COMMON SHARES WHICH OTHERWISE STATED. INVESTMENT RETURN AND
INCEPTED MAY 31, 2002 AND WHICH HAD NO PRINCIPAL VALUE WILL FLUCTUATE SO THAT
12B-1 FEE. THE CLASS A SHARE RETURNS PRIOR YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL
TO MARCH 12, 2007 DO NOT REFLECT THE 0.25% SHARES.
ANNUAL 12B-1 FEE APPLICABLE TO THE FUNDS'
CLASS A SHARES OR THE ANNUAL OTHER THE TOTAL ANNUAL FUND OPERATING EXPENSE
EXPENSES OF SUCH CLASS A SHARES WHICH ARE RATIO SET FORTH IN THE MOST RECENT FUND
ESTIMATED TO BE 0.10% HIGHER THAN THOSE OF PROSPECTUS AS OF THE DATE OF THIS REPORT
THE CLOSED-END FUND. IF THE 12B-1 FEE AND FOR CLASS A, CLASS B AND CLASS C SHARES
OTHER EXPENSES OF THE FUND'S CLASS A WAS 1.31%, 2.06% AND 2.06%, RESPECTIVELY.
SHARES WERE REFLECTED, RETURNS PRIOR TO THE EXPENSE RATIOS PRESENTED ABOVE MAY
MARCH 12, 2007 MAY BE LOWER THAN THOSE VARY FROM THE EXPENSE RATIOS PRESENTED IN
SHARES FOR THAT PERIOD. OTHER SECTIONS OF THIS REPORT THAT ARE
BASED ON EXPENSES INCURRED DURING THE
THE INCEPTION DATE FOR THE OPEN-END PERIOD COVERED BY THIS REPORT.
FUND'S CLASS B AND CLASS C SHARES IS MARCH
9, 2007; RETURNS SINCE THAT DATE ARE CLASS A SHARE PERFORMANCE REFLECTS THE
HISTORICAL RETURNS. ALL OTHER RETURNS ARE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
BLENDED RETURNS OF HISTORICAL CLASS B AND AND CLASS C SHARE PERFORMANCE REFLECTS THE
CLASS C SHARES AND THE HISTORICAL APPLICABLE CONTINGENT DEFERRED SALES
PERFORMANCE OF THE CLOSED-END FUND'S CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
COMMON SHARES AT NET ASSET VALUE, RESTATED CDSC ON CLASS B SHARES DECLINES FROM 5%
TO REFLECT THE 1.00% ANNUAL 12B-1 FEE BEGINNING AT THE TIME OF PURCHASE TO 0% AT
APPLICABLE TO THE FUND'S CLASS B AND CLASS THE BEGINNING OF THE SEVENTH YEAR. THE
C SHARES AND THE ANNUAL OTHER EXPENSES OF CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
SUCH CLASS B AND CLASS C SHARES, WHICH ARE YEAR AFTER PURCHASE.
ESTIMATED TO BE 0.10% HIGHER THAN THOSE OF
THE CLOSED-END FUND. THE PERFORMANCE OF THE FUND'S SHARE
CLASSES WILL DIFFER PRIMARILY DUE TO
THE PERFORMANCE DATA QUOTED REPRESENT DIFFERENT SALES CHARGE STRUCTURES AND
PAST PERFORMANCE AND CANNOT GUARANTEE CLASS EXPENSES
COMPARABLE FUTURE RESULTS; CURRENT
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE FUND PERFORMANCE WAS POSITIVELY
VISIT INVESCOAIM. COM FOR THE MOST RECENT IMPACTED BY A TEMPORARY 2% FEE ON
MONTH-END PERFORMANCE. PERFORMANCE FIGURES REDEMPTIONS THAT WAS IN EFFECT FROM MARCH
REFLECT REINVESTED DISTRIBUTIONS 12, 2007 TO MARCH 12, 2008. WITHOUT INCOME
(REINVESTED AT NET ASSET VALUE, EXCEPT FOR FROM THIS TEMPORARY FEE, RETURNS WOULD
PERIODS PRIOR TO MARCH 12, 2007, WHERE HAVE BEEN LOWER.
REINVESTMENTS
HAD THE ADVISOR NOT WAIVED FEES AND/OR
REIMBURSED EXPENSES IN THE PAST, RETURNS
WOULD HAVE BEEN LOWER.
7 AIM SELECT REAL ESTATE INCOME FUND
AIM SELECT REAL ESTATE INCOME FUND'S INVESTMENT OBJECTIVES ARE HIGH CURRENT INCOME
AND, SECONDARILY, CAPITAL APPRECIATION.
o Unless otherwise stated, information presented in this report is as of August 31, 2008, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
ABOUT SHARE CLASSES lack of strict financial and accounting security back at a higher price at
controls and standards. which the Fund's exposure is unlimited.
o Effective September 30, 2003, only
previously established qualified plans o Interest rate risk refers to the risk ABOUT INDEXES USED IN THIS REPORT
are eligible to purchase Class B shares that bond prices generally fall as
of any AIM fund. interest rates rise; conversely, bond o The S&P 500--REGISTERED TRADEMARK--
prices generally rise as interest rates INDEX is a market
o On March 12, 2007, AIM Select Real fall. capitalization-weighted index covering
Estate Income Fund was reorganized from all major areas of the U.S. economy. It
a Closed-End Fund to an Open-End Fund. o A majority of the Fund's assets are is not the 500 largest companies, but
Information presented for Class A likely to be invested in loans and rather the most widely held 500
shares prior to the reorganization securities that are less liquid than companies chosen with respect to market
included financial data for the those traded on national exchanges. size, liquidity, and their industry.
Closed-End Fund's Common Shares.
o Lower rated securities may be o The CUSTOM SELECT REAL ESTATE INCOME
PRINCIPAL RISKS OF INVESTING IN THE FUND susceptible to real or perceived INDEX is an index created by Invesco
adverse economic and competitive Aim to benchmark the Fund. The index
o Since a large percentage of the Fund's industry conditions. consists of the following indexes: 50%
assets may be invested in securities of FTSE NAREIT Equity REIT Index and 50%
a limited number of companies, each o There is no guarantee that the Wachovia Hybrid and Preferred
investment has a greater effect on the investment techniques and risk analyses Securities REIT Index. The FTSE NAREIT
Fund's overall performance, and any used by the Fund's portfolio managers Equity REIT Index is a market-cap
change in the value of those securities will produce the desired results. weighted index of all equity REITs
could significantly affect the value of traded on the NYSE, NASDAQ National
your investment in the Fund. o The prices of securities held by the Market System, and American Stock
Fund may decline in response to market Exchange. The Wachovia Hybrid and
o Credit risk is the risk of loss on an risks. Preferred Securities REIT Index is a
investment due to the deterioration of capitalization weighted unmanaged index
an issuer's financial health. Such a o The Fund may invest in mortgage- and of exchange listed perpetual REIT
deterioration of financial health may asset-backed securities. These preferred stocks and depository shares.
result in a reduction of the credit securities are subject to prepayment or
rating of the issuer's securities and call risk, which is the risk that o The LIPPER REAL ESTATE FUNDS INDEX is
may lead to the issuer's inability to payments from the borrower may be an equally weighted representation of
honor its contractual obligations, received earlier or later than expected the largest funds in the Lipper Real
including making timely payment of due to changes in the rate at which the Estate Funds category. These funds
interest and principal. underlying loans are prepaid. primarily invest their equity portfolio
in securities of domestic and foreign
o The Fund could conceivably hold real o Non-diversification increases the risk companies engaged in the real estate
estate directly if a company defaults that the value of the Fund's shares may industry.
on debt securities. In that event, an vary more widely, and the Fund may be
investment in the Fund may have subject to greater investment and o The FTSE NAREIT EQUITY REITS INDEX is a
additional risks relating to direct credit risk than if the Fund invested market-cap weighted index of all equity
ownership of real estate. more broadly. REITs traded on the NYSE, NASDAQ
National Market System, and American
o Prices of equity securities change in o Because the Fund concentrates its Stock Exchange.
response to many factors including the assets in the real estate industry, an
historical and prospective earnings of investment in the Fund will be closely o The Fund is not managed to track the
the issuer, the value of its assets, linked to the performance of the real performance of any particular index,
general economic conditions, interest estate markets. including the indexes defined here, and
rates, investor perceptions and market consequently, the performance of the
liquidity. o Because the Fund focuses its Fund may deviate significantly from the
investments in real estate investment performance of the indexes.
o Foreign securities have additional trusts (REITs), real estate operating
risks, including exchange rate changes, companies and other companies related continued on page 6
political and economic upheaval, the to the real estate industry, the value
relative lack of information, of shares may rise and fall more than
relatively low market liquidity, and the value of shares of a fund that
the potential invests in a broader range of
companies.
o The Fund may use enhanced investment
techniques such as short sales. Short
sales carry the risk of buying a
=======================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS,
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES.
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
=======================================================================================
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE
==========================================
FUND NASDAQ SYMBOLS
Class A Shares ASRAX
Class B Shares SARBX
Class C Shares ASRCX
==========================================
8 AIM SELECT REAL ESTATE INCOME FUND
SCHEDULE OF INVESTMENTS(a)
August 31, 2008
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS, COMMON STOCKS & OTHER EQUITY
INTERESTS-58.39%
APARTMENTS-5.42%
BRE Properties, Inc.(b) 12,900 $ 622,167
- --------------------------------------------------------------------------------
Camden Property Trust(b) 11,200 546,672
- --------------------------------------------------------------------------------
Essex Property Trust, Inc.(b) 28,300 3,321,005
- --------------------------------------------------------------------------------
Mid-America Apartment Communities, Inc. 48,100 2,412,696
================================================================================
6,902,540
================================================================================
DIVERSIFIED-3.61%
Vornado Realty Trust 14,400 1,432,224
- --------------------------------------------------------------------------------
Washington Real Estate Investment Trust(b) 89,700 3,170,895
================================================================================
4,603,119
================================================================================
FREESTANDING-2.22%
National Retail Properties Inc.(b) 100,000 2,269,000
- --------------------------------------------------------------------------------
Realty Income Corp.(b) 21,900 562,392
================================================================================
2,831,392
================================================================================
HEALTHCARE-11.89%
Health Care REIT, Inc. 111,773 5,797,666
- --------------------------------------------------------------------------------
Nationwide Health Properties, Inc. 132,400 4,557,208
- --------------------------------------------------------------------------------
Senior Housing Properties Trust 208,300 4,515,944
- --------------------------------------------------------------------------------
Ventas, Inc. 5,700 258,894
================================================================================
15,129,712
================================================================================
INDUSTRIAL PROPERTIES-3.26%
DCT Industrial Trust Inc.(b) 160,900 1,200,314
- --------------------------------------------------------------------------------
ProLogis(b) 68,500 2,949,610
================================================================================
4,149,924
================================================================================
INDUSTRIAL/OFFICE MIXED-3.18%
Liberty Property Trust 107,100 4,044,096
================================================================================
LODGING-RESORTS-4.30%
DiamondRock Hospitality Co.(b) 131,400 1,210,194
- --------------------------------------------------------------------------------
Host Hotels & Resorts Inc.(b) 241,500 3,453,450
- --------------------------------------------------------------------------------
LaSalle Hotel Properties(b) 30,900 805,563
================================================================================
5,469,207
================================================================================
OFFICE PROPERTIES-8.97%
Alexandria Real Estate Equities, Inc.(b) 2,900 312,359
- --------------------------------------------------------------------------------
Brandywine Realty Trust 209,101 3,638,357
- --------------------------------------------------------------------------------
Mack-Cali Realty Corp. 110,500 4,466,410
- --------------------------------------------------------------------------------
SL Green Realty Corp. 34,900 3,001,400
================================================================================
11,418,526
================================================================================
REGIONAL MALLS-7.96%
CBL & Associates Properties, Inc. 64,500 1,399,005
- --------------------------------------------------------------------------------
General Growth Properties, Inc.(b) 127,700 3,311,261
- --------------------------------------------------------------------------------
Simon Property Group, Inc. 57,100 5,417,648
================================================================================
10,127,914
================================================================================
SELF STORAGE FACILITIES-2.48%
Public Storage-Series A Dep. Shares 119,000 3,152,310
================================================================================
SHOPPING CENTERS-3.89%
Developers Diversified Realty Corp.(b) 53,300 1,786,083
- --------------------------------------------------------------------------------
Inland Real Estate Corp.(b) 176,100 2,648,544
- --------------------------------------------------------------------------------
Urstadt Biddle Properties-Class A 30,300 516,009
================================================================================
4,950,636
================================================================================
SPECIALTY PROPERTIES-1.21%
Digital Realty Trust, Inc.(b) 33,700 1,545,819
================================================================================
Total Real Estate Investment Trusts, Common
Stocks & Other Equity Interests (Cost
$74,696,120) 74,325,195
================================================================================
PREFERRED STOCKS-34.20%
APARTMENTS-2.05%
Mid-America Apartment Communities, Inc.-Series H,
8.30% Pfd. 108,500 2,610,510
================================================================================
FREESTANDING-1.73%
National Retail Properties Inc.-Series C, 7.38%
Pfd. 103,500 2,199,375
================================================================================
HEALTHCARE-2.21%
Health Care REIT, Inc.-Series F, 7.63% Pfd. 9,000 217,710
- --------------------------------------------------------------------------------
Omega Healthcare Investors, Inc.-Series D, 8.38%
Pfd.(b) 112,900 2,596,700
================================================================================
2,814,410
================================================================================
INDUSTRIAL PROPERTIES-0.04%
ProLogis-Series C, 8.54% Pfd.(c) 950 50,261
================================================================================
INDUSTRIAL/OFFICE MIXED-4.48%
PS Business Parks, Inc.,
Series K, 7.95% Pfd. 9,800 225,400
- --------------------------------------------------------------------------------
Series L, 7.60% Pfd. 19,600 401,800
- --------------------------------------------------------------------------------
Series M, 7.20% Pfd.(b) 124,100 2,562,665
- --------------------------------------------------------------------------------
Series O, 7.38% Pfd. 124,900 2,516,735
================================================================================
5,706,600
================================================================================
LODGING-RESORTS-2.75%
Eagle Hospitality Properties Trust Inc.-Series A,
8.25% Pfd.(c)(d) 195,800 1,205,403
- --------------------------------------------------------------------------------
Hospitality Properties Trust-Series B, 8.88%
Pfd.(b) 111,900 2,293,950
================================================================================
3,499,353
================================================================================
OFFICE PROPERTIES-4.45%
HRPT Properties Trust,
Series B, 8.75% Pfd.(b) 115,692 2,679,427
- --------------------------------------------------------------------------------
Series C, 7.13% Pfd.(b) 53,900 983,675
- --------------------------------------------------------------------------------
Kilroy Realty Corp.-Series F, 7.50% Pfd. 99,900 2,000,997
================================================================================
5,664,099
================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM SELECT REAL ESTATE INCOME FUND
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
REGIONAL MALLS-9.63%
CBL & Associates Properties, Inc.,
Series C, 7.75% Pfd. 194,600 $ 4,067,140
- --------------------------------------------------------------------------------
Series D, 7.38% Pfd. 97,500 1,911,000
- --------------------------------------------------------------------------------
Glimcher Realty Trust,
Series F, 8.75% Pfd.(b) 70,600 981,340
- --------------------------------------------------------------------------------
Series G, 8.13% Pfd.(b) 134,100 1,783,530
- --------------------------------------------------------------------------------
Realty Income Corp.-Series E, 6.75% Pfd. 114,100 2,408,651
- --------------------------------------------------------------------------------
Taubman Centers, Inc.-Series G, 8.00% Pfd. 49,900 1,103,788
================================================================================
12,255,449
================================================================================
SELF STORAGE FACILITIES-3.63%
Public Storage,
Series I, 7.25% Pfd.(b) 90,400 2,127,112
- --------------------------------------------------------------------------------
Series L, 6.75% Pfd. 30,300 643,572
- --------------------------------------------------------------------------------
Series M, 6.63% Pfd.(b) 88,800 1,844,376
================================================================================
4,615,060
================================================================================
SHOPPING CENTERS-0.87%
Cedar Shopping Centers Inc.-Series A, 8.88%
Pfd.(b) 47,300 1,113,915
================================================================================
SPECIALTY PROPERTIES-2.36%
Digital Realty Trust, Inc.,
Series A, 8.50% Pfd. 29,200 693,792
- --------------------------------------------------------------------------------
Series B, 7.88% Pfd. 50,800 1,123,188
- --------------------------------------------------------------------------------
Entertainment Properties Trust-Series B, 7.75%
Pfd. 58,800 1,183,644
================================================================================
3,000,624
================================================================================
Total Preferred Stocks (Cost $53,381,752) 43,529,656
================================================================================
<Caption>
PRINCIPAL
AMOUNT
ASSET-BACKED SECURITIES-
MORTGAGE BACKED SECURITIES-4.16%
Credit Suisse First Boston Mortgage Securities
Corp.-Series 2003-C3, Class G, Pass Through
Ctfs., 4.62%, 05/15/38(c)(d) $ 25,000 17,319
- --------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp.-Series
2005-GG3, Class AJ, Pass Through Ctfs., 4.86%,
08/10/42(c) 400,000 333,254
- --------------------------------------------------------------------------------
JP Morgan Chase Commercial Mortgage Securities
Corp.,
Series 2005-CB13, Class AJ, Pass Through Ctfs.,
5.54%, 01/12/43(c) 2,200,000 1,848,906
- --------------------------------------------------------------------------------
Series 2005-LDP5, Class AJ, Pass Through Ctfs.,
5.47%, 12/15/44(c) 2,000,000 1,678,037
- --------------------------------------------------------------------------------
Merrill Lynch Mortgage Trust,
Series 2004-MKB1, Class B, Pass Through Ctfs.,
5.28%, 02/12/42(c) 25,000 23,971
- --------------------------------------------------------------------------------
Series 2005-CIP1, Class AJ, Pass Through Ctfs.,
5.14%, 07/12/38(c) 1,450,000 1,207,458
- --------------------------------------------------------------------------------
Morgan Stanley Capital I-Series 2006-IQ11, Class
B, Pass Through Ctfs., 5.95%, 10/15/42(c) 270,000 186,270
================================================================================
Total Asset-Backed Securities (Cost
$5,774,993) 5,295,215
================================================================================
BONDS & NOTES-HEALTHCARE-0.50%
Nationwide Health Properties, Inc., Unsec. Notes,
6.25%, 02/01/13 (Cost $638,584)(c) 650,000 643,617
================================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-1.67%
Liquid Assets Portfolio-Institutional Class(e) 1,062,073 1,062,073
- --------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(e) 1,062,073 1,062,073
================================================================================
Total Money Market Funds (Cost $2,124,146) 2,124,146
================================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-98.92% (Cost $136,615,595) 125,917,829
================================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-14.04%
Liquid Assets Portfolio-Institutional Class (Cost
$17,865,222)(e)(f) 17,865,222 17,865,222
================================================================================
TOTAL INVESTMENTS-112.96% (Cost $154,480,817) 143,783,051
================================================================================
OTHER ASSETS LESS LIABILITIES-(12.96)% (16,499,089)
================================================================================
NET ASSETS-100.00% $127,283,962
________________________________________________________________________________
================================================================================
</Table>
Investment Abbreviations:
<Table>
Ctfs. - Certificates
Dep. - Depositary
Pfd. - Preferred
REIT - Real Estate Investment Trust
Unsec. - Unsecured
</Table>
Notes to Schedule of Investments:
(a) Property type classifications used in this report are generally according
to FSTE National Association of Real Estate Investment Trusts ("NAREIT")
U.S. Equity REITs Index, which is exclusively owned by NAREIT.
(b) All or a portion of this security was out on loan at August 31, 2008.
(c) In accordance with the procedures established by the Board of Trustees,
security fair valued based on an evaluated quote provided by an
independent pricing service. The aggregate value of these securities at
August 31, 2008 was $7,194,496, which represented 5.65% of the Fund's Net
Assets. See Note 1A.
(d) 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, 2008 was $1,222,722, which represented 0.96% of the Fund's
Net Assets. Unless otherwise indicated, these securities are not
considered to be illiquid.
(e) The money market fund and the Fund are affiliated by having the same
investment advisor.
(f) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1J.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM SELECT REAL ESTATE INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
<Table>
ASSETS:
Investments, at value (Cost
$134,491,449)* $123,793,683
- ------------------------------------------------------
Investments in affiliated money market
funds (Cost $19,989,368) 19,989,368
======================================================
Total investments (Cost
$154,480,817) 143,783,051
======================================================
Cash 20,281
- ------------------------------------------------------
Receivables for:
Investments sold 1,315,282
- ------------------------------------------------------
Fund shares sold 214,639
- ------------------------------------------------------
Dividends and Interest 328,502
- ------------------------------------------------------
Principal paydowns 123
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 26,330
- ------------------------------------------------------
Other assets 30,148
======================================================
Total assets 145,718,356
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Investments purchased 93,654
- ------------------------------------------------------
Fund shares reacquired 227,522
- ------------------------------------------------------
Collateral upon return of securities
loaned 17,865,222
- ------------------------------------------------------
Accrued fees to affiliates 78,050
- ------------------------------------------------------
Accrued other operating expenses 87,785
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 82,161
======================================================
Total liabilities 18,434,394
======================================================
Net assets applicable to shares
outstanding $127,283,962
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $146,072,041
- ------------------------------------------------------
Undistributed net investment income 497,244
- ------------------------------------------------------
Undistributed net realized gain (loss) (8,587,557)
- ------------------------------------------------------
Unrealized appreciation (depreciation) (10,697,766)
======================================================
$127,283,962
______________________________________________________
======================================================
NET ASSETS:
Class A $111,529,112
______________________________________________________
======================================================
Class B $ 1,126,365
______________________________________________________
======================================================
Class C $ 1,932,238
______________________________________________________
======================================================
Institutional Class $ 12,696,247
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 13,302,942
______________________________________________________
======================================================
Class B 134,503
______________________________________________________
======================================================
Class C 230,633
______________________________________________________
======================================================
Institutional Class 1,513,932
______________________________________________________
======================================================
Class A:
Net asset value per share $ 8.38
- ------------------------------------------------------
Maximum offering price per share
(Net asset value of $8.38 divided
by 94.50%) $ 8.87
______________________________________________________
======================================================
Class B:
Net asset value and offering price
per share $ 8.37
______________________________________________________
======================================================
Class C:
Net asset value and offering price
per share $ 8.38
______________________________________________________
======================================================
Institutional Class:
Net asset value and offering price
per share $ 8.39
______________________________________________________
======================================================
</Table>
* At August 31, 2008, securities with an aggregate value of $17,420,895 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11 AIM SELECT REAL ESTATE INCOME FUND
STATEMENT OF OPERATIONS
For the year ended August 31, 2008
<Table>
INVESTMENT INCOME:
Dividends $ 7,478,291
- ------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes securities lending income
of $109,086) 336,481
- ------------------------------------------------------------------------------------------------
Interest 175,121
================================================================================================
Total investment income 7,989,893
================================================================================================
EXPENSES:
Advisory fees 1,145,465
- ------------------------------------------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------------------------------------------
Custodian fees 20,282
- ------------------------------------------------------------------------------------------------
Distribution fees:
Class A 368,465
- ------------------------------------------------------------------------------------------------
Class B 5,561
- ------------------------------------------------------------------------------------------------
Class C 9,368
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B and C 312,091
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 1,100
- ------------------------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 20,843
- ------------------------------------------------------------------------------------------------
Other 83,440
================================================================================================
Total expenses 2,016,615
================================================================================================
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (19,030)
================================================================================================
Net expenses 1,997,585
================================================================================================
Net investment income 5,992,308
================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from investment securities (2,427,114)
================================================================================================
Change in net unrealized appreciation (depreciation) of investment securities (19,290,644)
================================================================================================
Net realized and unrealized gain (loss) (21,717,758)
================================================================================================
Net increase (decrease) in net assets resulting from operations $(15,725,450)
________________________________________________________________________________________________
================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM SELECT REAL ESTATE INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
For the year ended August 31, 2008, period January 1, 2007 through August 31,
2007 and the year ended December 31, 2006
<Table>
<Caption>
AUGUST 31, AUGUST 31, DECEMBER 31,
2008 2007 2006
- ----------------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 5,992,308 $ 10,641,298 $ 33,968,164
- ----------------------------------------------------------------------------------------------------------------
Net realized gain (loss) (2,427,114) 110,632,400 152,080,846
- ----------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (19,290,644) (133,061,751) 458,986
- ----------------------------------------------------------------------------------------------------------------
Distributions to auction rate preferred shareholders of
Closed-End Fund from net investment income -- -- (8,030,811)
================================================================================================================
Net increase (decrease) in net assets resulting from
operations (15,725,450) (11,788,053) 178,477,185
================================================================================================================
Distributions to shareholders from net investment income:
Class A (8,565,347) (9,120,720) (35,249,369)
- ----------------------------------------------------------------------------------------------------------------
Class B (19,825) (961) --
- ----------------------------------------------------------------------------------------------------------------
Class C (32,369) (588) --
- ----------------------------------------------------------------------------------------------------------------
Institutional Class (166,047) (172) --
================================================================================================================
Total distributions from net investment income (8,783,588) (9,122,441) (35,249,369)
================================================================================================================
Distributions to shareholders from net realized gains:
Class A (76,417,808) (3,664,438) (150,180,311)
- ----------------------------------------------------------------------------------------------------------------
Class B (83,959) -- --
- ----------------------------------------------------------------------------------------------------------------
Class C (140,190) -- --
- ----------------------------------------------------------------------------------------------------------------
Institutional Class (3,700) -- --
================================================================================================================
Total distributions from net realized gains (76,645,657) (3,664,438) (150,180,311)
================================================================================================================
Share transactions-net:
Class A (13,067,864) (429,827,090) (13,033,473)
- ----------------------------------------------------------------------------------------------------------------
Class B 1,152,702 168,134 --
- ----------------------------------------------------------------------------------------------------------------
Class C 1,875,071 357,312 --
- ----------------------------------------------------------------------------------------------------------------
Institutional Class 13,951,263 10,428 --
================================================================================================================
Net increase (decrease) in net assets resulting from share
transactions 3,911,172 (429,291,216) (13,033,473)
================================================================================================================
Net increase (decrease) in net assets (97,243,523) (453,866,148) (19,985,968)
================================================================================================================
NET ASSETS:
Beginning of year 224,527,485 678,393,633 698,379,601
================================================================================================================
End of year (including undistributed net investment income of
$497,244, $1,704,336 and $(70,787) respectively) $127,283,962 $ 224,527,485 $ 678,393,633
________________________________________________________________________________________________________________
================================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM SELECT REAL ESTATE INCOME FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2008
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Select Real Estate Income 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 six
separate portfolios, each authorized to issue an unlimited number of shares of
beneficial interest.
Prior to March 12, 2007, the Fund operated as AIM Select Real Estate Income
Fund (the "Closed-End Fund"). The Closed-End Fund was reorganized as an open-end
fund at which time the Fund became a new series portfolio of the Trust. The
Closed-End Fund was reorganized as an open-end fund on March 12, 2007 (the
"Reorganization Date") through the transfer of all its assets and liabilities to
the Fund (the "Reorganization"). Prior to the Reorganization, the Closed-End
Fund redeemed Preferred Shares in their entirety. As part of the Reorganization,
the Closed-End Fund was restructured from a sole series of AIM Select Real
Estate Income Fund to a new series portfolio of the Trust. Upon the closing of
the Reorganization, holders of the Closed-End Fund Common Shares received Class
A shares of the Fund. Information for the Common Shares of the Closed-End Fund,
prior to the Reorganization is included with Class A shares throughout this
report.
The Fund currently offers four different classes of shares: Class A, Class B,
Class C 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. Institutional Class
shares are sold at net asset value. 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. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objectives are high current income and secondarily,
capital appreciation.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. Futures contracts are valued at the
final settlement price set by an exchange on which they are principally
traded. Listed options are valued at the mean between the last bid and the
ask prices from the exchange on which they are principally traded. Options
not listed on an exchange are valued by an independent source at the mean
between the last bid and ask prices. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
Investments in open-end and closed-end registered investment companies
that do not trade on an exchange are valued at the end of day net asset
value per share. Investments in open-end and closed-end registered
investment companies that trade on an exchange are valued at the last
sales price or official closing price as of the close of the customary
trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate,
maturity, individual trading characteristics and other market data.
Short-term obligations, including commercial paper, having 60 days or less
to maturity are recorded at amortized cost which approximates value. Debt
securities are subject to interest rate and credit risks. In addition, all
debt securities involve some risk of default with respect to interest
and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and may 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
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
14 AIM SELECT REAL ESTATE INCOME FUND
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers following procedures
approved by the Board of Trustees. Issuer specific events, market trends,
bid/ask quotes of brokers and information providers and other market data
may be reviewed in the course of making a good faith determination of a
security's fair value.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the 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 as 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 recharacterizes distributions received from REIT investments
based on information provided by the REIT into the following categories:
ordinary income, long-term and short-term capital gains, and return of
capital. If information is not available timely from the REIT, the
recharacterization will be based on available information which may
include the previous year's allocation. If new or additional information
becomes available from the REIT at a later date, a recharacterization will
be made in the following year. The Fund records as dividend income the
amount recharacterized as ordinary income and as realized gain the amount
recharacterized as capital gain in the Statement of Operations, and the
amount recharacterized as return of capital in the Statement of Changes in
Net Assets. These recharacterizations are reflected in the accompanying
financial statements.
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 evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly
and are recorded on ex-dividend date. Distributions from net realized
capital gain, if any, are generally paid annually and recorded on ex-
dividend date. The Fund may elect to treat a portion of the proceeds from
redemptions as distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such
class. Transfer agency fees and expenses and other shareholder
recordkeeping fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) 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 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.
15 AIM SELECT REAL ESTATE INCOME FUND
I. RISKS INVOLVED IN INVESTING IN THE FUND -- The Fund's investments are
concentrated in a comparatively narrow segment of the economy.
Consequently, the Fund may tend to be more volatile than other mutual
funds, and the value of the Fund's investments may tend to rise and fall
more rapidly.
The Fund concentrates its assets in the real estate industry, an
investment in the fund will be closely linked to the performance of the
real estate markets. Property values may fall due to increasing vacancies
or declining rents resulting from economic, legal, cultural or
technological developments.
J. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any
loss on the collateral invested. Dividends received on cash collateral
investments for securities lending transactions, which are net of
compensation to counterparties, is included in Dividends from affiliates
on the Statement of Operations. The aggregate value of securities out on
loan is shown as a footnote on the Statement of Assets and Liabilities, if
any.
K. TEMPORARY REDEMPTION FEES -- The Fund had a 2% redemption fee which
expired in March 2008, that was retained by the Fund when Class A shares
issued in connection with the Reorganization of the Closed-End Fund were
redeemed within 12 months following the Reorganization Date. The
redemption fee was recorded as an increase in shareholder capital and was
allocated among the share classes based on the relative net assets of each
class.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
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 $250 million 0.75%
- -------------------------------------------------------------------
Next $250 million 0.74%
- -------------------------------------------------------------------
Next $500 million 0.73%
- -------------------------------------------------------------------
Next $1.5 billion 0.72%
- -------------------------------------------------------------------
Next $2.5 billion 0.71%
- -------------------------------------------------------------------
Next $2.5 billion 0.70%
- -------------------------------------------------------------------
Next $2.5 billion 0.69%
- -------------------------------------------------------------------
Over $10 billion 0.68%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a new master sub-advisory agreement approved by
shareholders of the Fund, effective May 1, 2008, 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).
Previously, under the terms of a master sub-advisory agreement between the
Advisor and Invesco Institutional (N.A.), Inc., the Advisor paid Invesco
Institutional (N.A.), Inc. 40% of the amount paid by the Fund to the Advisor,
net of any fee waivers and expense reimbursements. This agreement terminated on
May 1, 2008.
The Advisor has contractually agreed, through at least June 30, 2009, 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 (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the year ended August 31, 2008, the Advisor waived advisory fees of
$7,037.
At the request of the Trustees of the Trust, Invesco Ltd. ("Invesco") agreed
to reimburse expenses incurred by the Fund in connection with market timing
matters in the AIM Funds, which may include legal, audit, shareholder reporting,
communications and trustee expenses. These expenses along with the related
expense reimbursement are included in the Statement of Operations. For the year
ended August 31, 2008, Invesco reimbursed expenses of the Fund in the amount of
$878.
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 year ended August 31, 2008, 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
16 AIM SELECT REAL ESTATE INCOME FUND
limitations approved by the Trust's Board of Trustees. For the year ended August
31, 2008, expenses incurred under the agreement are shown in the Statement of
Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class
B, Class C and Institutional Class shares of the Fund. The Trust has adopted
plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class
A, Class B and Class C shares (collectively the "Plans"). The Fund, pursuant to
the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's
average daily net assets of Class A shares and 1.00% of the average daily net
assets of Class B and Class C shares. Of the Plan payments, up to 0.25% of the
average daily net assets of each class of shares may be paid to furnish
continuing personal shareholder services to customers who purchase and own
shares of such classes. Any amounts not paid as a service fee under the Plans
would constitute an asset-based sales charge. Rules of the Financial Industry
Regulatory Authority ("FINRA") impose a cap on the total sales charges,
including asset-based sales charges that may be paid by any class of shares of
the Fund. For the year ended August 31, 2008, expenses incurred under the Plans
are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the "sales charges") are
not recorded as expenses of the Fund. Front-end sales commissions are deducted
from proceeds from the sales of Fund shares prior to investment in Class A
shares of the Fund. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended August 31, 2008, IADI
advised the Fund that IADI retained $24,610 in front-end sales commissions from
the sale of Class A shares and $0, $156 and $637 from Class A, Class B and Class
C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of
Invesco Aim, IAIS and/or IADI.
NOTE 3--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2008, the Fund received credits from these arrangements, which
resulted in the reduction of the Fund's total expenses of $11,115.
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various 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 year ended August 31, 2008, the Fund paid legal fees of $2,822 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 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(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.
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the year ended August 31, 2008,
eight months ended August 31, 2007 and the year ended December 31, 2006 was as
follows:
<Table>
<Caption>
2008 2007 2006
- ----------------------------------------------------------------------------------------------------------------
Ordinary income $10,440,892 $ 9,122,441 $ 42,317,025(a)
- ----------------------------------------------------------------------------------------------------------------
Long-term capital gain 74,988,353 3,664,438 151,143,466(b)
================================================================================================================
Total distributions $85,429,245 $12,786,879 $193,460,491
________________________________________________________________________________________________________________
================================================================================================================
</Table>
(a) Includes Preferred Shares ordinary income distributions of $1,756,638 for
the year ended December 31, 2006.
(b) Includes Preferred Shares long-term capital gain distributions of
$6,274,173 for the year ended December 31, 2006.
17 AIM SELECT REAL ESTATE INCOME FUND
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2008, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2008
- ------------------------------------------------------------------------------------------------
Undistributed ordinary income $ 578,907
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) -- investments (12,757,237)
- ------------------------------------------------------------------------------------------------
Temporary book/tax differences (81,663)
- ------------------------------------------------------------------------------------------------
Post-October capital loss deferral (6,528,086)
- ------------------------------------------------------------------------------------------------
Shares of beneficial interest 146,072,041
================================================================================================
Total net assets $127,283,962
________________________________________________________________________________________________
================================================================================================
</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 wash sales.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
The Fund does not have a capital loss carryforward at period-end.
NOTE 7--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2008 was $109,722,960 and
$176,901,515, 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 $ 6,908,417
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (19,665,654)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $(12,757,237)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $156,540,288.
</Table>
NOTE 8--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of expenses related to the
plan of reorganization and distributions to shareholders on August 31, 2008,
undistributed net investment income was increased by $1,584,188, undistributed
net realized gain (loss) was decreased by $1,751,318 and shares of beneficial
interest increased by $167,130. This reclassification had no effect on the net
assets of the Fund.
18 AIM SELECT REAL ESTATE INCOME FUND
NOTE 9--SHARE INFORMATION
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------------
YEAR ENDED EIGHT MONTHS ENDED YEAR ENDED
AUGUST 31, 2008(a) AUGUST 31, 2007(b) DECEMBER 31, 2006
--------------------------- ----------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 1,839,980 $ 16,558,591 141,022 $ 2,382,123 -- $ --
- -----------------------------------------------------------------------------------------------------------------------
Class B(c) 159,313 1,442,997 10,418 174,122 -- --
- -----------------------------------------------------------------------------------------------------------------------
Class C(c) 246,055 2,240,917 22,500 365,894 -- --
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class(c) 1,546,029 14,211,127 581 10,017 -- --
=======================================================================================================================
Issued as reinvestment of
dividends:
Class A 4,159,275 37,122,833 212,635 3,618,000 -- --
- -----------------------------------------------------------------------------------------------------------------------
Class B(c) 11,708 103,040 55 926 -- --
- -----------------------------------------------------------------------------------------------------------------------
Class C(c) 16,374 144,890 35 588 -- --
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class(c) 19,351 169,747 10 172 -- --
=======================================================================================================================
Automatic conversion of
Class B shares to Class
A shares:
Class A 6,502 54,878 1 22 -- --
- -----------------------------------------------------------------------------------------------------------------------
Class B (6,516) (54,878) (1) (22) -- --
=======================================================================================================================
Reacquired:(d)
Class A (6,467,883) (66,804,166) (25,696,786) (435,827,235) (827,300)(e) (13,033,473)(e)
- -----------------------------------------------------------------------------------------------------------------------
Class B(c) (40,000) (338,457) (474) (6,892) -- --
- -----------------------------------------------------------------------------------------------------------------------
Class C(c) (53,711) (510,736) (620) (9,170) -- --
- -----------------------------------------------------------------------------------------------------------------------
Institutional Class(c) (52,039) (429,611) -- 239 -- --
=======================================================================================================================
1,384,438 $ 3,911,172 (25,310,624) $(429,291,216) (827,300)(e) $(13,033,473)(e)
_______________________________________________________________________________________________________________________
=======================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 22% of the
outstanding shares of the Fund. IADI has an agreement with these entities
to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates
may make payments to these entities, which are considered to be related to
the Fund, for providing services to the Fund, Invesco Aim and/or Invesco
Aim affiliates including but not limited to services such as securities
brokerage, distribution, third party record keeping and account servicing.
The Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
In addition, 10% of the outstanding shares of the Fund are owned by
affiliated mutual funds. Affiliated mutual funds are other mutual funds
that are also advised by Invesco Aim.
(b) Upon the Reorganization as an open-end fund on March 12, 2007, holders of
the Closed-End Fund Common Shares received 39,108,196 Class A shares of
the Fund with an aggregate net assets value of $680,052,002 in connection
with such reorganization, which was equal to the number of Closed-End Fund
Common Shares they owned and the aggregate net assets value prior to the
Reorganization. The net asset value of the Fund's Class A shares received
in connection with the Reorganization immediately after the Reorganization
was the same as the net asset value of Closed-End Fund Common Shares
immediately prior to the Reorganization.
(c) Class B, Class C and Institutional Class shares commenced on March 9,
2007.
(d) Net of redemption fees of $784,026 and $8,762,412 which were allocated
among the classes based on relative net assets of each class for the year
ended August 31, 2008 and the eight months ended August 31, 2007,
respectively.
(e) Closed-End Fund repurchased and retired Common Shares.
19 AIM SELECT REAL ESTATE INCOME FUND
NOTE 10--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated. Information presented prior to
March 12, 2007 includes financial data for the common shares of the Closed-End
Fund.
<Table>
<Caption>
CLASS A*
---------------------------------------------------------------------------------------------
YEAR ENDED EIGHT MONTHS ENDED YEAR ENDED DECEMBER 31,
AUGUST 31, AUGUST 31, ---------------------------------------------------
2008 2007 2006 2005 2004 2003
- -------------------------------------------------------------------------------------------------------------------------
Net asset value,
beginning of period $ 16.27 $ 17.35 $ 17.49 $ 20.02 $ 17.83 $ 12.83
- -------------------------------------------------------------------------------------------------------------------------
Income from investment
operations:
Net investment income 0.42(a) 0.44(a) 0.86 0.90 0.85 0.95(b)
- -------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on
securities (both
realized and
unrealized) (1.54) (1.54) 3.88 (0.36) 3.16 5.33
- -------------------------------------------------------------------------------------------------------------------------
Less distributions to
auction rate preferred
shareholders of Closed-
End Fund from net
investment income(c) N/A N/A (0.20) (0.17) (0.08) (0.06)
=========================================================================================================================
Total from
investment
operations (1.12) (1.10) 4.54 0.37 3.93 6.22
=========================================================================================================================
Less offering costs
charged to paid-in-
capital:
Offering costs on
common shares of
Closed-End Fund N/A -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Offering costs on
auction rate
preferred shares of
Closed-End Fund N/A -- -- -- -- (0.00)
- -------------------------------------------------------------------------------------------------------------------------
Dilutive effect of
common share
offering of Closed-
End Fund N/A -- -- -- -- (0.00)
=========================================================================================================================
Total offering costs
charged to paid-in
capital of Closed-
End Fund N/A -- -- -- -- (0.00)
=========================================================================================================================
Less distributions:
Dividends from net
investment income (0.65) (0.38) (0.89) (1.24) (1.24) (0.79)
- -------------------------------------------------------------------------------------------------------------------------
Distributions from net
realized gains (6.18) (0.09) (3.84) (1.66) (0.50) --
- -------------------------------------------------------------------------------------------------------------------------
Return of capital -- -- -- -- -- (0.43)
=========================================================================================================================
Total distributions (6.83) (0.47) (4.73) (2.90) (1.74) (1.22)
=========================================================================================================================
Increase from common
shares of Closed-End
Fund repurchased N/A -- 0.05 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Redemption fees added to
shares of beneficial
interest 0.06 0.49 N/A N/A N/A N/A
=========================================================================================================================
Net asset value, end of
period $ 8.38 $ 16.27 $ 17.35 $ 17.49 $ 20.02 $ 17.83
=========================================================================================================================
Market value per common
share of Closed-End
Fund at period end $ N/A $ N/A $ 16.67 $ 14.98 $ 17.50 $ 16.59
=========================================================================================================================
Total return at net asset
value (7.47)%(d)(e) (3.59)%(d)(e) 29.15%(f) 4.44%(f) 24.43%(f) 51.41%(f)
=========================================================================================================================
Market value return(f) N/A N/A 44.88% 2.33% 16.89% 46.95%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $111,529 $224,000 $678,394 $698,380 $799,358 $712,069
_________________________________________________________________________________________________________________________
=========================================================================================================================
Ratio of expenses to
average net assets:
With fee waivers and/or
expense
reimbursements 1.32%(g) 1.08%(h) 0.96%(i) 0.95%(i) 0.93%(i) 1.00%(b)(i)
- -------------------------------------------------------------------------------------------------------------------------
Without fee waivers
and/or expense
reimbursements 1.33%(g) 1.23%(h) 1.33%(i) 1.33%(i) 1.32%(i) 1.41%(b)(i)
=========================================================================================================================
Ratio of net investment
income to average net
assets 3.91%(g) 3.82%(h) 4.59%(i) 4.70%(i) 4.64%(i) 6.46%(b)(i)
=========================================================================================================================
Ratio of distributions to
auction rate preferred
shareholders of Closed-
End Fund to average net
assets attributable to
common shares of
Closed-End Fund N/A N/A 1.30%(h) 0.86% 0.42% 0.43%
_________________________________________________________________________________________________________________________
=========================================================================================================================
Portfolio turnover
rate(j) 73% 24% 23% 17% 19% 37%
=========================================================================================================================
Auction rate preferred
shares of Closed-End
Fund:
Liquidation value, end
of period (000s
omitted) N/A N/A -- $205,000 $205,000 $205,000
_________________________________________________________________________________________________________________________
=========================================================================================================================
Total shares
outstanding N/A N/A -- 8,200 8,200 8,200
=========================================================================================================================
Asset coverage per
share N/A N/A -- $110,168 $122,483 $111,838
=========================================================================================================================
Liquidation and market
value per share N/A N/A -- $ 25,000 $ 25,000 $ 25,000
_________________________________________________________________________________________________________________________
=========================================================================================================================
</Table>
* Prior to March 12, 2007 the Fund operated as a Closed-End Fund. On such
date, holders of common shares of Closed-End Fund received Class A shares
of the Fund equal to the number of Closed-End Fund common shares they owned
prior to the Reorganization.
(a) Calculated using average shares outstanding.
20 AIM SELECT REAL ESTATE INCOME FUND
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
(b) As a result of changes in accounting principles generally accepted in the
United States of America, the Closed-End Fund reclassified periodic
payments made under interest rate swap agreements, previously included
within interest expense as a component of realized gain (loss) in the
Statement of Operations. The effect of this reclassification was to
increase the net investment income ratio by 0.67%, decrease the expense
ratio by 0.67% and increase net investment income per share by $0.10 for
the year ended December 31, 2003.
(c) Based on average number of common shares outstanding of Closed-End Fund.
(d) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges and is not annualized for
periods less than one year.
(e) Includes the impact of the temporary 2% redemption fee which was effective
March 12, 2007 through March 11, 2008.
(f) Net asset value return includes adjustments in accordance with accounting
principles generally accepted in the United States of America and measures
the changes in common shares' value of Closed-End over the period
indicated, taking into account dividends as reinvested. Market value return
is computed based upon the New York Stock Exchange market price of the
Closed-End Fund's common shares and excludes the effects of brokerage
commissions. Dividends and distributions, if any, are assumed for purposes
of this calculation, to be reinvested at prices obtained under the Closed-
End Fund's dividend reinvestment plan.
(g) Ratios are based on average daily net assets (000's omitted) of $147,386.
(h) Annualized.
(i) Ratios do not reflect the effect of dividend payments to auction rate
preferred shareholders; income ratios reflect income earned on investments
made with assets attributable to auction rate preferred shares of Closed-
End Fund.
(j) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
21 AIM SELECT REAL ESTATE INCOME FUND
NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
CLASS B CLASS C INSTITUTIONAL CLASS
-------------------------- -------------------------- --------------------------
MARCH 9, 2007 MARCH 9, 2007 MARCH 9, 2007
(COMMENCEMENT (COMMENCEMENT (COMMENCEMENT
YEAR ENDED DATE) TO YEAR ENDED DATE) TO YEAR ENDED DATE) TO
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
2008 2007 2008 2007 2008 2007
- ------------------------------- -------------------------- -------------------------- --------------------------
Net asset value, beginning of
period $16.23 $17.34 $16.23 $17.34 $ 16.27 $17.34
- ------------------------------- -------------------------- -------------------------- --------------------------
Income from investment
operations:
Net investment income(a) 0.28 0.22 0.29 0.22 0.37 0.32
- ------------------------------- -------------------------- -------------------------- --------------------------
Net gains (losses) on
securities (both realized
and unrealized) (1.45) (1.56) (1.45) (1.56) (1.41) (1.57)
- ------------------------------- -------------------------- -------------------------- --------------------------
Total from investment
operations (1.17) (1.34) (1.16) (1.34) (1.04) (1.25)
- ------------------------------- -------------------------- -------------------------- --------------------------
Less distributions:
Dividends from net investment
income (0.56) (0.24) (0.56) (0.24) (0.70) (0.30)
- ------------------------------- -------------------------- -------------------------- --------------------------
Distributions from net
realized gains (6.18) -- (6.18) -- (6.18) --
- ------------------------------- -------------------------- -------------------------- --------------------------
Total distributions (6.74) (0.24) (6.74) (0.24) (6.88) (0.30)
- ------------------------------- -------------------------- -------------------------- --------------------------
Redemption fees added to shares
of beneficial interest 0.05 0.47 0.05 0.47 0.04 0.48
=============================== ========================== ========================== ==========================
Net asset value, end of period $ 8.37 $16.23 $ 8.38 $16.23 $ 8.39 $16.27
=============================== ========================== ========================== ==========================
Total return(b)(c) (8.01)% (5.10)% (7.90)% (5.10)% (6.91)% (4.53)%
=============================== ========================== ========================== ==========================
Ratios/supplemental data:
Net assets, end of period (000s
omitted) $1,126 $ 162 $1,932 $ 356 $12,696 $ 10
=============================== ========================== ========================== ==========================
Ratio of expenses to average
net assets:
With fee waivers and/or
expense reimbursements 2.07%(d) 2.04%(e) 2.07%(d) 2.04%(e) 0.88%(d) 0.89%(e)
- ------------------------------- -------------------------- -------------------------- --------------------------
Without fee waivers and/or
expense reimbursements 2.08%(d) 2.04%(e) 2.08%(d) 2.04%(e) 0.89%(d) 0.89%(e)
=============================== ========================== ========================== ==========================
Ratio of net investment income
to average net assets 3.16%(d) 2.86%(e) 3.16%(d) 2.86%(e) 4.35%(d) 4.01%(e)
=============================== ========================== ========================== ==========================
Portfolio turnover rate(f) 73% 24% 73% 24% 73% 24%
=============================== ========================== ========================== ==========================
</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 and is not annualized for
periods less than one year.
