N-CSRS 1 h58575nvcsrs.txt FORM N-CSRS - SEMI-ANNUAL REPORT ------------------------ OMB APPROVAL ------------------------ OMB Number: 3235-0570 Expires: August 31, 2011 Estimated average burden hours per response: 18.9 ------------------------ 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 811-02699 AIM Growth Series (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: 12/31 Date of reporting period: 6/30/08 Item 1. Reports to Stockholders. [INVESCO AIM LOGO] AIM BASIC VALUE FUND - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 [MOUNTAIN GRAPHIC] AIM Investments 2 Fund Performance became INVESCO AIM 3 Letter to Shareholders on March 31, 2008. 4 Schedule of Investments 6 Financial Statements For more details, go to 9 Notes to Financial Statements invescoaim.com 14 Financial Highlights 18 Fund Expenses 19 Approval of Investment Advisory Agreement 22 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND PERFORMANCE ======================================================================================= PERFORMANCE SUMMARY FUND VS. INDEXES