(c) Includes the impact of the temporary 2% redemption fee which was effective
March 12, 2007 through March 11, 2008.
(d) Ratios are based on average daily net assets (000's omitted) of $556, $937
and $3,850 for Class B, Class C and Institutional Class, respectively.
(e) Annualized.
(f) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year.
NOTE 11--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State Auditor -- Securities
Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of
Right to Hearing to Invesco Aim and IADI (Order No. 05-1318). The WVASC makes
findings of fact that Invesco Aim and IADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that Invesco Aim and IADI violated the West Virginia securities laws. The
WVASC orders Invesco Aim and IADI to cease any further violations and seeks to
impose monetary sanctions, including restitution to affected investors,
disgorgement of fees, reimbursement of investigatory, administrative and legal
costs and an "administrative assessment," to be determined by the Commissioner.
Initial research indicates that these damages could be limited or capped by
statute. By agreement with the Commissioner of Securities, Invesco Aim's time to
respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, Invesco Funds Group,
Inc. ("IFG"), Invesco Aim, IADI and/or related entities and individuals,
depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek
22 AIM SELECT REAL ESTATE INCOME FUND
NOTE 11--LEGAL PROCEEDINGS--(CONTINUED)
remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, various corrective measures under ERISA, rescission
of certain AIM Funds' advisory agreements and/or distribution plans and recovery
of all fees paid. The case pending in Illinois State Court regarding fair value
pricing was dismissed with prejudice on May 6, 2008.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various Invesco Aim- and IFG-related
parties: (i) a Consolidated Amended Class Action Complaint purportedly brought
on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund
Derivative Complaint purportedly brought on behalf of the AIM Funds and fund
registrants; and (iii) an Amended Class Action Complaint for Violations of ERISA
purportedly brought on behalf of participants in the Invesco 401(k) plan. Based
on orders issued by the MDL Court, all claims asserted against the AIM Funds
that have been transferred to the MDL Court have been dismissed, although
certain Funds remain nominal defendants in the Consolidated Amended Fund
Derivative Complaint. On September 15, 2006, the MDL Court granted the Invesco
defendants' motion to dismiss the Amended Class Action Complaint for Violations
of ERISA and dismissed such Complaint. Plaintiff appealed this ruling. On June
16, 2008, the Fourth Circuit Court of Appeals reversed the dismissal and
remanded this lawsuit back to the MDL Court for further proceedings.
IFG, Invesco Aim, IADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, Invesco Aim and IADI have advised the Fund that they are providing
full cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, Invesco Aim and/or related entities and individuals in the
future.
At the present time, management of Invesco Aim and the Fund are unable to
estimate the impact, if any, that the outcome of the Pending Litigation and
Regulatory Inquiries described above may have on Invesco Aim, IADI or the Fund.
23 AIM SELECT REAL ESTATE INCOME FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
AIM Select Real Estate Income 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 Select Real Estate Income Fund
(one of the funds constituting AIM Counselor Series Trust, hereafter referred to
as the "Fund") at August 31, 2008, the results of its operations for the year
then ended, the changes in its net assets and the financial highlights for each
of the periods then indicated, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 2008 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 20, 2008
Houston, Texas
24 AIM SELECT REAL ESTATE INCOME FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $986.00 $ 7.14 $1,017.95 $ 7.25 1.43%
- ---------------------------------------------------------------------------------------------------
B 1,000.00 982.10 10.86 1,014.18 11.04 2.18
- ---------------------------------------------------------------------------------------------------
C 1,000.00 982.20 10.86 1,014.18 11.04 2.18
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
25 AIM SELECT REAL ESTATE INCOME FUND
Supplement to Annual Report dated 8/31/08
AIM SELECT REAL ESTATE INCOME FUND
==========================================
INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS The total annual Fund operating expense
The following information has been For periods ended 8/31/08 ratio set forth in the most recent Fund
prepared to provide Institutional Class Inception 12.74% prospectus as of the date of this
shareholders with a performance overview 5 Years 12.33 supplement for Institutional Class shares
specific to their holdings. Institutional 1 Year -7.13 was 0.91%. The expense ratios presented
Class shares are offered exclusively to ========================================== above may vary from the expense ratios
institutional investors, including defined presented in other sections of the actual
contribution plans that meet certain ========================================== report that are based on expenses incurred
criteria. AVERAGE ANNUAL TOTAL RETURNS during the period covered by the report.
For periods ended 6/30/08, most recent
calendar quarter-end Fund performance was positively
Inception 13.27% impacted by a temporary 2% fee on
5 Years 13.52 redemptions that was in effect from March
1 Year -8.88 12, 2007 to March 12, 2008. Without income
========================================== from this temporary fee, returns would
have been lower.
On March 12, 2007, the Fund reorganized
from a closed-end Fund to an open-end Had the advisor not waived fees and/ or
Fund. The inception date for the open-end reimbursed expenses in the past,
Fund's Institutional Class shares is March performance would have been lower.
9, 2007; returns since that date are
historical returns. All other returns are Please note that past performance is
blended returns of the historical not indicative of future results. More
performance of Institutional Class shares recent returns may be more or less than
and the historical performance of the those shown. All returns assume
Closed-End Fund's Common Shares at net reinvestment of distributions at NAV.
asset value (NAV), restated to reflect the Investment return and principal value will
annual other expenses of the Institutional fluctuate so your shares, when redeemed,
Class shares, which are estimated to be may be worth more or less than their
0.04% higher than those of the Closed-End original cost. See full report for
Fund. The Closed-End Fund's Common Shares information on comparative benchmarks.
inception date is May 31, 2002. Please consult your Fund prospectus for
more information. For the most current
Institutional Class shares have no month-end performance, please call 800 451
sales charge; therefore, performance is at 4246 or visit invescoaim.com.
NAV. Performance of Institutional Class
shares will differ from performance of
other share classes primarily due to
differing sales charges and class
expenses.
==========================================
NASDAQ SYMBOL ASRIX
==========================================
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
This material is for institutional investor use only and may not be quoted, reproduced [INVESCO AIM LOGO]
or shown to the public, nor used in written form as sales literature for public use. - SERVICE MARK -
invescoaim.com SRE-INS-1 Invesco Aim Distributors, Inc.
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. 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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- -----------------------------------------------------------------------------------------------------------
Institutional $1,000.00 $987.10 $4.85 $1,020.26 $4.93 0.97%
- -----------------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
AIM SELECT REAL ESTATE INCOME FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM their assigned funds. During the contract ated the information provided differently
Counselor Series Trust is required under renewal process, the Trustees receive from one another and attributed different
the Investment Company Act of 1940 to comparative performance and fee data weight to the various factors. The
approve annually the renewal of the AIM regarding the AIM Funds prepared by an Trustees recognized that the advisory
Select Real Estate Income Fund (the Fund) independent company, Lipper, Inc. arrangements and resulting advisory fees
investment advisory agreement with Invesco (Lipper), under the direction and for the Fund and the other AIM Funds are
Aim Advisors, Inc. (Invesco Aim). During supervision of the independent Senior the result of years of review and
contract renewal meetings held on June Officer who also prepares a separate negotiation between the Trustees and
18-19, 2008, the Board as a whole and the analysis of this information for the Invesco Aim, that the Trustees may focus
disinterested or "independent" Trustees, Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of
voting separately, approved the recommendations to the Investments these arrangements in some years than in
continuance of the Fund's investment Committee regarding the performance, fees others, and that the Trustees'
advisory agreement for another year, and expenses of their assigned funds. The deliberations and conclusions in a
effective July 1, 2008. In doing so, the Investments Committee considers each particular year may be based in part on
Board determined that the Fund's Sub-Committee's recommendations and makes their deliberations and conclusions of
investment advisory agreement is in the its own recommendations regarding the these same arrangements throughout the
best interests of the Fund and its performance, fees and expenses of the AIM year and in prior years.
shareholders and that the compensation to Funds to the full Board. The Investments
Invesco Aim under the Fund's investment Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement is fair and reasonable. Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION
its annual recommendation to the Board
The independent Trustees met separately whether to approve the continuance of each The discussion below serves as a summary
during their evaluation of the Fund's AIM Fund's investment advisory agreement of the Senior Officer's independent
investment advisory agreement with and sub-advisory agreements for another written evaluation with respect to the
independent legal counsel from whom they year. Fund's investment advisory agreement as
received independent legal advice, and the well as a discussion of the material
independent Trustees also received The independent Trustees are assisted factors and related conclusions that
assistance during their deliberations from in their annual evaluation of the Fund's formed the basis for the Board's approval
the independent Senior Officer, a investment advisory agreement by the of the Fund's investment advisory
full-time officer of the AIM Funds who independent Senior Officer. One agreement and sub-advisory agreements.
reports directly to the independent responsibility of the Senior Officer is to Unless otherwise stated, information set
Trustees. manage the process by which the AIM Funds' forth below is as of June 19, 2008 and
proposed management fees are negotiated does not reflect any changes that may have
THE BOARD'S FUND EVALUATION PROCESS during the annual contract renewal process occurred since that date, including but
to ensure that they are negotiated in a not limited to changes to the Fund's
The Board's Investments Committee has manner that is at arms' length and performance, advisory fees, expense
established three Sub-Committees that are reasonable. Accordingly, the Senior limitations and/or fee waivers.
responsible for overseeing the management Officer must either supervise a
of a number of the series portfolios of competitive bidding process or prepare an I Investment Advisory Agreement
the AIM Funds. This Sub-Committee structure independent written evaluation. The Senior
permits the Trustees to focus on the Officer has recommended that an A. Nature, Extent and Quality of
performance of the AIM Funds that have independent written evaluation be provided Services Provided by Invesco Aim
been assigned to them. The Sub-Committees and, at the direction of the Board, has
meet throughout the year to review the prepared an independent written The Board reviewed the advisory services
performance of their assigned funds, and evaluation. provided to the Fund by Invesco Aim under
the Sub-Committees review monthly and the Fund's investment advisory agreement,
quarterly comparative performance During the annual contract renewal the performance of Invesco Aim in
information and periodic asset flow data process, the Board considered the factors providing these services, and the
for their assigned funds. These materials discussed below under the heading "Factors credentials and experience of the officers
are prepared under the direction and and Conclusions and Summary of Independent and employees of Invesco Aim who provide
supervision of the independent Senior Written Fee Evaluation" in evaluating the these services. The Board's review of the
Officer. Over the course of each year, the fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide
Sub-Committees meet with portfolio investment advisory agreement and these services included the Board's
managers for their assigned funds and sub-advisory agreements at the contract consideration of Invesco Aim's portfolio
other members of management and review renewal meetings and at their meetings and product review process, various back
with these individuals the performance, throughout the year as part of their office support functions provided by
investment objective(s), policies, ongoing oversight of the Fund. The Fund's Invesco Aim and its affiliates, and
strategies and limitations of these funds. investment advisory agreement and Invesco Aim's equity and fixed income
sub-advisory agreements were considered trading operations. The Board concluded
In addition to their meetings separately, although the Board also that the nature, extent and quality of the
throughout the year, the Sub-Committees considered the common interests of all of advisory services provided to the Fund by
meet at designated contract renewal the AIM Funds in their deliberations. The Invesco Aim were appropriate and that
meetings each year to conduct an in-depth Board considered all of the information Invesco Aim currently is providing
review of the performance, fees and provided to them and did not identify any satisfactory advisory services in
expenses of particular factor that was controlling. accordance with the terms of the Fund's
Each Trustee may have evalu- investment advisory agreement. In
addition, based on their ongoing meetings
throughout the year
continued
26 AIM SELECT REAL ESTATE INCOME FUND
with the Fund's portfolio manager or Board also considered the steps Invesco involves different levels of services and
managers, the Board concluded that these Aim has taken over the last several years different operational and regulatory
individuals are competent and able to to improve the quality and efficiency of requirements than Invesco Aim's management
continue to carry out their the services that Invesco Aim provides to of the Fund. The Board concluded that
responsibilities under the Fund's the AIM Funds. The Board concluded that these differences are appropriately
investment advisory agreement. Invesco Aim continues to be responsive to reflected in the fee structure for the
the Board's focus on fund performance. Fund.
In determining whether to continue the Although the independent written
Fund's investment advisory agreement, the evaluation of the Fund's Senior Of-ficer The Board noted that Invesco Aim has
Board considered the prior relationship only considered Fund performance through not proposed any advisory fee waivers or
between Invesco Aim and the Fund, as well the most recent calendar year, the Board expense limitations for the Fund. The
as the Board's knowledge of Invesco Aim's also reviewed more recent Fund performance Board concluded that it was not necessary
operations, and concluded that it was and this review did not change their at this time to discuss with Invesco Aim
beneficial to maintain the current conclusions. whether to implement any such waivers or
relationship, in part, because of such expense limitations because the Fund's
knowledge. The Board also considered the C. Advisory Fees and Fee Waivers total expenses were below the median total
steps that Invesco Aim and its affiliates expenses of the funds in the Fund's Lipper
have taken over the last several years to The Board compared the Fund's contractual expense group that are not managed by
improve the quality and efficiency of the advisory fee rate to the contractual Invesco Aim.
services they provide to the AIM Funds in advisory fee rates of funds in the Fund's
the areas of investment performance, Lipper expense group that are not managed After taking account of the Fund's
product line diversification, by Invesco Aim, at a common asset level contractual advisory fee rate, as well as
distribution, fund operations, shareholder and as of the end of the past calendar the comparative advisory fee information
services and compliance. The Board year. The Board noted that the Fund's discussed above, the Board concluded that
concluded that the quality and efficiency contractual advisory fee rate was below the Fund's advisory fees were fair and
of the services Invesco Aim and its the median contractual advisory fee rate reasonable.
affili-ates provide to the AIM Funds in of funds in its expense group. The Board
each of these areas have generally also reviewed the methodology used by D. Economies of Scale and Breakpoints
improved, and support the Board's approval Lipper in determining contractual fee
of the continuance of the Fund's rates. The Board considered the extent to which
investment advisory agreement. there are economies of scale in Invesco
The Board also compared the Fund's Aim's provision of advisory services to
B. Fund Performance effective fee rate (the advisory fee after the Fund. The Board also considered
any advisory fee waivers and before any whether the Fund benefits from such
Because there were only four funds expense limitations/waivers) to the economies of scale through contractual
identified by Invesco Aim in the Fund's advisory fee rates of other clients of breakpoints in the Fund's advisory fee
performance group for inclusion in the Invesco Aim and its affiliates with schedule or through advisory fee waivers
Lipper reports, the Board compared the investment strategies comparable to those or expense limitations. The Board noted
Fund's performance during the past one, of the Fund, including three mutual funds that the Fund's contractual advisory fee
three and five calendar years to the advised by Invesco Aim and four mutual schedule includes seven breakpoints, but
performance of funds in the Fund's funds advised or sub-advised by Invesco that, due to the Fund's asset level at the
performance universe identified by Lipper, Aim affiliates. The Board noted that the end of the past calendar year and the way
and against the performance of all funds Fund's rate was: (i) above the rates for in which the breakpoints have been
in the Lipper Real Estate Funds Index. The two of the mutual funds and the same as structured, the Fund is not benefiting
Board also reviewed the criteria used by the rate for the third mutual fund; and from the breakpoint. Based on this
Invesco Aim to identify the funds in the (ii) above the advisory or sub-advisory information, the Board concluded that the
Fund's performance group for inclusion in fee rates for the mutual funds advised or Fund's advisory fees would reflect
the Lipper reports and the methodology subadvised by Invesco Aim affiliates. None economies of scale at higher asset levels.
used by Lipper to identify the performance of the funds advised or sub-advised by The Board also noted that the Fund shares
universe. The Board noted that the Fund's Invesco Aim affiliates are in the Fund's directly in economies of scale through
performance was in the second quintile of Lipper expense group and the Board lower fees charged by third party service
its Lipper performance universe for the determined that comparing contractual fees providers based on the combined size of
one year period, the fourth quintile for to funds in the Lipper expense group was all of the AIM Funds and affiliates.
the three year period, and the third appropriate.
quintile for the five year period (the E. Profitability and Financial
first quintile being the best performing Additionally, the Board compared the Resources of Invesco Aim
funds and the fifth quintile being the Fund's effective fee rate to the total
worst performing funds). The Board noted advisory fees paid by numerous separately The Board reviewed information from
that the Fund's performance was above the managed accounts/wrap accounts advised by Invesco Aim concerning the costs of the
performance of the Index for the one year Invesco Aim affiliates. The Board noted advisory and other services that Invesco
period and below the Index for the three that the Fund's rate was generally above Aim and its affiliates provide to the Fund
and five year periods. The Board also the rates for the separately managed and the profitability of Invesco Aim and
noted that the Fund was reorganized from a accounts/wrap accounts. The Board its affiliates in providing these
closed-end fund to an open-end fund on considered that management of the services. The Board also reviewed
March 12, 2007. The separately managed accounts/wrap accounts information concerning the financial
by the Invesco Aim affiliates condition of Invesco Aim and its
affiliates. The Board also reviewed with
Invesco Aim the methodology used to
prepare the profitability
continued
27 AIM SELECT REAL ESTATE INCOME FUND
information. The Board considered the were qualified to continue to provide Invesco Asset Management (Japan) Limited,
overall profitability of Invesco Aim, as these services to the Fund. Invesco Australia Limited, Invesco Global
well as the profitability of Invesco Aim Asset Management (N.A.), Inc., Invesco
in connection with managing the Fund. The The Board considered the benefits Hong Kong Limited, Invesco Institutional
Board noted that Invesco Aim continues to realized by Invesco Aim as a result of (N.A.), Inc. and Invesco Senior Secured
operate at a net profit, although portfolio brokerage transactions executed Management, Inc. (collectively, the
increased expenses in recent years have through "soft dollar" arrangements. Under "Affiliated Sub-Advisers") under the
reduced the profitability of Invesco Aim these arrangements, portfolio brokerage sub-advisory agreements and the
and its affiliates. The Board concluded commissions paid by the Fund and/or other credentials and experience of the officers
that the Fund's fees were fair and funds advised by Invesco Aim are used to and employees of the Affiliated
reasonable, and that the level of profits pay for research and execution services. Sub-Advisers who will provide these
realized by Invesco Aim and its affiliates The Board noted that soft dollar services. The Board concluded that the
from providing services to the Fund was arrangements shift the payment obligation nature, extent and quality of the services
not excessive in light of the nature, for the research and execution services to be provided by the Affiliated
quality and extent of the services from Invesco Aim to the funds and Sub-Advisers were appropriate. The Board
provided. The Board considered whether therefore may reduce Invesco Aim's noted that the Affiliated Sub-Advisers,
Invesco Aim is financially sound and has expenses. The Board also noted that which have offices and personnel that are
the resources necessary to perform its research obtained through soft dollar geographically dispersed in financial
obligations under the Fund's investment arrangements may be used by Invesco Aim in centers around the world, have been formed
advisory agreement, and concluded that making investment decisions for the Fund in part for the purpose of researching and
Invesco Aim has the financial resources to and may therefore benefit Fund compiling information and making
fulfill these obligations. shareholders. The Board concluded that recommendations on the markets and
Invesco Aim's soft dollar arrangements economies of various countries and
F. Independent Written Evaluation of were appropriate. The Board also concluded securities of companies located in such
the Fund's Senior Officer that, based on their review and countries or on various types of
representations made by Invesco Aim, these investments and investment techniques, and
The Board noted that, at their direction, arrangements were consistent with providing investment advisory services.
the Senior Officer of the Fund, who is regulatory requirements. The Board concluded that the sub-advisory
independent of Invesco Aim and Invesco agreements will benefit the Fund and its
Aim's affiliates, had prepared an The Board considered the fact that the shareholders by permitting Invesco Aim to
independent written evaluation to assist Fund's uninvested cash and cash collateral utilize the additional resources and
the Board in determining the from any securities lending arrangements talent of the Affiliated Sub-Advisers in
reasonableness of the proposed management may be invested in money market funds managing the Fund.
fees of the AIM Funds, including the Fund. advised by Invesco Aim pursuant to
The Board noted that they had relied upon procedures approved by the Board. The B. Fund Performance
the Senior Officer's written evaluation Board noted that Invesco Aim will receive
instead of a competitive bidding process. advisory fees from these affiliated money The Board did view Fund performance as a
In determining whether to continue the market funds attributable to such relevant factor in considering whether to
Fund's investment advisory agreement, the investments, although Invesco Aim has approve the sub-advisory agreements for
Board considered the Senior Officer's contractually agreed to waive through at the Fund, as one of the Affiliated
written evaluation. least June 30, 2009, the advisory fees Sub-Advisers currently manages the Fund's
payable by the Fund in an amount equal to assets. Because there were only four funds
G. Collateral Benefits to Invesco Aim 100% of the net advisory fees Invesco Aim identified by Invesco Aim in the Fund's
and its Affiliates receives from the affiliated money market performance group for inclusion in the
funds with respect to the Fund's Lipper reports, the Board compared the
The Board considered various other investment of uninvested cash, but not Fund's performance during the past one,
benefits received by Invesco Aim and its cash collateral. The Board considered the three and five calendar years to the
affiliates resulting from Invesco Aim's contractual nature of this fee waiver and performance of funds in the Fund's
relationship with the Fund, including the noted that it remains in effect until at performance universe identified by Lipper,
fees received by Invesco Aim and its least June 30, 2009. The Board concluded and against the performance of all funds
affiliates for their provision of that the Fund's investment of uninvested in the Lipper Real Estate Funds Index. The
administrative, transfer agency and cash and cash collateral from any Board also reviewed the criteria used by
distribution services to the Fund. The securities lending arrangements in the Invesco Aim to identify the funds in the
Board considered the performance of affiliated money market funds is in the Fund's performance group for inclusion in
Invesco Aim and its affili-ates in best interests of the Fund and its the Lipper reports and the methodology
providing these services and the shareholders. used by Lipper to identify the performance
organizational structure employed by universe. The Board noted that the Fund's
Invesco Aim and its affiliates to provide II. Sub-Advisory Agreements performance was in the second quintile of
these services. The Board also considered its Lipper performance universe for the
that these services are provided to the A. Nature, Extent and Quality of one year period, the fourth quintile for
Fund pursuant to written contracts which Services Provided by Affiliated the three year period, and the third
are reviewed and approved on an annual Sub-Advisers quintile for the five year period (the
basis by the Board. The Board concluded first quintile being the best performing
that Invesco Aim and its affiliates were The Board reviewed the services to be funds and the fifth quintile
providing these services in a satisfactory provided by Invesco Trimark Ltd., Invesco
manner and in accordance with the terms of Asset Management Deutschland, GmbH,
their contracts, and Invesco Asset Management Limited,
continued
28 AIM SELECT REAL ESTATE INCOME FUND
being the worst performing funds). The
Board noted that the Fund's performance
was above the performance of the Index for
the one year period and below the Index
for the three and five year periods. The
Board also noted that the Fund was
reorganized from a closed-end fund to an
open-end fund on March 12, 2007. The Board
also considered the steps Invesco Aim has
taken over the last several years to
improve the quality and efficiency of the
services that Invesco Aim provides to the
AIM Funds. The Board concluded that
Invesco Aim continues to be responsive to
the Board's focus on fund performance. The
Board also reviewed more recent Fund
performance and this review did not change
their conclusions.
C. Sub-Advisory Fees
The Board considered the services to be
provided by the Affiliated Sub-Advisers
pursuant to the sub-advisory agreements
and the services to be provided by
Invesco Aim pursuant to the Fund's
investment advisory agreement, as well as
the allocation of fees between Invesco Aim
and the Affiliated Sub-Advisers pursuant
to the sub-advisory agreements. The Board
noted that the sub-advisory fees have no
direct effect on the Fund or its
shareholders, as they are paid by Invesco
Aim to the Affiliated Sub-Advisers, and
that Invesco Aim and the Affiliated
Sub-Advisers are affiliates. After taking
account of the Fund's contractual
sub-advisory fee rate, as well as other
relevant factors, the Board concluded that
the Fund's sub-advisory fees were fair and
reasonable.
D. Financial Resources of the
Affiliated Sub-Advisers
The Board considered whether each
Affiliated Sub-Adviser is financially
sound and has the resources necessary to
perform its obligations under its
respective sub-advisory agreement, and
concluded that each Affiliated Sub-Adviser
has the financial resources necessary to
fulfill these obligations.
29 AIM SELECT REAL ESTATE INCOME FUND
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2008:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
Long-Term Capital Gain Dividends $74,988,353
Qualified Dividend Income* 1.26%
Corporate Dividends Received Deduction* 0%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarter ended November 30, 2007 was 1.68%.
30 AIM SELECT REAL ESTATE INCOME FUND
PROXY RESULTS
A Special Meeting ("Meeting") of Shareholders of AIM Select Real Estate Income
Fund, an investment portfolio of AIM Counselor Series Trust, a Delaware
statutory trust ("Trust"), was held on February 29, 2008 and was adjourned, with
respect to certain proposals, until March 28, 2008. The Meeting on
March 28, 2008 was held for the following purposes:
(1) Elect 13 trustees to the Board of Trustees of the Trust, each of whom will
serve until his or her successor is elected and qualified.
(2) Approve an amendment to the Trust's Agreement and Declaration of Trust that
would permit the Board of Trustees of the Trust to terminate the Trust, the
Fund, and each other series portfolio of the Trust, or a share class without a
shareholder vote.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHELD/
MATTERS VOTES FOR ABSTENTIONS**
- -----------------------------------------------------------------------------------------------------------------------
(1)* Bob R. Baker................................................................... 80,004,783 1,692,073
Frank S. Bayley................................................................ 80,042,468 1,654,388
James T. Bunch................................................................. 80,071,331 1,625,525
Bruce L. Crockett.............................................................. 80,047,680 1,649,176
Albert R. Dowden............................................................... 80,044,519 1,652,337
Jack M. Fields................................................................. 80,054,678 1,642,178
Martin L. Flanagan............................................................. 80,013,733 1,683,123
Carl Frischling................................................................ 80,026,567 1,670,289
Prema Mathai-Davis............................................................. 80,025,589 1,671,267
Lewis F. Pennock............................................................... 80,059,672 1,637,184
Larry Soll, Ph.D. ............................................................. 80,040,389 1,656,467
Raymond Stickel, Jr. .......................................................... 80,056,699 1,640,157
Philip A. Taylor............................................................... 80,034,136 1,662,720
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(2)* Approve an amendment to the Trust's Agreement and
Declaration of Trust that would permit the Board
of Trustees of the Trust to terminate the Trust,
the Fund, and each other series portfolio of the
Trust, or a share class without a shareholder
vote............................................. 55,885,613 10,011,477 2,110,683 13,689,083
</Table>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Counselor Series Trust.
** Includes Broker Non-Votes.
31 AIM SELECT REAL ESTATE INCOME 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 103 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. 2007 Executive Director, Chief Executive Officer and President, None
Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global
Trustee investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Director, Chairman,
Chief Executive Officer and President, IVZ Inc. (holding
company); INVESCO North American Holdings, Inc. (holding
company); and, INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of Funds--Registered
Trademark--; Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President,
Invesco Holding Company Limited (parent of Invesco Aim and a
global investment management firm); Chairman, Investment
Company Institute; President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief Financial
Officer, Franklin Resources, Inc. (global investment
management organization)
- --------------------------------------------------------------------------------------------------------------------------------
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 President, Invesco Trimark Dealer Inc. (formerly AIM Mutual
Executive Officer Fund Dealer Inc.) (registered broker dealer), 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
register transfer agent) and AIM GP Canada Inc. (general
partner for a limited partnership); 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, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (formerly AIM Canada Holdings
Inc.) (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund 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 (formerly AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services) (registered investment advisor
and registered transfer agent); Trustee, President and
Principal Executive Officer of The AIM Family of Funds--
Registered Trademark-- (other than AIM Treasurer's Series
Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds--
Registered Trademark-- (AIM Treasurer's Series Trust and
Short-Term Investments Trust only); and Manager, Invesco
PowerShares Capital Management LLC
Formerly: Director and President, AIM Trimark Corporate
Class Inc. and AIM Trimark Canada Fund Inc.; Director and
President, Invesco Trimark Ltd./Invesco Trimark Ltee
(formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise
Services); Senior Managing Director, Invesco Holding Company
Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (registered broker dealer); President and Principal
Executive Officer, The AIM Family of Funds--Registered
Trademark-- (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.; and Director, Trimark Trust (federally
regulated Canadian Trust Company)
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited
Trustee and Chair consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
- --------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- --------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired
Trustee
Formerly: Partner, law firm of Baker & McKenzie; and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Policy
Trustee firm) Studies, Inc. and
Van Gilder Insurance
Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business None
Trustee corporations, including the Boss Group Ltd. (private
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company); Annuity and Life Re
(Holdings), Ltd. (reinsurance 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.; 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)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company); and Discovery Global
Education Fund (non-profit)
- --------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds) (15
portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA of the USA 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
Trustee
Formerly: Partner, Deloitte & Touche; and Director, Mainstay None
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.
32 AIM SELECT REAL ESTATE INCOME FUND
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 of N/A
Senior Vice President and Funds--Registered Trademark--
Senior Officer
Formerly: Director of Compliance and Assistant 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 Counsel, N/A
Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc.
Legal Officer and Secretary 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--Registered
Trademark--; 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, Senior Vice President, General Counsel
and Secretary, 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 President, The N/A
Vice President AIM Family of Funds--Registered Trademark--
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--Registered
Trademark--; 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; and Senior Vice President and Compliance
Director, Delaware Investments Family of Funds
- --------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A
Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited,
IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO North American Holdings,
Inc.; and Vice President, The AIM Family of Funds--Registered
Trademark--
Formerly: 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--Registered Trademark--; Director and Vice
President, INVESCO Distributors, Inc. and Chief Executive Officer
and President, INVESCO Funds Group, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sheri S. Morris -- 1964 2008 Vice President, Treasurer and Principal Financial Officer, The N/A
Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Assistant Vice
and Principal Financial President, Invesco Aim Advisors, Inc., Invesco Aim Capital
Officer Management, Inc. and Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of Funds--Registered Trademark--
- --------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash Management N/A
Vice President Group; 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, The AIM Family of Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust and Short-Term Investments
Trust); and President and Principal Executive Officer, The AIM
Family of Funds--Registered Trademark-- (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--Registered
Trademark-- (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 Advisors, N/A
Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim
Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc.,
Invesco Aim Private Asset Management, Inc. and The AIM Family of
Funds--Registered Trademark--
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.; Senior N/A
Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief
Compliance Officer, The AIM Family of Funds--Registered
Trademark--, 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, Invesco Aim Distributors, PricewaterhouseCoopers
Suite 100 Inc. Inc. LLP
Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
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 State Street Bank and
& Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company
2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street
Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Americas
New York, NY 10036-2714
33 AIM SELECT REAL ESTATE INCOME FUND
====================================================================================================================================
EDELIVERY
INVESCOAIM.COM/EDELIVERY
REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via email. Once your quarterly
statements, tax forms, fund reports, and prospectuses are available, we will send you an email notification containing links to
these documents. For security purposes, you will need to log in to your account to view your statements and tax forms.
WHY SIGN UP? HOW DO I SIGN UP?
Register for eDelivery to: It's easy. Just follow these simple steps:
1. Log in to your account.
- - save your Fund the cost of printing and postage. 2. Click on the "Service Center" tab.
- - reduce the amount of paper you receive. 3. Select "Register for eDelivery" and complete the consent
- - gain access to your documents faster by not waiting for the process.
mail.
- - view your documents online anytime at your convenience.
- - save the documents to your personal computer or print them out
for your records.
This service is provided by Invesco Aim Investment Services, Inc.
====================================================================================================================================
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, 2008,
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, 2009, 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 [INVESCO AIM LOGO]
individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco -SERVICE MARK-
Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco
Asset Management (Japan) Ltd., Invesco Hong Kong Ltd., Invesco Australia Limited, Invesco Asset Management
Limited and Invesco Asset Management Deutschland GmbH are affiliated investment advisors that serve as
subadvisors to many of the products and services represented by Invesco Aim. Invesco Aim Distributors, Inc. is
the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds
represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
invescoaim.com SREI-AR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM STRUCTURED CORE FUND
- - SERVICE MARK - Annual Report to Shareholders o August 31, 2008
[MOUNTAIN GRAPHIC]
2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Long-Term Fund Performance
8 Supplemental Information
9 Schedule of Investments
12 Financial Statements
15 Notes to Financial Statements
21 Financial Highlights
23 Auditor's Report
24 Fund Expenses
26 Approval of Investment Advisory Agreement
30 Tax Information
31 Results of Proxy
32 Trustees and Officers
Dear Shareholder:
In previous reports, I've talked with you about short-term market volatility. I'd like to take this
opportunity to update you on recent market developments and provide some perspective and encouragement to
[TAYLOR fellow long-term investors.
PHOTO]
MARKET OVERVIEW
About a year ago or so, we saw warning signs of increasing economic ills -- a weakening housing market,
rising inflation and slowing job growth, among others. Nonetheless, U.S. equity markets were performing
Philip Taylor relatively well. But as the year progressed, the housing market deteriorated, energy prices rose,
unemployment increased and the credit crunch grew more widespread.
In response, the U.S. Federal Reserve cut short-term interest rate targets to stimulate economic growth
and expand market liquidity.(1) Congress and the president worked together to enact an economic stimulus
plan, one facet of which was to provide more than 112 million taxpayers with $92 billion in tax rebates.(2) Historically, actions
such as these have stimulated economic growth. Unfortunately, other factors were simultaneously at work behind the scenes, and the
market began to reveal the strain of those factors.
HOW WE GOT HERE
The market stresses we saw over the past year were the result of years of lax lending associated with the recent housing boom.
Mortgage loans of questionable quality were bundled into hard-to-value securities that were sold to, and traded among, financial
institutions. The value of those securities declined; more institutions sought to sell them and fewer institutions were willing to
buy them. As a result, financial institutions' access to credit declined and the value of their holdings declined -- preventing
normal trading among banks and other financial institutions.
In October 2008, Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to
purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in
the last half century.
INVESTING IN A VOLATILE MARKET
Whether or not markets recover in the short term, the kind of volatility we've seen of late is a good reminder that in times of
market uncertainty, it's wise to stay true to three timeless investing principles:
o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. I urge you to stick to your
investment plan and stay focused on your long-term goals.
o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of
complementary asset classes may potentially cushion your portfolio against excessive volatility.
o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes
viewing market volatility as a matter of course, not a reason to panic.
That leads me to a fourth principle we believe may be critical to your success: Work with a trusted financial advisor. An
experienced advisor who knows your goals and situation can be your most valuable asset, particularly during times of market
volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course.
Recent market volatility has been disconcerting for everyone. Remember, however, that many of history's significant buying
opportunities were the result of short-term economic crises that, in their time, were considered unprecedented. I believe current
market volatility and uncertainty may represent a buying opportunity for patient, long-term investors. Invesco Aim's portfolio
managers are working diligently on your behalf to capitalize on this situation.
OUR NEW BRAND IDENTITY
While market conditions are obviously at the top of everyone's mind, there are some significant changes I want to share with you: We
have a new name and a new brand -- Invesco Aim.
Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers with $450 billion
in assets under management as of August 31, 2008. Invesco has 5,300 employees in 13 investment centers worldwide serving clients in
100 countries. This provides you:
o Diversified investment strategies from distinct management teams around the globe.
o A range of investment products to help you achieve your financial goals.
o The peace of mind professional asset management and a diversified investment portfolio can provide.
While our name may have changed, our commitment to putting shareholders first, helping clients achieve their investment goals and
providing excellent customer service will never change.
If you have questions about this report or your account, please contact one of our client service representatives at 800 959
4246.
Thank you for your continued confidence, and we look forward to serving you. Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
October 20, 2008
(1) U.S. Federal Reserve Board; 2 U.S. Department of the Treasury
2 AIM STRUCTURED CORE FUND
Dear Fellow Shareholders:
As I write this letter, turbulent financial markets are causing considerable investor anxiety, reminding us
again that markets are cyclical and the correction of excess is often painful, at least in the short term.
[CROCKETT Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment
PHOTO] discipline. We continue to put your interests first in the effort to improve investment performance,
contain shareholder costs and uphold the highest ethical standards.
We remain enthusiastic about the global reach and investment expertise that Invesco, a leading
independent global investment management company, brings to the management of AIM Funds as the parent
Bruce Crockett company of the advisors. The diverse investment strategies deployed throughout the worldwide network of
Invesco investment centers has helped strengthen the management of many AIM Funds. The rebranding of the
Funds' management company as Invesco Aim was followed by the launch of an upgraded, investor-friendly website (invescoaim.com); a
new mountain logo using a Himalayan peak to symbolize stability, endurance, strength and longevity; and a new ad campaign.
Emphasizing Invesco Aim's focus and investment quality, the ads will appear in financial publications such as Barron's and
Investment News through the end of 2008.
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."
We have recently completed another active proxy voting season during which we acted on your behalf to double the number of votes
in favor of separating the roles of chairman and CEO at the companies whose shares your Funds hold. We also continued to support the
movement for shareholders to have a bigger role in approving executive compensation, initiatives known as "say on pay." Like
virtually all other mutual fund complexes, AIM Funds abstain from voting on social issues as a matter of policy, and I would be
interested to hear your thoughts on this policy.
As always, you are welcome to email your questions or comments to me at bruce@brucecrockett.com. The dialogue that has been
established in this way has been instructive for your Board, and we want it to continue. Although the production schedule for Fund
annual reports and prospectuses allows me to write these letters of general report and response just twice a year, please be assured
that your comments are received, welcomed and heard in the interim.
We look forward to hearing from you and to representing you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
October 20, 2008
3 AIM STRUCTURED CORE FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= ment process is repeated on a monthly
PERFORMANCE SUMMARY basis to determine which companies should
be bought or sold within the portfolio.
For the fiscal year ended August 31, 2008, AIM Structured Core Fund, excluding
applicable sales charges, performed in line with its broad market and style-specific MARKET CONDITIONS AND YOUR FUND
benchmark, the S&P 500 Index, largely due to stock selection within the financials
sector, where we generally avoided much of the turbulence that adversely affected this Many factors contributed to the negative
sector over the past year. returns of most major market indexes for
the fiscal year ended August 31, 2008.(1)
Your Fund's long-term performance appears later in this report. The chief catalyst was undoubtedly the
ongoing subprime loan crisis and its far
FUND VS. INDEXES reaching effects on overall credit
availability. Additionally, record high
Total returns, 8/31/07 to 8/31/08, at net asset value (NAV). Performance shown does not crude oil prices, falling home values and
include applicable contingent deferred sales charges (CDSC) or front-end sales charges, the declining U.S. dollar placed
which would have reduced performance. significant pressure on the purchasing
power of the U.S. consumer. Late in the
Class A Shares -11.03% fiscal year, consumer confidence fell and
Class B Shares -11.71 market volatility increased as evidence of
Class C Shares -11.71 a pending recession was compounded by
Class R Shares -11.32 mounting inflationary pressures.
Investor Class Shares* -11.02
S&P 500 Index(triangle) (Broad Market/Style-Specific Index) -11.13 In seven separate actions beginning in
Lipper Large-Cap Core Funds Index(triangle) (Peer Group Index) -9.99 September 2007, the U.S. Federal Reserve
Board (the Fed) lowered the federal funds
(triangle) Lipper Inc. target rate from 5.25% to 2.00% in an
effort to inject liquidity into the
* Share class incepted during the reporting period. See page 7 for a detailed weakening credit markets.(2) The collapse
explanation of Fund performance. of Bear Stearns (not a Fund holding) and
======================================================================================= difficulties encountered by
government-sponsored mortgage suppliers
HOW WE INVEST the universe is evaluated on four factors: Freddie Mac and Fannie Mae (not Fund
company earnings momentum, price trend, holdings) was evidence that the housing
We manage your Fund to provide exposure to management action and relative valuation. market and financials sector continued to
large cap core stocks. The portfolio is The sum of the scores from these four struggle. In response, the Fed used a
designed to outperform the S&P 500 Index factors makes up our alpha (excess return) variety of monetary policy tools to help
while minimizing the amount of additional forecast, relative to the average stock in alleviate the strain on financial markets.
risk relative to the benchmark. The Fund the universe. Stocks are also evaluated on
can be used as a long-term allocation to a multitude of other factors to develop a Gross domestic product (GDP) increased
large cap stocks that complements other stock-specific risk forecast and at an annualized rate of 2.8% in the
style-specific strategies within a transaction cost forecast. second quarter of 2008, buoyed in part by
diversified asset allocation strategy. government tax rebates.(3) Indeed, this
We then incorporate the alpha forecast, level was higher than the 0.9% annualized
The investment process integrates the risk forecast and transaction cost GDP growth rate in the first quarter of
following key steps: forecast -- using an optimizer (a 2008.(3) Inflation, measured by a
proprietary software system) -- to build a seasonally-adjusted Consumer Price Index,
o Universe development portfolio that we believe is an optimal increased at an annual rate of 5.4% year
balance of the stocks' potential return over year as of August 2008.(4) The
o Stock rankings and risk. This portfolio is constructed advance in the price index was mostly
according to certain constraints to
o Risk assessment increase the probability that the Fund's
relative performance and volatility remain
o Portfolio construction within the Fund's strategy guidelines. The
portfolio is continually monitored by the
o Trading Fund management team. The overall invest-
While the companies included in the S&P
500 Index are used as a general guide for
developing the Fund's investable universe,
non-benchmark stocks may also be
considered. Each stock in
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector
1. Integrated Oil & Gas 12.1% 1. Exxon Mobil Corp. 5.7%
Information Technology 22.4% 2. Pharmaceuticals 5.8 2. Microsoft Corp. 3.6
Energy 13.4 3. Integrated Telecommunication 3. Apple Inc. 3.3
Consumer Discretionary 12.1 Services 5.7 4. AT&T Inc. 3.2
Financials 12.1 4. Computer Hardware 5.6 5. General Electric Co. 3.2
Health Care 11.7 5. Systems Software 5.6 6. Pfizer Inc. 2.9
Industrials 8.3 ========================================== 7. ConocoPhillips 2.6
Consumer Staples 6.6 8. Verizon Communications Inc. 2.5
Materials 6.5 ========================================== 9. Merck & Co. Inc. 2.2
Telecommunication Services 5.7 Total Net Assets $167.6 million 10. Hewlett-Packard Co. 2.2
Utilities 0.7 Total Number of Holdings* 89 ==========================================
U.S. Treasury Bills, Money Market Funds ==========================================
Plus Other Assets Less Liabilities 0.5
========================================== The Fund's holdings are subject to change, and there is no assurance that the Fund will
continue to hold any particular security.
* Excluding money market fund holdings.
4 AIM STRUCTURED CORE FUND
attributable to increases in the cost of an attractive alpha forecast, the JEREMY LEFKOWITZ
energy. Unemployment also trended higher optimizer may indicate that its
during the fiscal year and ended August transaction costs are too high and/or its Portfolio manager, is lead manager of AIM
2008 at a rate of 6.1%.(4) risk level is unacceptable. Placing more Structured Core Fund. He began his
of an emphasis on transaction costs and investment career in 1968 and has been
Market volatility increased potential risk in making stock selections associated with Invesco Institutional and/
significantly after the close of the can benefit or detract from Fund or its affiliates since 1982. Mr.
Fund's fiscal year. To put some context performance. For the fiscal year, it Lefkowitz earned a B.S. in industrial
around the recent financial events: The augmented our results. engineering and an M.B.A. in finance from
markets have shown serious strain for more Columbia University.
than a year, largely the result of years The portfolio benefited from both good
of lax credit practices associated with stock and sector selection. The portfolio MAUREEN DONNELLAN
the housing boom. Mortgage loans of was, on average, underweight financials
questionable quality were often bundled over the fiscal year which helped returns. Portfolio manager, is manager of AIM
into hard-to-understand securities and Stock selection within this sector was Structured Core Fund. She has been
sold to various financial institutions. better than in the Fund's benchmark, associated with Invesco Institutional
The complexity and obscure structure of further helping returns. Tempering this and/or its affiliates since 1974.
these securities hid an Achilles' heel of was an underweight in the consumer staples
our financial system, creating a liquidity sector which was one of only two sectors LAWSON MCWHORTER
crisis of historic severity. in the Fund that produced a positive
return for the fiscal year. From a stock Portfolio manager, is manager of AIM
Now those securities remain on the selection standpoint, alternative energy Structured Core Fund. He has been
financial institutions' balance sheets -- securities had the greatest contribution associated with Invesco Institutional
eroding capital, driving down profits and to returns. FIRST Solar and MOSAIC and/or its affiliates since 2005. Mr.
preventing normal trading among banks and outpaced the market by a wide margin. The McWhorter earned a B.A. with cum laude
other financial institutions due to the biggest detractors from performance for honors from Davidson College. He is a
participating financial institutions' the fiscal year came from overweights in Chartered Market Technician.
stability being in question. After the NVIDIA, XL CAPITAL and INTERCONTINENTAL
close of the fiscal year, this situation EXCHANGE. These stocks were no longer held WILLIAM MERSON
came to a head as some of these by the Fund as of the close of the fiscal
institutions began running out of the year. Portfolio manager, is manager of AIM
capital needed to operate their businesses Structured Core Fund. He has been
and found investors unwilling to supply In terms of risk management, we seek to associated with Invesco Institutional
fresh capital. Compounding the problem is minimize any style biases in the and/or its affiliates since 1984. Mr.
growing concern over future economic portfolio. Active managers typically add Merson earned a B.B.A. from Manhattan
prospects. value in one of or a combination of four College and an M.B.A. from New York
areas: beta bias (relative volatility), University.
To ensure the orderly functioning of style bias, sector/industry over/under
the credit markets and thereby preventing weight and stock selection. We attempt to DANIEL TSAI
a more severe economic downturn, in early add value through our stock selection
October Congress enacted a $700 billion decisions. Consequently, our risk Chartered Financial Analyst, portfolio
rescue plan -- the Troubled Assets Relief management process seeks to neutralize the manager, is manager of AIM Structured Core
Program. In addition, the Fed -- in Fund's exposure relative to the benchmark Fund. He has been associated with Invesco
concert with other world banks -- lowered with regard to beta, style and Institutional and/or its affiliates since
short-term interest rates from 2.0% to sector/industry exposures. 2000. Mr. Tsai earned a B.S. in mechanical
1.5% on October 8, 2008.2 engineering from National Taiwan
We thank you for your continued University and an M.S. in mechanical
Regarding the returns for AIM investment in AIM Structured Core Fund. engineering from the University of
Structured Core Fund, it is important to Michigan. He also earned an M.S. in
understand our investment process to 1 Lipper Inc. computer science at Wayne State
better evaluate the drivers of our University.
relative performance versus the benchmark. 2 U.S. Federal Reserve
We generally evaluate performance based on ANNE UNFLAT
the impact of our stock selection and risk 3 Bureau of Economic Analysis
management. Portfolio manager, is manager of AIM
4 Bureau of Labor Statistics Structured Core Fund. She has been
Our stock selection model (based on associated with Invesco Institutional
company earnings momentum, price trend, The views and opinions expressed in and/or its affiliates since 1988. Ms.
management action and relative value) that management's discussion of Fund Unflat graduated magna cum laude from
makes up our alpha (excess return) performance are those of Invesco Aim Queens College with a B.A. in economics.
forecast for stocks in our investment Advisors, Inc. These views and opinions She earned her M.B.A. in finance from St.
universe was a positive contributor to are subject to change at any time based on John's University.
Fund performance. However, in selecting factors such as market and economic
holdings for the Fund, we also take into conditions. These views and opinions may Assisted by the U.S. Structured Products
account our risk and transaction cost not be relied upon as investment advice or Group Research Team
forecasts. We use our optimization recommendations, or as an offer for a
software to assist in making investment particular security. The information is
decisions, based on risk and transaction not a complete analysis of every aspect of
cost forecasts as well as our alpha any market, country, industry, security or
forecast. Consequently, while our stock the Fund. Statements of fact are from
selection model may identify a stock with sources considered reliable, but Invesco
Aim Advisors, Inc. makes no representation
or warranty as to their completeness or
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our
investment management philosophy.
See important Fund and index disclosures
later in this report.
5 AIM STRUCTURED CORE FUND
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee
comparable future results.
The data shown in the chart include deferred sales charges. Index results
reinvested distributions, applicable sales include reinvested dividends, but they do
charges, Fund expenses and management not reflect sales charges. Performance of
fees. Results for Class B shares are an index of funds reflects fund expenses
calculated as if a hypothetical and management fees; performance of a
shareholder had liquidated his entire market index does not. Performance shown
investment in the Fund at the close of the in the chart and table(s) does not reflect
reporting period and paid the applicable deduction of taxes a shareholder would pay
contingent on Fund distributions or sale of Fund
shares.
6 AIM STRUCTURED CORE FUND
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- CLASS A, B, C AND R SHARES
Fund and index data from 3/31/06
AIM Structured AIM Structured AIM Structured AIM Structured
Core Fund- Core Fund- Core Fund- Core Fund- Lipper Large-Cap
Date Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 Index(1) Core Funds Index(1)
3/31/06 $9450 $10000 $10000 $10000 $10000 $10000
4/06 9554 10100 10100 10100 10134 10104
5/06 9261 9790 9790 9800 9843 9798
6/06 9337 9859 9859 9870 9856 9806
7/06 9412 9939 9939 9959 9917 9772
8/06 9630 10159 10159 10180 10152 10015
9/06 9866 10399 10399 10430 10414 10226
10/06 10272 10819 10819 10860 10753 10567
11/06 10423 10969 10969 11010 10957 10774
12/06 10487 11028 11028 11070 11111 10883
1/07 10697 11250 11250 11304 11279 11059
2/07 10419 10947 10947 11000 11059 10868
3/07 10583 11109 11109 11162 11182 10977
4/07 10986 11524 11524 11589 11677 11434
5/07 11361 11918 11918 11994 12084 11824
6/07 11063 11595 11595 11669 11884 11681
7/07 10583 11089 11089 11162 11516 11352
8/07 10746 11251 11251 11335 11688 11482
9/07 11178 11696 11696 11781 12125 11897
10/07 11533 12060 12060 12157 12318 12154
11/07 10967 11464 11453 11558 11802 11671
12/07 11089 11578 11578 11683 11721 11604
1/08 10064 10503 10502 10602 11018 10925
2/08 9716 10137 10137 10235 10660 10642
3/08 9755 10168 10167 10266 10614 10503
4/08 10286 10726 10725 10837 11131 11020
5/08 10412 10837 10837 10948 11275 11220
6/08 9609 10005 10005 10113 10325 10351
7/08 9474 9853 9853 9970 10239 10204
8/08 9563 9640 9934 10051 10387 10335
====================================================================================================================================
(1) Lipper Inc.
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/08, including maximum As of 6/30/08, the most recent calendar
applicable sales charges quarter-end, including maximum applicable
sales charges
CLASS A SHARES
Inception (3/31/06) -1.83% CLASS A SHARES
1 Year -15.91 Inception (3/31/06) -1.75%
1 Year -17.91
CLASS B SHARES
Inception (3/31/06) -1.50% CLASS B SHARES
1 Year -16.10 Inception (3/31/06) -1.30%
1 Year -18.00
CLASS C SHARES
Inception (3/31/06) -0.27% CLASS C SHARES
1 Year -12.59 Inception (3/31/06) 0.02%
1 Year -14.57
CLASS R SHARES
Inception (3/31/06) 0.21% CLASS R SHARES
1 Year -11.32 Inception (3/31/06) 0.50%
1 Year -13.34
INVESTOR CLASS SHARES
Inception 0.49% INVESTOR CLASS SHARES
1 Year -11.02 Inception 0.75%
========================================== 1 Year -13.13
==========================================
INVESTOR CLASS SHARES' INCEPTION DATE IS TOR CLASS SHARES WAS 1.20%, 1.95%, 1.95%,
APRIL 25, 2008. RETURNS SINCE THAT DATE 1.45% AND 1.20%, RESPECTIVELY. THE EXPENSE
ARE HISTORICAL RETURNS. ALL OTHER RETURNS RATIOS PRESENTED ABOVE MAY VARY FROM THE
ARE BLENDED RETURNS OF HISTORICAL INVESTOR EXPENSE RATIOS PRESENTED IN OTHER SECTIONS
CLASS SHARE PERFORMANCE AND RESTATED CLASS OF THIS REPORT THAT ARE BASED ON EXPENSES
A SHARE PERFORMANCE. (FOR PERIODS PRIOR TO INCURRED DURING THE PERIOD COVERED BY THIS
THE INCEPTION DATE OF INVESTOR CLASS REPORT.
SHARES) AT NET ASSET VALUE, WHICH RESTATED
PERFORMANCE WILL REFLECT THE RULE 12B-1 CLASS A SHARE PERFORMANCE REFLECTS THE
FEES APPLICABLE TO CLASS A SHARES FOR THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
PERIOD USING BLENDED RETURNS. CLASS A AND CLASS C SHARE PERFORMANCE REFLECTS THE
SHARES' INCEPTION DATE IS MARCH 31, 2006. APPLICABLE CONTINGENT DEFERRED SALES
CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
THE PERFORMANCE DATA QUOTED REPRESENT CDSC ON CLASS B SHARES DECLINES FROM 5%
PAST PERFORMANCE AND CANNOT GUARANTEE BEGINNING AT THE TIME OF PURCHASE TO 0% AT
COMPARABLE FUTURE RESULTS; CURRENT THE BEGINNING OF THE SEVENTH YEAR. THE
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
VISIT INVESCOAIM. COM FOR THE MOST RECENT YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
MONTH-END PERFORMANCE. PERFORMANCE FIGURES HAVE A FRONT-END SALES CHARGE; RETURNS
REFLECT REINVESTED DISTRIBUTIONS, CHANGES SHOWN ARE AT NET ASSET VALUE AND DO NOT
IN NET ASSET VALUE AND THE EFFECT OF THE REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
MAXIMUM SALES CHARGE UNLESS OTHERWISE ON A TOTAL REDEMPTION OF RETIREMENT PLAN
STATED. INVESTMENT RETURN AND PRINCIPAL ASSETS WITHIN THE FIRST YEAR.
VALUE WILL FLUCTU-ATE SO THAT YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL SHARES. THE PERFORMANCE OF THE FUND'S SHARE
CLASSES WILL DIFFER PRIMARILY DUE TO
THE NET ANNUAL FUND OPERATING EXPENSE DIFFERENT SALES CHARGE STRUCTURES AND
RATIO SET FORTH IN THE MOST RECENT FUND CLASS EXPENSES.
PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR CLASS A, CLASS B, CLASS C, CLASS R AND HAD THE ADVISOR NOT WAIVED FEES AND/OR
INVESTOR CLASS SHARES WAS 0.61%, 1.36%, REIMBURSED EXPENSES, PERFORMANCE WOULD
1.36%, 0.86% AND 0.61%, RESPECTIVELY.(1) HAVE BEEN LOWER.
THE TOTAL ANNUAL FUND OPERATING EXPENSE
RATIO SET FORTH IN THE MOST RECENT FUND (1) Total annual operating expenses less
PROSPECTUS AS OF THE DATE OF THIS REPORT any contractual fee waivers and/or
FOR CLASS A, CLASS B, CLASS C, CLASS R AND reimbursements by the advisor in
INVES- effect through at least June 30,
2009. See current prospectus for more
information.
7 AIM STRUCTURED CORE FUND
AIM STRUCTURED CORE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of August 31, 2008, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
ABOUT SHARE CLASSES o There is no guarantee that the o A direct investment cannot be made in
investment techniques and risk analyses an index. Unless otherwise indi cated,
o Effective September 30, 2003, only used by the Fund's portfolio managers index results include reinvested
previously established qualified plans will produce the desired results. dividends, and they do not reflect
are eligible to purchase Class B shares sales charges. Performance of an index
of any AIM fund. o The prices of securities held by the of funds reflects fund expenses;
Fund may decline in response to market perform ance of a market index does
o Class R shares are available only to risks. not.
certain retirement plans. Please see
the prospectus for more information. o Since a large percentage of the Fund's OTHER INFORMATION
assets may be invested in securities of
PRINCIPAL RISKS OF INVESTING IN THE FUND a limited number of companies, each o The Chartered Financial Analyst-regis
investment has a greater effect on the tered trademark-- (CFA--registered
o Credit risk is the risk of loss on an Fund's overall performance, and any trademark--) designation is a globally
investment due to the deterioration of change in the value of those securities recognized standard for measuring the
an issuer's financial health. Such a could significantly affect the value of compe-tence and integrity of investment
deterioration of financial health may your investment in the Fund. professionals.
result in a reduction of the credit
rating of the issuer's securities and o Portfolio turnover is greater than most o The returns shown in the management's
may lead to the issuer's inability to funds, which may affect the Fund's discussion of Fund performance are
honor its contractual obligations, performance due to higher brokerage based on net asset values calcu lated
including making timely payment of commissions. Active trading may also for shareholder transactions. Generally
interest and principal. increase short-term gains and losses, accepted accounting princi ples require
which may also result in taxable gain adjustments to be made to the net
o Prices of equity securities change in distributions to the Fund's assets of the Fund at period end for
response to many factors including the shareholders. financial reporting purposes, and as
historical and prospective earnings of such, the net asset values for
the issuer, the value of its assets, ABOUT INDEXES USED IN THIS REPORT shareholder transactions and the
general economic conditions, interest returns based on those net asset values
rates, investor perceptions and market o The S&P 500--REGISTERED TRADEMARK-- may differ from the net asset values
liquidity. INDEX is a market and returns reported in the Financial
capitalization-weighted index covering Highlights.
o Foreign securities have additional all major areas of the U.S. economy. It
risks, including exchange rate changes, is not the 500 largest companies, but o Industry classifications used in this
political and economic upheaval, the rather the most widely held 500 report are generally according to the
relative lack of information, companies chosen with respect to market Global Industry Classification
relatively low market liquidity, and size, liquidity, and their industry. Standard, which was developed by and is
the potential lack of strict financial the exclusive property and a service
and accounting controls and standards. o The LIPPER LARGE-CAP CORE FUNDS INDEX mark of MSCI Inc. and Standard &
is an equally weighted representation Poor's.
o Interest rate risk refers to the risk of the largest funds in the Lipper
that bond prices generally fall as Large-Cap Core Funds category. These
interest rates rise; conversely, bond funds typically have an average
prices generally rise as interest rates price-to-earnings ratio, price-to-book
fall. ratio, and three-year sales-per-share
growth value, compared to the S&P
o The Fund may use enhanced investment 500--REGISTERED TRADEMARK-- Index.
techniques such as leveraging and
derivatives. Leveraging entails risks o The Fund is not managed to track the
such as magnifying changes in the value performance of any particular index,
of the portfolio's securities. including the indexes defined here, and
Derivatives are subject to counterparty consequently, the performance of the
risk -- the risk that the other party Fund may deviate significantly from the
will not complete the transaction with performance of the indexes.
the Fund.
======================================================================================= ==========================================
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.
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares SCAUX
======================================================================================= Class B Shares SBCUX
Class C Shares SCCUX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares SCRUX
Investor Class Shares SCNUX
==========================================
8 AIM STRUCTURED CORE FUND
SCHEDULE OF INVESTMENTS(a)
August 31, 2008
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.51%
AEROSPACE & DEFENSE-0.58%
Honeywell International Inc. 19,500 $ 978,315
==============================================================================
APPAREL RETAIL-1.93%
Gap, Inc. (The) 166,500 3,238,425
==============================================================================
ASSET MANAGEMENT & CUSTODY BANKS-0.30%
Northern Trust Corp. 6,200 498,418
==============================================================================
AUTOMOTIVE RETAIL-0.78%
AutoZone, Inc.(b) 9,500 1,303,685
==============================================================================
BIOTECHNOLOGY-1.34%
Biogen Idec Inc.(b) 44,000 2,240,920
==============================================================================
COAL & CONSUMABLE FUELS-0.00%
Patriot Coal Corp.(b) 1 48
==============================================================================
COMMUNICATIONS EQUIPMENT-3.16%
EchoStar Corp.-Class A(b) 8,700 272,658
- ------------------------------------------------------------------------------
Juniper Networks, Inc.(b) 111,500 2,865,550
- ------------------------------------------------------------------------------
Research In Motion Ltd. (Canada)(b) 17,700 2,152,320
==============================================================================
5,290,528
==============================================================================
COMPUTER & ELECTRONICS RETAIL-2.09%
GameStop Corp.-Class A(b) 21,200 930,044
- ------------------------------------------------------------------------------
RadioShack Corp. 135,600 2,577,756
==============================================================================
3,507,800
==============================================================================
COMPUTER HARDWARE-5.60%
Apple Inc.(b) 32,850 5,569,060
- ------------------------------------------------------------------------------
Hewlett-Packard Co. 77,600 3,640,992
- ------------------------------------------------------------------------------
International Business Machines Corp. 1,400 170,422
==============================================================================
9,380,474
==============================================================================
COMPUTER STORAGE & PERIPHERALS-1.00%
Lexmark International, Inc.-Class A(b) 2,500 89,925
- ------------------------------------------------------------------------------
QLogic Corp.(b) 11,800 220,424
- ------------------------------------------------------------------------------
Seagate Technology 23,100 344,421
- ------------------------------------------------------------------------------
Western Digital Corp.(b) 37,500 1,022,250
==============================================================================
1,677,020
==============================================================================
CONSTRUCTION & ENGINEERING-0.40%
Foster Wheeler Ltd.(b) 13,500 670,815
==============================================================================
CONSUMER FINANCE-0.23%
Discover Financial Services 23,800 391,510
==============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.67%
MasterCard, Inc.-Class A 11,550 2,801,453
==============================================================================
DIVERSIFIED BANKS-2.21%
U.S. Bancorp 74,900 2,386,314
- ------------------------------------------------------------------------------
Wells Fargo & Co. 43,400 1,313,718
==============================================================================
3,700,032
==============================================================================
DIVERSIFIED CHEMICALS-1.53%
Dow Chemical Co. (The) 13,800 470,994
- ------------------------------------------------------------------------------
E. I. du Pont de Nemours and Co. 47,000 2,088,680
==============================================================================
2,559,674
==============================================================================
DIVERSIFIED REIT'S-0.36%
Vornado Realty Trust 6,000 596,760
==============================================================================
EDUCATION SERVICES-2.02%
Apollo Group Inc.-Class A(b) 53,200 3,387,776
==============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-2.39%
Emerson Electric Co. 17,200 804,960
- ------------------------------------------------------------------------------
First Solar, Inc.(b) 11,580 3,203,607
==============================================================================
4,008,567
==============================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-2.39%
CF Industries Holdings, Inc. 8,150 1,242,060
- ------------------------------------------------------------------------------
Mosaic Co. (The) 24,800 2,647,152
- ------------------------------------------------------------------------------
Potash Corp. of Saskatchewan Inc. (Canada) 650 112,840
==============================================================================
4,002,052
==============================================================================
FOOTWEAR-1.57%
NIKE, Inc.-Class B 43,300 2,624,413
==============================================================================
GENERAL MERCHANDISE STORES-1.41%
Big Lots, Inc.(b) 80,100 2,368,557
==============================================================================
HEALTH CARE DISTRIBUTORS-0.14%
PharMerica Corp.(b) 10,200 241,434
==============================================================================
HEALTH CARE SERVICES-3.95%
Express Scripts, Inc.(b) 43,800 3,215,358
- ------------------------------------------------------------------------------
Medco Health Solutions, Inc.(b) 72,800 3,410,680
==============================================================================
6,626,038
==============================================================================
HOMEBUILDING-0.82%
D.R. Horton, Inc. 96,200 1,198,652
- ------------------------------------------------------------------------------
NVR, Inc.(b) 300 179,319
==============================================================================
1,377,971
==============================================================================
HOUSEHOLD PRODUCTS-1.67%
Procter & Gamble Co. (The) 40,200 2,804,754
==============================================================================
HYPERMARKETS & SUPER CENTERS-1.75%
Wal-Mart Stores, Inc. 49,700 2,935,779
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM STRUCTURED CORE FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-0.74%
Mirant Corp.(b) 42,200 $ 1,248,276
==============================================================================
INDUSTRIAL CONGLOMERATES-4.24%
3M Co. 15,200 1,088,320
- ------------------------------------------------------------------------------
General Electric Co. 187,300 5,263,130
- ------------------------------------------------------------------------------
McDermott International, Inc.(b) 21,800 757,114
==============================================================================
7,108,564
==============================================================================
INDUSTRIAL MACHINERY-0.68%
Illinois Tool Works Inc. 23,100 1,145,991
==============================================================================
INDUSTRIAL REIT'S-0.38%
AMB Property Corp. 9,400 426,666
- ------------------------------------------------------------------------------
ProLogis 4,800 206,688
==============================================================================
633,354
==============================================================================
INSURANCE BROKERS-0.42%
Aon Corp. 14,700 698,103
==============================================================================
INTEGRATED OIL & GAS-12.12%
Chevron Corp. 27,400 2,365,168
- ------------------------------------------------------------------------------
ConocoPhillips 53,400 4,406,034
- ------------------------------------------------------------------------------
Exxon Mobil Corp. 120,100 9,609,201
- ------------------------------------------------------------------------------
Imperial Oil Ltd. (Canada) 7,200 369,144
- ------------------------------------------------------------------------------
Occidental Petroleum Corp. 44,900 3,563,264
==============================================================================
20,312,811
==============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-5.70%
AT&T Inc. 167,900 5,371,121
- ------------------------------------------------------------------------------
Verizon Communications Inc. 119,200 4,186,304
==============================================================================
9,557,425
==============================================================================
INTERNET RETAIL-0.17%
Expedia, Inc.(b) 16,400 289,624
==============================================================================
INTERNET SOFTWARE & SERVICES-1.68%
eBay Inc.(b) 112,900 2,814,597
==============================================================================
LEISURE PRODUCTS-1.27%
Hasbro, Inc. 57,100 2,135,540
==============================================================================
LIFE & HEALTH INSURANCE-3.32%
Aflac, Inc. 51,300 2,908,710
- ------------------------------------------------------------------------------
Manulife Financial Corp. (Canada) 35,300 1,263,387
- ------------------------------------------------------------------------------
Unum Group 54,700 1,389,927
==============================================================================
5,562,024
==============================================================================
MANAGED HEALTH CARE-0.39%
CIGNA Corp. 15,600 653,328
==============================================================================
METAL & GLASS CONTAINERS-1.03%
Owens-Illinois, Inc.(b) 38,900 1,734,940
==============================================================================
OIL & GAS EQUIPMENT & SERVICES-1.32%
Halliburton Co. 50,300 2,210,182
==============================================================================
PHARMACEUTICALS-5.83%
Johnson & Johnson 6,700 471,881
- ------------------------------------------------------------------------------
King Pharmaceuticals, Inc.(b) 8,400 96,096
- ------------------------------------------------------------------------------
Lilly (Eli) and Co. 15,300 713,745
- ------------------------------------------------------------------------------
Merck & Co. Inc. 104,200 3,716,814
- ------------------------------------------------------------------------------
Pfizer Inc. 250,000 4,777,500
==============================================================================
9,776,036
==============================================================================
PROPERTY & CASUALTY INSURANCE-3.25%
ACE Ltd. (Switzerland) 10,300 541,883
- ------------------------------------------------------------------------------
Allstate Corp. (The) 23,100 1,042,503
- ------------------------------------------------------------------------------
Chubb Corp. (The) 19,100 916,991
- ------------------------------------------------------------------------------
Travelers Cos., Inc. (The) 66,700 2,945,472
==============================================================================
5,446,849
==============================================================================
RETAIL REIT'S-0.70%
Simon Property Group, Inc. 12,400 1,176,512
==============================================================================
SEMICONDUCTOR EQUIPMENT-0.64%
Applied Materials, Inc. 59,600 1,068,032
==============================================================================
SEMICONDUCTORS-3.12%
Altera Corp. 5,800 131,312
- ------------------------------------------------------------------------------
Intel Corp. 77,000 1,760,990
- ------------------------------------------------------------------------------
National Semiconductor Corp. 24,200 518,606
- ------------------------------------------------------------------------------
Texas Instruments Inc. 115,100 2,821,101
==============================================================================
5,232,009
==============================================================================
SOFT DRINKS-1.79%
Coca-Cola Co. (The) 51,900 2,702,433
- ------------------------------------------------------------------------------
Dr. Pepper Snapple Group, Inc.(b) 11,900 294,049
==============================================================================
2,996,482
==============================================================================
SPECIALIZED REIT'S-0.90%
Public Storage 17,100 1,510,272
==============================================================================
STEEL-1.57%
AK Steel Holding Corp. 50,100 2,635,761
==============================================================================
SYSTEMS SOFTWARE-5.57%
Microsoft Corp. 223,100 6,088,399
- ------------------------------------------------------------------------------
Symantec Corp.(b) 145,300 3,241,643
==============================================================================
9,330,042
==============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM STRUCTURED CORE FUND
<Table>
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
TOBACCO-1.39%
Altria Group, Inc. 31,000 $ 651,930
- ------------------------------------------------------------------------------
Philip Morris International Inc. 31,100 1,670,070
==============================================================================
2,322,000
==============================================================================
Total Common Stocks & Other Equity Interests
(Cost $163,662,994) 166,811,972
==============================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY BILLS-0.30%
1.90%, 09/18/08 (Cost $499,551)(c)(d) $500,000 499,551
==============================================================================
<Caption>
SHARES VALUE
- ------------------------------------------------------------------------------
MONEY MARKET FUNDS-0.07%
Liquid Assets Portfolio-Institutional Class(e) 57,319 $ 57,319
- ------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(e) 57,319 57,319
==============================================================================
Total Money Market Funds (Cost $114,638) 114,638
==============================================================================
TOTAL INVESTMENTS-99.88% (Cost $164,277,183) 167,426,161
==============================================================================
OTHER ASSETS LESS LIABILITIES-0.12% 204,049
==============================================================================
NET ASSETS-100.00% $167,630,210
______________________________________________________________________________
==============================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</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) Non-income producing security.
(c) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(d) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1I and Note 6.
(e) 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.
11 AIM STRUCTURED CORE FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
<Table>
ASSETS:
Investments, at value (Cost
$164,162,545) $167,311,523
- ------------------------------------------------------
Investments in affiliated money market
funds (Cost $114,638) 114,638
======================================================
Total investments (Cost
$164,277,183) 167,426,161
======================================================
Receivables for:
Fund shares sold 83,261
- ------------------------------------------------------
Dividends 358,017
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 28,942
- ------------------------------------------------------
Other assets 24,950
======================================================
Total assets 167,921,331
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Fund shares reacquired 52,788
- ------------------------------------------------------
Variation margin 7,750
- ------------------------------------------------------
Accrued fees to affiliates 64,280
- ------------------------------------------------------
Accrued other operating expenses 121,239
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 45,064
======================================================
Total liabilities 291,121
======================================================
Net assets applicable to shares
outstanding $167,630,210
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $146,028,230
- ------------------------------------------------------
Undistributed net investment income 1,043,496
- ------------------------------------------------------
Undistributed net realized gain 17,397,206
- ------------------------------------------------------
Unrealized appreciation 3,161,278
======================================================
$167,630,210
______________________________________________________
======================================================
NET ASSETS:
Class A $ 951,024
______________________________________________________
======================================================
Class B $ 165,048
______________________________________________________
======================================================
Class C $ 249,122
______________________________________________________
======================================================
Class R $ 53,137
______________________________________________________
======================================================
Investor Class $136,837,832
______________________________________________________
======================================================
Institutional Class $ 29,374,047
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 96,202
______________________________________________________
======================================================
Class B 16,859
______________________________________________________
======================================================
Class C 25,439
______________________________________________________
======================================================
Class R 5,389
______________________________________________________
======================================================
Investor Class 13,827,641
______________________________________________________
======================================================
Institutional Class 2,965,507
______________________________________________________
======================================================
Class A:
Net asset value per share $ 9.89
- ------------------------------------------------------
Maximum offering price per share
(Net asset value of $9.89 divided
by 94.50%) $ 10.47
______________________________________________________
======================================================
Class B:
Net asset value and offering price
per share $ 9.79
______________________________________________________
======================================================
Class C:
Net asset value and offering price
per share $ 9.79
______________________________________________________
======================================================
Class R:
Net asset value and offering price
per share $ 9.86
______________________________________________________
======================================================
Investor Class:
Net asset value and offering price
per share $ 9.90
______________________________________________________
======================================================
Institutional Class:
Net asset value and offering price
per share $ 9.91
______________________________________________________
======================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM STRUCTURED CORE FUND
STATEMENT OF OPERATIONS
For the year ended August 31, 2008
<Table>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $3,118) $ 1,470,172
- ------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds 63,721
- ------------------------------------------------------------------------------------------------
Interest 6,475
================================================================================================
Total investment income 1,540,368
================================================================================================
EXPENSES:
Advisory fees 441,031
- ------------------------------------------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------------------------------------------
Custodian fees 11,345
- ------------------------------------------------------------------------------------------------
Distribution fees:
Class A 3,815
- ------------------------------------------------------------------------------------------------
Class B 7,811
- ------------------------------------------------------------------------------------------------
Class C 12,575
- ------------------------------------------------------------------------------------------------
Class R 3,309
- ------------------------------------------------------------------------------------------------
Investor Class 132,443
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 77,235
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 4,640
- ------------------------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 17,292
- ------------------------------------------------------------------------------------------------
Registration and filing fees 56,238
- ------------------------------------------------------------------------------------------------
Professional services fees 68,388
- ------------------------------------------------------------------------------------------------
Other 48,449
================================================================================================
Total expenses 934,571
================================================================================================
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (489,108)
================================================================================================
Net expenses 445,463
================================================================================================
Net investment income 1,094,905
================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain from:
Investment securities 25,989,741
- ------------------------------------------------------------------------------------------------
Futures contracts (1,418,020)
================================================================================================
24,571,721
================================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (41,769,116)
- ------------------------------------------------------------------------------------------------
Futures contracts 12,300
================================================================================================
(41,756,816)
================================================================================================
Net realized and unrealized gain (loss) (17,185,095)
================================================================================================
Net increase (decrease) in net assets resulting from operations $(16,090,190)
________________________________________________________________________________________________
================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM STRUCTURED CORE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2008 and 2007
<Table>
<Caption>
2008 2007
- -------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,094,905 $ 18,650
- -------------------------------------------------------------------------------------------------------
Net realized gain 24,571,721 100,642
- -------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (41,756,816) 272,805
=======================================================================================================
Net increase (decrease) in net assets resulting from operations (16,090,190) 392,097
=======================================================================================================
Distributions to shareholders from net investment income:
Class A (3,257) (20,605)
- -------------------------------------------------------------------------------------------------------
Class B -- (7,234)
- -------------------------------------------------------------------------------------------------------
Class C -- (6,815)
- -------------------------------------------------------------------------------------------------------
Class R -- (9,690)
- -------------------------------------------------------------------------------------------------------
Institutional Class (51,149) (11,700)
=======================================================================================================
Total distributions from net investment income (54,406) (56,044)
=======================================================================================================
Distributions to shareholders from net realized gains:
Class A (7,487) --
- -------------------------------------------------------------------------------------------------------
Class B (3,837) --
- -------------------------------------------------------------------------------------------------------
Class C (4,882) --
- -------------------------------------------------------------------------------------------------------
Class R (3,252) --
- -------------------------------------------------------------------------------------------------------
Institutional Class (53,151) --
=======================================================================================================
Total distributions from net realized gains (72,609) --
=======================================================================================================
Share transactions-net:
Class A (400,725) 446,057
- -------------------------------------------------------------------------------------------------------
Class B (577,108) 143,523
- -------------------------------------------------------------------------------------------------------
Class C (706,858) 364,389
- -------------------------------------------------------------------------------------------------------
Class R (544,118) 13,698
- -------------------------------------------------------------------------------------------------------
Investor Class 149,467,214 --
- -------------------------------------------------------------------------------------------------------
Institutional Class 31,561,248 270,572
=======================================================================================================
Net increase in net assets resulting from share transactions 178,799,653 1,238,239
=======================================================================================================
Net increase in net assets 162,582,448 1,574,292
=======================================================================================================
NET ASSETS:
Beginning of year 5,047,762 3,473,470
=======================================================================================================
End of year (including undistributed net investment income of $1,043,496
and $13,050, respectively) $167,630,210 $5,047,762
_______________________________________________________________________________________________________
=======================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
14 AIM STRUCTURED CORE FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2008
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Structured Core 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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest.
The Fund currently consists of six different classes of shares: Class A, Class
B, Class C, Class R, Investor Class and Institutional Class. Investor Class
shares of the Fund are offered only to certain grandfathered investors. Class A
shares are sold with a front-end sales charge unless certain waiver criteria are
met and under certain circumstances load 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 shares, Investor Class shares 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. Matters affecting each portfolio or class will
be voted on exclusively by the shareholders of such portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objective is long-term growth of capital.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. Futures contracts are valued at the
final settlement price set by an exchange on which they are principally
traded. Listed options are valued at the mean between the last bid and the
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.
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and may 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
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
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.
15 AIM STRUCTURED CORE FUND
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income 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 as 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 income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
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 evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such
class. Transfer agency fees and expenses and other shareholder
recordkeeping fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) 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 that contain a variety of indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet
occurred. The risk of material loss as a result of such indemnification
claims is considered remote.
I. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). 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. Variation
margin payments are received or made depending upon whether unrealized
gains or losses are incurred. When the contracts are closed, 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. 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. Risks may exceed amounts recognized in the
Statement of Assets and Liabilities.
J. 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.
16 AIM STRUCTURED CORE FUND
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 $250 million 0.60%
- -------------------------------------------------------------------
Next $250 million 0.575%
- -------------------------------------------------------------------
Next $500 million 0.55%
- -------------------------------------------------------------------
Next $1.5 billion 0.525%
- -------------------------------------------------------------------
Next $2.5 billion 0.50%
- -------------------------------------------------------------------
Next $2.5 billion 0.475%
- -------------------------------------------------------------------
Next $2.5 billion 0.45%
- -------------------------------------------------------------------
Over $10 billion 0.425%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a new master sub-advisory agreement approved by
shareholders of the Fund on March 28, 2008, effective May 1, 2008, 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).
Previously, under the terms of a master sub-advisory agreement between the
Advisor and Invesco Institutional (N.A.), Inc., the Advisor paid Invesco
Institutional (N.A.), Inc. 40% of the amount of the Advisor's compensation on
the sub-advised assets. This agreement was terminated on May 1, 2008.
Effective April 28, 2008, 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, Investor and Institutional Class shares to 0.60%,
1.35%, 1.35%, 0.85%, 0.60% and 0.35% of average daily net assets, respectively,
through at least June 30, 2009. Prior to April 28, 2008, the Advisor had
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 and Institutional
Class shares to 1.00%, 1.75%, 1.75%, 1.25% and 0.75% of average daily net
assets. 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; (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. These credits are used to pay certain expenses
incurred by the Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2009,
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 year ended August 31, 2008, the Advisor waived advisory fees and
reimbursed Fund expenses of $407,200 and reimbursed class level expenses of
$2,165, $1,108, $1,784, $939, $70,196 and $4,634 for Class A, Class B, Class C,
Class R, Investor Class and Institutional Class shares, respectively.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the year ended
August 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $23.
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 year ended August 31, 2008, 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 year
ended August 31, 2008, expenses incurred under the agreement are shown in the
Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class
B, Class C, Class R, Investor Class and Institutional Class shares of the Fund.
The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with
respect to the Fund's Class A, Class B, Class C, Class R and Investor Class
shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays 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, 0.50% of the average daily net assets of Class R shares and 0.25% of the
average daily net assets of Investor Class shares. Of the Plan payments, up to
0.25% of the average daily net assets of each class of shares may be paid to
furnish continuing personal shareholder services to customers who purchase and
own shares of such classes. Any amounts not paid as a service fee under the
Plans would constitute an asset-based sales charge. Rules of the Financial
Industry Regulatory
17 AIM STRUCTURED CORE FUND
Authority ("FINRA") impose a cap on the total sales charges, including asset-
based sales charges that may be paid by any class of shares of the Fund. For the
year ended August 31, 2008, expenses incurred under the Plans are shown in the
Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the "sales charges") are
not recorded as expenses of the Fund. Front-end sales commissions are deducted
from proceeds from the sales of Fund shares prior to investment in Class A
shares of the Fund. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended August 31, 2008, IADI
advised the Fund that IADI retained $853 in front-end sales commissions from the
sale of Class A shares and $0, $398, $9,353 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--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2008, the Fund received credits from this arrangement, which
resulted in the reduction of the Fund's total expenses of $1,059.
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various 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 year ended August 31, 2008, the Fund paid legal fees of $2,493 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 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(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.
NOTE 6--FUTURES CONTRACTS
<Table>
<Caption>
OPEN FUTURES CONTRACTS AT PERIOD-END
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTH/ VALUE UNREALIZED
CONTRACT CONTRACTS COMMITMENT 08/31/08 APPRECIATION
- ---------------------------------------------------------------------------------------------------------------------
Chicago Mercantile Exchange S&P 500 Index 2 September-08/Long $641,300 $12,300
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
18 AIM STRUCTURED CORE FUND
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended August 31, 2008
and 2007 was as follows:
<Table>
<Caption>
2008 2007
- ----------------------------------------------------------------------------------------------------
Ordinary income $ 54,406 $56,044
- ----------------------------------------------------------------------------------------------------
Long-term capital gain 72,609 --
====================================================================================================
Total distributions $127,015 $56,044
____________________________________________________________________________________________________
====================================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2008, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2008
- ------------------------------------------------------------------------------------------------
Undistributed ordinary income $ 1,080,666
- ------------------------------------------------------------------------------------------------
Undistributed long-term gain 20,130,471
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation -- investments 428,013
- ------------------------------------------------------------------------------------------------
Temporary book/tax differences (37,170)
- ------------------------------------------------------------------------------------------------
Shares of beneficial interest 146,028,230
================================================================================================
Total net assets $167,630,210
________________________________________________________________________________________________
================================================================================================
</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 difference is attributable primarily to wash sales and futures
contracts.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
The Fund does not have a capital loss carryforward at period-end.
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2008 was $198,248,611 and $68,105,664,
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 $ 10,452,509
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (10,024,496)
================================================================================================
Net unrealized appreciation of investment securities $ 428,013
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $166,998,148.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of expenses related to the
plan of reorganization on August 31, 2008, undistributed net investment income
was increased by $1,116, undistributed net realized gains was increased by
$19,854 and shares of beneficial interest decreased by $20,970. Further, as a
result of tax deferrals acquired in the reorganization of AIM S&P 500 Index
Fund, undistributed net investment income was decreased by $11,169,
undistributed net realized gain was decreased by $7,176,333 and shares of
beneficial interest increased by $7,187,502. These reclassifications had no
effect on the net assets of the Fund.
19 AIM STRUCTURED CORE FUND
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ---------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
------------------------------------------------------
2008(a) 2007
--------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------------------
Sold:
Class A 52,645 $ 550,487 44,275 $ 491,285
- ---------------------------------------------------------------------------------------------------------------------
Class B 10,713 113,741 16,451 183,040
- ---------------------------------------------------------------------------------------------------------------------
Class C 100,723 1,010,754 32,644 369,797
- ---------------------------------------------------------------------------------------------------------------------
Class R 5,587 57,004 361 4,008
- ---------------------------------------------------------------------------------------------------------------------
Investor Class(b) 878,241 9,098,926 -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 1,946,816 21,051,375 22,949 258,872
=====================================================================================================================
Issued as reinvestment of dividends:
Class A 931 10,620 1,872 20,605
- ---------------------------------------------------------------------------------------------------------------------
Class B 338 3,837 656 7,234
- ---------------------------------------------------------------------------------------------------------------------
Class C 424 4,818 618 6,815
- ---------------------------------------------------------------------------------------------------------------------
Class R 285 3,252 880 9,690
- ---------------------------------------------------------------------------------------------------------------------
Investor Class(b) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 9,141 104,300 1,063 11,700
=====================================================================================================================
Issued in connection with acquisitions:(c)
Investor Class 17,521,866 188,037,074 -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class 1,777,178 19,072,533 -- --
=====================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 4,681 51,224 223 2,548
- ---------------------------------------------------------------------------------------------------------------------
Class B (4,713) (51,224) (223) (2,548)
=====================================================================================================================
Reacquired:
Class A (98,908) (1,013,056) (6,193) (68,381)
- ---------------------------------------------------------------------------------------------------------------------
Class B (65,478) (643,462) (3,915) (44,203)
- ---------------------------------------------------------------------------------------------------------------------
Class C (169,375) (1,722,430) (1,122) (12,223)
- ---------------------------------------------------------------------------------------------------------------------
Class R (61,725) (604,374) -- --
- ---------------------------------------------------------------------------------------------------------------------
Investor Class(b) (4,572,466) (47,668,786) -- --
- ---------------------------------------------------------------------------------------------------------------------
Institutional Class (851,641) (8,666,960) -- --
=====================================================================================================================
16,485,263 $178,799,653 110,539 $1,238,239
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
(a) There are entities that are record owners of more than 5% of the
outstanding shares of the Fund and in the aggregate own 23% of the
outstanding shares of the Fund. IADI has an agreement with these entities
to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates
may make payments to these entities, which are considered to be related to
the Fund, for providing services to the Fund, Invesco Aim and/or Invesco
Aim affiliates including but not limited to services such as securities
brokerage, distribution, third party record keeping and account servicing.
The Trust has no knowledge as to whether all or any portion of the shares
owned of record by these entities are also owned beneficially.
(b) Investor Class shares commenced on April 25, 2008.
(c) As of the open of business on April 28, 2008, the Fund acquired all the net
assets of AIM S&P 500 Index Fund pursuant to a plan of reorganization
approved by the Trustees of the Fund on October 30, 2007 and by the
shareholders of AIM S&P 500 Index Fund on March 28, 2008. The acquisition
was accomplished by a tax-free exchange of 19,299,044 shares of the Fund
for 14,941,286 shares outstanding of AIM S&P 500 Index Fund as of the close
of business on April 25, 2008. Each class of AIM S&P 500 Index Fund was
exchanged for the like class of shares of the Fund based on the relative
net asset value of AIM S&P 500 Index Fund to the net asset value of the
Fund on the close of business, April 25, 2008. AIM S&P 500 Index Fund's net
assets at that date of $207,109,606 including $44,541,884 of unrealized
appreciation, was combined with those of the Fund. The net assets of the
Fund immediately before the acquisition were $15,694,957. The net assets of
the Fund immediately following the acquisition were $222,804,563.
NOTE 11--NEW ACCOUNTING STANDARD
In March 2008, the Financial Accounting Standards Board (FASB) issued 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. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008. Management is
currently in the process of determining the impact of the standard on the Fund's
disclosures in the financial statements.
20 AIM STRUCTURED CORE FUND
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
INCOME (LOSS)
FROM INVESTMENT OPERATIONS
-------------------------------------
NET GAINS DISTRIBUTIONS
(LOSSES) ----------------------------------------
NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended 08/31/08 $11.19 $ 0.14(c) $(1.37) $(1.23) $(0.02) $(0.05) $(0.07) $ 9.89
Year ended 08/31/07 10.19 0.08(c) 1.10 1.18 (0.18) -- (0.18) 11.19
Year ended 08/31/06(e) 10.00 0.04 0.15 0.19 -- -- -- 10.19
- ------------------------------------------------------------------------------------------------------------------------------
CLASS B
Year ended 08/31/08 11.14 0.06(c) (1.36) (1.30) -- (0.05) (0.05) 9.79
Year ended 08/31/07 10.16 (0.01)(c) 1.10 1.09 (0.11) -- (0.11) 11.14
Year ended 08/31/06(e) 10.00 0.01 0.15 0.16 -- -- -- 10.16
- ------------------------------------------------------------------------------------------------------------------------------
CLASS C
Year ended 08/31/08 11.14 0.06(c) (1.36) (1.30) -- (0.05) (0.05) 9.79
Year ended 08/31/07 10.16 (0.01)(c) 1.10 1.09 (0.11) -- (0.11) 11.14
Year ended 08/31/06(e) 10.00 0.01 0.15 0.16 -- -- -- 10.16
- ------------------------------------------------------------------------------------------------------------------------------
CLASS R
Year ended 08/31/08 11.17 0.11(c) (1.37) (1.26) -- (0.05) (0.05) 9.86
Year ended 08/31/07 10.18 0.05(c) 1.10 1.15 (0.16) -- (0.16) 11.17
Year ended 08/31/06(e) 10.00 0.03 0.15 0.18 -- -- -- 10.18
- ------------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
Year ended 08/31/08(f) 10.73 0.05(c) (0.88) (0.83) -- -- -- 9.90
- ------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Year ended 08/31/08 11.21 0.16(c) (1.36) (1.20) (0.05) (0.05) (0.10) 9.91
Year ended 08/31/07 10.20 0.10(c) 1.10 1.20 (0.19) -- (0.19) 11.21
Year ended 08/31/06(e) 10.00 0.05 0.15 0.20 -- -- -- 10.20
______________________________________________________________________________________________________________________________
==============================================================================================================================
<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 (LOSS)
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b)
- ----------------------------------------------------------------------------------------------------------------
CLASS A
Year ended 08/31/08 (11.03)% $ 951 0.75%(d) 1.93%(d) 1.34%(d) 118%
Year ended 08/31/07 11.60 1,532 1.02 6.88 0.67 79
Year ended 08/31/06(e) 1.90 985 1.06(g) 10.44(g) 0.95(g) 25
- ----------------------------------------------------------------------------------------------------------------
CLASS B
Year ended 08/31/08 (11.71) 165 1.50(d) 2.68(d) 0.59(d) 118
Year ended 08/31/07 10.74 847 1.77 7.63 (0.08) 79
Year ended 08/31/06(e) 1.60 640 1.81(g) 11.19(g) 0.20(g) 25
- ----------------------------------------------------------------------------------------------------------------
CLASS C
Year ended 08/31/08 (11.71) 249 1.50(d) 2.68(d) 0.59(d) 118
Year ended 08/31/07 10.74 1,043 1.77 7.63 (0.08) 79
Year ended 08/31/06(e) 1.60 625 1.81(g) 11.19(g) 0.20(g) 25
- ----------------------------------------------------------------------------------------------------------------
CLASS R
Year ended 08/31/08 (11.32) 53 1.00(d) 2.18(d) 1.09(d) 118
Year ended 08/31/07 11.33 684 1.27 7.13 0.42 79
Year ended 08/31/06(e) 1.80 611 1.31(g) 10.69(g) 0.70(g) 25
- ----------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
Year ended 08/31/08(f) (7.73) 136,838 0.60(d) 1.10(d) 1.49(d) 118
- ----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
Year ended 08/31/08 (10.79) 29,374 0.50(d) 1.57(d) 1.59(d) 118
Year ended 08/31/07 11.85 942 0.77 6.55 0.92 79
Year ended 08/31/06(e) 2.00 612 0.80(g) 10.14(g) 1.21(g) 25
________________________________________________________________________________________________________________
================================================================================================================
</Table>
(a) Includes adjustments in accordance with accounting principles generally
accepted in the United States of America and as such, the net asset value
for financial reporting purposes and the returns based upon those net asset
values may differ from the net asset value and returns for shareholder
transactions. Does not include sales charges and is not annualized for
periods less than one year, if applicable.
(b) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable. For the period ending August
31, 2008, the portfolio turnover calculation excludes the value of
securities purchased of $152,787,103 and sold of $149,849,402 in effort to
realign the Fund's portfolio holdings after reorganization of AIM S&P 500
Index Fund into the Fund.
(c) Calculated using average shares outstanding.
(d) Ratios are annualized, if applicable and based on average daily net assets
(000's omitted) of $1,526, $781, $1,258, $662, $150,307 and $16,302 for
Class A, Class B, Class C, Class R, Investor Class and Institutional Class
shares, respectively.
(e) Commencement date of March 31, 2006.
(f) Commencement date of April 25, 2008.
(g) Annualized.
21 AIM STRUCTURED CORE FUND
NOTE 13--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State
Auditor -- Securities Commission ("WVASC") issued a Summary Order to Cease and
Desist and Notice of Right to Hearing to Invesco Aim and IADI (Order No. 05-
1318). The WVASC makes findings of fact that Invesco Aim and IADI entered into
certain arrangements permitting market timing of the AIM Funds and failed to
disclose these arrangements in the prospectuses for such Funds, and conclusions
of law to the effect that Invesco Aim and IADI violated the West Virginia
securities laws. The WVASC orders Invesco Aim and IADI to cease any further
violations and seeks to impose monetary sanctions, including restitution to
affected investors, disgorgement of fees, reimbursement of investigatory,
administrative and legal costs and an "administrative assessment," to be
determined by the Commissioner. Initial research indicates that these damages
could be limited or capped by statute. By agreement with the Commissioner of
Securities, Invesco Aim's time to respond to that Order has been indefinitely
suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, Invesco Funds Group,
Inc. ("IFG"), Invesco Aim, IADI and/or related entities and individuals,
depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, various corrective measures under ERISA, rescission
of certain AIM Funds' advisory agreements and/or distribution plans and recovery
of all fees paid. The case pending in Illinois State Court regarding fair value
pricing was dismissed with prejudice on May 6, 2008.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various Invesco Aim- and IFG-related
parties: (i) a Consolidated Amended Class Action Complaint purportedly brought
on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund
Derivative Complaint purportedly brought on behalf of the AIM Funds and fund
registrants; and (iii) an Amended Class Action Complaint for Violations of ERISA
purportedly brought on behalf of participants in the Invesco 401(k) plan. Based
on orders issued by the MDL Court, all claims asserted against the AIM Funds
that have been transferred to the MDL Court have been dismissed, although
certain Funds remain nominal defendants in the Consolidated Amended Fund
Derivative Complaint. On September 15, 2006, the MDL Court granted the Invesco
defendants' motion to dismiss the Amended Class Action Complaint for Violations
of ERISA and dismissed such Complaint. Plaintiff appealed this ruling. On June
16, 2008, the Fourth Circuit Court of Appeals reversed the dismissal and
remanded this lawsuit back to the MDL Court for further proceedings.
IFG, Invesco Aim, IADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, Invesco Aim and IADI have advised the Fund that they are providing
full cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, Invesco Aim and/or related entities and individuals in the
future.
At the present time, management of Invesco Aim and the Fund are unable to
estimate the impact, if any, that the outcome of the Pending Litigation and
Regulatory Inquiries described above may have on Invesco Aim, IADI or the Fund.
22 AIM STRUCTURED CORE FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Structured Core 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 Structured Core Fund (one of
the funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2008, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 20, 2008
Houston, Texas
23 AIM STRUCTURED CORE 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
fees (12b-1); 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. With
the exception of the actual ending account value and expenses of the Investor
Class Shares, the example is based on an investment of $1,000 invested at the
beginning of the period and held for the entire period March 1, 2008, through
August 31, 2008. The actual ending account and expenses of the Investor Class
shares in the below example are based on an investment of $1,000 invested as of
close of business April 25, 2008 (the date the share class commenced operations)
and held through August 31, 2008.
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 (as of close of business
April 25, 2008 through August 31, 2008 for the Investor Class Shares). Because
the actual ending account value and expense information in the example is not
based upon a six month period for the Investor Class shares, 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 transactional 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 transactional 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 (03/01/08) (08/31/08)(1) PERIOD(2,4) (08/31/08) PERIOD(2,5) RATIO(3)
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $984.10 $3.24 $1,021.87 $3.30 0.65%
- ---------------------------------------------------------------------------------------------------
B 1,000.00 980.00 6.97 1,018.10 7.10 1.40
- ---------------------------------------------------------------------------------------------------
C 1,000.00 980.00 6.97 1,018.10 7.10 1.40
- ---------------------------------------------------------------------------------------------------
R 1,000.00 982.10 4.48 1,020.61 4.57 0.90
- ---------------------------------------------------------------------------------------------------
Investor(1) 1,000.00 984.10 2.10 1,022.12 3.05 0.60
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008 (as of close of
business April 25, 2008 through August 31, 2008 for the Investor Class
shares), after actual expenses and will differ from the hypothetical ending
account value which is based on the Fund's expense ratio and a hypothetical
annual return of 5% before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year. For the Investor Class
shares actual expenses are equal to the annualized expense ratio indicated
above multiplied by the average account value over the period, multiplied by
129 (as of close of business April 25, 2008, through August 31, 2008)/366.
Because the Investor 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) Effective on April 28, 2008, the advisor contractually agreed to waive
advisory fees and/or reimburse expenses to the extent necessary to limit
Total Annual Fund Operating Expenses of Class A, Class B, Class C, Class R
and Investor Class shares to 0.60%, 1.35%, 1.35%, 0.85% and 0.60% of average
daily net assets, respectively. The annualized expense ratios restated as if
this agreement had been in effect throughout the entire most recent fiscal
half year are 0.60%, 1.35%, 1.35%, 0.85% and 0.60% for the Class A, Class B,
Class C, Class R and Investor Class shares, respectively.
24 AIM STRUCTURED CORE FUND
(4) The actual expenses paid restated as if the changes discussed above had been
in effect throughout the entire most recent fiscal half year are $2.99,
$6.72, $6.72, $4.23 and $2.10 for the Class A, Class B, Class C, Class R and
Investor Class shares, respectively.
(5) Hypothetical expenses are equal to the annualized expense ratio indicated
above multiplied by the average account value over the period, multiplied by
184/366 to reflect a one-half year period. The hypothetical ending account
value and expenses may be used to compare ongoing costs of investing in
Investor Class shares of the Fund and other funds because such data is based
on a full six month period. The hypothetical expenses paid restated as if
the changes discussed above in footnote 3 had been in effect throughout the
entire most recent fiscal half year are $3.05, $6.85, $ $6.85, $4.32 and
$3.05 for the Class A, Class B, Class C, Class R and Investor Class shares,
respectively.
25 AIM STRUCTURED CORE FUND
Supplement to Annual Report dated 8/31/08
AIM STRUCTURED CORE FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class
shareholders with a performance overview specific to their holdings.
Institutional Class shares are offered exclusively to institutional investors,
including defined contribution plans that meet certain criteria.
==========================================
NASDAQ SYMBOL SCIUX
==========================================
Fund expenses provided later in this supplement.
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 [INVESCO AIM LOGO]
- SERVICE MARK -
This material is for institutional investor use only and may not be quoted,
reproduced or shown to the public, nor used in written form as sales literature
for public use.
invescoaim.com SCOR-INS-1 Invesco Aim Distributors, Inc.
Supplement to Annual Report dated 8/31/08
AIM STRUCTURED CORE FUND
========================================== The net annual Fund operating expense Please note that past performance is
AVERAGE ANNUAL TOTAL RETURNS ratio set forth in the most recent Fund not indicative of future results. More
prospectus as of the date of this recent returns may be more or less than
For periods ended 8/31/08 supplement for Institutional Class shares those shown. All returns assume
Inception (3/31/06) 0.73% was 0.35%.(1) The total annual Fund reinvestment of distributions at NAV.
1 Year -10.79 operating expense ratio set forth in the Investment return and principal value will
most recent Fund prospectus as of the date fluctuate so your shares, when redeemed,
AVERAGE ANNUAL TOTAL RETURNS of this supplement for Institutional Class may be worth more or less than their
shares was 0.86%. The expense ratios original cost. See full report for
For periods ended 6/30/08, most recent presented above may vary from the expense information on comparative benchmarks.
calendar quarter-end ratios presented in other sections of the Please consult your Fund prospectus for
Inception (3/31/06) 1.01% actual report that are based on expenses more information. For the most current
1 Year -12.90 incurred during the period covered by the month-end performance, please call 800 451
========================================== report. 4246 or visit invescoaim.com.
Institutional Class shares have no sales Had the advisor not waived fees and/ (1) Total annual operating expenses less
charge; therefore, performance is at net or reimbursed expenses, performance would any contractual fee waivers and/or
asset value (NAV). Performance of have been lower. reimbursements by the advisor in
Institutional Class shares will differ effect through at least June 30,
from performance of other share classes 2009. See current prospectus for more
primarily due to differing sales charges information.
and class expenses.
Past performance cannot guarantee index does not. Performance shown in the shown in the chart in the annual report is
comparable future results. chart and table(s) does not reflect that of the Fund's Class A, B, C and R
deduction of taxes a shareholder would pay shares. The performance of the Fund's
The data shown in the chart above on Fund distributions or sale of Fund other share classes will differ primarily
includes reinvested distributions and Fund shares. Performance of the indexes does due to different sales charge structures
expenses including management fees. Index not reflect the effects of taxes. and class expenses, and may be greater
results include reinvested dividends. than or less than the performance of the
Performance of an index of funds reflects The performance data shown in the Fund's Institutional Class shares shown in
fund expenses and management fees; chart above is that of the Fund's the chart above.
performance of a market institutional share class. The performance
data
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- INSTITUTIONAL CLASS SHARES
Fund and index data from 3/31/06
AIM Structured
Core Fund-
Institutional
Class Lipper Large-Cap
Date Shares S&P 500 Index(1) Core Funds Index(1)
3/31/06 $10000 $10000 $10000
4/06 10040 10134 10104
5/06 9740 9843 9798
6/06 9840 9856 9806
7/06 9710 9917 9772
8/06 9940 10152 10015
9/06 10251 10414 10226
10/06 10711 10753 10567
11/06 10921 10957 10774
12/06 10881 11111 10883
1/07 11233 11279 11059
2/07 10932 11059 10868
3/07 11133 11182 10977
4/07 11495 11677 11434
5/07 11997 12084 11824
6/07 11706 11884 11681
7/07 11425 11516 11352
8/07 11525 11688 11482
9/07 11967 12125 11897
10/07 12568 12318 12154
11/07 12237 11802 11671
12/07 12426 11721 11604
1/08 11068 11018 10925
2/08 10850 10660 10642
3/08 10757 10614 10503
4/08 11233 11131 11020
5/08 11493 11275 11220
6/08 10788 10325 10351
7/08 10653 10239 10204
8/08 10178 10387 10335
====================================================================================================================================
(1) Lipper Inc.
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. 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 (03/01/08) (08/31/08)(1) PERIOD(2,3) (08/31/08) PERIOD(2,4) RATIO(2)
- ------------------------------------------------------------------------------------------------
Institutional $1,000.00 $986.10 $1.99 $1,023.13 $2.03 0.40%
- ------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year. Effective on April 28,
2008, the advisor contractually agreed to waive advisory fees and/or
reimburse expenses to the extent necessary to limit Total Annual Fund
Operating Expenses of the Institutional Class shares to 0.35% of average
daily nets assets. The annualized expense ratio restated as if this
agreement had been in effect throughout the entire most recent fiscal half
year is 0.35% for Institutional Class shares.
(3) The actual expenses paid restated as if the changes discussed above had been
in effect throughout the entire most recent fiscal half year is $1.75.
(4) The hypothetical expenses paid restated as if the changes discussed above
had been in effect throughout the entire most recent fiscal half year is
$1.78.
AIM STRUCTURED CORE FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT renewal process, the Trustees receive from one another and attributed different
comparative performance and fee data weight to the various factors. The
The Board of Trustees (the Board) of AIM regarding the AIM Funds prepared by an Trustees recognized that the advisory
Counselor Series Trust is required under independent company, Lipper, Inc. arrangements and resulting advisory fees
the Investment Company Act of 1940 to (Lipper), under the direction and for the Fund and the other AIM Funds are
approve annually the renewal of the AIM supervision of the independent Senior the result of years of review and
Structured Core Fund (the Fund) investment Officer who also prepares a separate negotiation between the Trustees and
advisory agreement with Invesco Aim analysis of this information for the Invesco Aim, that the Trustees may focus
Advisors, Inc. (Invesco Aim). During Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of
contract renewal meetings held on June recommendations to the Investments these arrangements in some years than in
18-19, 2008, the Board as a whole and the Committee regarding the performance, fees others, and that the Trustees'
disinterested or "independent" Trustees, and expenses of their assigned funds. The deliberations and conclusions in a
voting separately, approved the Investments Committee considers each particular year may be based in part on
continuance of the Fund's investment Sub-Committee's recommendations and makes their deliberations and conclusions of
advisory agreement for another year, its own recommendations regard- ing the these same arrangements throughout the
effective July 1, 2008. In doing so, the performance, fees and expenses of the AIM year and in prior years.
Board determined that the Fund's Funds to the full Board. The Investments
investment advisory agreement is in the Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF
best interests of the Fund and its Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION
shareholders and that the compensation to its annual recommendation to the Board
Invesco Aim under the Fund's investment whether to approve the continuance of each The discussion below serves as a summary
advisory agreement is fair and reasonable. AIM Fund's investment advisory agreement of the Senior Officer's independent
and sub-advisory agreements for another written evaluation with respect to the
The independent Trustees met separately year. Fund's investment advisory agreement as
during their evaluation of the Fund's well as a discussion of the material
investment advisory agreement with The independent Trustees are assisted factors and related conclusions that
independent legal counsel from whom they in their annual evaluation of the Fund's formed the basis for the Board's approval
received independent legal advice, and the investment advisory agreement by the of the Fund's investment advisory
independent Trustees also received independent Senior Officer. One agreement and sub-advisory agreements.
assistance during their deliberations from responsibility of the Senior Officer is to Unless otherwise stated, information set
the independent Senior Officer, a manage the process by which the AIM Funds' forth below is as of June 19, 2008 and
full-time officer of the AIM Funds who proposed management fees are negotiated does not reflect any changes that may have
reports directly to the independent during the annual contract renewal process occurred since that date, including but
Trustees. to ensure that they are negotiated in a not limited to changes to the Fund's
manner that is at arms' length and performance, advisory fees, expense
THE BOARD'S FUND EVALUATION PROCESS reasonable. Accordingly, the Senior limitations and/or fee waivers.
Of-ficer must either supervise a
The Board's Investments Committee has competitive bidding process or prepare an I. Investment Advisory Agreement
established three Sub-Committees that are independent written evaluation. The Senior
responsible for overseeing the management Officer has recommended that an A. Nature, Extent and Quality of
of a number of the series portfolios of independent written evaluation be provided Services Provided by Invesco Aim
the AIM Funds. This SubCommittee structure and, at the direction of the Board, has
permits the Trustees to focus on the prepared an independent written The Board reviewed the advisory services
performance of the AIM Funds that have evaluation. provided to the Fund by Invesco Aim under
been assigned to them. The Sub-Committees the Fund's investment advisory agreement,
meet throughout the year to review the During the annual contract renewal the performance of Invesco Aim in
performance of their assigned funds, and process, the Board considered the factors providing these services, and the
the Sub-Committees review monthly and discussed below under the heading "Factors credentials and experience of the officers
quarterly comparative performance and Conclusions and Summary of Independent and employees of Invesco Aim who provide
information and periodic asset flow data Written Fee Evaluation" in evaluating the these services. The Board's review of the
for their assigned funds. These materials fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide
are prepared under the direction and investment advisory agreement and these services included the Board's
supervision of the independent Senior sub-advisory agreements at the contract consideration of Invesco Aim's portfolio
Officer. Over the course of each year, the renewal meetings and at their meetings and product review process, various back
Sub-Committees meet with portfolio throughout the year as part of their office support functions provided by
managers for their assigned funds and ongoing oversight of the Fund. The Fund's Invesco Aim and its affiliates, and
other members of management and review investment advisory agreement and Invesco Aim's equity and fixed income
with these individuals the performance, sub-advisory agreements were considered trading operations. The Board concluded
investment objective(s), policies, separately, although the Board also that the nature, extent and quality of the
strategies and limitations of these funds. considered the common interests of all of advisory services provided to the Fund by
the AIM Funds in their deliberations. The Invesco Aim were appropriate and that
In addition to their meetings Board considered all of the information Invesco Aim currently is providing
throughout the year, the Sub-Committees provided to them and did not identify any satisfactory advisory services in
meet at designated contract renewal particular factor that was controlling. accordance with the terms of the Fund's
meetings each year to conduct an in-depth Each Trustee may have evaluated the investment advisory agreement. In
review of the performance, fees and information provided differently addition, based on their ongoing meetings
expenses of their assigned funds. During throughout the year with the Fund's
the contract portfolio manager or
continued
26 AIM STRUCTURED CORE FUND
managers, the Board concluded that these C. Advisory Fees and Fee Waivers contractual advisory fee rate, as well as
individuals are competent and able to the comparative advisory fee information
continue to carry out their The Board compared the Fund's contractual and the expense limitation discussed
responsibilities under the Fund's advisory fee rate to the contractual above, the Board concluded that the Fund's
investment advisory agreement. advisory fee rates of funds in the Fund's advisory fees were fair and reasonable.
Lipper expense group that are not managed
In determining whether to continue the by Invesco Aim, at a common asset level D. Economies of Scale and Breakpoints
Fund's investment advisory agreement, the and as of the end of the past calendar
Board considered the prior relationship year. The Board noted that the Fund's The Board considered the extent to which
between Invesco Aim and the Fund, as well contractual advisory fee rate was below there are economies of scale in Invesco
as the Board's knowledge of Invesco Aim's the median contractual advisory fee rate Aim's provision of advisory services to
operations, and concluded that it was of funds in its expense group. The Board the Fund. The Board also considered
beneficial to maintain the current also reviewed the methodology used by whether the Fund benefits from such
relationship, in part, because of such Lipper in determining contractual fee economies of scale through contractual
knowledge. The Board also considered the rates. breakpoints in the Fund's advisory fee
steps that Invesco Aim and its affiliates schedule or through advisory fee waivers
have taken over the last several years to The Board also compared the Fund's or expense limitations. The Board noted
improve the quality and efficiency of the effective fee rate (the advisory fee after that the Fund's contractual advisory fee
services they provide to the AIM Funds in any advisory fee waivers and before any schedule includes seven breakpoints and
the areas of investment performance, expense limitations/waivers) to the that the level of the Fund's advisory
product line diversification, advisory fee rates of other clients of fees, as a percentage of the Fund's net
distribution, fund operations, shareholder Invesco Aim and its affiliates with assets, has decreased as net assets
services and compliance. The Board investment strategies comparable to those increased because of the breakpoint. Based
concluded that the quality and efficiency of the Fund, including three mutual funds on this information, the Board concluded
of the services Invesco Aim and its advised by Invesco Aim and one mutual fund that the Fund's advisory fees
affiliates provide to the AIM Funds in sub-advised by an Invesco Aim affiliate. appropriately reflect economies of scale
each of these areas generally have The Board noted that the Fund's rate was: at current asset levels. The Board also
improved, and support the Board's approval (i) below the rates for two of the mutual noted that the Fund shares directly in
of the continuance of the Fund's funds and above the rate for the third economies of scale through lower fees
investment advisory agreement. mutual fund; and (ii) above the charged by third party service providers
sub-advisory fee rate for the sub-advised based on the combined size of all of the
B. Fund Performance mutual fund. AIM Funds and affiliates.
The Board noted that the Fund recently Additionally, the Board compared the E. Profitability and Financial
began operations and that only one Fund's effective fee rate to the total Resources of Invesco Aim
calendar year of comparative performance advisory fees paid by numerous separately
data was available. The Board compared the managed accounts/wrap accounts advised by The Board reviewed information from
Fund's performance during the past Invesco Aim affiliates. The Board noted Invesco Aim concerning the costs of the
calendar year to the performance of funds that the Fund's rate was generally above advisory and other services that Invesco
in the Fund's performance group that are the rates for the separately managed Aim and its affiliates provide to the Fund
not managed by Invesco Aim, and against accounts/wrap accounts. The Board and the profitability of Invesco Aim and
the performance of all funds in the Lipper considered that management of the its affiliates in providing these
Large Cap Core Funds Index. The Board also separately managed accounts/wrap accounts services. The Board also reviewed
reviewed the criteria used by Invesco Aim by the Invesco Aim affiliates involves information concerning the financial
to identify the funds in the Fund's different levels of services and different condition of Invesco Aim and its
performance group for inclusion in the operational and regulatory requirements affiliates. The Board also reviewed with
Lipper reports. The Board noted that the than Invesco Aim's management of the Fund. Invesco Aim the methodology used to
Fund's performance was in the third The Board concluded that these differences prepare the profitability information. The
quintile of its performance group for the are appropriately reflected in the fee Board considered the overall profitability
one year period (the first quintile being structure for the Fund. of Invesco Aim, as well as the
the best performing funds and the fifth profitability of Invesco Aim in connection
quintile being the worst performing The Board noted that Invesco Aim has with managing the Fund. The Board noted
funds). The Board noted that the Fund's contractually agreed to waive fees and/ or that Invesco Aim continues to operate at a
performance was below the performance of limit expenses of the Fund through at net profit, although increased expenses in
the Index for the one year period. The least June 30, 2009 in an amount necessary recent years have reduced the
Board also considered the steps Invesco to limit total annual operating expenses profitability of Invesco Aim and its
Aim has taken over the last several years to a specified percentage of average daily affiliates. The Board concluded that the
to improve the quality and efficiency of net assets for each class of the Fund. The Fund's fees were fair and reasonable, and
the services that Invesco Aim provides to Board considered the contractual nature of that the level of profits realized by
the AIM Funds. The Board concluded that this fee waiver and noted that it remains Invesco Aim and its affiliates from
Invesco Aim continues to be responsive to in effect until at least June 30, 2009. providing services to the Fund was not
the Board's focus on fund performance. The Board also considered the effect this excessive in light of the nature, quality
expense limitation would have on the and extent of the services provided. The
Fund's estimated total expenses. Board considered whether Invesco Aim is
financially sound and has the resources
After taking account of the Fund's necessary to perform its obligations
27 AIM STRUCTURED CORE FUND continued
under the Fund's investment advisory Aim in making investment decisions for the world, have been formed in part for the
agreement, and concluded that Invesco Aim Fund and may therefore benefit Fund purpose of researching and compiling
has the financial resources necessary to shareholders. The Board concluded that information and making recommendations on
fulfill these obligations. Invesco Aim's soft dollar arrangements the markets and economies of various
were appropriate. The Board also concluded countries and securities of companies
F. Independent Written Evaluation of that, based on their review and located in such countries or on various
the Fund's Senior Officer representations made by Invesco Aim, these types of investments and investment
arrangements were consistent with techniques, and providing investment
The Board noted that, at their direction, regulatory requirements. advisory services. The Board concluded
the Senior Officer of the Fund, who is that the sub-advisory agreements will
independent of Invesco Aim and Invesco The Board considered the fact that the benefit the Fund and its shareholders by
Aim's affiliates, had prepared an Fund's uninvested cash and cash collateral permitting Invesco Aim to utilize the
independent written evaluation to assist from any securities lending arrangements additional resources and talent of the
the Board in determining the may be invested in money market funds Affiliated Sub-Advisers in managing the
reasonableness of the proposed management advised by Invesco Aim pursuant to Fund.
fees of the AIM Funds, including the Fund. procedures approved by the Board. The
The Board noted that they had relied upon Board noted that Invesco Aim will receive B. Fund Performance
the Senior Officer's written evaluation advisory fees from these affiliated money
instead of a competitive bidding process. market funds attributable to such The Board did view Fund performance as a
In determining whether to continue the investments, although Invesco Aim has relevant factor in considering whether to
Fund's investment advisory agreement, the contractually agreed to waive through at approve the sub-advisory agreements for
Board considered the Senior Officer's least June 30, 2009, the advisory fees the Fund, as one of the Affiliated
written evaluation. payable by the Fund in an amount equal to Sub-Advisers manages the Fund's assets.
100% of the net advisory fees Invesco Aim The Board noted that the Fund recently
G. Collateral Benefits to Invesco Aim receives from the affiliated money market began operations and that only one
and its Affiliates funds with respect to the Fund's calendar year of comparative performance
investment of uninvested cash, but not data was available. The Board compared the
The Board considered various other cash collateral. The Board considered the Fund's performance during the past
benefits received by Invesco Aim and its contractual nature of this fee waiver and calendar year to the performance of funds
affiliates resulting from Invesco Aim's noted that it remains in effect until at in the Fund's performance group that are
relationship with the Fund, including the least June 30, 2009. The Board concluded not managed by Invesco Aim, and against
fees received by Invesco Aim and its that the Fund's investment of uninvested the performance of all funds in the Lipper
affiliates for their provision of cash and cash collateral from any Large Cap Core Funds Index. The Board also
administrative, transfer agency and securities lending arrangements in the reviewed the criteria used by Invesco Aim
distribution services to the Fund. The affiliated money market funds is in the to identify the funds in the Fund's
Board considered the performance of best interests of the Fund and its performance group for inclusion in the
Invesco Aim and its affiliates in shareholders. Lipper reports. The Board noted that the
providing these services and the Fund's performance was in the third
organizational structure employed by II. Sub-Advisory Agreements quintile of its performance group for the
Invesco Aim and its affiliates to provide one year period (the first quintile being
these services. The Board also considered A. Nature, Extent and Quality of the best performing funds and the fifth
that these services are provided to the Services Provided by Affiliated quintile being the worst performing
Fund pursuant to written contracts which Sub-Advisers funds). The Board noted that the Fund's
are reviewed and approved on an annual performance was below the performance of
basis by the Board. The Board concluded The Board reviewed the services to be the Index for the one year period. The
that Invesco Aim and its affiliates were provided by Invesco Trimark Ltd., Invesco Board also considered the steps Invesco
providing these services in a satisfactory Asset Management Deutschland, GmbH, Aim has taken over the last several years
manner and in accordance with the terms of Invesco Asset Management Limited, Invesco to improve the quality and efficiency of
their contracts, and were qualified to Asset Management (Japan) Limited, Invesco the services that Invesco Aim provides to
continue to provide these services to the Australia Limited, Invesco Global Asset the AIM Funds. The Board concluded that
Fund. Management (N.A.), Inc., Invesco Hong Kong Invesco Aim continues to be responsive to
Limited, Invesco Institutional (N.A.), the Board's focus on fund performance. The
The Board considered the benefits Inc. and Invesco Senior Secured Board also reviewed more recent Fund
realized by Invesco Aim as a result of Management, Inc. (collectively, the performance and this review did not change
portfolio brokerage transactions executed "Affiliated Sub-Advisers") under the their conclusions.
through "soft dollar" arrangements. Under sub-advisory agreements and the
these arrangements, portfolio brokerage credentials and experience of the officers C. Sub-Advisory Fees
commissions paid by the Fund and/or other and employees of the Affiliated
funds advised by Invesco Aim are used to Sub-Advisers who will provide these The Board considered the services to be
pay for research and execution services. services. The Board concluded that the provided by the Affiliated Sub-Advisers
The Board noted that soft dollar nature, extent and quality of the services pursuant to the sub-advisory agreements
arrangements shift the payment obligation to be provided by the Affiliated and the services to be provided by
for the research and execution services Sub-Advisers were appropriate. The Board Invesco Aim pursuant to the Fund's
from Invesco Aim to the funds and noted that the Affiliated Sub-Advisers, investment advisory agreement, as well as
therefore may reduce Invesco Aim's which have offices and personnel that are the allocation of fees between Invesco Aim
expenses. The Board also noted that geographically dispersed in financial and the Affiliated Sub-Advisers pursuant
research obtained through soft dollar centers around the to
arrangements may be used by Invesco
28 AIM STRUCTURED CORE FUND continued
the sub-advisory agreements. The Board
noted that the sub-advisory fees have no
direct effect on the Fund or its
shareholders, as they are paid by
Invesco Aim to the Affiliated
Sub-Advisers, and that Invesco Aim and the
Affiliated Sub-Advisers are affiliates.
After taking account of the Fund's
contractual sub-advisory fee rate, as well
as other relevant factors, the Board
concluded that the Fund's sub-advisory
fees were fair and reasonable.
D. Financial Resources of the
Affiliated Sub-Advisers
The Board considered whether each
Affiliated Sub-Adviser is financially
sound and has the resources necessary to
perform its obligations under its
respective sub-advisory agreement, and
concluded that each Affiliated Sub-Adviser
has the financial resources necessary to
fulfill these obligations.
29 AIM STRUCTURED CORE FUND
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2008:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
Long-Term Capital Gain Dividends $ 72,609
Qualified Dividend Income* 100.00%
Corporate Dividends Received Deduction* 100.00%
U.S. Treasury Obligations* 0.30%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2007, was 2.79%.
30 AIM STRUCTURED CORE FUND
PROXY RESULTS
A Special Meeting ("Meeting") of Shareholders of AIM Structured Core Fund, an
investment portfolio of AIM Counselor Series Trust, a Delaware statutory trust
("Trust"), was held on February 29, 2008 and was adjourned, with respect to
certain proposals, until March 28, 2008. The Meeting on March 28, 2008 was held
for the following purposes:
(1) Elect 13 trustees to the Board of Trustees of the Trust, each of whom will
serve until his or her successor is elected and qualified.
(2) Approve an amendment to the Trust's Agreement and Declaration of Trust that
would permit the Board of Trustees of the Trust to terminate the Trust, the
Fund, and each other series portfolio of the Trust, or a share class without
a shareholder vote.
(3) Approve a new sub-advisory agreement between Invesco Aim Advisors, Inc. and
each of AIM Funds Management, Inc.; 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.; and
Invesco Senior Secured Management, Inc.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHELD/
MATTERS VOTES FOR ABSTENTIONS**
- -----------------------------------------------------------------------------------------------------------------------
(1)* Bob R. Baker................................................................... 80,004,783 1,692,073
Frank S. Bayley................................................................ 80,042,468 1,654,388
James T. Bunch................................................................. 80,071,331 1,625,525
Bruce L. Crockett.............................................................. 80,047,680 1,649,176
Albert R. Dowden............................................................... 80,044,519 1,652,337
Jack M. Fields................................................................. 80,054,678 1,642,178
Martin L. Flanagan............................................................. 80,013,733 1,683,123
Carl Frischling................................................................ 80,026,567 1,670,289
Prema Mathai-Davis............................................................. 80,025,589 1,671,267
Lewis F. Pennock............................................................... 80,059,672 1,637,184
Larry Soll, Ph.D. ............................................................. 80,040,389 1,656,467
Raymond Stickel, Jr. .......................................................... 80,056,699 1,640,157
Philip A. Taylor............................................................... 80,034,136 1,662,720
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(2)* Approve an amendment to the Trust's Agreement and
Declaration of Trust that would permit the Board
of Trustees of the Trust to terminate the Trust,
the Fund, and each other series portfolio of the
Trust, or a share class without a shareholder
vote............................................. 55,885,613 10,011,477 2,110,683 13,689,083
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(3) Approve a new sub-advisory agreement between
Invesco Aim Advisors, Inc. and each of AIM Funds
Management, Inc.; 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.; and Invesco Senior Secured Management,
Inc. ............................................ 1,279,310 167 41,545 13,744
</Table>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Counselor Series Trust.
** Includes Broker Non-Votes.
31 AIM STRUCTURED CORE 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 103 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. 2007 Executive Director, Chief Executive Officer and President, None
Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global
Trustee investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Director, Chairman,
Chief Executive Officer and President, IVZ Inc. (holding
company); INVESCO North American Holdings, Inc. (holding
company); and, INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of Funds--Registered
Trademark--; Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President,
Invesco Holding Company Limited (parent of Invesco Aim and a
global investment management firm); Chairman, Investment
Company Institute; President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief Financial
Officer, Franklin Resources, Inc. (global investment
management organization)
- --------------------------------------------------------------------------------------------------------------------------------
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 President, Invesco Trimark Dealer Inc. (formerly AIM Mutual
Executive Officer Fund Dealer Inc.) (registered broker dealer), 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
register transfer agent) and AIM GP Canada Inc. (general
partner for a limited partnership); 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, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (formerly AIM Canada Holdings
Inc.) (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund 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 (formerly AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services) (registered investment advisor
and registered transfer agent); Trustee, President and
Principal Executive Officer of The AIM Family of Funds--
Registered Trademark-- (other than AIM Treasurer's Series
Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds--
Registered Trademark-- (AIM Treasurer's Series Trust and
Short-Term Investments Trust only); and Manager, Invesco
PowerShares Capital Management LLC
Formerly: Director and President, AIM Trimark Corporate
Class Inc. and AIM Trimark Canada Fund Inc.; Director and
President, Invesco Trimark Ltd./Invesco Trimark Ltee
(formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise
Services); Senior Managing Director, Invesco Holding Company
Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (registered broker dealer); President and Principal
Executive Officer, The AIM Family of Funds--Registered
Trademark-- (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.; and Director, Trimark Trust (federally
regulated Canadian Trust Company)
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited
Trustee and Chair consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
- --------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- --------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired
Trustee
Formerly: Partner, law firm of Baker & McKenzie; and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Policy
Trustee firm) Studies, Inc. and
Van Gilder Insurance
Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business None
Trustee corporations, including the Boss Group Ltd. (private
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company); Annuity and Life Re
(Holdings), Ltd. (reinsurance 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.; 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)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company); and Discovery Global
Education Fund (non-profit)
- --------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds) (15
portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA of the USA 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
Trustee
Formerly: Partner, Deloitte & Touche; and Director, Mainstay None
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.
32 AIM STRUCTURED CORE FUND
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 of N/A
Senior Vice President and Funds--Registered Trademark--
Senior Officer
Formerly: Director of Compliance and Assistant 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 Counsel, N/A
Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc.
Legal Officer and Secretary 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--Registered
Trademark--; 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, Senior Vice President, General Counsel
and Secretary, 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 President, The N/A
Vice President AIM Family of Funds--Registered Trademark--
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--Registered
Trademark--; 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; and Senior Vice President and Compliance
Director, Delaware Investments Family of Funds
- --------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A
Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited,
IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO North American Holdings,
Inc.; and Vice President, The AIM Family of Funds--Registered
Trademark--
Formerly: 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--Registered Trademark--; Director and Vice
President, INVESCO Distributors, Inc. and Chief Executive Officer
and President, INVESCO Funds Group, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sheri S. Morris -- 1964 2008 Vice President, Treasurer and Principal Financial Officer, The N/A
Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Assistant Vice
and Principal Financial President, Invesco Aim Advisors, Inc., Invesco Aim Capital
Officer Management, Inc. and Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of Funds--Registered Trademark--
- --------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash Management N/A
Vice President Group; 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, The AIM Family of Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust and Short-Term Investments
Trust); and President and Principal Executive Officer, The AIM
Family of Funds--Registered Trademark-- (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--Registered
Trademark-- (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 Advisors, N/A
Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim
Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc.,
Invesco Aim Private Asset Management, Inc. and The AIM Family of
Funds--Registered Trademark--
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.; Senior N/A
Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief
Compliance Officer, The AIM Family of Funds--Registered
Trademark--, 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, Invesco Aim Distributors, PricewaterhouseCoopers
Suite 100 Inc. Inc. LLP
Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
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 State Street Bank and
& Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company
2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street
Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Americas
New York, NY 10036-2714
33 AIM STRUCTURED CORE FUND
====================================================================================================================================
EDELIVERY
INVESCOAIM.COM/EDELIVERY
REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via email. Once your quarterly
statements, tax forms, fund reports, and prospectuses are available, we will send you an email notification containing links to
these documents. For security purposes, you will need to log in to your account to view your statements and tax forms.
WHY SIGN UP? HOW DO I SIGN UP?
Register for eDelivery to: It's easy. Just follow these simple steps:
- - save your Fund the cost of printing and postage. 1. Log in to your account.
- - reduce the amount of paper you receive. 2. Click on the "Service Center" tab.
- - gain access to your documents faster by not waiting for the 3. Select "Register for eDelivery" and complete the consent
mail. process.
- - view your documents online anytime at your convenience.
- - save the documents to your personal computer or print them
out for your records.
This service is provided by Invesco Aim Investment Services, Inc.
====================================================================================================================================
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, 2008, 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, 2009, 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 [INVESCO AIM LOGO]
individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco - SERVICE MARK
Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco
Asset Management (Japan) Ltd., Invesco Hong Kong Ltd., Invesco Australia Limited, Invesco Asset Management
Limited and Invesco Asset Management Deutschland GmbH are affiliated investment advisors that serve as
subadvisors to many of the products and services represented by Invesco Aim. Invesco Aim Distributors, Inc. is
the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds
represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
-invescoaim.com SCOR-AR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM STRUCTURED GROWTH FUND
- SERVICE MARK - Annual Report to Shareholders o August 31, 2008
[MOUNTAIN GRAPHIC]
2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Long-Term Fund Performance
8 Supplemental Information
9 Schedule of Investments
11 Financial Statements
14 Notes to Financial Statements
20 Financial Highlights
22 Auditor's Report
23 Fund Expenses
24 Approval of Investment Advisory Agreement
28 Tax Information
29 Results of Proxy
30 Trustees and Officers
Dear Shareholder:
In previous reports, I've talked with you about short-term market volatility. I'd like to take this
opportunity to update you on recent market developments and provide some perspective and encouragement to
[TAYLOR fellow long-term investors.
PHOTO]
MARKET OVERVIEW
Philip Taylor
About a year ago or so, we saw warning signs of increasing economic ills -- a weakening housing market,
rising inflation and slowing job growth, among others. Nonetheless, U.S. equity markets were performing
relatively well. But as the year progressed, the housing market deteriorated, energy prices rose,
unemployment increased and the credit crunch grew more widespread.
In response, the U.S. Federal Reserve cut short-term interest rate targets to stimulate economic growth
and expand market liquidity.(1) Congress and the president worked together to enact an economic stimulus
plan, one facet of which was to provide more than 112 million taxpayers with $92 billion in tax rebates.(2) Historically, actions
such as these have stimulated economic growth. Unfortunately, other factors were simultaneously at work behind the scenes, and the
market began to reveal the strain of those factors.
HOW WE GOT HERE
The market stresses we saw over the past year were the result of years of lax lending associated with the recent housing boom.
Mortgage loans of questionable quality were bundled into hard-to-value securities that were sold to, and traded among, financial
institutions. The value of those securities declined; more institutions sought to sell them and fewer institutions were willing to
buy them. As a result, financial institutions' access to credit declined and the value of their holdings declined -- preventing
normal trading among banks and other financial institutions.
In October 2008, Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to
purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in
the last half century.
INVESTING IN A VOLATILE MARKET
Whether or not markets recover in the short term, the kind of volatility we've seen of late is a good reminder that in times of
market uncertainty, it's wise to stay true to three timeless investing principles:
o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. I urge you to stick to your
investment plan and stay focused on your long-term goals.
o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of
complementary asset classes may potentially cushion your portfolio against excessive volatility.
o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes
viewing market volatility as a matter of course, not a reason to panic.
That leads me to a fourth principle we believe may be critical to your success: Work with a trusted financial advisor. An
experienced advisor who knows your goals and situation can be your most valuable asset, particularly during times of market
volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course.
Recent market volatility has been disconcerting for everyone. Remember, however, that many of history's significant buying
opportunities were the result of short-term economic crises that, in their time, were considered unprecedented. I believe current
market volatility and uncertainty may represent a buying opportunity for patient, long-term investors. Invesco Aim's portfolio
managers are working diligently on your behalf to capitalize on this situation.
OUR NEW BRAND IDENTITY
While market conditions are obviously at the top of everyone's mind, there are some significant changes I want to share with you: We
have a new name and a new brand -- Invesco Aim.
Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers with $450 billion
in assets under management as of August 31, 2008. Invesco has 5,300 employees in 13 investment centers worldwide serving clients in
100 countries. This provides you:
o Diversified investment strategies from distinct management teams around the globe.
o A range of investment products to help you achieve your financial goals.
o The peace of mind professional asset management and a diversified investment portfolio can provide.
While our name may have changed, our commitment to putting shareholders first, helping clients achieve their investment goals and
providing excellent customer service will never change.
If you have questions about this report or your account, please contact one of our client service representatives at 800 959
4246.
Thank you for your continued confidence, and we look forward to serving you.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
October 20, 2008
(1) U.S. Federal Reserve Board;
(2) U.S. Department of the Treasury
2 AIM STRUCTURED GROWTH FUND
Dear Fellow Shareholders:
As I write this letter, turbulent financial markets are causing considerable investor anxiety, reminding us
again that markets are cyclical and the correction of excess is often painful, at least in the short term.
[CROCKETT Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment
PHOTO] discipline. We continue to put your interests first in the effort to improve investment performance,
contain shareholder costs and uphold the highest ethical standards.
Bruce Crockett
We remain enthusiastic about the global reach and investment expertise that Invesco, a leading
independent global investment management company, brings to the management of AIM Funds as the parent
company of the advisors. The diverse investment strategies deployed throughout the worldwide network of
Invesco investment centers has helped strengthen the management of many AIM Funds. The rebranding of the
Funds' management company as Invesco Aim was followed by the launch of an upgraded, investor-friendly
website (invescoaim.com); a new mountain logo using a Himalayan peak to symbolize stability, endurance, strength and longevity; and
a new ad campaign. Emphasizing Invesco Aim's focus and investment quality, the ads will appear in financial publications such as
Barron's and Investment News through the end of 2008.
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."
We have recently completed another active proxy voting season during which we acted on your behalf to double the number of votes
in favor of separating the roles of chairman and CEO at the companies whose shares your Funds hold. We also continued to support the
movement for shareholders to have a bigger role in approving executive compensation, initiatives known as "say on pay." Like
virtually all other mutual fund complexes, AIM Funds abstain from voting on social issues as a matter of policy, and I would be
interested to hear your thoughts on this policy.
As always, you are welcome to email your questions or comments to me at bruce@brucecrockett.com. The dialogue that has been
established in this way has been instructive for your Board, and we want it to continue. Although the production schedule for Fund
annual reports and prospectuses allows me to write these letters of general report and response just twice a year, please be assured
that your comments are received, welcomed and heard in the interim.
We look forward to hearing from you and to representing you.
Sincerely,
/S/ BRUCE L. CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
October 20, 2008
3 AIM STRUCTURED GROWTH FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= MARKET CONDITIONS AND YOUR FUND
PERFORMANCE SUMMARY
Many factors contributed to the negative
For the fiscal year ended August 31, 2008, AIM Structured Growth Fund underper-formed returns of most major market indexes for
its style-specific benchmark, the Russell 1000 Growth Index. These results were the fiscal year ended August 31, 2008.(1)
partially due to weakness in select health care, information technology and energy The chief catalyst was undoubtedly the
holdings. ongoing subprime loan crisis and its far
reaching effects on overall credit
Your Fund's long-term performance appears later in this report. availability. Additionally, record high
crude oil prices, falling home values and
FUND VS. INDEXES the declining U.S. dollar placed
significant pressure on the purchasing
Total returns, 8/31/07 to 8/31/08, at net asset value (NAV). Performance shown does not power of the U.S. consumer. Late in the
include applicable contingent deferred sales charges (CDSC) or front-end sales charges, fiscal year, consumer confidence fell and
which would have reduced performance. market volatility increased as evidence of
a pending recession was compounded by
Class A Shares -8.25% mounting inflationary pressures.
Class B Shares -8.98
Class C Shares -8.98 In seven separate actions beginning in
Class R Shares -8.55 September 2007, the U.S. Federal Reserve
S&P 500 Index(triangle) (Broad Market Index) -11.13 Board (the Fed) lowered the federal funds
Russell 1000 Growth Index(triangle) (Style-Specific Index) -6.77 target rate from 5.25% to 2.00% in an
Lipper Large-Cap Growth Funds Index(triangle) (Peer Group Index) -6.18 effort to inject liquidity into the
(triangle) Lipper Inc. weakening credit markets.(2) The collapse
======================================================================================= of Bear Stearns (not a Fund holding) and
difficulties encountered by
HOW WE INVEST company earnings momentum, price trend, government-sponsored mortgage suppliers
management action and relative valuation. Freddie Mac and Fannie Mae (not Fund
We manage your Fund to provide exposure to The sum of the scores from these four holdings) was evidence that the housing
large cap growth stocks. The portfolio is factors makes up our alpha (excess return) market and financials sector continued to
designed to outperform the Russell 1000 forecast, relative to the average stock in struggle. In response, the Fed used a
Growth Index while minimizing the amount the universe. Stocks are also evaluated on variety of monetary policy tools to help
of additional risk relative to the a multitude of other factors to develop a alleviate the strain on financial markets.
benchmark. The Fund can be used as a stock-specific risk forecast and
long-term allocation to large cap stocks transaction cost forecast. Gross domestic product (GDP) increased
that complements other style-specific at an annualized rate of 2.8% in the
strategies within a diversified asset We then incorporate the alpha forecast, second quarter of 2008, buoyed in part by
allocation strategy. risk forecast and transaction cost government tax rebates.(3) Indeed, this
forecast -- using an optimizer (a software level was higher than the 0.9% annualized
The investment process integrates the system) -- to construct a portfolio that GDP growth rate in the first quarter of
following key steps: we believe is an optimal balance of the 2008.(3) Inflation, measured by a
stocks' potential return and risk. This seasonally-adjusted Consumer Price Index,
o Universe development portfolio is constructed according to increased at an annual rate of 5.4% year
certain constraints to increase the over year as of August 2008.(4) The
o Stock rankings probability that the Fund's relative advance in the price index was mostly
performance and volatility remain within attributable to increases in the cost of
o Risk assessment the Fund's strategy guidelines. The energy. Unemployment also trended higher
portfolio is continually monitored by the during the fiscal year and ended August at
o Portfolio construction Fund management team. The overall a rate of 6.1%.(4)
investment process is repeated on a
o Trading monthly basis to determine which companies
should be bought or sold within the
While the companies included in the portfolio.
Russell 1000 Growth Index are used as a
general guide for developing the Fund's
investable universe, non-benchmark stocks
may also be considered. In our stock
selection model, each stock in the
universe is evaluated on four factors:
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector
1. Computer Hardware 9.0% 1. Microsoft Corp. 6.0%
Information Technology 31.6% 2. Systems Software 8.6 2. Wal-Mart Stores, Inc. 3.9
Health Care 15.3 3. Pharmaceuticals 7.6 3. Exxon Mobil Corp. 3.8
Energy 12.8 4. Integrated Oil & Gas 7.0 4. Hewlett-Packard Co. 3.7
Consumer Discretionary 11.5 5. Health Care Services 6.0 5. Apollo Group Inc.-Class A 3.6
Materials 9.4 ========================================== 6. Merck & Co. Inc. 3.5
Industrials 9.0 7. First Solar, Inc. 3.5
Consumer Staples 7.1 ========================================== 8. International Business Machines
Utilities 1.0 Total Net Assets $166.0 million Corp. 3.5
Telecommunication Services 0.7 Total Number of Holdings* 66 9. Medco Health Solutions, Inc. 3.2
Financials 0.6 ========================================== 10. Gap, Inc. (The) 3.1
Money Market Funds and U.S. ==========================================
Treasury Bills Plus Other Assets
Less Liabilities 1.0 The Fund's holdings are subject to change, and there is no assurance that the Fund will
========================================== continue to hold any particular security.
* Excluding money market fund holdings.
4 AIM STRUCTURED GROWTH FUND
Market volatility increased mizer may indicate that its transaction JEREMY LEFKOWITZ
significantly after the close of the costs are too high and/or its risk level
Fund's fiscal year. To put some context is unacceptable. Placing more of an Portfolio manager, is lead manager of AIM
around the recent financial events: The emphasis on transaction costs and Structured Growth Fund. He began his
markets have shown serious strain for more potential risk in making stock selections investment career in 1968 and has been
than a year, largely the result of years can benefit or detract from Fund associated with Invesco Institutional
of lax credit practices associated with performance. For the fiscal year, it and/or its affiliates since 1982. Mr.
the housing boom. Mortgage loans of detracted from our results. Lefkowitz earned a B.S. in industrial
questionable quality were often bundled engineering and an M.B.A. in finance from
into hard-to-understand securities and Stock selection within the portfolio Columbia University.
sold to various financial institutions. was weak for the fiscal year. Alternative
The complexity and obscure structure of energy securities made the greatest DANIEL KOSTYK
these securities hid an Achilles' heel of contribution to returns. FIRST SOLAR and
our financial system, creating a liquidity MOSAIC outpaced the market by a wide Chartered Financial Analyst, portfolio
crisis of historic severity. margin as investors sought companies manager, is manager of AIM Structured
looking to profit from alternatives to oil Growth Fund. He has been associated with
Now those securities remain on the in the energy industry. Detracting from Invesco Institutional and/or its
financial institutions' balance sheets -- performance, however, were WELLCARE GROUP, affiliates since 1995. Mr. Kostyk earned
eroding capital, driving down profits and MCDERMOTT INTERNATIONAL and GARMIN. a B.S. in mechanical engineering from
preventing normal trading among banks and WellCare Group and Garmin were no longer Northwestern University in Chicago.
other financial institutions due to the held by the Fund as of the close of the
participating financial institutions' fiscal year. ANTHONY MUNCHAK
stability being in question. After the
close of the fiscal year, this situation The portfolio was overweight Chartered Financial Analyst, portfolio
came to a head as some of these contributors and detractors relative to manager, is manager of AIM Structured
institutions began running out of the the benchmark. Our strategy emphasized Growth Fund. He has been associated with
capital needed to operate their businesses stocks we believed possessed strong Invesco Institutional and/or its
and found investors unwilling to supply earnings growth, positive price trends and affiliates since 2000. Mr. Munchak earned
fresh capital. Compounding the problem is reasonable valuations. a B.S. and an M.S. from Boston College. He
growing concern over future economic also earned an M.B.A. from Bentley
prospects. In terms of risk management, we seek to College.
minimize any style biases in the
To ensure the orderly functioning of portfolio. Active managers typically add GLEN MURPHY
the credit markets and thereby preventing value in one or a combination of four
a more severe economic downturn, in early areas: beta bias (relative volatility), Chartered Financial Analyst, portfolio
October Congress enacted a $700 billion style bias, sector/ industry over/under manager, is manager of AIM Structured
rescue plan -- the Troubled Assets Relief weight and stock selection. We attempt to Growth Fund. He has been associated with
Program. In addition, the Fed -- in add value through our stock selection Invesco Institutional and/or its
concert with other world banks -- lowered decisions. Consequently, our risk affiliates since 1995. Mr. Murphy earned
short-term interest rates from 2.0% to management process seeks to neutralize the a B.B.A. from the University of
1.5% on October 8, 2008.(2) Fund's exposure relative to the benchmark Massachu-setts and an M.S. in finance from
with regard to beta, style and Boston College.
Regarding the returns for AIM sector/industry exposures.
Structured Growth Fund, it is important to FRANCIS ORLANDO
understand our investment process to We thank you for your continued
better evaluate the drivers of our investment in AIM Structured Growth Fund. Chartered Financial Analyst, portfolio
relative performance versus the manager, is manager of AIM Structured
style-specific benchmark. We generally (1) Lipper Inc. Growth Fund. He has been associated with
evaluate performance based on the impact Invesco Institutional and/or its
of our stock selection and risk management (2) U.S. Federal Reserve affiliates since 1987. Mr. Orlando earned
processes. a B.B.A. from Merrimack College and an
(3) Bureau of Economic Analysis M.B.A. from Boston University.
Our stock selection model (based on
company earnings momentum, price trend, (4) Bureau of Labor Statistics Assisted by the U.S. Structured Products
management action and relative value) that Group Research Team
makes up our alpha (excess return) The views and opinions expressed in
forecast for stocks in our investment management's discussion of Fund
universe was a detractor from Fund performance are those of Invesco Aim
performance. However, in selecting Advisors, Inc. These views and opinions
holdings for the Fund, we also take into are subject to change at any time based on
account our risk and transaction cost factors such as market and economic
forecasts. We use our optimization conditions. These views and opinions may
software to assist in making investment not be relied upon as investment advice or
decisions, based on risk and transaction recommendations, or as an offer for a
cost forecasts as well as our alpha particular security. The information is
forecast. Consequently, while our stock not a complete analysis of every aspect of
selection model may identify a stock with any market, country, industry, security or
an attractive alpha forecast, the opti- the Fund. Statements of fact are from
sources considered reliable, but Invesco
Aim Advisors, Inc. makes no representation
or warranty as to their completeness or
accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our
investment management philosophy.
See important Fund and index disclosures
later in this report.
5 AIM STRUCTURED GROWTH FUND
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee deferred sales charges. Index results
comparable future results. include reinvested dividends, but they do
not reflect sales charges. Performance of
The data shown in the chart include an index of funds reflects fund expenses
reinvested distributions, applicable sales and management fees; performance of a
charges, Fund expenses and management market index does not. Performance shown
fees. Results for Class B shares are in the chart and table(s) does not reflect
calculated as if a hypothetical deduction of taxes a shareholder would pay
shareholder had liquidated his entire on Fund distributions or sale of Fund
investment in the Fund at the close of the shares.
reporting period and paid the applicable
contingent
6 AIM STRUCTURED GROWTH FUND
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT - CLASS A, B, C AND R SHARES
Fund and index data from 3/31/06
AIM Structured AIM Structured AIM Structured AIM Structured Lipper Large-Cap
Growth Fund- Growth Fund- Growth Fund- Growth Fund- Russell 1000 Growth Funds
Date Class A Shares Class B Shares Class C Shares Class R Shares Growth Index(1) S&P 500 Index(1) Index(1)
3/31/06 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
4/06 9488 10030 10030 10030 9986 10134 9984
5/06 9204 9720 9720 9730 9648 9843 9519
6/06 9299 9820 9820 9830 9610 9856 9487
7/06 9167 9680 9680 9691 9427 9917 9244
8/06 9384 9899 9899 9920 9721 10152 9458
9/06 9668 10190 10190 10220 9988 10414 9662
10/06 10103 10649 10649 10680 10339 10753 9953
11/06 10301 10849 10849 10880 10544 10957 10180
12/06 10262 10800 10800 10843 10580 11111 10234
1/07 10594 11141 11141 11183 10852 11279 10498
2/07 10300 10830 10830 10882 10648 11059 10261
3/07 10490 11020 11020 11073 10706 11182 10339
4/07 10822 11361 11361 11423 11210 11677 10758
5/07 11295 11852 11852 11923 11613 12084 11123
6/07 11021 11561 11552 11633 11440 11884 11018
7/07 10755 11271 11271 11353 11262 11516 10878
8/07 10850 11361 11361 11453 11442 11688 11057
9/07 11267 11792 11792 11883 11921 12125 11732
10/07 11826 12372 12372 12474 12327 12318 12256
11/07 11513 12032 12032 12133 11873 11802 11756
12/07 11692 12214 12214 12325 11830 11721 11767
1/08 10413 10865 10865 10967 10907 11018 10760
2/08 10198 10639 10639 10751 10691 10660 10536
3/08 10110 10547 10547 10658 10626 10614 10446
4/08 10559 10999 10999 11121 11184 11131 11090
5/08 10794 11236 11236 11368 11593 11275 11392
6/08 10140 10546 10546 10669 10758 10325 10554
7/08 10003 10401 10401 10535 10554 10239 10346
8/08 9957 10041 10341 10475 10668 10387 10374
====================================================================================================================================
(1) Lipper Inc.
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/08, including maximum As of 6/30/08, the most recent calendar
applicable sales charges quarter-end, including maximum applicable
sales charges
CLASS A SHARES
CLASS A SHARES
Inception (3/31/06) -0.18%
1 Year -13.32 Inception (3/31/06) 0.63%
1 Year -13.07
CLASS B SHARES
CLASS B SHARES
Inception (3/31/06) 0.17%
1 Year -13.40 Inception (3/31/06) 1.09%
1 Year -13.21
CLASS C SHARES
CLASS C SHARES
Inception (3/31/06) 1.40%
1 Year -9.86 Inception (3/31/06) 2.40%
1 Year -9.58
CLASS R SHARES
CLASS R SHARES
Inception (3/31/06) 1.94%
1 Year -8.55 Inception (3/31/06) 2.93%
1 Year -8.28
========================================== ==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST CLASS A SHARE PERFORMANCE REFLECTS THE
PERFORMANCE AND CANNOT GUARANTEE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
COMPARABLE FUTURE RESULTS; CURRENT AND CLASS C SHARE PERFORMANCE REFLECTS THE
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE APPLICABLE CONTINGENT DEFERRED SALES
VISIT INVESCOAIM. COM FOR THE MOST RECENT CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
MONTH-END PERFORMANCE. PERFORMANCE FIGURES CDSC ON CLASS B SHARES DECLINES FROM 5%
REFLECT REINVESTED DISTRIBUTIONS, CHANGES BEGINNING AT THE TIME OF PURCHASE TO 0% AT
IN NET ASSET VALUE AND THE EFFECT OF THE THE BEGINNING OF THE SEVENTH YEAR. THE
MAXIMUM SALES CHARGE UNLESS OTHERWISE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
STATED. INVESTMENT RETURN AND PRINCIPAL YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE HAVE A FRONT-END SALES CHARGE; RETURNS
A GAIN OR LOSS WHEN YOU SELL SHARES. SHOWN ARE AT NET ASSET VALUE AND DO NOT
REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
THE NET ANNUAL FUND OPERATING EXPENSE ON A TOTAL REDEMPTION OF RETIREMENT PLAN
RATIO SET FORTH IN THE MOST RECENT FUND ASSETS WITHIN THE FIRST YEAR.
PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR CLASS A, CLASS B, CLASS C AND CLASS R THE PERFORMANCE OF THE FUND'S SHARE
SHARES WAS 1.01%, 1.76%, 1.76% AND 1.26%, CLASSES WILL DIFFER PRIMARILY DUE TO
RESPECTIVELY.(1) THE TOTAL ANNUAL FUND DIFFERENT SALES CHARGE STRUCTURES AND
OPERATING EXPENSE RATIO SET FORTH IN THE CLASS EXPENSES.
MOST RECENT FUND PROSPECTUS AS OF THE DATE
OF THIS REPORT FOR CLASS A, CLASS B, CLASS HAD THE ADVISOR NOT WAIVED FEES AND/OR
C AND CLASS R SHARES WAS 1.29%, 2.04%, REIMBURSED EXPENSES IN THE PAST,
2.04% AND 1.54%, RESPECTIVELY. THE EXPENSE PERFORMANCE WOULD HAVE BEEN LOWER.
RATIOS PRESENTED ABOVE MAY VARY FROM THE
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS (1) Total annual operating expenses less
OF THIS REPORT THAT ARE BASED ON EXPENSES any contractual fee waivers and/or
INCURRED DURING THE PERIOD COVERED BY THIS expense reimbursements by the advisor
REPORT. in effect through at least June 30,
2009. See current prospectus for more
information.
7 AIM STRUCTURED GROWTH FUND
AIM STRUCTURED GROWTH FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of August 31, 2008, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
ABOUT SHARE CLASSES o The Fund may use enhanced investment - The Fund is not managed to track the
techniques such as leveraging and performance of any particular index,
o Effective September 30, 2003, only derivatives. Leveraging entails risks including the indexes defined here, and
previously established qualified plans such as magnifying changes in the value consequently, the performance of the
are eligible to purchase Class B shares of the portfolio's securities. Fund may deviate significantly from the
of any AIM fund. Derivatives are subject to counterparty performance of the indexes.
risk -- the risk that the other party
o Class R shares are available only to will not complete the transaction with - A direct investment cannot be made in
certain retirement plans. Please see the Fund. an index. Unless otherwise indicated,
the prospectus for more information. index results include reinvested
o There is no guarantee that the dividends, and they do not reflect
PRINCIPAL RISKS OF INVESTING IN THE FUND investment techniques and risk analyses sales charges. Performance of an index
used by the Fund's portfolio managers of funds reflects fund expenses;
o Credit risk is the risk of loss on an will produce the desired results. performance of a market index does not.
investment due to the deterioration of
an issuer's financial health. Such a o The prices of securities held by the OTHER INFORMATION
deterioration of financial health may Fund may decline in response to market
result in a reduction of the credit risks. - The Chartered Financial Analyst
rating of the issuer's securities and --REGISTERED TRADEMARK--(CFA)
may lead to the issuer's inability to o Since a large percentage of the Fund's --REGISTERED TRADEMARK-- designation is
honor its contractual obligations, assets may be invested in securities of a globally recognized standard for
including making timely payment of a limited number of companies, each measuring the competence and integrity
interest and principal. investment has a greater effect on the of investment professionals.
Fund's overall performance, and any
o Prices of equity securities change in change in the value of those securities - The returns shown in the management's
response to many factors including the could significantly affect the value of discussion of Fund performance are
historical and prospective earnings of your investment in the Fund. based on net asset values calculated
the issuer, the value of its assets, for shareholder transactions. Generally
general economic conditions, interest ABOUT INDEXES USED IN THIS REPORT accepted accounting principles require
rates, investor perceptions and market adjustments to be made to the net
liquidity. o The S&P 500--REGISTERED TRADEMARK-- assets of the Fund at period end for
INDEX is a market financial reporting purposes, and as
o Foreign securities have additional capitalization-weighted index covering such, the net asset values for
risks, including exchange rate changes, all major areas of the U.S. economy. It shareholder transactions and the
political and economic upheaval, the is not the 500 largest companies, but returns based on those net asset values
relative lack of information, rather the most widely held 500 may differ from the net asset values
relatively low market liquidity, and companies chosen with respect to market and returns reported in the Financial
the potential lack of strict financial size, liquidity, and their industry. Highlights.
and accounting controls and standards.
o The RUSSELL 1000--REGISTERED - Industry classifications used in this
o The Fund invests in "growth" stocks, TRADEMARK-- GROWTH INDEX measures the report are generally according to the
which may be more volatile than other performance of those Russell 1000 Global Industry Classification
investment styles because growth stocks companies with higher price-to-book Standard, which was developed by and is
are more sensitive to investor ratios and higher forecasted growth the exclusive property and a service
perceptions of an issuing company's values. The Russell 1000 Growth Index mark of MSCI Inc. and Standard & Poor's
growth potential. is a trademark/service mark of the
Frank Russell Company.
o Interest rate risk refers to the risk Russell--REGISTERED TRADEMARK-- is a
that bond prices generally fall as trademark of the Frank Russell Company.
interest rates rise; conversely, bond
prices generally rise as interest rates o The LIPPER LARGE-CAP GROWTH FUNDS INDEX
fall. is an equally weighted representation
of the largest funds in the Lipper
o Portfolio turnover is greater than most Large-Cap Growth Funds category. These
funds, which may affect the Fund's funds typically have an above-average
performance due to higher brokerage price-to-earnings ratio, price-to-book
commissions. Active trading may also ratio, and three-year sales-per-share
increase short-term gains and losses, growth value, compared to the S&P 500
which may also result in taxable gain Index.
distributions to the Fund's
shareholders.
=======================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, ==========================================
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. FUND NASDAQ SYMBOLS
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================= Class A Shares AASGX
Class B Shares BASGX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares CASGX
Class R Shares RASGX
==========================================
8 AIM STRUCTURED GROWTH FUND
SCHEDULE OF INVESTMENTS(a)
August 31, 2008
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-99.00%
AEROSPACE & DEFENSE-1.77%
Boeing Co. (The) 19,900 $ 1,304,644
- -------------------------------------------------------------------------------
Honeywell International Inc. 32,700 1,640,559
===============================================================================
2,945,203
===============================================================================
APPAREL RETAIL-4.18%
Aeropostale, Inc.(b)(c) 49,400 1,722,084
- -------------------------------------------------------------------------------
Gap, Inc. (The)(b) 267,800 5,208,710
===============================================================================
6,930,794
===============================================================================
BIOTECHNOLOGY-1.43%
Biogen Idec Inc.(c) 46,500 2,368,245
===============================================================================
COAL & CONSUMABLE FUELS-2.72%
Walter Industries, Inc. 48,100 4,511,780
===============================================================================
COMPUTER & ELECTRONICS RETAIL-1.42%
RadioShack Corp. 123,900 2,355,339
===============================================================================
COMPUTER HARDWARE-8.97%
Apple Inc.(c) 17,800 3,017,634
- -------------------------------------------------------------------------------
Hewlett-Packard Co. 131,400 6,165,288
- -------------------------------------------------------------------------------
International Business Machines Corp. 46,900 5,709,137
===============================================================================
14,892,059
===============================================================================
COMPUTER STORAGE & PERIPHERALS-2.80%
QLogic Corp.(c) 33,800 631,384
- -------------------------------------------------------------------------------
Seagate Technology 23,800 354,858
- -------------------------------------------------------------------------------
Western Digital Corp.(c) 134,100 3,655,566
===============================================================================
4,641,808
===============================================================================
CONSTRUCTION & ENGINEERING-0.50%
Foster Wheeler Ltd.(c) 16,700 829,823
===============================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-0.31%
AGCO Corp.(c) 8,300 511,529
===============================================================================
CONSUMER FINANCE-0.29%
Discover Financial Services 29,000 477,050
===============================================================================
DATA PROCESSING & OUTSOURCED SERVICES-3.52%
Hewitt Associates, Inc.-Class A(c) 27,100 1,089,691
- -------------------------------------------------------------------------------
MasterCard, Inc.-Class A(b) 19,600 4,753,980
===============================================================================
5,843,671
===============================================================================
DIVERSIFIED CHEMICALS-0.10%
E. I. du Pont de Nemours and Co.(b) 3,900 173,316
===============================================================================
EDUCATION SERVICES-4.12%
Apollo Group Inc.-Class A(c) 94,400 6,011,392
- -------------------------------------------------------------------------------
DeVry, Inc. 16,100 830,438
===============================================================================
6,841,830
===============================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-4.05%
First Solar, Inc.(c) 20,900 5,781,985
- -------------------------------------------------------------------------------
GrafTech International Ltd.(c) 46,100 936,752
===============================================================================
6,718,737
===============================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-4.20%
CF Industries Holdings, Inc. 28,500 4,343,400
- -------------------------------------------------------------------------------
Mosaic Co. (The) 9,200 982,008
- -------------------------------------------------------------------------------
Terra Industries Inc.(b) 32,700 1,643,175
===============================================================================
6,968,583
===============================================================================
GENERAL MERCHANDISE STORES-0.37%
Big Lots, Inc.(b)(c) 20,700 612,099
===============================================================================
HEALTH CARE DISTRIBUTORS-0.28%
PharMerica Corp.(b)(c) 19,800 468,666
===============================================================================
HEALTH CARE SERVICES-5.95%
Express Scripts, Inc.(c) 62,100 4,558,761
- -------------------------------------------------------------------------------
Medco Health Solutions, Inc.(c) 113,600 5,322,160
===============================================================================
9,880,921
===============================================================================
HOMEBUILDING-0.74%
D.R. Horton, Inc.(b) 99,100 1,234,786
===============================================================================
HYPERMARKETS & SUPER CENTERS-3.87%
Wal-Mart Stores, Inc. 108,700 6,420,909
===============================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-0.99%
Mirant Corp.(b)(c) 55,600 1,644,648
===============================================================================
INDUSTRIAL CONGLOMERATES-2.07%
General Electric Co. 117,200 3,293,320
- -------------------------------------------------------------------------------
McDermott International, Inc.(c) 4,200 145,866
===============================================================================
3,439,186
===============================================================================
INDUSTRIAL MACHINERY-0.27%
Bean (John) Technologies Corp.(c) 34,900 453,700
===============================================================================
INTEGRATED OIL & GAS-7.03%
ConocoPhillips 9,800 808,598
- -------------------------------------------------------------------------------
Exxon Mobil Corp. 79,300 6,344,793
- -------------------------------------------------------------------------------
Occidental Petroleum Corp. 56,800 4,507,648
===============================================================================
11,661,039
===============================================================================
INTEGRATED TELECOMMUNICATION SERVICES-0.67%
Verizon Communications Inc. 31,700 1,113,304
===============================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM STRUCTURED GROWTH FUND
<Table>
<Caption>
SHARES VALUE
- -------------------------------------------------------------------------------
INTERNET RETAIL-0.10%
Netflix Inc.(c) 5,500 $ 169,620
===============================================================================
INTERNET SOFTWARE & SERVICES-2.92%
eBay Inc.(c) 194,200 4,841,406
===============================================================================
LEISURE PRODUCTS-0.60%
Hasbro, Inc. 26,600 994,840
===============================================================================
METAL & GLASS CONTAINERS-2.12%
Owens-Illinois, Inc.(c) 78,800 3,514,480
===============================================================================
OIL & GAS EQUIPMENT & SERVICES-0.33%
Halliburton Co. 12,400 544,856
===============================================================================
OIL & GAS STORAGE & TRANSPORTATION-2.71%
Frontline Ltd. (Bermuda)(b) 74,600 4,506,586
===============================================================================
PHARMACEUTICALS-7.61%
Forest Laboratories, Inc.(c) 25,400 906,526
- -------------------------------------------------------------------------------
Lilly (Eli) and Co. 90,200 4,207,830
- -------------------------------------------------------------------------------
Merck & Co. Inc. 163,400 5,828,478
- -------------------------------------------------------------------------------
Perrigo Co.(b) 13,300 465,367
- -------------------------------------------------------------------------------
Pfizer Inc. 64,400 1,230,684
===============================================================================
12,638,885
===============================================================================
SEMICONDUCTOR EQUIPMENT-0.85%
Amkor Technology, Inc.(b)(c) 54,500 409,295
- -------------------------------------------------------------------------------
Applied Materials, Inc. 55,500 994,560
===============================================================================
1,403,855
===============================================================================
SEMICONDUCTORS-3.93%
Intel Corp. 63,500 1,452,245
- -------------------------------------------------------------------------------
National Semiconductor Corp.(b) 16,500 353,595
- -------------------------------------------------------------------------------
Texas Instruments Inc. 192,700 4,723,077
===============================================================================
6,528,917
===============================================================================
SOFT DRINKS-1.13%
Coca-Cola Co. (The) 26,400 1,374,648
- -------------------------------------------------------------------------------
Dr. Pepper Snapple Group, Inc.(c) 20,400 504,084
===============================================================================
1,878,732
===============================================================================
SPECIALIZED REIT'S-0.31%
Public Storage 5,800 512,256
===============================================================================
STEEL-2.97%
AK Steel Holding Corp. 86,500 4,550,765
- -------------------------------------------------------------------------------
Schnitzer Steel Industries, Inc.-Class A 5,500 376,255
===============================================================================
4,927,020
===============================================================================
SYSTEMS SOFTWARE-8.63%
Microsoft Corp. 365,800 9,982,682
- -------------------------------------------------------------------------------
Symantec Corp.(c) 194,500 4,339,295
===============================================================================
14,321,977
===============================================================================
TOBACCO-2.17%
Altria Group, Inc. 39,800 836,994
- -------------------------------------------------------------------------------
Philip Morris International Inc. 51,600 2,770,920
===============================================================================
3,607,914
===============================================================================
Total Common Stocks & Other Equity Interests
(Cost 163,955,545) 164,330,369
===============================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.24%
U.S. TREASURY BILLS-0.24%
1.85%, 09/18/08 (Cost $399,651)(d)(e) $ 400,000 399,651
===============================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-0.68%
Liquid Assets Portfolio-Institutional Class(f) 565,757 565,757
- -------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 565,757 565,757
===============================================================================
Total Money Market Funds (Cost $1,131,514) 1,131,514
===============================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-99.92% (Cost $165,486,710) 165,861,534
===============================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-5.31%
Liquid Assets Portfolio-Institutional Class (Cost
$8,814,630)(f)(g) 8,814,630 8,814,630
===============================================================================
TOTAL INVESTMENTS-105.23% (Cost $174,301,340) 174,676,164
===============================================================================
OTHER ASSETS LESS LIABILITIES-(5.23)% (8,681,403)
===============================================================================
NET ASSETS-100.00% $165,994,761
_______________________________________________________________________________
===============================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</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) All or a portion of this security was out on loan at August 31, 2008.
(c) Non-income producing security.
(d) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(e) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1J and Note 6.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1I.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM STRUCTURED GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
<Table>
ASSETS:
Investments, at value (Cost
$164,355,196)* $164,730,020
- ------------------------------------------------------
Investments in affiliated money market
funds (Cost $9,946,144) 9,946,144
======================================================
Total investments (Cost
$174,301,340) 174,676,164
======================================================
Cash 2,640,457
- ------------------------------------------------------
Receivables for:
Fund shares sold 37,467
- ------------------------------------------------------
Dividends 218,580
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 5,970
- ------------------------------------------------------
Other assets 22,627
======================================================
Total assets 177,601,265
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Investments purchased 2,640,457
- ------------------------------------------------------
Fund shares reacquired 65,746
- ------------------------------------------------------
Collateral upon return of securities
loaned 8,814,630
- ------------------------------------------------------
Variation margin 10,075
- ------------------------------------------------------
Accrued fees to affiliates 7,442
- ------------------------------------------------------
Accrued other operating expenses 58,046
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 10,108
======================================================
Total liabilities 11,606,504
======================================================
Net assets applicable to shares
outstanding $165,994,761
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $170,643,349
- ------------------------------------------------------
Undistributed net investment income 604,771
- ------------------------------------------------------
Undistributed net realized gain (loss) (5,629,035)
- ------------------------------------------------------
Unrealized appreciation 375,676
======================================================
$165,994,761
______________________________________________________
======================================================
NET ASSETS:
Class A $ 4,893,527
______________________________________________________
======================================================
Class B $ 464,754
______________________________________________________
======================================================
Class C $ 1,911,479
______________________________________________________
======================================================
Class R $ 26,358
______________________________________________________
======================================================
Institutional Class $158,698,643
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 479,960
______________________________________________________
======================================================
Class B 46,242
______________________________________________________
======================================================
Class C 190,162
______________________________________________________
======================================================
Class R 2,589
______________________________________________________
======================================================
Institutional Class 15,517,107
______________________________________________________
======================================================
Class A:
Net asset value per share $ 10.20
- ------------------------------------------------------
Maximum offering price per share
(Net asset value of $10.20 divided
by 94.50%) $ 10.79
______________________________________________________
======================================================
Class B:
Net asset value and offering price
per share $ 10.05
______________________________________________________
======================================================
Class C:
Net asset value and offering price
per share $ 10.05
______________________________________________________
======================================================
Class R:
Net asset value and offering price
per share $ 10.18
______________________________________________________
======================================================
Institutional Class:
Net asset value and offering price
per share $ 10.23
______________________________________________________
======================================================
</Table>
* At August 31, 2008, securities with an aggregate value of $8,607,919 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11 AIM STRUCTURED GROWTH FUND
STATEMENT OF OPERATIONS
For the year ended August 31, 2008
<Table>
INVESTMENT INCOME:
Dividends $ 2,263,993
- ------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes securities lending income
of $85,221) 168,071
- ------------------------------------------------------------------------------------------------
Interest 7,203
================================================================================================
Total investment income 2,439,267
================================================================================================
EXPENSES:
Advisory fees 1,064,053
- ------------------------------------------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------------------------------------------
Custodian fees 11,929
- ------------------------------------------------------------------------------------------------
Distribution fees:
Class A 16,159
- ------------------------------------------------------------------------------------------------
Class B 5,657
- ------------------------------------------------------------------------------------------------
Class C 22,456
- ------------------------------------------------------------------------------------------------
Class R 83
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 18,757
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 6,481
- ------------------------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 20,462
- ------------------------------------------------------------------------------------------------
Other 142,384
================================================================================================
Total expenses 1,358,421
================================================================================================
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (19,507)
================================================================================================
Net expenses 1,338,914
================================================================================================
Net investment income 1,100,353
================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (5,163,042)
- ------------------------------------------------------------------------------------------------
Futures contracts (402,423)
================================================================================================
(5,565,465)
================================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (10,559,470)
- ------------------------------------------------------------------------------------------------
Futures contracts (18,293)
================================================================================================
(10,577,763)
================================================================================================
Net realized and unrealized gain (loss) (16,143,228)
================================================================================================
Net increase (decrease) in net assets resulting from operations $(15,042,875)
________________________________________________________________________________________________
================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM STRUCTURED GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2008 and 2007
<Table>
<Caption>
2008 2007
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,100,353 $ 539,308
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (5,565,465) 5,263,156
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (10,577,763) 10,523,460
========================================================================================================
Net increase (decrease) in net assets resulting from operations (15,042,875) 16,325,924
========================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A (16,383) (3,871)
- --------------------------------------------------------------------------------------------------------
Class R -- (150)
- --------------------------------------------------------------------------------------------------------
Institutional Class (840,921) (290,942)
========================================================================================================
Total distributions from net investment income (857,304) (294,963)
========================================================================================================
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A (206,607) (2,112)
- --------------------------------------------------------------------------------------------------------
Class B (19,986) (835)
- --------------------------------------------------------------------------------------------------------
Class C (68,888) (875)
- --------------------------------------------------------------------------------------------------------
Class R (386) (648)
- --------------------------------------------------------------------------------------------------------
Institutional Class (4,857,348) (102,685)
========================================================================================================
Total distributions from net realized gains (5,153,215) (107,155)
========================================================================================================
SHARE TRANSACTIONS-NET:
Class A (1,833,555) 6,290,642
- --------------------------------------------------------------------------------------------------------
Class B 79,346 (309,428)
- --------------------------------------------------------------------------------------------------------
Class C 136,158 1,359,341
- --------------------------------------------------------------------------------------------------------
Class R 15,882 (679,209)
- --------------------------------------------------------------------------------------------------------
Institutional Class 15,306,943 61,142,130
========================================================================================================
Net increase in net assets resulting from share transactions 13,704,774 67,803,476
========================================================================================================
Net increase (decrease) in net assets (7,348,620) 83,727,282
________________________________________________________________________________________________________
========================================================================================================
NET ASSETS:
Beginning of year 173,343,381 89,616,099
========================================================================================================
End of year (including undistributed net investment income of $604,771
and $368,757, respectively) $165,994,761 $173,343,381
________________________________________________________________________________________________________
========================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM STRUCTURED GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
August 31, 2008
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Structured Growth 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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest.
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R 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 shares 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. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objective is long-term growth of capital.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. Futures contracts are valued at the
final settlement price set by an exchange on which they are principally
traded. Listed options are valued at the mean between the last bid and the
ask prices from the exchange on which they are principally traded. Options
not listed on an exchange are valued by an independent source at the mean
between the last bid and ask prices. For purposes of determining net asset
value per share, futures and option contracts generally are valued 15
minutes after the close of the customary trading session of the New York
Stock Exchange ("NYSE").
Investments in open-end and closed-end registered investment companies
that do not trade on an exchange are valued at the end of day net asset
value per share. Investments in open-end and closed-end registered
investment companies that trade on an exchange are valued at the last
sales price or official closing price as of the close of the customary
trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and may 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
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers following procedures
approved by the Board of Trustees. Issuer specific events, market trends,
bid/ask quotes of brokers and information providers and other market data
may be reviewed in the course of making a good faith determination of a
security's fair value.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income is recorded on the ex-dividend date. Bond premiums
and discounts are amortized and/or accreted for financial reporting
purposes.
14 AIM STRUCTURED GROWTH FUND
The Fund may periodically participate in litigation related to Fund
investments. As such, the Fund may receive proceeds from litigation
settlements. Any proceeds as 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 income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
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 evaluated for making this determination are the
country in which the issuer maintains 50% or more of its assets, the type
of security, financial guarantees and enhancements, the nature of the
collateral and the sponsor organization. Country of issuer and/or credit
risk exposure has been determined to be the United States of America
unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such
class. Transfer agency fees and expenses and other shareholder
recordkeeping fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) 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 that contain a variety of indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet
occurred. The risk of material loss as a result of such indemnification
claims is considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any
loss on the collateral invested. Dividends received on cash collateral
investments for securities lending transactions, which are net of
compensation to counterparties, is included in Dividends from affiliates
on the Statement of Operations. The aggregate value of securities out on
loan is shown as a footnote on the Statement of Assets and Liabilities, if
any.
J. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). 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. Variation
margin payments are received or made depending upon whether unrealized
gains or losses are incurred. When the contracts are closed, 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. 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. Risks may exceed amounts recognized in the
Statement of Assets and Liabilities.
15 AIM STRUCTURED GROWTH FUND
K. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
This practice does not apply to securities pledged as collateral for
securities lending transactions.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
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 $250 million 0.60%
- -------------------------------------------------------------------
Next $250 million 0.575%
- -------------------------------------------------------------------
Next $500 million 0.55%
- -------------------------------------------------------------------
Next $1.5 billion 0.525%
- -------------------------------------------------------------------
Next $2.5 billion 0.50%
- -------------------------------------------------------------------
Next $2.5 billion 0.475%
- -------------------------------------------------------------------
Next $2.5 billion 0.45%
- -------------------------------------------------------------------
Over $10 billion 0.425%
___________________________________________________________________
===================================================================
</Table>
Under the terms of a new master sub-advisory agreement approved by
shareholders of the Fund, effective May 1, 2008, 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).
Previously, under the terms of a master sub-advisory agreement between the
Advisor and Invesco Institutional (N.A.), Inc., the Advisor paid Invesco
Institutional (N.A.), Inc. 40% of the amount of the Advisor's compensation on
the sub-advised assets. This agreement was terminated on May 1, 2008.
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
and Institutional Class shares to 1.00%, 1.75%, 1.75%, 1.25% and 0.75% of
average daily net assets, respectively, through at least June 30, 2009. 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; (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. These credits are used to pay certain expenses incurred by the Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2009,
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 (excluding investments of cash
collateral from securities lending) in such affiliated money market funds.
For the year ended August 31, 2008, the Advisor waived advisory fees of $2,839
and reimbursed class level expenses of $16,230 for Class A, Class B, Class C and
Class R shares in proportion to the relative net assets of such classes.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. For the year ended August 31, 2008, Invesco did not
reimburse any expenses.
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 year ended August 31, 2008, 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 year
ended August 31, 2008, expenses incurred under the agreement are shown in the
Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class
B, Class C, Class R 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
16 AIM STRUCTURED GROWTH FUND
charges that may be paid by any class of shares of the Fund. For the year ended
August 31, 2008, expenses incurred under the Plans are shown in the Statement of
Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the "sales charges") are
not recorded as expenses of the Fund. Front-end sales commissions are deducted
from proceeds from the sales of Fund shares prior to investment in Class A
shares of the Fund. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended August 31, 2008, IADI
advised the Fund that IADI retained $2,642 in front-end sales commissions from
the sale of Class A shares and $0, $742, $2,875 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--EXPENSE OFFSET ARRANGEMENTS
The expense offset arrangements are comprised of (i) transfer agency credits
which result from balances in Demand Deposit Accounts (DDA) used by the transfer
agent for clearing shareholder transactions and (ii) custodian credits which
result from periodic overnight cash balances at the custodian. For the year
ended August 31, 2008, the Fund received credits from these arrangements, which
resulted in the reduction of the Fund's total expenses of $438.
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various 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 year ended August 31, 2008, the Fund paid legal fees of $2,805 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 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(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.
NOTE 6--FUTURES CONTRACTS
<Table>
<Caption>
OPEN FUTURES CONTRACTS AT PERIOD-END
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTH/ VALUE UNREALIZED
CONTRACT CONTRACTS COMMITMENT 08/31/08 APPRECIATION
- ---------------------------------------------------------------------------------------------------------------------
Chicago Mercantile Exchange E-mini S&P 500 Index 13 September-08/Long $833,690 $852
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended August 31, 2008
and 2007 was as follows:
<Table>
<Caption>
2008 2007
- -----------------------------------------------------------------------------------------------------
Ordinary income $5,736,595 $346,557
- -----------------------------------------------------------------------------------------------------
Long-term capital gain 273,924 55,561
=====================================================================================================
Total distributions $6,010,519 $402,118
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
17 AIM STRUCTURED GROWTH FUND
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2008, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2008
- ------------------------------------------------------------------------------------------------
Undistributed ordinary income $ 614,765
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation -- investments 367,369
- ------------------------------------------------------------------------------------------------
Temporary book/tax differences (9,994)
- ------------------------------------------------------------------------------------------------
Capital loss carryforward (665,716)
- ------------------------------------------------------------------------------------------------
Post-October capital loss deferral (4,955,012)
- ------------------------------------------------------------------------------------------------
Shares of beneficial interest 170,643,349
================================================================================================
Total net assets $165,994,761
________________________________________________________________________________________________
================================================================================================
</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 wash sales.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
August 31, 2016 $665,716
_______________________________________________________________________________________________
===============================================================================================
</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 year ended August 31, 2008 was $218,479,021 and
$208,522,525, 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 $ 13,327,802
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (12,960,433)
================================================================================================
Net unrealized appreciation of investment securities $ 367,369
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $174,308,795.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of distributions, on
August 31, 2008, undistributed net investment income was decreased by $7,035 and
undistributed net realized gain (loss) was increased by $7,035. This
reclassification had no effect on the net assets of the Fund.
18 AIM STRUCTURED GROWTH FUND
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------------------------
2008(a) 2007
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 126,221 $ 1,439,845 754,832 $ 8,442,717
- ----------------------------------------------------------------------------------------------------------------------
Class B 37,404 424,646 52,116 576,888
- ----------------------------------------------------------------------------------------------------------------------
Class C 64,135 718,782 201,234 2,271,388
- ----------------------------------------------------------------------------------------------------------------------
Class R 1,458 15,648 797 8,993
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 1,601,599 18,008,711 5,931,247 66,326,390
======================================================================================================================
Issued as reinvestment of dividends:
Class A 18,312 218,096 511 5,619
- ----------------------------------------------------------------------------------------------------------------------
Class B 1,576 18,615 75 824
- ----------------------------------------------------------------------------------------------------------------------
Class C 5,708 67,407 80 875
- ----------------------------------------------------------------------------------------------------------------------
Class R 32 386 72 798
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 477,642 5,698,269 35,784 393,627
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 7,720 81,915 2,709 31,228
- ----------------------------------------------------------------------------------------------------------------------
Class B (7,802) (81,915) (2,728) (31,228)
======================================================================================================================
Reacquired:
Class A (325,612) (3,573,411) (191,553) (2,188,922)
- ----------------------------------------------------------------------------------------------------------------------
Class B (26,522) (282,000) (74,712) (855,912)
- ----------------------------------------------------------------------------------------------------------------------
Class C (61,575) (650,031) (79,974) (912,922)
- ----------------------------------------------------------------------------------------------------------------------
Class R (14) (152) (59,757) (689,000)
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class (784,168) (8,400,037) (484,204) (5,577,887)
======================================================================================================================
1,136,114 $13,704,774 6,086,529 $67,803,476
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) 89% of the outstanding shares of the Fund are owned by affiliated mutual
funds. Affiliated mutual funds are other mutual funds that are also advised
by Invesco Aim.
NOTE 11--NEW ACCOUNTING STANDARD
In March 2008, the Financial Accounting Standards Board (FASB) issued 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. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008. Management is
currently in the process of determining the impact of the standard on the Fund's
disclosures in the financial statements.
19 AIM STRUCTURED GROWTH FUND
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
INCOME (LOSS) FROM
INVESTMENT OPERATIONS
------------------------------------
NET GAINS DISTRIBUTIONS
(LOSSES) ON ----------------------------------------
NET ASSET NET SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END TOTAL
OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD RETURN(b)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
08/31/08 $11.45 $ 0.04 $(0.93) $(0.89) $(0.03) $(0.33) $(0.36) $10.20 (8.25)%
Year ended
08/31/07 9.93 0.02 1.53 1.55 (0.02) (0.01) (0.03) 11.45 15.63
Year ended
08/31/06(e) 10.00 0.11 (0.18) (0.07) -- -- -- 9.93 (0.70)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Year ended
08/31/08 11.35 (0.04) (0.93) (0.97) -- (0.33) (0.33) 10.05 (8.98)
Year ended
08/31/07 9.90 (0.07) 1.53 1.46 -- (0.01) (0.01) 11.35 14.76
Year ended
08/31/06(e) 10.00 0.08 (0.18) (0.10) -- -- -- 9.90 (1.00)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS C
Year ended
08/31/08 11.35 (0.04) (0.93) (0.97) -- (0.33) (0.33) 10.05 (8.98)
Year ended
08/31/07 9.90 (0.07) 1.53 1.46 -- (0.01) (0.01) 11.35 14.76
Year ended
08/31/06(e) 10.00 0.08 (0.18) (0.10) -- -- -- 9.90 (1.00)
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS R
Year ended
08/31/08 11.44 0.01 (0.94) (0.93) -- (0.33) (0.33) 10.18 (8.55)
Year ended
08/31/07 9.92 (0.01) 1.54 1.53 (0.00) (0.01) (0.01) 11.44 15.46
Year ended
08/31/06(e) 10.00 0.10 (0.18) (0.08) -- -- -- 9.92 (0.80)
- -----------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS
Year ended
08/31/08 11.48 0.07 (0.93) (0.86) (0.06) (0.33) (0.39) 10.23 (7.99)
Year ended
08/31/07 9.94 0.05 1.53 1.58 (0.03) (0.01) (0.04) 11.48 15.93
Year ended
08/31/06(e) 10.00 0.12 (0.18) (0.06) -- -- -- 9.94 (0.60)
___________________________________________________________________________________________________________________________________
===================================================================================================================================
<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 (LOSS)
END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
(000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(c)
- ------------------------------------------------------------------------------------------------
CLASS A
Year ended
08/31/08 $ 4,894 1.00%(d) 1.18%(d) 0.37%(d) 119%
Year ended
08/31/07 7,481 1.01 1.29 0.17 91
Year ended
08/31/06(e) 862 1.03(f) 5.52(f) 2.57(f) 7
- ------------------------------------------------------------------------------------------------
CLASS B
Year ended
08/31/08 465 1.75(d) 1.93(d) (0.38)(d) 119
Year ended
08/31/07 472 1.76 2.04 (0.58) 91
Year ended
08/31/06(e) 662 1.78(f) 6.27(f) 1.82(f) 7
- ------------------------------------------------------------------------------------------------
CLASS C
Year ended
08/31/08 1,911 1.75(d) 1.93(d) (0.38)(d) 119
Year ended
08/31/07 2,065 1.76 2.04 (0.58) 91
Year ended
08/31/06(e) 599 1.78(f) 6.27(f) 1.82(f) 7
- ------------------------------------------------------------------------------------------------
CLASS R
Year ended
08/31/08 26 1.25(d) 1.43(d) 0.12(d) 119
Year ended
08/31/07 13 1.26 1.54 (0.08) 91
Year ended
08/31/06(e) 595 1.28(f) 5.77(f) 2.32(f) 7
- ------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS
Year ended
08/31/08 158,699 0.73(d) 0.73(d) 0.64(d) 119
Year ended
08/31/07 163,313 0.75 0.89 0.43 91
Year ended
08/31/06(e) 86,898 0.77(f) 5.20(f) 2.83(f) 7
________________________________________________________________________________________________
================================================================================================
</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 and is not annualized for
periods less than one year, if applicable.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are based on average daily net assets (000's omitted) of $6,464,
$566, $2,246, $17, and $168,051 for Class A, Class B, Class C, Class R and
Institutional Class shares, respectively.
(e) Commencement date of March 31, 2006.
(f) Annualized.
20 AIM STRUCTURED GROWTH FUND
NOTE 13--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State Auditor -- Securities
Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of
Right to Hearing to Invesco Aim and IADI (Order No. 05-1318). The WVASC makes
findings of fact that Invesco Aim and IADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that Invesco Aim and IADI violated the West Virginia securities laws. The
WVASC orders Invesco Aim and IADI to cease any further violations and seeks to
impose monetary sanctions, including restitution to affected investors,
disgorgement of fees, reimbursement of investigatory, administrative and legal
costs and an "administrative assessment," to be determined by the Commissioner.
Initial research indicates that these damages could be limited or capped by
statute. By agreement with the Commissioner of Securities, Invesco Aim's time to
respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, Invesco Funds Group,
Inc. ("IFG"), Invesco Aim, IADI and/or related entities and individuals,
depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, various corrective measures under ERISA, rescission
of certain AIM Funds' advisory agreements and/or distribution plans and recovery
of all fees paid. The case pending in Illinois State Court regarding fair value
pricing was dismissed with prejudice on May 6, 2008.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various Invesco Aim- and IFG-related
parties: (i) a Consolidated Amended Class Action Complaint purportedly brought
on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund
Derivative Complaint purportedly brought on behalf of the AIM Funds and fund
registrants; and (iii) an Amended Class Action Complaint for Violations of ERISA
purportedly brought on behalf of participants in the Invesco 401(k) plan. Based
on orders issued by the MDL Court, all claims asserted against the AIM Funds
that have been transferred to the MDL Court have been dismissed, although
certain Funds remain nominal defendants in the Consolidated Amended Fund
Derivative Complaint. On September 15, 2006, the MDL Court granted the Invesco
defendants' motion to dismiss the Amended Class Action Complaint for Violations
of ERISA and dismissed such Complaint. Plaintiff appealed this ruling. On June
16, 2008, the Fourth Circuit Court of Appeals reversed the dismissal and
remanded this lawsuit back to the MDL Court for further proceedings.
IFG, Invesco Aim, IADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, Invesco Aim and IADI have advised the Fund that they are providing
full cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, Invesco Aim and/or related entities and individuals in the
future.
At the present time, management of Invesco Aim and the Fund are unable to
estimate the impact, if any, that the outcome of the Pending Litigation and
Regulatory Inquiries described above may have on Invesco Aim, IADI or the Fund.
21 AIM STRUCTURED GROWTH FUND
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Structured Growth Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Structured Growth Fund (one of
the funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2008, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 20, 2008
Houston, Texas
22 AIM STRUCTURED GROWTH FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $976.10 $4.97 $1,020.11 $5.08 1.00%
- ---------------------------------------------------------------------------------------------------
B 1,000.00 972.00 8.67 1,016.34 8.87 1.75
- ---------------------------------------------------------------------------------------------------
C 1,000.00 972.00 8.67 1,016.34 8.87 1.75
- ---------------------------------------------------------------------------------------------------
R 1,000.00 974.20 6.20 1,018.85 6.34 1.25
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
23 AIM STRUCTURED GROWTH FUND
Supplement to Annual Report dated 8/31/08
AIM STRUCTURED GROWTH FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class shareholders with a performance overview specific to
their holdings. Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans
that meet certain criteria.
==========================================
NASDAQ SYMBOL IASGX
==========================================
Fund expenses provided later in this supplement.
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 [INVESCO AIM LOGO]
- SERVICE MARK -
This material is for institutional investor use only and may not be quoted, reproduced
or shown to the public, nor used in written form as sales literature for public use.
invescoaim.com SGRO-INS-1 Invesco Aim Distributors, Inc.
Supplement to Annual Report dated 8/31/08
AIM STRUCTURED GROWTH FUND
==========================================
AVERAGE ANNUAL TOTAL RETURNS The net annual Fund operating expense Investment return and principal value will
For periods ended 8/31/08 ratio set forth in the most recent Fund fluctuate so your shares, when redeemed,
prospectus as of the date of this may be worth more or less than their
Inception (3/31/06) 2.45% supplement for Institutional Class shares original cost. See full report for
1 Year -7.99 was 0.75%.(1) The total annual Fund information on comparative benchmarks.
========================================== operating expense ratio set forth in the Please consult your Fund prospectus for
most recent Fund prospectus as of the date more information. For the most current
========================================== of this supplement for Institutional Class month-end performance, please call 800 451
AVERAGE ANNUAL TOTAL RETURNS shares was 0.89%. The expense ratios 4246 or visit invescoaim.com.
For periods ended 6/30/08, most recent presented above may vary from the expense
calendar quarter-end ratios presented in other sections of the 1 Total annual operating expenses less
actual report that are based on expenses any contractual fee waivers and/or
Inception (3/31/06) 3.43% incurred during the period covered by the expense reimbursements by the advisor
1 Year -7.82 report. in effect through at least June 30,
========================================== 2009 See current prospectus for more
Please note that past performance is information.
Institutional Class shares have no sales not indicative of future results. More
charge; therefore, performance is at net recent returns may be more or less than
asset value (NAV). Performance of those shown. All returns assume
Institutional Class shares will differ reinvestment of distributions at NAV.
from performance of other share classes
primarily due to differing sales charges
and class expenses.
Past performance cannot guarantee the chart and table(s) does not reflect shares. The performance of the Fund's
comparable future results. deduction of taxes a shareholder would pay other share classes will differ primarily
on Fund distributions or sale of Fund due to different sales charge structures
The data shown in the chart above shares. Performance of the indexes does and class expenses, and may be greater
includes reinvested distributions and Fund not reflect the effects of taxes. than or less than the performance of the
expenses including management fees. Index Fund's Institutional Class shares shown in
results include reinvested dividends. The performance data shown in the chart the chart above.
Performance of an index of funds reflects above is that of the Fund's institutional
fund expenses and management fees; share class. The performance data shown in
performance of a market index does not. the chart in the annual report is that of
Performance shown in the Fund's Class A, B, C and R
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- INSTITUTIONAL CLASS SHARES
Fund and index data from 3/31/06
AIM Structured
Growth Fund-
Institutional Lipper Large-Cap
Class Russell 1000 Growth Funds
Date Shares Growth Index(1) S&P 500 Index(1) Index(1)
3/31/06 $10000 $10000 $10000 $10000
4/06 10040 9986 10134 9984
5/06 9740 9648 9843 9519
6/06 9840 9610 9856 9487
7/06 9710 9427 9917 9244
8/06 9940 9721 10152 9458
9/06 10251 9988 10414 9662
10/06 10711 10339 10753 9953
11/06 10921 10544 10957 10180
12/06 10881 10580 11111 10234
1/07 11233 10852 11279 10498
2/07 10932 10648 11059 10261
3/07 11133 10706 11182 10339
4/07 11495 11210 11677 10758
5/07 11997 11613 12084 11123
6/07 11706 11440 11884 11018
7/07 11425 11262 11516 10878
8/07 11525 11442 11688 11057
9/07 11967 11921 12125 11732
10/07 12568 12327 12318 12256
11/07 12237 11873 11802 11756
12/07 12426 11830 11721 11767
1/08 11068 10907 11018 10760
2/08 10850 10691 10660 10536
3/08 10757 10626 10614 10446
4/08 11233 11184 11131 11090
5/08 11493 11593 11275 11392
6/08 10788 10758 10325 10554
7/08 10653 10554 10239 10346
8/08 10602 10668 10387 10374
====================================================================================================================================
(1) Lipper Inc.
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. 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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ------------------------------------------------------------------------------------------------
Institutional $1,000.00 $977.10 $3.62 $1,021.47 $3.70 0.73%
- ------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
AIM STRUCTURED GROWTH FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM their assigned funds. During the contract ated the information provided differently
Counselor Series Trust is required under renewal process, the Trustees receive from one another and attributed different
the Investment Company Act of 1940 to comparative performance and fee data weight to the various factors. The
approve annually the renewal of the AIM regarding the AIM Funds prepared by an Trustees recognized that the advisory
Structured Growth Fund (the Fund) independent company, Lipper, Inc. arrangements and resulting advisory fees
investment advisory agreement with Invesco (Lipper), under the direction and for the Fund and the other AIM Funds are
Aim Advisors, Inc. (Invesco Aim). During supervision of the independent Senior the result of years of review and
contract renewal meetings held on June Officer who also prepares a separate negotiation between the Trustees and
18-19, 2008, the Board as a whole and the analysis of this information for the Invesco Aim, that the Trustees may focus
disinterested or "independent" Trustees, Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of
voting separately, approved the recommendations to the Investments these arrangements in some years than in
continuance of the Fund's investment Committee regarding the performance, fees others, and that the Trustees'
advisory agreement for another year, and expenses of their assigned funds. The deliberations and conclusions in a
effective July 1, 2008. In doing so, the Investments Committee considers each particular year may be based in part on
Board determined that the Fund's Sub-Committee's recommendations and makes their deliberations and conclusions of
investment advisory agreement is in the its own recommendations regarding the these same arrangements throughout the
best interests of the Fund and its performance, fees and expenses of the AIM year and in prior years.
shareholders and that the compensation to Funds to the full Board. The Investments
Invesco Aim under the Fund's investment Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF
advisory agreement is fair and reasonable. Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION
its annual recommendation to the Board
The independent Trustees met separately whether to approve the continuance of each The discussion below serves as a summary
during their evaluation of the Fund's AIM Fund's investment advisory agreement of the Senior Officer's independent
investment advisory agreement with and sub-advisory agreements for another written evaluation with respect to the
independent legal counsel from whom they year. Fund's investment advisory agreement as
received independent legal advice, and the well as a discussion of the material
independent Trustees also received The independent Trustees are assisted factors and related conclusions that
assistance during their deliberations from in their annual evaluation of the Fund's formed the basis for the Board's approval
the independent Senior Officer, a investment advisory agreement by the of the Fund's investment advisory
full-time officer of the AIM Funds who independent Senior Officer. One agreement and sub-advisory agreements.
reports directly to the independent responsibility of the Senior Officer is to Unless otherwise stated, information set
Trustees. manage the process by which the AIM Funds' forth below is as of June 19, 2008 and
proposed management fees are negotiated does not reflect any changes that may have
THE BOARD'S FUND EVALUATION PROCESS during the annual contract renewal process occurred since that date, including but
to ensure that they are negotiated in a not limited to changes to the Fund's
The Board's Investments Committee has manner that is at arms' length and performance, advisory fees, expense
established three Sub-Committees that are reasonable. Accordingly, the Senior limitations and/or fee waivers.
responsible for overseeing the management Officer must either supervise a
of a number of the series portfolios of competitive bidding process or prepare an I. Investment Advisory Agreement
the AIM Funds. This SubCommittee structure independent written evaluation. The Senior
permits the Trustees to focus on the Officer has recommended that an A. Nature, Extent and Quality of
performance of the AIM Funds that have independent written evaluation be provided Services Provided by Invesco Aim
been assigned to them. The Sub-Committees and, at the direction of the Board, has
meet throughout the year to review the prepared an independent written The Board reviewed the advisory services
performance of their assigned funds, and evaluation. provided to the Fund by Invesco Aim under
the Sub-Committees review monthly and the Fund's investment advisory agreement,
quarterly comparative performance During the annual contract renewal the performance of Invesco Aim in
information and periodic asset flow data process, the Board considered the factors providing these services, and the
for their assigned funds. These materials discussed below under the heading "Factors credentials and experience of the officers
are prepared under the direction and and Conclusions and Summary of Independent and employees of Invesco Aim who provide
supervision of the independent Senior Written Fee Evaluation" in evaluating the these services. The Board's review of the
Officer. Over the course of each year, the fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide
Sub-Committees meet with portfolio investment advisory agreement and these services included the Board's
managers for their assigned funds and sub-advisory agreements at the contract consideration of Invesco Aim's portfolio
other members of management and review renewal meetings and at their meetings and product review process, various back
with these individuals the performance, throughout the year as part of their office support functions provided by
investment objective(s), policies, ongoing oversight of the Fund. The Fund's Invesco Aim and its affiliates, and
strategies and limitations of these funds. investment advisory agreement and Invesco Aim's equity and fixed income
sub-advisory agreements were considered trading operations. The Board concluded
In addition to their meetings separately, although the Board also that the nature, extent and quality of the
throughout the year, the Sub-Committees considered the common interests of all of advisory services provided to the Fund by
meet at designated contract renewal the AIM Funds in their deliberations. The Invesco Aim were appropriate and that
meetings each year to conduct an in-depth Board considered all of the information Invesco Aim currently is providing
review of the performance, fees and provided to them and did not identify any satisfactory advisory services in
expenses of particular factor that was controlling. accordance with the terms of the Fund's
Each Trustee may have evalu- investment advisory agreement. In
addition, based on their ongoing meetings
throughout the year
24 AIM STRUCTURED GROWTH FUND continued
with the Fund's portfolio manager or C. Advisory Fees and Fee Waivers the Board concluded that the Fund's
managers, the Board concluded that these advisory fees were fair and reasonable.
individuals are competent and able to The Board compared the Fund's contractual
continue to carry out their advisory fee rate to the contractual D. Economies of Scale and Breakpoints
responsibilities under the Fund's advisory fee rates of funds in the Fund's
investment advisory agreement. Lipper expense group that are not managed The Board considered the extent to which
by Invesco Aim, at a common asset level there are economies of scale in Invesco
In determining whether to continue the and as of the end of the past calendar Aim's provision of advisory services to
Fund's investment advisory agreement, the year. The Board noted that the Fund's the Fund. The Board also considered
Board considered the prior relationship contractual advisory fee rate was below whether the Fund benefits from such
between Invesco Aim and the Fund, as well the median contractual advisory fee rate economies of scale through contractual
as the Board's knowledge of Invesco Aim's of funds in its expense group. The Board breakpoints in the Fund's advisory fee
operations, and concluded that it was also reviewed the methodology used by schedule or through advisory fee waivers
beneficial to maintain the current Lipper in determining contractual fee or expense limitations. The Board noted
relationship, in part, because of such rates. that the Fund's contractual advisory fee
knowledge. The Board also considered the schedule includes seven breakpoints but
steps that Invesco Aim and its affiliates The Board also compared the Fund's that, due to the Fund's asset level at the
have taken over the last several years to effective fee rate (the advisory fee after end of the past calendar year and the way
improve the quality and efficiency of the any advisory fee waivers and before any in which the breakpoints have been
services they provide to the AIM Funds in expense limitations/waivers) to the structured, the Fund has yet to benefit
the areas of investment performance, advisory fee rates of other clients of from the breakpoints. Based on this
product line diversification, Invesco Aim and its affiliates with information, the Board concluded that the
distribution, fund operations, shareholder investment strategies comparable to those Fund's advisory fees would reflect
services and compliance. The Board of the Fund, including two mutual funds economies of scale at higher asset levels.
concluded that the quality and efficiency advised by Invesco Aim and two mutual The Board also noted that the Fund shares
of the services Invesco Aim and its funds sub-advised by an Invesco Aim directly in economies of scale through
affiliates provide to the AIM Funds in affiliate. The Board noted that the Fund's lower fees charged by third party service
each of these areas generally have rate was: (i) below the rates for two of providers based on the combined size of
improved, and support the Board's approval the mutual funds; and (ii) above the all of the AIM Funds and affiliates.
of the continuance of the Fund's sub-advisory fee rates for the sub-advised
investment advisory agreement. mutual funds. E. Profitability and Financial
Resources of Invesco Aim
B. Fund Performance Additionally, the Board compared the
Fund's effective fee rate to the total The Board reviewed information from
The Board noted that the Fund recently advisory fees paid by numerous separately Invesco Aim concerning the costs of the
began operations and that only one managed accounts/wrap accounts advised by advisory and other services that Invesco
calendar year of comparative performance Invesco Aim affiliates. The Board noted Aim and its affiliates provide to the Fund
data was available. The Board compared the that the Fund's rate generally was above and the profitability of Invesco Aim and
Fund's performance during the past the rates for the separately managed its affiliates in providing these
calendar year to the performance of funds accounts/wrap accounts. The Board services. The Board also reviewed
in the Fund's performance group that are considered that management of the information concerning the financial
not managed by Invesco Aim, and against separately managed accounts/wrap accounts condition of Invesco Aim and its
the performance of all funds in the Lipper by the Invesco Aim affiliates involves affiliates. The Board also reviewed with
Large Cap Growth Funds Index. The Board different levels of services and different Invesco Aim the methodology used to
also reviewed the criteria used by Invesco operational and regulatory requirements prepare the profitability information. The
Aim to identify the funds in the Fund's than Invesco Aim's management of the Fund. Board considered the overall profitability
performance group for inclusion in the The Board concluded that these differences of Invesco Aim, as well as the
Lipper reports. The Board noted that the are appropriately reflected in the fee profitability of Invesco Aim in connection
Fund's performance was in the third structure for the Fund. with managing the Fund. The Board noted
quintile of its performance group for the that Invesco Aim continues to operate at a
one year period (the first quintile being The Board noted that Invesco Aim has net profit, although increased expenses in
the best performing funds and the fifth contractually agreed to waive fees and/ or recent years have reduced the
quintile being the worst performing limit expenses of the Fund through at profitability of Invesco Aim and its
funds). The Board noted that the Fund's least June 30, 2009 in an amount necessary affiliates. The Board concluded that the
performance was below the performance of to limit total annual operating expenses Fund's fees were fair and reasonable, and
the Index for the one year period. The to a specified percentage of average daily that the level of profits realized by
Board also considered the steps Invesco net assets for each class of the Fund. The Invesco Aim and its affiliates from
Aim has taken over the last several years Board considered the contractual nature of providing services to the Fund was not
to improve the quality and efficiency of this fee waiver and noted that it remains excessive in light of the nature, quality
the services that Invesco Aim provides to in effect until at least June 30, 2009. and extent of the services provided. The
the AIM Funds. The Board concluded that The Board also considered the effect this Board considered whether Invesco Aim is
Invesco Aim continues to be responsive to expense limitation would have on the financially sound and has the resources
the Board's focus on fund performance. Fund's estimated total expenses. necessary to perform its obligations under
the Fund's investment advisory agreement,
After taking account of the Fund's and concluded that Invesco Aim has the
contractual advisory fee rate, as well as financial resources necessary to fulfill
the comparative advisory fee information these obligations.
and the expense limitation discussed
above,
25 AIM STRUCTURED GROWTH FUND continued
F. Independent Written Evaluation of were appropriate. The Board also concluded countries and securities of companies
the Fund's Senior Officer that, based on their review and located in such countries or on various
representations made by Invesco Aim, these types of investments and investment
The Board noted that, at their direction, arrangements were consistent with techniques, and providing investment
the Senior Officer of the Fund, who is regulatory requirements. advisory services. The Board concluded
independent of Invesco Aim and Invesco that the sub-advisory agreements will
Aim's affiliates, had prepared an The Board considered the fact that the benefit the Fund and its shareholders by
independent written evaluation to assist Fund's uninvested cash and cash collateral permitting Invesco Aim to utilize the
the Board in determining the from any securities lending arrangements additional resources and talent of the
reasonableness of the proposed management may be invested in money market funds Affiliated Sub-Advisers in managing the
fees of the AIM Funds, including the Fund. advised by Invesco Aim pursuant to Fund.
The Board noted that they had relied upon procedures approved by the Board. The
the Senior Officer's written evaluation Board noted that Invesco Aim will receive B. Fund Performance
instead of a competitive bidding process. advisory fees from these affiliated money
In determining whether to continue the market funds attributable to such The Board did view Fund performance as a
Fund's investment advisory agreement, the investments, although Invesco Aim has relevant factor in considering whether to
Board considered the Senior Officer's contractually agreed to waive through at approve the sub-advisory agreements for
written evaluation. least June 30, 2009, the advisory fees the Fund, as one of the Affiliated
payable by the Fund in an amount equal to Sub-Advisers currently manages the Fund's
G. Collateral Benefits to Invesco Aim 100% of the net advisory fees Invesco Aim assets. The Board noted that the Fund
and its Affiliates receives from the affiliated money market recently began operations and that only
funds with respect to the Fund's one calendar year of comparative
The Board considered various other investment of uninvested cash, but not performance data was available. The Board
benefits received by Invesco Aim and its cash collateral. The Board considered the compared the Fund's performance during the
affiliates resulting from Invesco Aim's contractual nature of this fee waiver and past calendar year to the performance of
relationship with the Fund, including the noted that it remains in effect until at funds in the Fund's performance group that
fees received by Invesco Aim and its least June 30, 2009. The Board concluded are not managed by Invesco Aim, and
affiliates for their provision of that the Fund's investment of uninvested against the performance of all funds in
administrative, transfer agency and cash and cash collateral from any the Lipper Large Cap Growth Funds Index.
distribution services to the Fund. The securities lending arrangements in the The Board also reviewed the criteria used
Board considered the performance of affiliated money market funds is in the by Invesco Aim to identify the funds in
Invesco Aim and its affiliates in best interests of the Fund and its the Fund's performance group for inclusion
providing these services and the shareholders. in the Lipper reports. The Board noted
organizational structure employed by that the Fund's performance was in the
Invesco Aim and its affiliates to provide II. Sub-Advisory Agreements third quintile of its performance group
these services. The Board also considered for the one year period (the first
that these services are provided to the A. Nature, Extent and Quality of quintile being the best performing funds
Fund pursuant to written contracts which Services Provided by Affiliated and the fifth quintile being the worst
are reviewed and approved on an annual Sub-Advisers performing funds). The Board noted that
basis by the Board. The Board concluded the Fund's performance was below the
that Invesco Aim and its affiliates were The Board reviewed the services to be performance of the Index for the one year
providing these services in a satisfactory provided by Invesco Trimark Ltd., Invesco period. The Board also considered the
manner and in accordance with the terms of Asset Management Deutschland, GmbH, steps Invesco Aim has taken over the last
their contracts, and were qualified to Invesco Asset Management Limited, Invesco several years to improve the quality and
continue to provide these services to the Asset Management (Japan) Limited, Invesco efficiency of the services that Invesco
Fund. Australia Limited, Invesco Global Asset Aim provides to the AIM Funds. The Board
Management (N.A.), Inc., Invesco Hong Kong concluded that Invesco Aim continues to be
The Board considered the benefits Limited, Invesco Institutional (N.A.), responsive to the Board's focus on fund
realized by Invesco Aim as a result of Inc. and Invesco Senior Secured performance. The Board also reviewed more
portfolio brokerage transactions executed Management, Inc. (collectively, the recent Fund performance and this review
through "soft dollar" arrangements. Under "Affiliated Sub-Advisers") under the did not change their conclusions.
these arrangements, portfolio brokerage sub-advisory agreements and the
commissions paid by the Fund and/or other credentials and experience of the officers C. Sub-Advisory Fees
funds advised by Invesco Aim are used to and employees of the Affiliated
pay for research and execution services. Sub-Advisers who will provide these The Board considered the services to be
The Board noted that soft dollar services. The Board concluded that the provided by the Affiliated Sub-Advisers
arrangements shift the payment obligation nature, extent and quality of the services pursuant to the sub-advisory agreements
for the research and execution services to be provided by the Affiliated and the services to be provided by
from Invesco Aim to the funds and Sub-Advisers were appropriate. The Board Invesco Aim pursuant to the Fund's
therefore may reduce Invesco Aim's noted that the Affiliated Sub-Advisers, investment advisory agreement, as well as
expenses. The Board also noted that which have offices and personnel that are the allocation of fees between Invesco Aim
research obtained through soft dollar geographically dispersed in financial and the Affiliated Sub-Advisers pursuant
arrangements may be used by Invesco Aim in centers around the world, have been formed to the sub-advisory agreements. The Board
making investment decisions for the Fund in part for the purpose of researching and noted that the sub-advisory fees have no
and may therefore benefit Fund compiling information and making direct effect on the Fund or its
shareholders. The Board concluded that recommendations on the markets and share-
Invesco Aim's soft dollar arrangements economies of various
26 AIM STRUCTURED GROWTH FUND continued
holders, as they are paid by Invesco Aim
to the Affiliated Sub-Advisers, and that
Invesco Aim and the Affiliated
Sub-Advisers are affiliates. After taking
account of the Fund's contractual
sub-advisory fee rate, as well as other
relevant factors, the Board concluded that
the Fund's sub-advisory fees were fair and
reasonable.
D. Financial Resources of the
Affiliated Sub-Advisers
The Board considered whether each
Affiliated Sub-Adviser is financially
sound and has the resources necessary to
perform its obligations under its
respective sub-advisory agreement, and
concluded that each Affiliated Sub-Adviser
has the financial resources necessary to
fulfill these obligations.
27 AIM STRUCTURED GROWTH FUND
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2008:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
----------------------------
Long-Term Capital Gain Dividends $273,924
Qualified Dividend Income* 30.95%
Corporate Dividends Received Deduction* 30.83%
U.S. Treasury Obligations* 0.24%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarters ended November 30, 2007 was 1.41%.
28 AIM STRUCTURED GROWTH FUND
PROXY RESULTS
A Special Meeting ("Meeting") of Shareholders of AIM Structured Growth Fund, an
investment portfolio of AIM Counselor Series Trust, a Delaware statutory trust
("Trust"), was held on February 29, 2008 and was adjourned, with respect to
certain proposals, until March 28, 2008. The Meeting on March 28, 2008 was held
for the following purposes:
(1) Elect 13 trustees to the Board of Trustees of the Trust, each of whom will
serve until his or her successor is elected and qualified.
(2) Approve an amendment to the Trust's Agreement and Declaration of Trust that
would permit the Board of Trustees of the Trust to terminate the Trust, the
Fund, and each other series portfolio of the Trust, or a share class without
a shareholder vote.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHELD/
MATTERS VOTES FOR ABSTENTIONS**
- -----------------------------------------------------------------------------------------------------------------------
(1)* Bob R. Baker................................................................... 80,004,783 1,692,073
Frank S. Bayley................................................................ 80,042,468 1,654,388
James T. Bunch................................................................. 80,071,331 1,625,525
Bruce L. Crockett.............................................................. 80,047,680 1,649,176
Albert R. Dowden............................................................... 80,044,519 1,652,337
Jack M. Fields................................................................. 80,054,678 1,642,178
Martin L. Flanagan............................................................. 80,013,733 1,683,123
Carl Frischling................................................................ 80,026,567 1,670,289
Prema Mathai-Davis............................................................. 80,025,589 1,671,267
Lewis F. Pennock............................................................... 80,059,672 1,637,184
Larry Soll, Ph.D. ............................................................. 80,040,389 1,656,467
Raymond Stickel, Jr. .......................................................... 80,056,699 1,640,157
Philip A. Taylor............................................................... 80,034,136 1,662,720
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(2)* Approve an amendment to the Trust's Agreement and
Declaration of Trust that would permit the Board
of Trustees of the Trust to terminate the Trust,
the Fund, and each other series portfolio of the
Trust, or a share class without a shareholder
vote............................................. 55,885,613 10,011,477 2,110,683 13,689,083
</Table>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Counselor Series Trust.
** Includes Broker Non-Votes.
29 AIM STRUCTURED GROWTH 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 103 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. 2007 Executive Director, Chief Executive Officer and President, None
Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global
Trustee investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Director, Chairman,
Chief Executive Officer and President, IVZ Inc. (holding
company); INVESCO North American Holdings, Inc. (holding
company); and, INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of Funds--Registered
Trademark--; Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President,
Invesco Holding Company Limited (parent of Invesco Aim and a
global investment management firm); Chairman, Investment
Company Institute; President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief Financial
Officer, Franklin Resources, Inc. (global investment
management organization)
- --------------------------------------------------------------------------------------------------------------------------------
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 President, Invesco Trimark Dealer Inc. (formerly AIM Mutual
Executive Officer Fund Dealer Inc.) (registered broker dealer), 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
register transfer agent) and AIM GP Canada Inc. (general
partner for a limited partnership); 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, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (formerly AIM Canada Holdings
Inc.) (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund 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 (formerly AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services) (registered investment advisor
and registered transfer agent); Trustee, President and
Principal Executive Officer of The AIM Family of Funds--
Registered Trademark-- (other than AIM Treasurer's Series
Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds--
Registered Trademark-- (AIM Treasurer's Series Trust and
Short-Term Investments Trust only); and Manager, Invesco
PowerShares Capital Management LLC
Formerly: Director and President, AIM Trimark Corporate
Class Inc. and AIM Trimark Canada Fund Inc.; Director and
President, Invesco Trimark Ltd./Invesco Trimark Ltee
(formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise
Services); Senior Managing Director, Invesco Holding Company
Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (registered broker dealer); President and Principal
Executive Officer, The AIM Family of Funds--Registered
Trademark-- (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.; and Director, Trimark Trust (federally
regulated Canadian Trust Company)
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited
Trustee and Chair consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
- --------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- --------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired
Trustee
Formerly: Partner, law firm of Baker & McKenzie; and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Policy
Trustee firm) Studies, Inc. and
Van Gilder Insurance
Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business None
Trustee corporations, including the Boss Group Ltd. (private
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company); Annuity and Life Re
(Holdings), Ltd. (reinsurance 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.; 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)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company); and Discovery Global
Education Fund (non-profit)
- --------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds) (15
portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA of the USA 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
Trustee
Formerly: Partner, Deloitte & Touche; and Director, Mainstay None
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.
30 AIM STRUCTURED GROWTH FUND
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 of N/A
Senior Vice President and Funds--Registered Trademark--
Senior Officer
Formerly: Director of Compliance and Assistant 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 Counsel, N/A
Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc.
Legal Officer and Secretary 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--Registered
Trademark--; 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, Senior Vice President, General Counsel
and Secretary, 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 President, The N/A
Vice President AIM Family of Funds--Registered Trademark--
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--Registered
Trademark--; 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; and Senior Vice President and Compliance
Director, Delaware Investments Family of Funds
- --------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A
Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited,
IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO North American Holdings,
Inc.; and Vice President, The AIM Family of Funds--Registered
Trademark--
Formerly: 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--Registered Trademark--; Director and Vice
President, INVESCO Distributors, Inc. and Chief Executive Officer
and President, INVESCO Funds Group, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sheri S. Morris -- 1964 2008 Vice President, Treasurer and Principal Financial Officer, The N/A
Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Assistant Vice
and Principal Financial President, Invesco Aim Advisors, Inc., Invesco Aim Capital
Officer Management, Inc. and Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of Funds--Registered Trademark--
- --------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash Management N/A
Vice President Group; 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, The AIM Family of Funds--Registered Trademark-- (other
than AIM Treasurer's Series Trust and Short-Term Investments
Trust); and President and Principal Executive Officer, The AIM
Family of Funds--Registered Trademark-- (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--Registered
Trademark-- (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 Advisors, N/A
Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim
Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc.,
Invesco Aim Private Asset Management, Inc. and The AIM Family of
Funds--Registered Trademark--
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.; Senior N/A
Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief
Compliance Officer, The AIM Family of Funds--Registered
Trademark--, 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, Invesco Aim Distributors, PricewaterhouseCoopers
Suite 100 Inc. Inc. LLP
Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
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 State Street Bank and
& Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company
2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street
Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Americas
New York, NY 10036-2714
31 AIM STRUCTURED GROWTH FUND
====================================================================================================================================
EDELIVERY
INVESCOAIM.COM/EDELIVERY
REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via email. Once your quarterly
statements, tax forms, fund reports, and prospectuses are available, we will send you an email notification containing links to
these documents. For security purposes, you will need to log in to your account to view your statements and tax forms.
WHY SIGN UP? HOW DO I SIGN UP?
Register for eDelivery to: It's easy. Just follow these simple steps:
- - save your Fund the cost of printing and postage. 1. Log in to your account.
- - reduce the amount of paper you receive. 2. Click on the "Service Center" tab.
- - gain access to your documents faster by not waiting for the 3. Select "Register for eDelivery" and complete the consent
mail. process.
- - view your documents online anytime at your convenience.
- - save the documents to your personal computer or print them
out for your records.
This service is provided by Invesco Aim Investment Services, Inc.
====================================================================================================================================
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, 2008, 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, 2009, 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 [INVESCO AIM LOGO]
individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco -SERVICE MARK-
Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco
Asset Management (Japan) Ltd., Invesco Hong Kong Ltd., Invesco Australia Limited, Invesco Asset Management
Limited and Invesco Asset Management Deutschland GmbH are affiliated investment advisors that serve as
subadvisors to many of the products and services represented by Invesco Aim. Invesco Aim Distributors, Inc. is
the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds
represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
invescoaim.com SGRO-AR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM STRUCTURED VALUE FUND
- SERVICE MARK - Annual Report to Shareholders o August 31, 2008
[MOUNTAIN GRAPHIC]
2 Letters to Shareholders
4 Performance Summary
4 Management Discussion
6 Long-Term Fund Performance
8 Supplemental Information
9 Schedule of Investments
12 Financial Statements
14 Notes to Financial Statements
20 Financial Highlights
22 Auditor's Report
23 Fund Expenses
24 Approval of Investment Advisory Agreement
28 Tax Information
29 Results of Proxy
30 Trustees and Officers
Dear Shareholder:
In previous reports, I've talked with you about short-term market volatility. I'd like to take this
opportunity to update you on recent market developments and provide some perspective and encouragement to
[TAYLOR fellow long-term investors.
PHOTO]
MARKET OVERVIEW
Philip Taylor
About a year ago or so, we saw warning signs of increasing economic ills -- a weakening housing market,
rising inflation and slowing job growth, among others. Nonetheless, U.S. equity markets were performing
relatively well. But as the year progressed, the housing market deteriorated, energy prices rose,
unemployment increased and the credit crunch grew more widespread.
In response, the U.S. Federal Reserve cut short-term interest rate targets to stimulate economic growth
and expand market liquidity.(1) Congress and the president worked together to enact an economic stimulus
plan, one facet of which was to provide more than 112 million taxpayers with $92 billion in tax rebates.(2)
Historically, actions such as these have stimulated economic growth. Unfortunately, other factors were simultaneously at work behind
the scenes, and the market began to reveal the strain of those factors.
HOW WE GOT HERE
The market stresses we saw over the past year were the result of years of lax lending associated with the recent housing boom.
Mortgage loans of questionable quality were bundled into hard-to-value securities that were sold to, and traded among, financial
institutions. The value of those securities declined; more institutions sought to sell them and fewer institutions were willing to
buy them. As a result, financial institutions' access to credit declined and the value of their holdings declined -- preventing
normal trading among banks and other financial institutions.
In October 2008, Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to
purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in
the last half century.
INVESTING IN A VOLATILE MARKET
Whether or not markets recover in the short term, the kind of volatility we've seen of late is a good reminder that in times of
market uncertainty, it's wise to stay true to three timeless investing principles:
o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. I urge you to stick to your
investment plan and stay focused on your long-term goals.
o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of
complementary asset classes may potentially cushion your portfolio against excessive volatility.
o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes
viewing market volatility as a matter of course, not a reason to panic.
That leads me to a fourth principle we believe may be critical to your success: Work with a trusted financial advisor. An
experienced advisor who knows your goals and situation can be your most valuable asset, particularly during times of market
volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course.
Recent market volatility has been disconcerting for everyone. Remember, however, that many of history's significant buying
opportunities were the result of short-term economic crises that, in their time, were considered unprecedented. I believe current
market volatility and uncertainty may represent a buying opportunity for patient, long-term investors. Invesco Aim's portfolio
managers are working diligently on your behalf to capitalize on this situation.
OUR NEW BRAND IDENTITY
While market conditions are obviously at the top of everyone's mind, there are some significant changes I want to share with you: We
have a new name and a new brand -- Invesco Aim.
Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers with $450 billion
in assets under management as of August 31, 2008. Invesco has 5,300 employees in 13 investment centers worldwide serving clients in
100 countries. This provides you:
o Diversified investment strategies from distinct management teams around the globe.
o A range of investment products to help you achieve your financial goals.
o The peace of mind professional asset management and a diversified investment portfolio can provide.
While our name may have changed, our commitment to putting shareholders first, helping clients achieve their investment goals and
providing excellent customer service will never change.
If you have questions about this report or your account, please contact one of our client service representatives at 800 959
4246.
Thank you for your continued confidence, and we look forward to serving you.
Sincerely,
/S/ PHILIP TAYLOR
Philip Taylor
Senior Managing Director, Invesco Ltd.
CEO, Invesco Aim
October 20, 2008
(1) U.S. Federal Reserve Board;
(2) U.S. Department of the Treasury
2 AIM STRUCTURED VALUE FUND
Dear Fellow Shareholders:
As I write this letter, turbulent financial markets are causing considerable investor anxiety, reminding us
again that markets are cyclical and the correction of excess is often painful, at least in the short term.
[CROCKETT Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment
PHOTO] discipline. We continue to put your interests first in the effort to improve investment performance,
contain shareholder costs and uphold the highest ethical standards.
Bruce Crockett
We remain enthusiastic about the global reach and investment expertise that Invesco, a leading
independent global investment management company, brings to the management of AIM Funds as the parent
company of the advisors. The diverse investment strategies deployed throughout the worldwide network of
Invesco investment centers has helped strengthen the management of many AIM Funds. The rebranding of the
Funds' management company as Invesco Aim was followed by the launch of an upgraded, investor-friendly
website (invescoaim.com); a new mountain logo using a Himalayan peak to symbolize stability, endurance, strength and longevity; and
a new ad campaign. Emphasizing Invesco Aim's focus and investment quality, the ads will appear in financial publications such as
Barron's and Investment News through the end of 2008.
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."
We have recently completed another active proxy voting season during which we acted on your behalf to double the number of votes
in favor of separating the roles of chairman and CEO at the companies whose shares your Funds hold. We also continued to support the
movement for shareholders to have a bigger role in approving executive compensation, initiatives known as "say on pay." Like
virtually all other mutual fund complexes, AIM Funds abstain from voting on social issues as a matter of policy, and I would be
interested to hear your thoughts on this policy.
As always, you are welcome to email your questions or comments to me at bruce@brucecrockett.com. The dialogue that has been
established in this way has been instructive for your Board, and we want it to continue. Although the production schedule for Fund
annual reports and prospectuses allows me to write these letters of general report and response just twice a year, please be assured
that your comments are received, welcomed and heard in the interim.
We look forward to hearing from you and to representing you.
Sincerely,
/S/ BRUCE CROCKETT
Bruce L. Crockett
Independent Chair
AIM Funds Board of Trustees
October 20, 2008
3 AIM STRUCTURED VALUE FUND
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
======================================================================================= which companies should be bought or sold
PERFORMANCE SUMMARY within the portfolio.
For the fiscal year ended August 31, 2008, AIM Structured Value Fund, excluding MARKET CONDITIONS AND YOUR FUND
applicable sales charges, performed in line with its style-specific benchmark, the
Russell 1000 Value Index, largely due to stock selection in the materials and Many factors contributed to the negative
financials sectors. Through stock selection, we were able to avoid much of the returns of most major market indexes for
turbulence that adversely affected the financials sector over the past year. the fiscal year ended August 31, 2008.(1)
The chief catalyst was undoubtedly the
Your Fund's long-term performance appears later in this report. ongoing subprime loan crisis and its
far-reaching effects on overall credit
FUND VS. INDEXES availability. Additionally, record high
crude oil prices, falling home values and
Total returns, 8/31/07 to 8/31/08, at net asset value (NAV). Performance shown does not the declining U.S. dollar placed
include applicable contingent deferred sales charges (CDSC) or front-end sales charges, significant pressure on the purchasing
which would have reduced performance. power of the U.S. consumer. Late in the
fiscal year, consumer confidence fell and
Class A Shares -13.74% market volatility increased as evidence of
Class B Shares -14.42 a pending recession was compounded by
Class C Shares -14.43 mounting inflationary pressures.
Class R Shares -14.08
S&P 500 Index(triangle) (Broad Market Index) -11.13 In seven separate actions beginning in
Russell 1000 Value Index(triangle) (Style-Specific Index) -14.66 September 2007, the U.S. Federal Reserve
Lipper Large-Cap Value Funds Index(triangle) (Peer Group Index) -14.27 Board (the Fed) lowered the federal funds
(triangle)Lipper Inc. target rate from 5.25% to 2.00% in an
======================================================================================= effort to inject liquidity into the
weakening credit markets.(2) The collapse
HOW WE INVEST universe is evaluated on four factors: of Bear Stearns (not a Fund holding) and
company earnings momentum, price trend, difficulties encountered by
We manage your Fund to provide exposure to management action and relative valuation. government-sponsored mortgage suppliers
large cap value stocks. The portfolio is The sum of the scores from these four Freddie Mac and Fannie Mae (not Fund
designed to outperform the Russell 1000 factors makes up our alpha (excess return) holdings) was evidence that the housing
Value Index while minimizing the amount of forecast, relative to the average stock in market and financials sector continued to
additional risk relative to the benchmark. the universe. Stocks are also evaluated on struggle. In response, the Fed used a
The Fund can be used as a long-term a multitude of other factors to develop a variety of monetary policy tools to help
allocation to large cap stocks that stock-specific risk forecast and alleviate the strain on financial markets.
complements other style-specific transaction cost forecast.
strategies in a diversified asset Gross domestic product (GDP) increased
allocation strategy. We then incorporate the alpha forecast, at an annualized rate of 2.8% in the
risk forecast and transaction cost second quarter of 2008, buoyed in part by
The investment process integrates the forecast -- using an optimizer (a software government tax rebates.(3) Indeed, this
following key steps: system) -- to build a portfolio that we level was higher than the 0.9% annualized
believe is an optimal balance of the GDP growth rate for the first quarter of
o Universe development stocks' potential return and risk. This 2008.(3) Inflation, measured by a
portfolio is constructed according to seasonally-adjusted Consumer Price Index,
o Stock rankings certain constraints to increase the increased at an annual rate of 5.4% year
probability that the Fund's relative over year as of August 2008.(4) The
o Risk assessment performance and volatility remain within advance in the price index was mostly
the Fund's strategy guidelines. The attributable to increases in
o Portfolio construction portfolio is continually monitored by the
Fund management team. The overall
o Trading investment process is repeated on a
monthly basis to determine
While the companies included in the
Russell 1000 Value Index are used as a
general guide for developing the Fund's
investable universe, non-benchmark stocks
may also be considered. In our stock
selection model, each stock in the
========================================== ========================================== ==========================================
PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS*
By sector
1. Integrated Oil & Gas 16.0% 1. Exxon Mobil Corp. 7.0%
Financials 24.9% 2. Pharmaceuticals 8.9 2. AT&T Inc. 4.5
Energy 16.0 3. Integrated Telecommunication 3. Pfizer Inc. 3.7
Consumer Discretionary 12.7 Services 7.7 4. ConocoPhillips 3.6
Health Care 10.6 4. Property & Casualty Insurance 6.4 5. Chevron Corp. 3.5
Information Technology 8.1 5. Diversified Banks 6.0 6. Wells Fargo & Co. 3.4
Telecommunication Services 7.7 7. Verizon Communications Inc. 3.1
Industrials 6.7 Total Net Assets $139.6 million 8. General Electric Co. 3.1
Materials 5.4 Total Number of Holdings* 117 9. U.S. Bancorp 2.6
Consumer Staples 5.1 10. Merck & Co. Inc. 2.3
Utilities 1.7 ========================================== ==========================================
U.S. Treasury Bills and Money
Market Funds Plus Other Assets The Fund's holdings are subject to change, and there is no assurance that the Fund will
Less Liabilities 1.1 continue to hold any particular security.
==========================================
* Excluding money market fund holdings.
4 AIM STRUCTURED VALUE FUND
the cost of energy. Unemployment also an attractive alpha forecast, the JEREMY LEFKOWITZ
trended higher during the fiscal year and optimizer may indicate that its
ended August at a rate of 6.1%.(4) transaction costs are too high and/or its Portfolio manager, is lead manager of AIM
risk level is unacceptable. Placing more Structured Value Fund. He began his
Market volatility increased of an emphasis on transaction costs and investment career in 1968 and has been
significantly after the close of the potential risk in making stock selections associated with Invesco Institutional and/
Fund's fiscal year. To put some context can benefit or detract from Fund or its affiliates since 1982. Mr.
around the recent financial events: The performance. For the fiscal year, it Lefkowitz earned a B.S. in industrial
markets have shown serious strain for more contributed to our results. engineering and an M.B.A. in finance from
than a year, largely the result of years Columbia University.
of lax credit practices associated with Stock selection within the portfolio
the housing boom. Mortgage loans of was strong for the fiscal year, primarily DANIEL KOSTYK
questionable quality were often bundled as the result of the optimization process.
into hard-to-understand securities and The largest contributor to Fund Chartered Financial Analyst, portfolio
sold to various financial institutions. performance was MOSAIC, a fertilizer manager, is manager of AIM Structured
The complexity and obscure structure of producer. This was partly due to ethanol Value Fund. He has been associated with
these securities hid an Achilles' heel of being made from corn which is a Invesco Institutional and/or its
our financial system, creating a liquidity fertilizer-hungry crop. The portfolio also affiliates since 1995. Mr. Kostyk earned a
crisis of historic severity. benefited from not owning certain B.S. in mechanical engineering from
benchmark financial companies, Northwestern University in Chicago.
Now those securities remain on the particularly Washington Mutual, Lehman
financial institutions' balance sheets -- Brothers, and Wachovia. Detracting from ANTHONY MUNCHAK
eroding capital, driving down profits and Fund performance were companies on the
preventing normal trading among banks and other side of the oil equation. WESTERN Chartered Financial Analyst, portfolio
other financial institutions due to the REFINING and FRONTIER OIL, both oil manager, is manager of AIM Structured
participating financial institutions' refiners, under-performed the broad market Value Fund. He has been associated with
stability being in question. After the index and the portfolio's overweight Invesco Institutional and/or its
close of the fiscal year, this situation position hurt returns. affiliates since 2000. Mr. Munchak earned
came to a head as some of these a B.S. and an M.S. from Boston College. He
institutions began running out of the In terms of risk management, we seek to also earned an M.B.A. from Bentley
capital needed to operate their businesses minimize any style biases in the College.
and found investors unwilling to supply portfolio. Active managers typically add
fresh capital. Compounding the problem is value in one or a combination of four GLEN MURPHY
growing concern over future economic areas: beta bias (relative volatility),
prospects. style bias, sector/ industry over/under Chartered Financial Analyst, portfolio
weight and stock selection. We attempt to manager, is manager of AIM Structured
To ensure the orderly functioning of add value through our stock selection Value Fund. He has been associated with
the credit markets and thereby preventing decisions. Consequently, our risk Invesco Institutional and/or its
a more severe economic downturn, in early management process seeks to neutralize the affiliates since 1995. Mr. Murphy earned a
October Congress enacted a $700 billion Fund's exposure relative to the benchmark B.B.A. from the University of
rescue plan -- the Troubled Assets Relief with regard to beta, style and Massachusetts and an M.S. in finance from
Program. In addition, the Fed -- in sector/industry exposures. Boston College.
concert with other world banks -- lowered
short-term interest rates from 2.0% to We thank you for your continued FRANCIS ORLANDO
1.5% on October 8, 2008.(2) investment in AIM Structured Value Fund.
Chartered Financial Analyst, portfolio
Regarding the returns for AIM (1) Lipper Inc. manager, is manager of AIM Structured
Structured Value Fund, it is important to Value Fund. He has been associated with
understand our investment process to (2) U.S. Federal Reserve Invesco Institutional and/or its
better evaluate the drivers of our affiliates since 1987. Mr. Orlando earned
relative performance versus the (3) Bureau of Economic Analysis a B.B.A. from Merrimack College and an
style-specific benchmark. We generally M.B.A. from Boston University.
evaluate performance based on the impact (4) Bureau of Labor Statistics
of our stock selection and risk management Assisted by the U.S. Structured Products
processes. The views and opinions expressed in Group Research Team
management's discussion of Fund
Our stock selection model (based on performance are those of Invesco Aim
company earnings momentum, price trend, Advisors, Inc. These views and opinions
management action and relative value) that are subject to change at any time based on
makes up our alpha (excess return) factors such as market and economic
forecast for stocks in our investment conditions. These views and opinions may
universe was a positive contributor to not be relied upon as investment advice or
Fund performance. However, in selecting recommendations, or as an offer for a
holdings for the Fund, we also take into particular security. The information is
account our risk and transaction cost not a complete analysis of every aspect of
forecasts. We use our optimization any market, country, industry, security or
software to assist in making investment the Fund. Statements of fact are from
decisions, based on risk and transaction sources considered reliable, but Invesco
cost forecasts as well as our alpha Aim Advisors, Inc. makes no representation
forecast. Consequently, while our stock or warranty as to their completeness or
selection model may identify a stock with accuracy. Although historical performance
is no guarantee of future results, these
insights may help you understand our
investment management philosophy.
See important Fund and index disclosures
later in this report.
5 AIM STRUCTURED VALUE FUND
YOUR FUND'S LONG-TERM PERFORMANCE
Past performance cannot guarantee deferred sales charges. Index results
comparable future results. include reinvested dividends, but they do
not reflect sales charges. Performance of
The data shown in the chart include an index of funds reflects fund expenses
reinvested distributions, applicable sales and management fees; performance of a
charges, Fund expenses and management market index does not. Performance shown
fees. Results for Class B shares are in the chart and table(s) does not reflect
calculated as if a hypothetical deduction of taxes a shareholder would pay
shareholder had liquidated his entire on Fund distributions or sale of Fund
investment in the Fund at the close of the shares.
reporting period and paid the applicable
contingent
6 AIM STRUCTURED VALUE FUND
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- CLASS A, B, C AND R SHARES
Fund and index data from 3/31/06
AIM Structured AIM Structured AIM Structured AIM Structured Lipper Large-Cap
Value Fund- Value Fund- Value Fund- Value Fund- Russell 1000 S&P 500 Value Funds
Date Class A Shares Class B Shares Class C Shares Class R Shares Value Index(1) Index(1) Index(1)
3/31/06 $ 9450 $10000 $10000 $10000 $10000 $10000 $10000
4/06 9639 10190 10190 10200 10254 10134 10249
5/06 9318 9850 9850 9860 9995 9843 9998
6/06 9441 9970 9970 9981 10059 9856 10005
7/06 9724 10260 10260 10281 10304 9917 10158
8/06 9866 10399 10399 10421 10476 10152 10346
9/06 10027 10569 10569 10601 10685 10414 10586
10/06 10377 10929 10929 10971 11035 10753 10902
11/06 10614 11180 11180 11221 11286 10957 11090
12/06 10748 11307 11307 11347 11540 11111 11329
1/07 11015 11588 11577 11628 11687 11279 11475
2/07 10740 11287 11287 11338 11505 11059 11270
3/07 10987 11538 11537 11598 11683 11182 11414
4/07 11385 11949 11948 12010 12115 11677 11903
5/07 11746 12319 12318 12392 12552 12084 12341
6/07 11338 11889 11879 11961 12258 11884 12153
7/07 10711 11219 11218 11298 11692 11516 11665
8/07 10834 11349 11338 11429 11823 11688 11803
9/07 11204 11729 11718 11811 12229 12125 12177
10/07 11338 11859 11848 11952 12230 12318 12273
11/07 10691 11169 11157 11258 11632 11802 11745
12/07 10667 11143 11132 11243 11520 11721 11608
1/08 10139 10581 10570 10675 11058 11018 11020
2/08 9825 10254 10243 10355 10595 10660 10649
3/08 9699 10110 10110 10211 10515 10614 10501
4/08 10149 10580 10570 10685 11028 11131 11021
5/08 10178 10600 10590 10706 11010 11275 11114
6/08 9326 9711 9700 9809 9957 10325 10143
7/08 9267 9639 9629 9747 9921 10239 10005
8/08 9347 9426 9701 9816 10089 10387 10119
====================================================================================================================================
(1) Lipper Inc.
========================================== ==========================================
AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS
As of 8/31/08, including maximum As of 6/30/08, the most recent calendar
applicable sales charges quarter-end, including maximum applicable
sales charges
CLASS A SHARES
CLASS A SHARES
Inception (3/31/06) -2.75%
1 Year -18.46 Inception (3/31/06) -3.05%
1 Year -22.24
CLASS B SHARES
CLASS B SHARES
Inception (3/31/06) -2.42%
1 Year -18.61 Inception (3/31/06) -2.60%
1 Year -22.31
CLASS C SHARES
CLASS C SHARES
Inception (3/31/06) -1.25%
1 Year -15.27 Inception (3/31/06) -1.34%
1 Year -19.13
CLASS R SHARES
CLASS R SHARES
Inception (3/31/06) -0.76%
1 Year -14.08 Inception (3/31/06) -0.87%
1 Year -17.99
========================================== ==========================================
THE PERFORMANCE DATA QUOTED REPRESENT PAST CLASS A SHARE PERFORMANCE REFLECTS THE
PERFORMANCE AND CANNOT GUARANTEE MAXIMUM 5.50% SALES CHARGE, AND CLASS B
COMPARABLE FUTURE RESULTS; CURRENT AND CLASS C SHARE PERFORMANCE REFLECTS THE
PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE APPLICABLE CONTINGENT DEFERRED SALES
VISIT INVESCOAIM.COM FOR THE MOST RECENT CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE
MONTH-END PERFORMANCE. PERFORMANCE FIGURES CDSC ON CLASS B SHARES DECLINES FROM 5%
REFLECT REINVESTED DISTRIBUTIONS, CHANGES BEGINNING AT THE TIME OF PURCHASE TO 0% AT
IN NET ASSET VALUE AND THE EFFECT OF THE THE BEGINNING OF THE SEVENTH YEAR. THE
MAXIMUM SALES CHARGE UNLESS OTHERWISE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST
STATED. INVESTMENT RETURN AND PRINCIPAL YEAR AFTER PURCHASE. CLASS R SHARES DO NOT
VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE HAVE A FRONT-END SALES CHARGE; RETURNS
A GAIN OR LOSS WHEN YOU SELL SHARES. SHOWN ARE AT NET ASSET VALUE AND DO NOT
REFLECT A 0.75% CDSC THAT MAY BE IMPOSED
THE NET ANNUAL FUND OPERATING EXPENSE ON A TOTAL REDEMPTION OF RETIREMENT PLAN
RATIO SET FORTH IN THE MOST RECENT FUND ASSETS WITHIN THE FIRST YEAR.
PROSPECTUS AS OF THE DATE OF THIS REPORT
FOR CLASS A, CLASS B, CLASS C AND CLASS R THE PERFORMANCE OF THE FUND'S SHARE
SHARES WAS 1.01%, 1.76%, 1.76% AND 1.26%, CLASSES WILL DIFFER PRIMARILY DUE TO
RESPECTIVELY.(1) THE TOTAL ANNUAL FUND DIFFERENT SALES CHARGE STRUCTURES AND
OPERATING EXPENSE RATIO SET FORTH IN THE CLASS EXPENSES.
MOST RECENT FUND PROSPECTUS AS OF THE DATE
OF THIS REPORT FOR CLASS A, CLASS B, CLASS HAD THE ADVISOR NOT WAIVED FEES AND/OR
C AND CLASS R SHARES WAS 1.36%, 2.11%, REIMBURSED EXPENSES, PERFORMANCE WOULD
2.11% AND 1.61%, RESPECTIVELY. THE EXPENSE HAVE BEEN LOWER.
RATIOS PRESENTED ABOVE MAY VARY FROM THE
EXPENSE RATIOS PRESENTED IN OTHER SECTIONS (1) Total annual operating expenses less
OF THIS REPORT THAT ARE BASED ON EXPENSES any contractual fee waivers and/or
INCURRED DURING THE PERIOD COVERED BY THIS expense reimbursements by the advisor
REPORT. in effect through at least June 30,
2009. See current prospectus for more
information.
7 AIM STRUCTURED VALUE FUND
AIM STRUCTURED VALUE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL.
o Unless otherwise stated, information presented in this report is as of August 31, 2008, and is based on total net assets.
o Unless otherwise noted, all data provided by Invesco Aim.
ABOUT SHARE CLASSES o There is no guarantee that the o The Fund is not managed to track the
investment techniques and risk analyses performance of any particular index,
o Effective September 30, 2003, only used by the Fund's portfolio managers including the indexes defined here, and
previously established qualified plans will produce the desired results. consequently, the performance of the
are eligible to purchase Class B shares Fund may deviate significantly from the
of any AIM fund. o The prices of securities held by the performance of the indexes.
Fund may decline in response to market
o Class R shares are available only to risks. o A direct investment cannot be made in
certain retirement plans. Please see an index. Unless otherwise indicated,
the prospectus for more information. o The Fund invests in "value" stocks, index results include reinvested
which can continue to be inexpensive dividends, and they do not reflect
PRINCIPAL RISKS OF INVESTING IN THE FUND for long periods of time and may never sales charges. Performance of an index
realize their full value. of funds reflects fund expenses;
o Credit risk is the risk of loss on an performance of a market index does not.
investment due to the deterioration of o Since a large percentage of the Fund's
an issuer's financial health. Such a assets may be invested in securities of OTHER INFORMATION
deterioration of financial health may a limited number of companies, each
result in a reduction of the credit investment has a greater effect on the o The Chartered Financial ANALYST--REGIS-
rating of the issuer's securities and Fund's overall performance, and any TERED TRADEMARK-- (CFA--REGISTERED
may lead to the issuer's inability to change in the value of those securities TRADEMARK--) designation is a globally
honor its contractual obligations, could significantly affect the value of recognized standard for measuring the
including making timely payment of your investment in the Fund. competence and integrity of investment
interest and principal. professionals.
ABOUT INDEXES USED IN THIS REPORT
o Prices of equity securities change in o The returns shown in the management's
response to many factors including the o The S&P 500--REGISTERED TRADEMARK-- discussion of Fund performance are
historical and prospective earnings of INDEX is a market based on net asset values calculated
the issuer, the value of its assets, capitalization-weighted index covering for shareholder transactions. Generally
general economic conditions, interest all major areas of the U.S. economy. It accepted accounting principles require
rates, investor perceptions and market is not the 500 largest companies, but adjustments to be made to the net
liquidity. rather the most widely held 500 assets of the Fund at period end for
companies chosen with respect to market financial reporting purposes, and as
o Foreign securities have additional size, liquidity, and their industry. such, the net asset values for
risks, including exchange rate changes, shareholder transactions and the
political and economic upheaval, the o The RUSSELL 1000--REGISTERED returns based on those net asset values
relative lack of information, TRADEMARK-- VALUE INDEX measures the may differ from the net asset values
relatively low market liquidity, and performance of those Russell 1000 and returns reported in the Financial
the potential lack of strict financial companies with lower price-to-book Highlights.
and accounting controls and standards. ratios and lower forecasted growth
values. The Russell 1000 Value Index is o Industry classifications used in this
o Interest rate risk refers to the risk a trademark/service mark of the Frank report are generally according to the
that bond prices generally fall as Russell Company. Russell--REGISTERED Global Industry Classification
interest rates rise; conversely, bond TRADEMARK-- is a trademark of the Frank Standard, which was developed by and is
prices generally rise as interest rates Russell Company. the exclusive property and a service
fall. mark of MSCI Inc. and Standard &
o The LIPPER LARGE-CAP VALUE FUNDS INDEX Poor's.
o The Fund may use enhanced investment is an equally weighted representation
techniques such as leveraging and of the largest funds in the Lipper
derivatives. Leveraging entails risks Large-Cap Value Funds category. These
such as magnifying changes in the value funds typically have a below-average
of the portfolio's securities. price-to-earnings ratio, price-to-book
Derivatives are subject to counterparty ratio, and three-year sales-per-share
risk -- the risk that the other party growth value, compared to the S&P 500
will not complete the transaction with Index.
the Fund.
=======================================================================================
THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, ==========================================
WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. FUND NASDAQ SYMBOLS
INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING.
======================================================================================= Class A Shares ASAVX
Class B Shares ASBVX
NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class C Shares SBCVX
Class R Shares ASRVX
==========================================
8 AIM STRUCTURED VALUE FUND
SCHEDULE OF INVESTMENTS(a)
August 31, 2008
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS & OTHER EQUITY INTERESTS-98.90%
AEROSPACE & DEFENSE-0.91%
Boeing Co. (The) 7,700 $ 504,812
- --------------------------------------------------------------------------------
United Technologies Corp. 11,700 767,403
================================================================================
1,272,215
================================================================================
APPAREL RETAIL-2.61%
Gap, Inc. (The) 132,000 2,567,400
- --------------------------------------------------------------------------------
Ross Stores, Inc. 10,800 434,268
- --------------------------------------------------------------------------------
TJX Cos., Inc. (The)(b) 17,800 645,072
================================================================================
3,646,740
================================================================================
APPAREL, ACCESSORIES & LUXURY GOODS-0.14%
Warnaco Group, Inc. (The)(b)(c) 3,900 201,123
================================================================================
ASSET MANAGEMENT & CUSTODY BANKS-1.54%
Northern Trust Corp. 2,800 225,092
- --------------------------------------------------------------------------------
State Street Corp. 28,400 1,921,828
================================================================================
2,146,920
================================================================================
AUTOMOTIVE RETAIL-0.49%
AutoZone, Inc.(c) 5,000 686,150
================================================================================
BIOTECHNOLOGY-0.50%
Biogen Idec Inc.(c) 13,800 702,834
================================================================================
BROADCASTING & CABLE TV-0.47%
CBS Corp.-Class B(b) 12,900 208,722
- --------------------------------------------------------------------------------
DIRECTV Group, Inc. (The)(b)(c) 15,700 442,897
================================================================================
651,619
================================================================================
COAL & CONSUMABLE FUELS-0.54%
Walter Industries, Inc. 8,000 750,400
================================================================================
COMMERCIAL PRINTING-0.17%
Deluxe Corp. 14,200 234,442
================================================================================
COMPUTER & ELECTRONICS RETAIL-1.99%
Best Buy Co., Inc.(b) 13,300 595,441
- --------------------------------------------------------------------------------
GameStop Corp.-Class A(b)(c) 3,200 140,384
- --------------------------------------------------------------------------------
RadioShack Corp.(b) 107,600 2,045,476
================================================================================
2,781,301
================================================================================
COMPUTER STORAGE & PERIPHERALS-2.80%
Lexmark International, Inc.-Class A(b)(c) 24,000 863,280
- --------------------------------------------------------------------------------
QLogic Corp.(c) 107,300 2,004,364
- --------------------------------------------------------------------------------
Seagate Technology 41,700 621,747
- --------------------------------------------------------------------------------
Western Digital Corp.(c) 15,300 417,078
================================================================================
3,906,469
================================================================================
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-1.30%
AGCO Corp.(b)(c) 29,400 1,811,922
================================================================================
CONSUMER FINANCE-0.28%
Discover Financial Services(b) 24,000 394,800
================================================================================
DATA PROCESSING & OUTSOURCED SERVICES-1.48%
Hewitt Associates, Inc.-Class A(c) 26,200 1,053,502
- --------------------------------------------------------------------------------
MasterCard, Inc.-Class A(b) 4,200 1,018,710
================================================================================
2,072,212
================================================================================
DIVERSIFIED BANKS-5.99%
U.S. Bancorp(b) 113,300 3,609,738
- --------------------------------------------------------------------------------
Wells Fargo & Co.(b) 157,000 4,752,390
================================================================================
8,362,128
================================================================================
DIVERSIFIED REIT'S-0.80%
Vornado Realty Trust 11,200 1,113,952
================================================================================
EDUCATION SERVICES-1.00%
Apollo Group Inc.-Class A(c) 12,400 789,632
- --------------------------------------------------------------------------------
DeVry, Inc.(b) 11,800 608,644
================================================================================
1,398,276
================================================================================
ELECTRICAL COMPONENTS & EQUIPMENT-0.19%
GrafTech International Ltd.(b)(c) 13,400 272,288
================================================================================
FERTILIZERS & AGRICULTURAL CHEMICALS-2.16%
CF Industries Holdings, Inc.(b) 6,400 975,360
- --------------------------------------------------------------------------------
Mosaic Co. (The) 12,000 1,280,880
- --------------------------------------------------------------------------------
Terra Industries Inc.(b) 15,100 758,775
================================================================================
3,015,015
================================================================================
FOOTWEAR-0.43%
NIKE, Inc.-Class B(b) 9,800 593,978
================================================================================
GENERAL MERCHANDISE STORES-0.36%
Big Lots, Inc.(b)(c) 17,100 505,647
================================================================================
HEALTH CARE DISTRIBUTORS-0.14%
PharMerica Corp.(c) 8,100 191,727
================================================================================
HEALTH CARE EQUIPMENT-0.23%
Boston Scientific Corp.(c) 25,400 319,024
================================================================================
HEALTH CARE SERVICES-0.84%
Express Scripts, Inc.(b)(c) 8,400 616,644
- --------------------------------------------------------------------------------
Medco Health Solutions, Inc.(b)(c) 11,900 557,515
================================================================================
1,174,159
================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
9 AIM STRUCTURED VALUE FUND
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
HOMEBUILDING-2.28%
D.R. Horton, Inc.(b) 196,100 $ 2,443,406
- --------------------------------------------------------------------------------
M.D.C. Holdings, Inc.(b) 5,300 219,685
- --------------------------------------------------------------------------------
NVR, Inc.(b)(c) 860 514,048
================================================================================
3,177,139
================================================================================
HOUSEHOLD PRODUCTS-1.86%
Procter & Gamble Co. (The) 37,200 2,595,444
================================================================================
HOUSEWARES & SPECIALTIES-0.21%
American Greetings Corp.-Class A(b) 5,100 82,008
- --------------------------------------------------------------------------------
Blyth, Inc.(b) 5,300 83,793
- --------------------------------------------------------------------------------
Tupperware Brands Corp.(b) 3,500 125,020
================================================================================
290,821
================================================================================
HYPERMARKETS & SUPER CENTERS-2.02%
BJ's Wholesale Club, Inc.(b)(c) 5,400 205,362
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 44,300 2,616,801
================================================================================
2,822,163
================================================================================
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-1.53%
Mirant Corp.(b)(c) 72,200 2,135,676
================================================================================
INDUSTRIAL CONGLOMERATES-3.45%
3M Co. 7,100 508,360
- --------------------------------------------------------------------------------
General Electric Co. 153,600 4,316,160
================================================================================
4,824,520
================================================================================
INDUSTRIAL REIT'S-0.06%
AMB Property Corp. 1,700 77,163
================================================================================
INSURANCE BROKERS-0.94%
Aon Corp. 15,500 736,095
- --------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc. 17,900 571,547
================================================================================
1,307,642
================================================================================
INTEGRATED OIL & GAS-15.98%
Chevron Corp. 56,600 4,885,712
- --------------------------------------------------------------------------------
ConocoPhillips 60,300 4,975,353
- --------------------------------------------------------------------------------
Exxon Mobil Corp. 122,500 9,801,225
- --------------------------------------------------------------------------------
Occidental Petroleum Corp. 33,500 2,658,560
================================================================================
22,320,850
================================================================================
INTEGRATED TELECOMMUNICATION SERVICES-7.69%
AT&T Inc. 195,800 6,263,642
- --------------------------------------------------------------------------------
Cincinnati Bell Inc.(b)(c) 19,000 74,100
- --------------------------------------------------------------------------------
Verizon Communications Inc.(b) 125,500 4,407,560
================================================================================
10,745,302
================================================================================
INTERNET RETAIL-1.02%
Expedia, Inc.(b)(c) 80,600 1,423,396
================================================================================
INTERNET SOFTWARE & SERVICES-0.38%
eBay Inc.(c) 21,100 526,023
================================================================================
LEISURE PRODUCTS-1.63%
Callaway Golf Co.(b) 12,800 173,824
- --------------------------------------------------------------------------------
Hasbro, Inc.(b) 54,400 2,034,560
- --------------------------------------------------------------------------------
Polaris Industries Inc.(b) 1,600 72,144
================================================================================
2,280,528
================================================================================
LIFE & HEALTH INSURANCE-1.90%
Aflac, Inc. 34,400 1,950,480
- --------------------------------------------------------------------------------
Unum Group(b) 27,600 701,316
================================================================================
2,651,796
================================================================================
MANAGED HEALTH CARE-0.06%
Magellan Health Services, Inc.(c) 1,800 78,408
================================================================================
METAL & GLASS CONTAINERS-1.50%
Owens-Illinois, Inc.(c) 47,100 2,100,660
================================================================================
MULTI-LINE INSURANCE-0.12%
Loews Corp. 4,000 173,720
================================================================================
MULTI-UTILITIES-0.21%
Xcel Energy, Inc.(b) 14,600 299,446
================================================================================
OFFICE REIT'S-0.49%
Boston Properties, Inc. 6,700 686,549
================================================================================
OTHER DIVERSIFIED FINANCIAL SERVICES-1.36%
Bank of America Corp. 28,800 896,832
- --------------------------------------------------------------------------------
Citigroup Inc. 3,900 74,061
- --------------------------------------------------------------------------------
JPMorgan Chase & Co. 24,200 931,458
================================================================================
1,902,351
================================================================================
PHARMACEUTICALS-8.88%
Forest Laboratories, Inc.(c) 6,700 239,123
- --------------------------------------------------------------------------------
Johnson & Johnson 17,500 1,232,525
- --------------------------------------------------------------------------------
King Pharmaceuticals, Inc.(c) 17,600 201,344
- --------------------------------------------------------------------------------
Lilly (Eli) and Co. 39,100 1,824,015
- --------------------------------------------------------------------------------
Merck & Co. Inc. 91,600 3,267,372
- --------------------------------------------------------------------------------
Perrigo Co.(b) 14,100 493,359
- --------------------------------------------------------------------------------
Pfizer Inc. 268,900 5,138,679
================================================================================
12,396,417
================================================================================
PROPERTY & CASUALTY INSURANCE-6.43%
Allstate Corp. (The) 56,300 2,540,819
- --------------------------------------------------------------------------------
Axis Capital Holdings Ltd. 20,600 688,658
- --------------------------------------------------------------------------------
Chubb Corp. (The)(b) 50,700 2,434,107
- --------------------------------------------------------------------------------
Progressive Corp. (The)(b) 34,100 629,827
- --------------------------------------------------------------------------------
Travelers Cos., Inc. (The) 60,700 2,680,512
================================================================================
8,973,923
================================================================================
PUBLISHING-0.11%
Scholastic Corp.(b) 5,800 151,380
================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
10 AIM STRUCTURED VALUE FUND
<Table>
<Caption>
SHARES VALUE
- --------------------------------------------------------------------------------
REINSURANCE-1.47%
Arch Capital Group Ltd. (Bermuda)(c) 4,200 $ 292,992
- --------------------------------------------------------------------------------
Everest Re Group, Ltd. 3,200 262,816
- --------------------------------------------------------------------------------
Odyssey Re Holdings Corp.(b) 2,600 98,176
- --------------------------------------------------------------------------------
PartnerRe Ltd. (Bermuda)(b) 6,700 461,697
- --------------------------------------------------------------------------------
RenaissanceRe Holdings Ltd.(b) 18,500 938,135
================================================================================
2,053,816
================================================================================
RESIDENTIAL REIT'S-0.39%
Equity Residential 13,000 548,600
================================================================================
RETAIL REIT'S-1.20%
Simon Property Group, Inc.(b) 17,600 1,669,888
================================================================================
SEMICONDUCTOR EQUIPMENT-0.25%
Amkor Technology, Inc.(b)(c) 45,600 342,456
================================================================================
SEMICONDUCTORS-0.76%
National Semiconductor Corp. 24,800 531,464
- --------------------------------------------------------------------------------
Texas Instruments Inc. 18,700 458,337
- --------------------------------------------------------------------------------
TriQuint Semiconductor, Inc.(c) 11,700 73,593
================================================================================
1,063,394
================================================================================
SOFT DRINKS-0.73%
Coca-Cola Co. (The) 12,400 645,668
- --------------------------------------------------------------------------------
Dr. Pepper Snapple Group, Inc.(c) 15,200 375,592
================================================================================
1,021,260
================================================================================
SPECIALIZED REIT'S-1.97%
Nationwide Health Properties, Inc.(b) 8,000 275,360
- --------------------------------------------------------------------------------
Public Storage(b) 25,500 2,252,160
- --------------------------------------------------------------------------------
Senior Housing Properties Trust(b) 10,300 223,304
================================================================================
2,750,824
================================================================================
STEEL-1.68%
AK Steel Holding Corp. 10,000 526,100
- --------------------------------------------------------------------------------
Nucor Corp. 13,500 708,750
- --------------------------------------------------------------------------------
Schnitzer Steel Industries, Inc.-Class A(b) 15,300 1,046,673
- --------------------------------------------------------------------------------
Worthington Industries, Inc.(b) 3,800 66,880
================================================================================
2,348,403
================================================================================
SYSTEMS SOFTWARE-2.41%
Microsoft Corp. 19,900 543,071
- --------------------------------------------------------------------------------
Symantec Corp.(c) 126,500 2,822,215
================================================================================
3,365,286
================================================================================
TOBACCO-0.46%
Altria Group, Inc. 11,800 248,154
- --------------------------------------------------------------------------------
Universal Corp.(b) 1,300 67,496
- --------------------------------------------------------------------------------
UST Inc.(b) 6,100 326,899
================================================================================
642,549
================================================================================
TRUCKING-0.11%
Werner Enterprises, Inc.(b) 6,500 148,265
================================================================================
Total Common Stocks & Other Equity Interests
(Cost $143,210,249) 138,101,399
================================================================================
<Caption>
PRINCIPAL
AMOUNT
U.S. TREASURY SECURITIES-0.25%
U.S. TREASURY BILLS-0.25%
1.85%, 09/18/08(d)(e) (Cost $349,694) $ 350,000 349,694
================================================================================
<Caption>
SHARES
MONEY MARKET FUNDS-0.68%
Liquid Assets Portfolio-Institutional Class(f) 476,971 476,971
- --------------------------------------------------------------------------------
Premier Portfolio-Institutional Class(f) 476,971 476,971
================================================================================
Total Money Market Funds (Cost $953,942) 953,942
================================================================================
TOTAL INVESTMENTS (excluding investments purchased
with cash collateral from securities on
loan)-99.83% (Cost $144,513,885) 139,405,035
================================================================================
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON
LOAN
MONEY MARKET FUNDS-9.17%
Liquid Assets Portfolio-Institutional Class (Cost
$12,801,303)(f)(g) 12,801,303 12,801,303
================================================================================
TOTAL INVESTMENTS-109.00% (Cost $157,315,188) 152,206,338
================================================================================
OTHER ASSETS LESS LIABILITIES-(9.00)% (12,562,071)
================================================================================
NET ASSETS-100.00% $139,644,267
________________________________________________________________________________
================================================================================
</Table>
Investment Abbreviations:
<Table>
REIT - Real Estate Investment Trust
</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) All or a portion of this security was out on loan at August 31, 2008.
(c) Non-income producing security.
(d) Security traded on a discount basis. The interest rate shown represents
the discount rate at the time of purchase by the Fund.
(e) All or a portion of the value was pledged as collateral to cover margin
requirements for open futures contracts. See Note 1J and Note 6.
(f) The money market fund and the Fund are affiliated by having the same
investment advisor.
(g) The security has been segregated to satisfy the commitment to return the
cash collateral received in securities lending transactions upon the
borrower's return of the securities loaned. See Note 1I.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
11 AIM STRUCTURED VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
<Table>
ASSETS:
Investments, at value (Cost
$143,559,943)* $138,451,093
- ------------------------------------------------------
Investments in affiliated money market
funds (Cost $13,755,245) 13,755,245
======================================================
Total investments (Cost
$157,315,188) 152,206,338
======================================================
Receivables for:
Fund shares sold 38,516
- ------------------------------------------------------
Dividends and Interest 336,228
- ------------------------------------------------------
Investment for trustee deferred
compensation and retirement plans 5,864
- ------------------------------------------------------
Other assets 21,044
======================================================
Total assets 152,607,990
______________________________________________________
======================================================
LIABILITIES:
Payables for:
Fund shares reacquired 64,170
- ------------------------------------------------------
Collateral upon return of securities
loaned 12,801,303
- ------------------------------------------------------
Variation margin 8,525
- ------------------------------------------------------
Accrued fees to affiliates 9,184
- ------------------------------------------------------
Accrued other operating expenses 71,379
- ------------------------------------------------------
Trustee deferred compensation and
retirement plans 9,162
======================================================
Total liabilities 12,963,723
======================================================
Net assets applicable to shares
outstanding $139,644,267
______________________________________________________
======================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $158,297,421
- ------------------------------------------------------
Undistributed net investment income 2,011,028
- ------------------------------------------------------
Undistributed net realized gain (loss) (15,560,912)
- ------------------------------------------------------
Unrealized appreciation (depreciation) (5,103,270)
======================================================
$139,644,267
______________________________________________________
======================================================
NET ASSETS:
Class A $ 4,087,874
______________________________________________________
======================================================
Class B $ 1,031,438
______________________________________________________
======================================================
Class C $ 235,088
______________________________________________________
======================================================
Class R $ 17,764
______________________________________________________
======================================================
Institutional Class $134,272,103
______________________________________________________
======================================================
SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE,
UNLIMITED NUMBER OF SHARES AUTHORIZED:
Class A 428,286
______________________________________________________
======================================================
Class B 108,606
______________________________________________________
======================================================
Class C 24,766
______________________________________________________
======================================================
Class R 1,865
______________________________________________________
======================================================
Institutional Class 14,040,540
______________________________________________________
======================================================
Class A:
Net asset value per share $ 9.54
- ------------------------------------------------------
Maximum offering price per share
(Net asset value of $9.54 divided
by 94.50%) $ 10.10
______________________________________________________
======================================================
Class B:
Net asset value and offering price
per share $ 9.50
______________________________________________________
======================================================
Class C:
Net asset value and offering price
per share $ 9.49
______________________________________________________
======================================================
Class R:
Net asset value and offering price
per share $ 9.52
______________________________________________________
======================================================
Institutional Class:
Net asset value and offering price
per share $ 9.56
______________________________________________________
======================================================
</Table>
* At August 31, 2008, securities with an aggregate value of $12,424,238 were on
loan to brokers.
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
12 AIM STRUCTURED VALUE FUND
STATEMENT OF OPERATIONS
For the year ended August 31, 2008
<Table>
INVESTMENT INCOME:
Dividends $ 3,422,848
- ------------------------------------------------------------------------------------------------
Dividends from affiliated money market funds (includes securities lending income
of $68,583) 153,333
- ------------------------------------------------------------------------------------------------
Interest 5,516
================================================================================================
Total investment income 3,581,697
================================================================================================
EXPENSES:
Advisory fees 834,803
- ------------------------------------------------------------------------------------------------
Administrative services fees 50,000
- ------------------------------------------------------------------------------------------------
Custodian fees 12,097
- ------------------------------------------------------------------------------------------------
Distribution fees:
Class A 6,095
- ------------------------------------------------------------------------------------------------
Class B 7,408
- ------------------------------------------------------------------------------------------------
Class C 2,045
- ------------------------------------------------------------------------------------------------
Class R 66
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- A, B, C and R 13,524
- ------------------------------------------------------------------------------------------------
Transfer agent fees -- Institutional 5,576
- ------------------------------------------------------------------------------------------------
Trustees' and officers' fees and benefits 19,464
- ------------------------------------------------------------------------------------------------
Registration and filing fees 60,292
- ------------------------------------------------------------------------------------------------
Professional services fees 61,366
- ------------------------------------------------------------------------------------------------
Other 30,649
================================================================================================
Total expenses 1,103,385
================================================================================================
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (48,660)
================================================================================================
Net expenses 1,054,725
================================================================================================
Net investment income 2,526,972
================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM:
Net realized gain (loss) from:
Investment securities (14,864,567)
- ------------------------------------------------------------------------------------------------
Futures contracts (680,162)
================================================================================================
(15,544,729)
================================================================================================
Change in net unrealized appreciation (depreciation) of:
Investment securities (7,993,316)
- ------------------------------------------------------------------------------------------------
Futures contracts (5,098)
================================================================================================
(7,998,414)
================================================================================================
Net realized and unrealized gain (loss) (23,543,143)
================================================================================================
Net increase (decrease) in net assets resulting from operations $(21,016,171)
________________________________________________________________________________________________
================================================================================================
</Table>
See accompanying Notes to Financial Statements which are an integral part of the
financial statements.
13 AIM STRUCTURED VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
For the years ended August 31, 2008 and 2007
<Table>
<Caption>
2008 2007
- --------------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 2,526,972 $ 1,572,273
- --------------------------------------------------------------------------------------------------------
Net realized gain (loss) (15,544,729) 2,725,104
- --------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) (7,998,414) 2,825,764
========================================================================================================
Net increase (decrease) in net assets resulting from operations (21,016,171) 7,123,141
========================================================================================================
Distributions to shareholders from net investment income:
Class A (18,421) (6,110)
- --------------------------------------------------------------------------------------------------------
Class B (1,111) --
- --------------------------------------------------------------------------------------------------------
Class C (332) --
- --------------------------------------------------------------------------------------------------------
Class R (78) (2,292)
- --------------------------------------------------------------------------------------------------------
Institutional Class (1,688,483) (542,391)
========================================================================================================
Total distributions from net investment income (1,708,425) (550,793)
========================================================================================================
Distributions to shareholders from net realized gains:
Class A (36,401) (786)
- --------------------------------------------------------------------------------------------------------
Class B (12,339) (625)
- --------------------------------------------------------------------------------------------------------
Class C (3,686) (443)
- --------------------------------------------------------------------------------------------------------
Class R (211) (432)
- --------------------------------------------------------------------------------------------------------
Institutional Class (2,625,170) (55,158)
========================================================================================================
Total distributions from net realized gains (2,677,807) (57,444)
========================================================================================================
Share transactions-net:
Class A 2,560,980 1,107,095
- --------------------------------------------------------------------------------------------------------
Class B 460,895 (169,271)
- --------------------------------------------------------------------------------------------------------
Class C 119,138 (557,889)
- --------------------------------------------------------------------------------------------------------
Class R 10,135 (707,324)
- --------------------------------------------------------------------------------------------------------
Institutional Class 24,069,585 55,246,248
========================================================================================================
Net increase in net assets resulting from share transactions 27,220,733 54,918,859
========================================================================================================
Net increase in net assets 1,818,330 61,433,763
________________________________________________________________________________________________________
========================================================================================================
NET ASSETS:
Beginning of year 137,825,937 76,392,174
========================================================================================================
End of year (including undistributed net investment income of
$2,011,028 and $1,197,469, respectively) $139,644,267 $137,825,937
________________________________________________________________________________________________________
========================================================================================================
</Table>
NOTES TO FINANCIAL STATEMENTS
August 31, 2008
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
AIM Structured Value 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 six separate
portfolios, each authorized to issue an unlimited number of shares of beneficial
interest.
The Fund currently offers five different classes of shares: Class A, Class B,
Class C, Class R 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 shares 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. Matters affecting each
portfolio or class will be voted on exclusively by the shareholders of such
portfolio or class.
The assets, liabilities and operations of each portfolio are accounted for
separately. Information presented in these financial statements pertains only to
the Fund.
The Fund's investment objective is long-term growth of capital.
The following is a summary of the significant accounting policies followed by
the Fund in the preparation of its financial statements.
14 AIM STRUCTURED VALUE FUND
A. SECURITY VALUATIONS -- Securities, including restricted securities, are
valued according to the following policy.
A security listed or traded on an exchange (except convertible bonds) is
valued at its last sales price or official closing price as of the close
of the customary trading session on the exchange where the security is
principally traded, or lacking any sales or official closing price on a
particular day, the security may be valued at the closing bid price on
that day. Securities traded in the over-the-counter market are valued
based on prices furnished by independent pricing services or market
makers. When such securities are valued by an independent pricing service
they may be considered fair valued. Futures contracts are valued at the
final settlement price set by an exchange on which they are principally
traded. Listed options are valued at the mean between the last bid and the
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.
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.
Debt obligations (including convertible bonds) and unlisted equities are
fair valued using an evaluated quote provided by an independent pricing
service. Evaluated quotes provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as institution-size trading in similar groups of
securities, developments related to specific securities, dividend rate,
yield, quality, type of issue, coupon rate, maturity, individual trading
characteristics and other market data. Short-term obligations, including
commercial paper, having 60 days or less to maturity are recorded at
amortized cost which approximates value. Debt securities are subject to
interest rate and credit risks. In addition, all debt securities involve
some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted
into U.S. dollar amounts using the applicable exchange rates as of the
close of the NYSE. If market quotations are available and reliable for
foreign exchange traded equity securities, the securities will be valued
at the market quotations. Because trading hours for certain foreign
securities end before the close of the NYSE, closing market quotations may
become unreliable. If between the time trading ends on a particular
security and the close of the customary trading session on the NYSE,
events occur that are significant and may 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
and are valued at the last bid price in the case of equity securities and
in the case of debt obligations, the mean between the last bid and asked
prices.
Securities for which market quotations are not readily available or are
unreliable are valued at fair value as determined in good faith by or
under the supervision of the Trust's officers following procedures
approved by the Board of Trustees. Issuer specific events, market trends,
bid/ask quotes of brokers and information providers and other market data
may be reviewed in the course of making a good faith determination of a
security's fair value.
Valuations change in response to many factors including the historical
and prospective earnings of the issuer, the value of the issuer's assets,
general economic conditions, interest rates, investor perceptions and
market liquidity. Because of the inherent uncertainties of valuation, the
values reflected in the financial statements may materially differ from
the value received upon actual sale of those investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions
are accounted for on a trade date basis. Realized gains or losses on sales
are computed on the basis of specific identification of the securities
sold. Interest income is recorded on the accrual basis from settlement
date. Dividend income 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 as 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 income and realized and unrealized capital gains and
losses to a class based on the relative net assets of each class.
C. COUNTRY DETERMINATION -- For the purposes of making investment selection
decisions and presentation in the Schedule of Investments, the investment
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 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
15 AIM STRUCTURED VALUE FUND
and enhancements, the nature of the collateral and the sponsor
organization. Country of issuer and/or credit risk exposure has been
determined to be the United States of America unless otherwise noted.
D. DISTRIBUTIONS -- Distributions from income and net realized capital gain,
if any, are generally paid annually and recorded on ex-dividend date. The
Fund may elect to treat a portion of the proceeds from redemptions as
distributions for federal income tax purposes.
E. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements
of Subchapter M of the Internal Revenue Code necessary to qualify as a
regulated investment company and to distribute substantially all of the
Fund's taxable earnings to shareholders. As such, the Fund will not be
subject to federal income taxes on otherwise taxable income (including net
realized capital gain) that is distributed to shareholders. Therefore, no
provision for federal income taxes is recorded in the financial
statements.
The Fund files tax returns in the U.S. Federal jurisdiction and certain
other jurisdictions. Generally the Fund is subject to examinations by such
taxing authorities for up to three years after the filing of the return
for the tax period.
F. EXPENSES -- Fees provided for under the Rule 12b-1 plan of a particular
class of the Fund are charged to the operations of such class. Transfer
agency fees and expenses and other shareholder recordkeeping fees and
expenses attributable to the Institutional Class are charged to such
class. Transfer agency fees and expenses and other shareholder
recordkeeping fees and expenses relating to all other classes are
allocated among those classes based on relative net assets. All other
expenses are allocated among the classes based on relative net assets.
G. ACCOUNTING ESTIMATES -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
H. INDEMNIFICATIONS -- Under the Trust's organizational documents, each
Trustee, officer, employee or other agent of the Trust (including the
Trust's investment manager) 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 that contain a variety of indemnification clauses. The Fund's
maximum exposure under these arrangements is unknown as this would involve
future claims that may be made against the Fund that have not yet
occurred. The risk of material loss as a result of such indemnification
claims is considered remote.
I. SECURITIES LENDING -- The Fund may lend portfolio securities having a
market value up to one-third of the Fund's total assets. Such loans are
secured by collateral equal to no less than the market value of the loaned
securities determined daily by the securities lending provider. Such
collateral will be cash or debt securities issued or guaranteed by the
U.S. Government or any of its sponsored agencies. Cash collateral received
in connection with these loans is invested in short-term money market
instruments or affiliated money market funds and is shown as such on the
Schedule of Investments. It is the Fund's policy to obtain additional
collateral from or return excess collateral to the borrower by the end of
the next business day, following the valuation date of the securities
loaned. Therefore, the value of the collateral held may be temporarily
less than the value of the securities on loan. Lending securities entails
a risk of loss to the Fund if and to the extent that the market value of
the securities loaned were to increase and the borrower did not increase
the collateral accordingly, and the borrower fails to return the
securities. The Fund could also experience delays and costs in gaining
access to the collateral. The Fund bears the risk of any deficiency in the
amount of the collateral available for return to the borrower due to any
loss on the collateral invested. Dividends received on cash collateral
investments for securities lending transactions, which are net of
compensation to counterparties, is included in Dividends from affiliates
on the Statement of Operations. The aggregate value of securities out on
loan is shown as a footnote on the Statement of Assets and Liabilities, if
any.
J. FUTURES CONTRACTS -- The Fund may purchase or sell futures contracts.
Initial margin deposits required upon entering into futures contracts are
satisfied by the segregation of specific securities as collateral for the
account of the broker (the Fund's agent in acquiring the futures
position). 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. Variation
margin payments are received or made depending upon whether unrealized
gains or losses are incurred. When the contracts are closed, 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. 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. Risks may exceed amounts recognized in the
Statement of Assets and Liabilities.
K. COLLATERAL -- To the extent the Fund has pledged or segregated a security
as collateral and that security is subsequently sold, it is the Fund's
practice to replace such collateral no later than the next business day.
This practice does not apply to securities pledged as collateral for
securities lending transactions.
NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES
The Trust has entered into a master investment advisory agreement with Invesco
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 $250 million 0.60%
- -------------------------------------------------------------------
Next $250 million 0.575%
- -------------------------------------------------------------------
Next $500 million 0.55%
- -------------------------------------------------------------------
Next $1.5 billion 0.525%
- -------------------------------------------------------------------
Next $2.5 billion 0.50%
- -------------------------------------------------------------------
Next $2.5 billion 0.475%
- -------------------------------------------------------------------
Next $2.5 billion 0.45%
- -------------------------------------------------------------------
Over $10 billion 0.425%
___________________________________________________________________
===================================================================
</Table>
16 AIM STRUCTURED VALUE FUND
Under the terms of a new master sub-advisory agreement approved by
shareholders of the Fund, effective May 1, 2008, 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).
Previously, under the terms of a master sub-advisory agreement between the
Advisor and Invesco Institutional (N.A.), Inc., the Advisor paid Invesco
Institutional (N.A.), Inc. 40% of the amount of the Advisor's compensation on
the sub-advised assets. This agreement terminated on May 1, 2008.
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
and Institutional Class shares to 1.00%, 1.75%, 1.75%, 1.25% and 0.75% of
average daily net assets, respectively, through at least June 30, 2009. 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; (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. These credits are used to pay certain expenses incurred by the Fund.
Further, the Advisor has contractually agreed, through at least June 30, 2009,
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 (excluding investments of cash collateral
from securities lending) cash in such affiliated money market funds.
For the year ended August 31, 2008, the Advisor waived advisory fees $29,524
and reimbursed class level expenses of $9,491, $2,884, $796, $51 and $5,576
expenses of Class A, Class B, Class C, Class R and Institutional Class shares,
respectively.
At the request of the Trustees of the Trust, Invesco agreed to reimburse
expenses incurred by the Fund in connection with market timing matters in the
AIM Funds, which may include legal, audit, shareholder reporting, communications
and trustee expenses. These expenses along with the related expense
reimbursement are included in the Statement of Operations. For the year ended
August 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $36.
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 year ended August 31, 2008, 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 year
ended August 31, 2008, expenses incurred under the agreement are shown in the
Statement of Operations as transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Aim
Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class
B, Class C, Class R 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 year ended August 31, 2008, expenses incurred under the Plans
are shown in the Statement of Operations as distribution fees.
Front-end sales commissions and CDSC (collectively the "sales charges") are
not recorded as expenses of the Fund. Front-end sales commissions are deducted
from proceeds from the sales of Fund shares prior to investment in Class A
shares of the Fund. CDSC are deducted from redemption proceeds prior to
remittance to the shareholder. During the year ended August 31, 2008, IADI
advised the Fund that IADI retained $1,711 in front-end sales commissions from
the sale of Class A shares and $0, $101, $46 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--EXPENSE OFFSET ARRANGEMENT
The expense offset arrangement is comprised of transfer agency credits which
result from balances in Demand Deposit Accounts (DDA) used by the transfer agent
for clearing shareholder transactions. For the year ended August 31, 2008, the
Fund received credits from this arrangement, which resulted in the reduction of
the Fund's total expenses of $302.
NOTE 4--TRUSTEES' AND OFFICERS' FEES AND BENEFITS
"Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund
to pay remuneration to certain Trustees and Officers of the Fund. Trustees have
the option to defer compensation payable by the Fund, and "Trustees' and
Officers' Fees and Benefits" also include amounts accrued by the Fund to fund
such deferred compensation amounts. Those Trustees who defer compensation have
the option to select various 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
17 AIM STRUCTURED VALUE FUND
and receive benefits under such plan. "Trustees' and Officers' Fees and
Benefits" include amounts accrued by the Fund to fund such retirement benefits.
Obligations under the deferred compensation and retirement plans represent
unsecured claims against the general assets of the Fund.
During the year ended August 31, 2008, the Fund paid legal fees of $2,727 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 5--CASH BALANCES
The Fund is permitted to temporarily carry a negative or overdrawn balance in
its account with The State Street Bank and Trust Company, the custodian bank. To
compensate the custodian bank for such overdrafts, the overdrawn Fund may either
(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.
NOTE 6--FUTURES CONTRACTS
<Table>
<Caption>
OPEN FUTURES CONTRACTS AT PERIOD-END
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF MONTH/ VALUE UNREALIZED
CONTRACT CONTRACTS COMMITMENT 08/31/08 APPRECIATION
- ---------------------------------------------------------------------------------------------------------------------
Chicago Mercantile Exchange E-mini S&P 500 11 September-08/Long $705,430 $5,580
_____________________________________________________________________________________________________________________
=====================================================================================================================
</Table>
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS
DISTRIBUTIONS TO SHAREHOLDERS:
The tax character of distributions paid during the years ended August 31, 2008
and 2007 was as follows:
<Table>
<Caption>
2008 2007
- -----------------------------------------------------------------------------------------------------
Ordinary income $4,036,815 $562,760
- -----------------------------------------------------------------------------------------------------
Long-term capital gain 349,417 45,477
=====================================================================================================
Total distributions $4,386,232 $608,237
_____________________________________________________________________________________________________
=====================================================================================================
</Table>
TAX COMPONENTS OF NET ASSETS:
As of August 31, 2008, the components of net assets on a tax basis were as
follows:
<Table>
<Caption>
2008
- ------------------------------------------------------------------------------------------------
Undistributed ordinary income $ 2,020,079
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation)-investments (5,550,870)
- ------------------------------------------------------------------------------------------------
Temporary book/tax differences (9,051)
- ------------------------------------------------------------------------------------------------
Capital loss carryforward (430,774)
- ------------------------------------------------------------------------------------------------
Post-October Capital loss deferral (14,682,538)
- ------------------------------------------------------------------------------------------------
Shares of beneficial interest 158,297,421
================================================================================================
Total net assets $139,644,267
________________________________________________________________________________________________
================================================================================================
</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 wash sales.
The temporary book/tax differences are a result of timing differences between
book and tax recognition of income and/or expenses. The Fund's temporary
book/tax differences are the result of the trustee deferral of compensation and
retirement plan benefits.
Capital loss carryforward is calculated and reported as of a specific date.
Results of transactions and other activity after that date may affect the amount
of capital loss carryforward actually available for the Fund to utilize. The
ability to utilize capital loss carryforward in the future may be limited under
the Internal Revenue Code and related regulations based on the results of future
transactions.
The Fund has a capital loss carryforward as of August 31, 2008 which expires
as follows:
<Table>
<Caption>
CAPITAL LOSS
EXPIRATION CARRYFORWARD*
- -----------------------------------------------------------------------------------------------
August 31, 2016 $430,774
_______________________________________________________________________________________________
===============================================================================================
</Table>
18 AIM STRUCTURED VALUE FUND
NOTE 8--INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities,
U.S. Treasury obligations and money market funds, if any) purchased and sold by
the Fund during the year ended August 31, 2008 was $146,813,272 and
$121,129,893, 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 $ 6,442,921
- ------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (11,993,791)
================================================================================================
Net unrealized appreciation (depreciation) of investment securities $ (5,550,870)
________________________________________________________________________________________________
================================================================================================
Cost of investments for tax purposes is $157,757,208.
</Table>
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES
Primarily as a result of differing book/tax treatment of distributions, on
August 31, 2008, undistributed net investment income was decreased by $4,988,
undistributed net realized gain (loss) was increased by $4,988. This
reclassification had no effect on the net assets of the Fund.
NOTE 10--SHARE INFORMATION
<Table>
<Caption>
CHANGES IN SHARES OUTSTANDING
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
-------------------------------------------------------
2008(a) 2007
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------
Sold:
Class A 324,245 $ 3,314,989 198,849 $ 2,334,302
- ----------------------------------------------------------------------------------------------------------------------
Class B 79,256 803,847 67,041 772,625
- ----------------------------------------------------------------------------------------------------------------------
Class C 22,824 233,105 26,613 319,489
- ----------------------------------------------------------------------------------------------------------------------
Class R 954 9,846 761 8,952
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 2,458,953 25,971,597 5,067,304 58,701,761
======================================================================================================================
Issued as reinvestment of dividends:
Class A 4,851 52,634 607 6,896
- ----------------------------------------------------------------------------------------------------------------------
Class B 1,222 13,256 55 619
- ----------------------------------------------------------------------------------------------------------------------
Class C 345 3,735 38 439
- ----------------------------------------------------------------------------------------------------------------------
Class R 26 289 240 2,724
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class 397,571 4,313,653 52,555 597,549
======================================================================================================================
Automatic conversion of Class B shares to Class A shares:
Class A 10,189 99,570 6,602 76,276
- ----------------------------------------------------------------------------------------------------------------------
Class B (10,221) (99,570) (6,621) (76,276)
======================================================================================================================
Reacquired:
Class A (87,363) (906,213) (111,705) (1,310,379)
- ----------------------------------------------------------------------------------------------------------------------
Class B (24,920) (256,638) (73,167) (866,239)
- ----------------------------------------------------------------------------------------------------------------------
Class C (12,182) (117,702) (73,659) (877,817)
- ----------------------------------------------------------------------------------------------------------------------
Class R -- -- (60,117) (719,000)
- ----------------------------------------------------------------------------------------------------------------------
Institutional Class (623,869) (6,215,665) (345,649) (4,053,062)
======================================================================================================================
2,541,881 $27,220,733 4,749,747 $54,918,859
______________________________________________________________________________________________________________________
======================================================================================================================
</Table>
(a) 88% of the outstanding shares of the Fund are owned by affiliated mutual
funds. Affiliated mutual funds are other mutual funds that are also advised
by Invesco Aim.
NOTE 11--NEW ACCOUNTING STANDARD
In March 2008, the Financial Accounting Standards Board (FASB) issued 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. It is effective for financial statements
issued for fiscal years beginning after November 15, 2008. Management is
currently in the process of determining the impact of the standard on the Fund's
disclosures in the financial statements.
19 AIM STRUCTURED VALUE FUND
NOTE 12--FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for a share of the Fund
outstanding throughout the periods indicated.
<Table>
<Caption>
Income (loss) from
investment operations
-------------------------------------
NET GAINS Distributions
(LOSSES) -------------------------
NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS
VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET NET ASSET
BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END
OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD
- --------------------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
08/31/08 $11.40 $0.16 $(1.70) $(1.54) $(0.11) $(0.21) $(0.32) $ 9.54
Year ended
08/31/07 10.44 0.14 0.89 1.03 (0.06) (0.01) (0.07) 11.40
Year ended
08/31/06(e) 10.00 0.20 0.24 0.44 -- -- -- 10.44
- --------------------------------------------------------------------------------------------------------------------------
CLASS B
Year ended
08/31/08 11.35 0.08 (1.70) (1.62) (0.02) (0.21) (0.23) 9.50
Year ended
08/31/07 10.40 0.05 0.91 0.96 -- (0.01) (0.01) 11.35
Year ended
08/31/06(e) 10.00 0.16 0.24 0.40 -- -- -- 10.40
- --------------------------------------------------------------------------------------------------------------------------
CLASS C
Year ended
08/31/08 11.33 0.08 (1.69) (1.61) (0.02) (0.21) (0.23) 9.49
Year ended
08/31/07 10.40 0.05 0.89 0.94 -- (0.01) (0.01) 11.33
Year ended
08/31/06(e) 10.00 0.16 0.24 0.40 -- -- -- 10.40
- --------------------------------------------------------------------------------------------------------------------------
CLASS R
Year ended
08/31/08 11.38 0.13 (1.70) (1.57) (0.08) (0.21) (0.29) 9.52
Year ended
08/31/07 10.42 0.11 0.90 1.01 (0.04) (0.01) (0.05) 11.38
Year ended
08/31/06(e) 10.00 0.18 0.24 0.42 -- -- -- 10.42
- --------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS
Year ended
08/31/08 11.43 0.19 (1.71) (1.52) (0.14) (0.21) (0.35) 9.56
Year ended
08/31/07 10.45 0.17 0.89 1.06 (0.07) (0.01) (0.08) 11.43
Year ended
08/31/06(e) 10.00 0.21 0.24 0.45 -- -- -- 10.45
__________________________________________________________________________________________________________________________
==========================================================================================================================
<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
TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO
RETURN(b) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVERS(c)
- -------------------------------------------------------------------------------------------------------------
CLASS A
Year ended
08/31/08 (13.83)% $ 4,088 1.01%(d) 1.42%(d) 1.57%(d) 88%
Year ended
08/31/07 9.80 2,011 1.01 1.36 1.17 62
Year ended
08/31/06(e) 4.40 856 1.03(f) 5.80(f) 4.59(f) 5
- -------------------------------------------------------------------------------------------------------------
CLASS B
Year ended
08/31/08 (14.50) 1,031 1.76(d) 2.17(d) 0.82(d) 88
Year ended
08/31/07 9.20 718 1.76 2.11 0.42 62
Year ended
08/31/06(e) 4.00 790 1.78(f) 6.55(f) 3.84(f) 5
- -------------------------------------------------------------------------------------------------------------
CLASS C
Year ended
08/31/08 (14.43) 235 1.76(d) 2.17(d) 0.82(d) 88
Year ended
08/31/07 9.01 156 1.76 2.11 0.42 62
Year ended
08/31/06(e) 4.00 632 1.78(f) 6.55(f) 3.84(f) 5
- -------------------------------------------------------------------------------------------------------------
CLASS R
Year ended
08/31/08 (14.08) 18 1.26(d) 1.67(d) 1.32(d) 88
Year ended
08/31/07 9.65 10 1.26 1.61 0.92 62
Year ended
08/31/06(e) 4.20 625 1.28(f) 6.05(f) 4.34(f) 5
- -------------------------------------------------------------------------------------------------------------
INSTITUTIONAL
CLASS
Year ended
08/31/08 (13.64) 134,272 0.75(d) 0.78(d) 1.83(d) 88
Year ended
08/31/07 10.13 134,931 0.75 0.94 1.43 62
Year ended
08/31/06(e) 4.50 73,488 0.77(f) 5.50(f) 4.85(f) 5
_____________________________________________________________________________________________________________
=============================================================================================================
</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 and is not annualized for
periods less than one year, if applicable.
(c) Portfolio turnover is calculated at the fund level and is not annualized
for periods less than one year, if applicable.
(d) Ratios are based on average daily net assets (000's omitted) of $2,438,
$741, $205, $13 and $135,737 for Class A, Class B, Class C, Class R and
Institutional Class shares, respectively.
(e) Commencement date of March 31, 2006.
(f) Annualized.
20 AIM STRUCTURED VALUE FUND
NOTE 13--LEGAL PROCEEDINGS
Terms used in the Legal Proceedings Note are defined terms solely for the
purpose of this note.
PENDING LITIGATION AND REGULATORY INQUIRIES
On August 30, 2005, the West Virginia Office of the State Auditor -- Securities
Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of
Right to Hearing to Invesco Aim and IADI (Order No. 05-1318). The WVASC makes
findings of fact that Invesco Aim and IADI entered into certain arrangements
permitting market timing of the AIM Funds and failed to disclose these
arrangements in the prospectuses for such Funds, and conclusions of law to the
effect that Invesco Aim and IADI violated the West Virginia securities laws. The
WVASC orders Invesco Aim and IADI to cease any further violations and seeks to
impose monetary sanctions, including restitution to affected investors,
disgorgement of fees, reimbursement of investigatory, administrative and legal
costs and an "administrative assessment," to be determined by the Commissioner.
Initial research indicates that these damages could be limited or capped by
statute. By agreement with the Commissioner of Securities, Invesco Aim's time to
respond to that Order has been indefinitely suspended.
Civil lawsuits, including purported class action and shareholder derivative
suits, have been filed against certain of the AIM Funds, Invesco Funds Group,
Inc. ("IFG"), Invesco Aim, IADI and/or related entities and individuals,
depending on the lawsuit, alleging:
- that the defendants permitted improper market timing and related activity in
the AIM Funds; and
- that certain AIM Funds inadequately employed fair value pricing.
These lawsuits allege as theories of recovery, depending on the lawsuit,
violations of various provisions of the Federal and state securities laws and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
negligence, breach of fiduciary duty and/or breach of contract. These lawsuits
seek remedies that include, depending on the lawsuit, damages, restitution,
injunctive relief, imposition of a constructive trust, removal of certain
directors and/or employees, various corrective measures under ERISA, rescission
of certain AIM Funds' advisory agreements and/or distribution plans and recovery
of all fees paid. The case pending in Illinois State Court regarding fair value
pricing was dismissed with prejudice on May 6, 2008.
All lawsuits based on allegations of market timing, late trading and related
issues have been transferred to the United States District Court for the
District of Maryland (the "MDL Court"). Pursuant to an Order of the MDL Court,
plaintiffs in these lawsuits consolidated their claims for pre-trial purposes
into three amended complaints against various Invesco Aim- and IFG-related
parties: (i) a Consolidated Amended Class Action Complaint purportedly brought
on behalf of shareholders of the AIM Funds; (ii) a Consolidated Amended Fund
Derivative Complaint purportedly brought on behalf of the AIM Funds and fund
registrants; and (iii) an Amended Class Action Complaint for Violations of ERISA
purportedly brought on behalf of participants in the Invesco 401(k) plan. Based
on orders issued by the MDL Court, all claims asserted against the AIM Funds
that have been transferred to the MDL Court have been dismissed, although
certain Funds remain nominal defendants in the Consolidated Amended Fund
Derivative Complaint. On September 15, 2006, the MDL Court granted the Invesco
defendants' motion to dismiss the Amended Class Action Complaint for Violations
of ERISA and dismissed such Complaint. Plaintiff appealed this ruling. On June
16, 2008, the Fourth Circuit Court of Appeals reversed the dismissal and
remanded this lawsuit back to the MDL Court for further proceedings.
IFG, Invesco Aim, IADI and/or related entities and individuals have received
inquiries from numerous regulators in the form of subpoenas or other oral or
written requests for information and/or documents related to one or more of the
following issues, among others, some of which concern one or more AIM Funds:
market timing activity, late trading, fair value pricing, excessive or improper
advisory and/or distribution fees, mutual fund sales practices, including
revenue sharing and directed-brokerage arrangements, investments in securities
of other registered investment companies, contractual plans, issues related to
Section 529 college savings plans and procedures for locating lost security
holders. IFG, Invesco Aim and IADI have advised the Fund that they are providing
full cooperation with respect to these inquiries. Regulatory actions and/or
additional civil lawsuits related to these or other issues may be filed against
the AIM Funds, IFG, Invesco Aim and/or related entities and individuals in the
future.
At the present time, management of Invesco Aim and the Fund are unable to
estimate the impact, if any, that the outcome of the Pending Litigation and
Regulatory Inquiries described above may have on Invesco Aim, IADI or the Fund.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees of AIM Counselor Series Trust
and Shareholders of AIM Structured Value Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of AIM Structured Value Fund (one of
the funds constituting AIM Counselor Series Trust, hereafter referred to as the
"Fund") at August 31, 2008, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2008 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PRICEWATERHOUSECOOPERS LLP
October 20, 2008
Houston, Texas
22 AIM STRUCTURED VALUE FUND
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, which may include sales charges (loads) on purchase payments or
contingent deferred sales charges on redemptions, and redemption fees, if any;
and (2) ongoing costs, including management fees; distribution and/or service
(12b-1) fees; and other Fund expenses. This example is intended to help you
understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with ongoing costs of investing in other mutual funds. The
example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as sales
charges (loads) on purchase payments, contingent deferred sales charges on
redemptions, and redemption fees, if any. Therefore, the hypothetical
information is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transaction costs were included, your costs would have been higher.
<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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- ---------------------------------------------------------------------------------------------------
A $1,000.00 $951.20 $4.90 $1,020.11 $5.08 1.00%
- ---------------------------------------------------------------------------------------------------
B 1,000.00 947.20 8.57 1,016.34 8.87 1.75
- ---------------------------------------------------------------------------------------------------
C 1,000.00 947.10 8.57 1,016.34 8.87 1.75
- ---------------------------------------------------------------------------------------------------
R 1,000.00 948.20 6.12 1,018.85 6.34 1.25
- ---------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
23 AIM STRUCTURED VALUE FUND
Supplement to Annual Report dated 8/31/08
AIM STRUCTURED VALUE FUND
INSTITUTIONAL CLASS SHARES
The following information has been prepared to provide Institutional Class shareholders with a performance overview specific to
their holdings. Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans
that meet certain criteria.
==========================================
NASDAQ SYMBOL ASIVX
==========================================
Fund expenses provided later in this supplement.
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
This material is for institutional investor use only and may not be quoted, reproduced [INVESCO AIM LOGO]
or shown to the public, nor used in written form as sales literature for public use. - SERVICE MARK -
invescoaim.com SVAL-INS-1 Invesco Aim Distributors, Inc.
Supplement to Annual Report dated 8/31/08
Supplement to Annual Report dated 8/31/08
AIM STRUCTURED VALUE FUND
==========================================
AVERAGE ANNUAL TOTAL RETURNS and class expenses. than those shown. All returns assume
For periods ended 8/31/08 reinvestment of distributions at NAV.
Inception (3/31/06) -0.26% The net annual Fund operating expense Investment return and principal value will
1 Year -13.64 ratio set forth in the most recent Fund fluctuate so your shares, when redeemed,
========================================== prospectus as of the date of this may be worth more or less than their
supplement for Institutional Class shares original cost. See full report for
========================================== was 0.75%.(1) The total annual Fund information on comparative benchmarks.
AVERAGE ANNUAL TOTAL RETURNS operating expense ratio set forth in the Please consult your Fund prospectus for
For periods ended 6/30/08, most recent most recent Fund prospectus as of the date more information. For the most current
calendar quarter-end of this supplement for Institutional Class month-end performance, please call 800 451
Inception (3/31/06) -0.32% shares was 0.94%. The expense ratios 4246 or visit invescoaim.com.
1 Year -17.49 presented above may vary from the expense
========================================== ratios presented in other sections of the (1) Total annual operating expenses less
actual report that are based on expenses any contractual fee waivers and/or
Institutional Class shares have no sales incurred during the period covered by the expense reimbursements by the advisor
charge; therefore, performance is at net report. in effect through at least June 30,
asset value (NAV). Performance of 2009. See current prospectus for more
Institutional Class shares will differ Please note that past performance is information.
from performance of other share classes not indicative of future results. More
primarily due to differing sales charges recent returns may be more or less
the chart and table(s) does not reflect shares. The performance of the Fund's
Past performance cannot guarantee deduction of taxes a shareholder would pay other share classes will differ primarily
comparable future results. on Fund distributions or sale of Fund due to different sales charge structures
shares. Performance of the indexes does and class expenses, and may be greater
The data shown in the chart above not reflect the effects of taxes. than or less than the performance of the
includes reinvested distributions and Fund Fund's Institutional Class shares shown in
expenses including management fees. Index The performance data shown in the chart the chart above.
results include reinvested dividends. above is that of the Fund's institutional
Performance of an index of funds reflects share class. The performance data shown in
fund expenses and management fees; the chart in the annual report is that of
performance of a market index does not. the Fund's Class A, B, C and R
Performance shown in
====================================================================================================================================
[MOUNTAIN CHART]
RESULTS OF A $10,000 INVESTMENT -- INSTITUTIONAL CLASS SHARES
Fund and index data from 3/31/06
AIM Structured
Value Fund-
Institutional Class Russell 1000 Lipper Large-Cap
Date Shares Value Index(1) S&P 500 Index(1) Value Funds Index(1)
3/31/06 $10000 $10000 $10000 $10000
4/06 10200 10254 10134 10249
5/06 9860 9995 9843 9998
6/06 10000 10059 9856 10005
7/06 10300 10304 9917 10158
8/06 10451 10476 10152 10346
9/06 10631 10685 10414 10586
10/06 11000 11035 10753 10902
11/06 11260 11286 10957 11090
12/06 11397 11540 11111 11329
1/07 11679 11687 11279 11475
2/07 11397 11505 11059 11270
3/07 11660 11683 11182 11414
4/07 12072 12115 11677 11903
5/07 12465 12552 12084 12341
6/07 12032 12258 11884 12153
7/07 11368 11692 11516 11665
8/07 11509 11823 11688 11803
9/07 11891 12229 12125 12177
10/07 12042 12230 12318 12273
11/07 11357 11632 11802 11745
12/07 11341 11520 11721 11608
1/08 10769 11058 11018 11020
2/08 10447 10595 10660 10649
3/08 10313 10515 10614 10501
4/08 10791 11028 11131 11021
5/08 10822 11010 11275 11114
6/08 9929 9957 10325 10143
7/08 9866 9921 10239 10005
8/08 9938 10089 10387 10119
====================================================================================================================================
1 Lipper Inc.
CALCULATING YOUR ONGOING FUND EXPENSES
EXAMPLE
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with ongoing costs of investing in other mutual funds. The example is based on
an investment of $1,000 invested at the beginning of the period and held for the
entire period March 1, 2008, through August 31, 2008.
ACTUAL EXPENSES
The table below provides information about actual account values and actual
expenses. You may use the information in this table, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Actual Expenses Paid During Period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table below also provides information about hypothetical account values and
hypothetical expenses based on the Fund's actual expense ratio and an assumed
rate of return of 5% per year before expenses, which is not the Fund's actual
return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only. 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 (03/01/08) (08/31/08)(1) PERIOD(2) (08/31/08) PERIOD(2) RATIO
- -----------------------------------------------------------------------------------------------------------
Institutional $1,000.00 $951.20 $3.68 $1,021.37 $3.81 0.75%
- -----------------------------------------------------------------------------------------------------------
</Table>
(1) The actual ending account value is based on the actual total return of the
Fund for the period March 1, 2008, through August 31, 2008, after actual
expenses and will differ from the hypothetical ending account value which is
based on the Fund's expense ratio and a hypothetical annual return of 5%
before expenses.
(2) Expenses are equal to the Fund's annualized expense ratio as indicated above
multiplied by the average account value over the period, multiplied by
184/366 to reflect the most recent fiscal half year.
AIM STRUCTURED VALUE FUND
APPROVAL OF INVESTMENT ADVISORY AGREEMENT
The Board of Trustees (the Board) of AIM renewal process, the Trustees receive from one another and attributed different
Counselor Series Trust is required under comparative performance and fee data weight to the various factors. The
the Investment Company Act of 1940 to regarding the AIM Funds prepared by an Trustees recognized that the advisory
approve annually the renewal of the AIM independent company, Lipper, Inc. arrangements and resulting advisory fees
Structured Value Fund (the Fund) (Lipper), under the direction and for the Fund and the other AIM Funds are
investment advisory agreement with Invesco supervision of the independent Senior the result of years of review and
Aim Advisors, Inc. (Invesco Aim). During Officer who also prepares a separate negotiation between the Trustees and
contract renewal meetings held on June analysis of this information for the Invesco Aim, that the Trustees may focus
18-19, 2008, the Board as a whole and the Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of
disinterested or "independent" Trustees, recommendations to the Investments these arrangements in some years than in
voting separately, approved the Committee regarding the performance, fees others, and that the Trustees'
continuance of the Fund's investment and expenses of their assigned funds. The deliberations and conclusions in a
advisory agreement for another year, Investments Committee considers each particular year may be based in part on
effective July 1, 2008. In doing so, the Sub-Committee's recommendations and makes their deliberations and conclusions of
Board determined that the Fund's its own recommendations regarding the these same arrangements throughout the
investment advisory agreement is in the performance, fees and expenses of the AIM year and in prior years.
best interests of the Fund and its Funds to the full Board. The Investments
shareholders and that the compensation to Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF
Invesco Aim under the Fund's investment Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION
advisory agreement is fair and reasonable. its annual recommendation to the Board
whether to approve the continuance of each The discussion below serves as a
The independent Trustees met separately AIM Fund's investment advisory agreement summary of the Senior Officer's
during their evaluation of the Fund's and sub-advisory agreements for another independent written evaluation with
investment advisory agreement with year. respect to the Fund's investment advisory
independent legal counsel from whom they agreement as well as a discussion of the
received independent legal advice, and the The independent Trustees are assisted material factors and related conclusions
independent Trustees also received in their annual evaluation of the Fund's that formed the basis for the Board's
assistance during their deliberations from investment advisory agreement by the approval of the Fund's investment advisory
the independent Senior Officer, a independent Senior Officer. One agreement and sub-advisory agreements.
full-time officer of the AIM Funds who responsibility of the Senior Officer is to Unless otherwise stated, information set
reports directly to the independent manage the process by which the AIM Funds' forth below is as of June 19, 2008 and
Trustees. proposed management fees are negotiated does not reflect any changes that may have
during the annual contract renewal process occurred since that date, including but
THE BOARD'S FUND EVALUATION PROCESS to ensure that they are negotiated in a not limited to changes to the Fund's
manner that is at arms' length and performance, advisory fees, expense
The Board's Investments Committee has reasonable. Accordingly, the Senior limitations and/or fee waivers.
established three Sub-Committees that are Officer must either supervise a
responsible for overseeing the management competitive bidding process or prepare an I. Investment Advisory Agreement
of a number of the series portfolios of independent written evaluation. The Senior
the AIM Funds. This Sub-Committee Officer has recommended that an A. Nature, Extent and Quality of
structure permits the Trustees to focus on independent written evaluation be provided Services Provided by Invesco Aim
the performance of the AIM Funds that have and, at the direction of the Board, has
been assigned to them. The Sub-Committees prepared an independent written The Board reviewed the advisory services
meet throughout the year to review the evaluation. provided to the Fund by Invesco Aim under
performance of their assigned funds, and the Fund's investment advisory agreement,
the Sub-Committees review monthly and During the annual contract renewal the performance of Invesco Aim in
quarterly comparative performance process, the Board considered the factors providing these services, and the
information and periodic asset flow data discussed below under the heading "Factors credentials and experience of the officers
for their assigned funds. These materials and Conclusions and Summary of Independent and employees of Invesco Aim who provide
are prepared under the direction and Written Fee Evaluation" in evaluating the these services. The Board's review of the
supervision of the independent Senior fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide
Officer. Over the course of each year, the investment advisory agreement and these services included the Board's
Sub-Committees meet with portfolio sub-advisory agreements at the contract consideration of Invesco Aim's portfolio
managers for their assigned funds and renewal meetings and at their meetings and product review process, various back
other members of management and review throughout the year as part of their office support functions provided by
with these individuals the performance, ongoing oversight of the Fund. The Fund's Invesco Aim and its affiliates, and
investment objective(s), policies, investment advisory agreement and Invesco Aim's equity and fixed income
strategies and limitations of these funds. sub-advisory agreements were considered trading operations. The Board concluded
separately, although the Board also that the nature, extent and quality of the
In addition to their meetings considered the common interests of all of advisory services provided to the Fund by
throughout the year, the Sub-Committees the AIM Funds in their deliberations. The Invesco Aim were appropriate and that
meet at designated contract renewal Board considered all of the information Invesco Aim currently is providing
meetings each year to conduct an in-depth provided to them and did not identify any satisfactory advisory services in
review of the performance, fees and particular factor that was controlling. accordance with the terms of the Fund's
expenses of their assigned funds. During Each Trustee may have evaluated the investment advisory agreement. In
the contract information provided differently addition, based on their ongoing meetings
throughout the year with the Fund's
portfolio manager or
24 AIM STRUCTURED VALUE FUND continued
managers, the Board concluded that these continues to be responsive to the Board's the comparative advisory fee information
individuals are competent and able to focus on fund performance. and the expense limitation discussed
continue to carry out their above, the Board concluded that the Fund's
responsibilities under the Fund's C. Advisory Fees and Fee Waivers advisory fees were fair and reasonable.
investment advisory agreement.
The Board compared the Fund's contractual D. Economies of Scale and Breakpoints
In determining whether to continue the advisory fee rate to the contractual
Fund's investment advisory agreement, the advisory fee rates of funds in the Fund's The Board considered the extent to which
Board considered the prior relationship Lipper expense group that are not managed there are economies of scale in Invesco
between Invesco Aim and the Fund, as well by Invesco Aim, at a common asset level Aim's provision of advisory services to
as the Board's knowledge of Invesco Aim's and as of the end of the past calendar the Fund. The Board also considered
operations, and concluded that it was year. The Board noted that the Fund's whether the Fund benefits from such
beneficial to maintain the current contractual advisory fee rate was below economies of scale through contractual
relationship, in part, because of such the median contractual advisory fee rate breakpoints in the Fund's advisory fee
knowledge. The Board also considered the of funds in its expense group. The Board schedule or through advisory fee waivers
steps that Invesco Aim and its affiliates also reviewed the methodology used by or expense limitations. The Board noted
have taken over the last several years to Lipper in determining contractual fee that the Fund's contractual advisory fee
improve the quality and efficiency of the rates. schedule includes seven breakpoints but
services they provide to the AIM Funds in that, due to the Fund's asset level at the
the areas of investment performance, The Board also compared the Fund's end of the past calendar year and the way
product line diversification, effective fee rate (the advisory fee after in which the breakpoints have been
distribution, fund operations, shareholder any advisory fee waivers and before any structured, the Fund has yet to benefit
services and compliance. The Board expense limitations/waivers) to the from the breakpoints. Based on this
concluded that the quality and efficiency advisory fee rates of other clients of information, the Board concluded that the
of the services Invesco Aim and its Invesco Aim and its affiliates with Fund's advisory fees would reflect
affiliates provide to the AIM Funds in investment strategies comparable to those economies of scale at higher asset levels.
each of these areas generally have of the Fund, including three mutual funds The Board also noted that the Fund shares
improved, and support the Board's approval advised by Invesco Aim. The Board noted directly in economies of scale through
of the continuance of the Fund's that the Fund's rate was below the rates lower fees charged by third party service
investment advisory agreement. for two of the mutual funds and the same providers based on the combined size of
rate as the third mutual fund. all of the AIM Funds and affiliates.
B. Fund Performance
Additionally, the Board compared the E. Profitability and Financial
The Board noted that the Fund recently Fund's effective fee rate to the total Resources of Invesco Aim
began operations and that only one advisory fees paid by numerous separately
calendar year of comparative performance managed accounts/wrap accounts advised by The Board reviewed information from
data was available. The Board compared the Invesco Aim affiliates. The Board noted Invesco Aim concerning the costs of the
Fund's performance during the past that the Fund's rate was generally above advisory and other services that Invesco
calendar year to the performance of funds the rates for the separately managed Aim and its affiliates provide to the Fund
in the Fund's performance group that are accounts/wrap accounts. The Board and the profitability of Invesco Aim and
not managed by Invesco Aim, and against considered that management of the its affiliates in providing these
the performance of all funds in the Lipper separately managed accounts/wrap accounts services. The Board also reviewed
Large Cap Value Funds Index. The Board by the Invesco Aim affiliates involves information concerning the financial
also reviewed the criteria used by Invesco different levels of services and different condition of Invesco Aim and its
Aim to identify the funds in the Fund's operational and regulatory requirements affiliates. The Board also reviewed with
performance group for inclusion in the than Invesco Aim's management of the Fund. Invesco Aim the methodology used to
Lipper reports. The Board noted that the The Board concluded that these differences prepare the profitability information. The
Fund's performance was in the fourth are appropriately reflected in the fee Board considered the overall profitability
quintile of its performance group for the structure for the Fund. of Invesco Aim, as well as the
one year period (the first quintile being profitability of Invesco Aim in connection
the best performing funds and the fifth The Board noted that Invesco Aim has with managing the Fund. The Board noted
quintile being the worst performing contractually agreed to waive fees and/ or that Invesco Aim continues to operate at a
funds). The Board noted that the Fund's limit expenses of the Fund through at net profit, although increased expenses in
performance was below the performance of least June 30, 2009 in an amount necessary recent years have reduced the
the Index for the one year period. The to limit total annual operating expenses profitability of Invesco Aim and its
Board noted that Invesco Aim acknowledges to a specified percentage of average daily affiliates. The Board concluded that the
the Fund's underperformance because of net assets for each class of the Fund. The Fund's fees were fair and reasonable, and
shorter term performance results and Board considered the contractual nature of that the level of profits realized by
continues to monitor the Fund. The Board this fee waiver and noted that it remains Invesco Aim and its affiliates from
also considered the steps Invesco Aim has in effect until at least June 30, 2009. providing services to the Fund was not
taken over the last several years to The Board also considered the effect this excessive in light of the nature, quality
improve the quality and efficiency of the expense limitation would have on the and extent of the services provided. The
services that Invesco Aim provides to the Fund's estimated total expenses. Board considered whether Invesco Aim is
AIM Funds. The Board concluded that financially sound and has the resources
Invesco Aim After taking account of the Fund's necessary to perform its obligations under
contractual advisory fee rate, as well as the Fund's investment advisory agreement,
25 AIM STRUCTURED VALUE FUND continued
and concluded that Invesco Aim has the the Fund and may therefore benefit Fund purpose of researching and compiling
financial resources necessary to fulfill shareholders. The Board concluded that information and making recommendations on
these obligations. Invesco Aim's soft dollar arrangements the markets and economies of various
were appropriate. The Board also concluded countries and securities of companies
F. Independent Written Evaluation of that, based on their review and located in such countries or on various
the Fund's Senior Officer representations made by Invesco Aim, these types of investments and investment
arrangements were consistent with techniques, and providing investment
The Board noted that, at their direction, regulatory requirements. advisory services. The Board concluded
the Senior Officer of the Fund, who is that the sub-advisory agreements will
independent of Invesco Aim and Invesco The Board considered the fact that the benefit the Fund and its shareholders by
Aim's affiliates, had prepared an Fund's uninvested cash and cash collateral permitting Invesco Aim to utilize the
independent written evaluation to assist from any securities lending arrangements additional resources and talent of the
the Board in determining the may be invested in money market funds Affiliated Sub-Advisers in managing the
reasonableness of the proposed management advised by Invesco Aim pursuant to Fund.
fees of the AIM Funds, including the Fund. procedures approved by the Board. The
The Board noted that they had relied upon Board noted that Invesco Aim will receive B. Fund Performance
the Senior Officer's written evaluation advisory fees from these affiliated money
instead of a competitive bidding process. market funds attributable to such The Board did view Fund performance as a
In determining whether to continue the investments, although Invesco Aim has relevant factor in considering whether to
Fund's investment advisory agreement, the contractually agreed to waive through at approve the sub-advisory agreements for
Board considered the Senior Officer's least June 30, 2009, the advisory fees the Fund, as one of the Affiliated
written evaluation. payable by the Fund in an amount equal to Sub-Advisers currently manages the Fund's
100% of the net advisory fees Invesco Aim assets. The Board noted that the Fund
G. Collateral Benefits to Invesco Aim receives from the affiliated money market recently began operations and that only
and its Affiliates funds with respect to the Fund's one calendar year of comparative
investment of uninvested cash, but not performance data was available. The Board
The Board considered various other cash collateral. The Board considered the compared the Fund's performance during the
benefits received by Invesco Aim and its contractual nature of this fee waiver and past calendar year to the performance of
affiliates resulting from Invesco Aim's noted that it remains in effect until at funds in the Fund's performance group that
relationship with the Fund, including the least June 30, 2009. The Board concluded are not managed by Invesco Aim, and
fees received by Invesco Aim and its that the Fund's investment of uninvested against the performance of all funds in
affiliates for their provision of cash and cash collateral from any the Lipper Large Cap Value Funds Index.
administrative, transfer agency and securities lending arrangements in the The Board also reviewed the criteria used
distribution services to the Fund. The affiliated money market funds is in the by Invesco Aim to identify the funds in
Board considered the performance of best interests of the Fund and its the Fund's performance group for inclusion
Invesco Aim and its affiliates in shareholders. in the Lipper reports. The Board noted
providing these services and the that the Fund's performance was in the
organizational structure employed by II. Sub-Advisory Agreements fourth quintile of its performance group
Invesco Aim and its affiliates to provide for the one year period (the first
these services. The Board also considered A. Nature, Extent and Quality of quintile being the best performing funds
that these services are provided to the Services Provided by Affiliated and the fifth quintile being the worst
Fund pursuant to written contracts which Sub-Advisers performing funds). The Board noted that
are reviewed and approved on an annual the Fund's performance was below the
basis by the Board. The Board concluded The Board reviewed the services to be performance of the Index for the one year
that Invesco Aim and its affiliates were provided by Invesco Trimark Ltd., Invesco period. The Board also considered the
providing these services in a satisfactory Asset Management Deutschland, GmbH, steps Invesco Aim has taken over the last
manner and in accordance with the terms of Invesco Asset Management Limited, Invesco several years to improve the quality and
their contracts, and were qualified to Asset Management (Japan) Limited, Invesco efficiency of the services that Invesco
continue to provide these services to the Australia Limited, Invesco Global Asset Aim provides to the AIM Funds. The Board
Fund. Management (N.A.), Inc., Invesco Hong Kong concluded that Invesco Aim continues to be
Limited, Invesco Institutional (N.A.), responsive to the Board's focus on fund
The Board considered the benefits Inc. and Invesco Senior Secured performance. The Board also reviewed more
realized by Invesco Aim as a result of Management, Inc. (collectively, the recent Fund performance and this review
portfolio brokerage transactions executed "Affiliated Sub-Advisers") under the did not change their conclusions.
through "soft dollar" arrangements. Under sub-advisory agreements and the
these arrangements, portfolio brokerage credentials and experience of the officers C. Sub-Advisory Fees
commissions paid by the Fund and/or other and employees of the Affiliated
funds advised by Invesco Aim are used to Sub-Advisers who will provide these The Board considered the services to be
pay for research and execution services. services. The Board concluded that the provided by the Affiliated Sub-Advisers
The Board noted that soft dollar nature, extent and quality of the services pursuant to the sub-advisory agreements
arrangements shift the payment obligation to be provided by the Affiliated and the services to be provided by
for the research and execution services Sub-Advisers were appropriate. The Board Invesco Aim pursuant to the Fund's
from Invesco Aim to the funds and noted that the Affiliated Sub-Advisers, investment advisory agreement, as well as
therefore may reduce Invesco Aim's which have offices and personnel that are the allocation of fees between Invesco Aim
expenses. The Board also noted that geographically dispersed in financial and the Affiliated Sub-Advisers pursuant
research obtained through soft dollar centers around the world, have been formed to
arrangements may be used by Invesco Aim in in part for the
making investment decisions for
26 AIM STRUCTURED VALUE FUND continued
the sub-advisory agreements. The Board
noted that the sub-advisory fees have no
direct effect on the Fund or its
shareholders, as they are paid by Invesco
Aim to the Affiliated Sub-Advisers, and
that Invesco Aim and the Affiliated
Sub-Advisers are affiliates. After taking
account of the Fund's contractual
sub-advisory fee rate, as well as other
relevant factors, the Board concluded that
the Fund's sub-advisory fees were fair and
reasonable.
D. Financial Resources of the
Affiliated Sub-Advisers
The Board considered whether each
Affiliated Sub-Adviser is financially
sound and has the resources necessary to
perform its obligations under its
respective sub-advisory agreement, and
concluded that each Affiliated Sub-Adviser
has the financial resources necessary to
fulfill these obligations.
27 AIM STRUCTURED VALUE FUND
TAX INFORMATION
Form 1099-DIV, Form 1042-S and other year-end tax information provide
shareholders with actual calendar year amounts that should be included in their
tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the
Internal Revenue Code or to meet a specific state's requirement.
The Fund designates the following amounts or, if subsequently determined to be
different, the maximum amount allowable for its fiscal year ended August 31,
2008:
<Table>
<Caption>
FEDERAL AND STATE INCOME TAX
Long-Term Capital Gain Dividends $349,417
Qualified Dividend Income* 57.29%
Corporate Dividends Received Deduction* 57.33%
U. S. Treasury Obligations 0.14%
</Table>
* The above percentages are based on ordinary income dividends paid to
shareholders during the Fund's fiscal year.
NON-RESIDENT ALIEN SHAREHOLDER INFORMATION
The percentage of qualifying assets not subject to the U.S. estate tax for the
fiscal quarter ended November 30, 2007 was 1.59%.
28 AIM STRUCTURED VALUE FUND
PROXY RESULTS
A Special Meeting ("Meeting") of Shareholders of AIM Structured Value Fund, an
investment portfolio of AIM Counselor Series Trust, a Delaware statutory trust
("Trust"), was held on February 29, 2008 and was adjourned, with respect to
certain proposals, until March 28, 2008. The Meeting on March 28, 2008 was held
for the following purposes:
(1) Elect 13 trustees to the Board of Trustees of the Trust, each of whom will
serve until his or her successor is elected and qualified.
(2) Approve an amendment to the Trust's Agreement and Declaration of Trust that
would permit the Board of Trustees of the Trust to terminate the Trust, the
Fund, and each other series portfolio of the Trust, or a share class without
a shareholder vote.
The results of the voting on the above matters were as follows:
<Table>
<Caption>
WITHHELD/
MATTERS VOTES FOR ABSTENTIONS**
- -----------------------------------------------------------------------------------------------------------------------
(1)* Bob R. Baker................................................................... 80,004,783 1,692,073
Frank S. Bayley................................................................ 80,042,468 1,654,388
James T. Bunch................................................................. 80,071,331 1,625,525
Bruce L. Crockett.............................................................. 80,047,680 1,649,176
Albert R. Dowden............................................................... 80,044,519 1,652,337
Jack M. Fields................................................................. 80,054,678 1,642,178
Martin L. Flanagan............................................................. 80,013,733 1,683,123
Carl Frischling................................................................ 80,026,567 1,670,289
Prema Mathai-Davis............................................................. 80,025,589 1,671,267
Lewis F. Pennock............................................................... 80,059,672 1,637,184
Larry Soll, Ph.D. ............................................................. 80,040,389 1,656,467
Raymond Stickel, Jr. .......................................................... 80,056,699 1,640,157
Philip A. Taylor............................................................... 80,034,136 1,662,720
<Caption>
VOTES WITHHELD/ BROKER
VOTES FOR AGAINST ABSTENTIONS NON-VOTES
- -----------------------------------------------------------------------------------------------------------------------
(2)* Approve an amendment to the Trust's Agreement and
Declaration of Trust that would permit the Board
of Trustees of the Trust to terminate the Trust,
the Fund, and each other series portfolio of the
Trust, or a share class without a shareholder
vote............................................. 55,885,613 10,011,477 2,110,683 13,689,083
</Table>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Counselor Series Trust.
** Includes Broker Non-Votes.
29 AIM STRUCTURED VALUE 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 103 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. 2007 Executive Director, Chief Executive Officer and President, None
Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global
Trustee investment management firm); Chairman, Invesco Aim Advisors,
Inc. (registered investment advisor); Director, Chairman,
Chief Executive Officer and President, IVZ Inc. (holding
company); INVESCO North American Holdings, Inc. (holding
company); and, INVESCO Group Services, Inc. (service
provider); Trustee, The AIM Family of Funds--Registered
Trademark-- ; Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President,
Invesco Holding Company Limited (parent of Invesco Aim and a
global investment management firm); Chairman, Investment
Company Institute; President, Co-Chief Executive Officer,
Co-President, Chief Operating Officer and Chief Financial
Officer, Franklin Resources, Inc. (global investment
management organization)
- --------------------------------------------------------------------------------------------------------------------------------
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 President, Invesco Trimark Dealer Inc. (formerly AIM Mutual
Executive Officer Fund Dealer Inc.) (registered broker dealer), 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
register transfer agent) and AIM GP Canada Inc. (general
partner for a limited partnership); 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, IVZ Callco
Inc. (holding company), INVESCO Inc. (holding company) and
Invesco Canada Holdings Inc. (formerly AIM Canada Holdings
Inc.) (holding company); Chief Executive Officer, AIM
Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund 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 (formerly AIM Funds Management Inc. d/b/a
INVESCO Enterprise Services) (registered investment advisor
and registered transfer agent); Trustee, President and
Principal Executive Officer of The AIM Family of Funds--
Registered Trademark-- (other than AIM Treasurer's Series
Trust and Short-Term Investments Trust); Trustee and
Executive Vice President, The AIM Family of Funds--
Registered Trademark-- (AIM Treasurer's Series Trust and
Short-Term Investments Trust only); and Manager, Invesco
PowerShares Capital Management LLC
Formerly: Director and President, AIM Trimark Corporate
Class Inc. and AIM Trimark Canada Fund Inc.; Director and
President, Invesco Trimark Ltd./Invesco Trimark Ltee
(formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise
Services); Senior Managing Director, Invesco Holding Company
Limited; Trustee and Executive Vice President, Tax-Free
Investments Trust; Director and Chairman, Fund Management
Company (registered broker dealer); President and Principal
Executive Officer, The AIM Family of Funds--Registered
Trademark-- (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.; and Director, Trimark Trust (federally
regulated Canadian Trust Company)
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Bruce L. Crockett -- 1944 2003 Chairman, Crockett Technology Associates (technology ACE Limited
Trustee and Chair consulting company) (insurance company);
and Captaris, Inc.
(unified messaging
provider)
- --------------------------------------------------------------------------------------------------------------------------------
Bob R. Baker -- 1936 1983 Retired None
Trustee
- --------------------------------------------------------------------------------------------------------------------------------
Frank S. Bayley -- 1939 2003 Retired
Trustee
Formerly: Partner, law firm of Baker & McKenzie; and None
Director, Badgley Funds, Inc. (registered investment
company) (2 portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
James T. Bunch -- 1942 2000 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Policy
Trustee firm) Studies, Inc. and
Van Gilder Insurance
Corporation
- --------------------------------------------------------------------------------------------------------------------------------
Albert R. Dowden -- 1941 2003 Director of a number of public and private business None
Trustee corporations, including the Boss Group Ltd. (private
investment and management); Continental Energy Services, LLC
(oil and gas pipeline service); Reich & Tang Funds
(registered investment company); Annuity and Life Re
(Holdings), Ltd. (reinsurance 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.; 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)
Formerly: Chief Executive Officer, Texana Timber LP
(sustainable forestry company); and Discovery Global
Education Fund (non-profit)
- --------------------------------------------------------------------------------------------------------------------------------
Carl Frischling -- 1937 2003 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds) (15
portfolios)
- --------------------------------------------------------------------------------------------------------------------------------
Prema Mathai-Davis -- 1950 2003 Formerly: Chief Executive Officer, YWCA of the USA 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
Trustee
Formerly: Partner, Deloitte & Touche; and Director, Mainstay None
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.
30 AIM STRUCTURED VALUE FUND
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 of N/A
Senior Vice President and Funds--Registered Trademark--
Senior Officer
Formerly: Director of Compliance and Assistant 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 Counsel, N/A
Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc.
Legal Officer and Secretary 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--Registered
Trademark-- ; 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, Senior Vice President, General Counsel
and Secretary, 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 President, The N/A
Vice President AIM Family of Funds--Registered Trademark--
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--Registered
Trademark-- ; 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; and Senior Vice
President and Compliance Director, Delaware Investments Family of
Funds
- --------------------------------------------------------------------------------------------------------------------------------
Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A
Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited,
IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO
Funds Group, Inc.; Secretary, INVESCO North American Holdings,
Inc.; and Vice President, The AIM Family of Funds--Registered
Trademark--
Formerly: 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--Registered Trademark-- ; Director and Vice
President, INVESCO Distributors, Inc. and Chief Executive Officer
and President, INVESCO Funds Group, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
Sheri S. Morris -- 1964 2008 Vice President, Treasurer and Principal Financial Officer, The N/A
Vice President, Treasurer AIM Family of Funds--Registered Trademark-- ; and Assistant Vice
and Principal Financial President, Invesco Aim Advisors, Inc., Invesco Aim Capital
Officer Management, Inc. and Invesco Aim Private Asset Management Inc.
Formerly: Assistant Vice President and Assistant Treasurer, The
AIM Family of Funds--Registered Trademark--
- --------------------------------------------------------------------------------------------------------------------------------
Karen Dunn Kelley -- 1960 2003 Head of Invesco's World Wide Fixed Income and Cash Management N/A
Vice President Group; 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, The AIM Family of Funds--Registered Trademark--
(other than AIM Treasurer's Series Trust and Short-Term
Investments Trust); and President and Principal Executive
Officer, The AIM Family of Funds--Registered Trademark-- (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--Registered
Trademark-- (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 Advisors, N/A
Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim
Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc.,
Invesco Aim Private Asset Management, Inc. and The AIM Family of
Funds--Registered Trademark--
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.; Senior N/A
Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief
Compliance Officer, The AIM Family of Funds--Registered
Trademark-- , 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, Invesco Aim Distributors, PricewaterhouseCoopers
Suite 100 Inc. Inc. LLP
Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street
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 State Street Bank and
& Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company
2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street
Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801
Americas
New York, NY 10036-2714
31 AIM STRUCTURED VALUE FUND
====================================================================================================================================
EDELIVERY
INVESCOAIM.COM/EDELIVERY
REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via email. Once your quarterly
statements, tax forms, fund reports, and prospectuses are available, we will send you an email notification containing links to
these documents. For security purposes, you will need to log in to your account to view your statements and tax forms.
WHY SIGN UP? HOW DO I SIGN UP?
Register for eDelivery to: It's easy. Just follow these simple steps:
- - save your Fund the cost of printing and postage. 1. Log in to your account.
- - reduce the amount of paper you receive. 2. Click on the "Service Center" tab.
- - gain access to your documents faster by not waiting for the 3. Select "Register for eDelivery" and complete the consent
mail. process.
- - view your documents online anytime at your convenience.
- - save the documents to your personal computer or print them
out for your records.
This service is provided by Invesco Aim Investment Services, Inc.
====================================================================================================================================
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, 2008, 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, 2009, 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 [INVESCO AIM LOGO]
individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco -SERVICE MARK-
Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco
Asset Management (Japan) Ltd., Invesco Hong Kong Ltd., Invesco Australia Limited, Invesco Asset Management
Limited and Invesco Asset Management Deutschland GmbH are affiliated investment advisors that serve as
subadvisors to many of the products and services represented by Invesco Aim. Invesco Aim Distributors, Inc. is
the distributor for the retail mutual funds, exchange-traded funds and U.S. institutional money market funds
represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.
[INVESCO AIM LOGO] - SERVICE MARK -
invescoaim.com SVAL-AR-1 Invesco Aim Distributors, Inc.
ITEM 2. CODE OF ETHICS.
As of the end of the period covered by this report, the Registrant had
adopted a code of ethics (the "Code") that applies to the Registrant's
principal executive officer ("PEO") and principal financial officer
("PFO"). 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 Percentage of Fees
Billed Applicable to Billed Applicable to
Non-Audit Services Non-Audit Services
Provided for fiscal Provided for fiscal
Fees Billed for year end 2008 Fees Billed for year end 2007
Services Rendered to Pursuant to Waiver of Services Rendered to Pursuant to Waiver of
the Registrant for Pre-Approval the Registrant for Pre-Approval
fiscal year end 2008 Requirement(1) fiscal year end 2007 Requirement(1)
-------------------- --------------------- -------------------- ---------------------
Audit Fees $259,468 N/A $272,969 N/A
Audit-Related Fees $ 0 0% $ 0 0%
Tax Fees(2) $ 64,876 0% $ 57,896 0%
All Other Fees $ 0 0% $ 0 0%
-------- --------
Total Fees $324,344 0% $330,865 0%
PWC billed the Registrant aggregate non-audit fees of $64,876 for the fiscal
year ended 2008, and $57,896 for the fiscal year ended 2007, for non-audit
services rendered to the Registrant.
- ----------
(1) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Registrant at the
time of engagement, (ii) the aggregate amount of all such services provided
is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant to PWC during a fiscal year; and (iii) such services are
promptly brought to the attention of the Registrant's Audit Committee and
approved by the Registrant's Audit Committee prior to the completion of the
audit.
(2) Tax fees for the fiscal year end August 31, 2008 includes fees billed for
reviewing tax returns and consultation services. Tax fees for the fiscal
year end August 31, 2007 includes fees billed for reviewing tax returns.
FEES BILLED BY PWC RELATED TO INVESCO AIM AND INVESCO AIM AFFILIATES
PWC billed Invesco Aim Advisors, 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 Non- Fees Billed for Non-
Audit Services 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 fiscal Non-Audit Services
year end 2008 That Provided for fiscal year year end 2007 That Provided for fiscal year
Were Required end 2008 Pursuant to Were Required end 2007 Pursuant to
to be Pre-Approved Waiver of Pre- to be Pre-Approved Waiver of Pre-
by the Registrant's Approval by the Registrant's Approval
Audit Committee Requirement(1) Audit Committee Requirement(1)
--------------------- ------------------------ --------------------- ------------------------
Audit-Related Fees $0 0% $0 0%
Tax Fees $0 0% $0 0%
All Other Fees $0 0% $0 0%
--- ---
Total Fees(2) $0 0% $0 0%
- ----------
(1) With respect to the provision of non-audit services, the pre-approval
requirement is waived pursuant to a de minimis exception if (i) such
services were not recognized as non-audit services by the Registrant at the
time of engagement, (ii) the aggregate amount of all such services provided
is no more than 5% of the aggregate audit and non-audit fees paid by the
Registrant, Invesco 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 2008,
and $0 for the fiscal year ended 2007, 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, Invesco Aim Advisors, Inc. ("Invesco 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 two matters
that required further consideration under the SEC's auditor independence
rules.
First, PwC was engaged to perform services to an affiliate of Invesco Ltd.,
including (a) consulting with respect to the acquisition by the affiliate
of certain assets from a third party; and (b) providing expert testimony in
connection with any arbitration proceeding or litigation arising from or
relating to the transaction. SEC rules provide that an accountant is not
independent if, at any point during the audit and professional engagement
period, the accountant provides expert services unrelated to the audit to
an audit client. Specifically, PwC would not be permitted to provide expert
testimony nor perform other services in support of the client or its
counsel in connection with a proceeding. Within days of being engaged to
provide the services it was determined that some of the services
contemplated in the engagement terms would be inconsistent with the SEC's
auditor independence rules. A review of the services performed pursuant to
the original agreement was conducted. It was concluded that the services
performed were not inconsistent with the SEC's independence rules.
Following the review, the initial engagement terms were modified to limit
PwC's services to those permitted under the rules.
Second, an employee of PwC served as a nominee shareholder (effectively
equivalent to a Trustee) of various companies or trusts since 2001. Some of
these companies held shares of INVESCO Nippon Warrants Fund (the
"Investment."), an affiliate of Invesco Ltd., formerly known as AMVESCAP
PLC (the "Company"). The investment, which consisted of 2,070 shares, was
initially entered into during July 1, 2001 - December 31, 2005.
PwC informed the Audit Committee that the second matter could have
constituted an investment in an affiliate of an audit client in violation
of Rule 2-01(c)(1) of Regulation S-X. PwC advised the Audit Committee that
it believes its independence had not been adversely affected as it related
to the audits of the Funds. In reaching this conclusion, PwC noted that
during the time of its audit, the engagement team was not aware of the
investment, as it relates to the second matter, and that PwC did not
believe either of these situations affected PwC's ability to act
objectively and impartially and to issue a report on financial statements
as the
Funds' independent auditor. Based upon PwC's review and discussion, the
audit committee 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 September 24, 2008, 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 September 24, 2008, 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: November 7, 2008
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: November 7, 2008
By: /s/ SHERI MORRIS
-----------------------------------------------------------
Sheri Morris
Principal Financial Officer
Date: November 7, 2008
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.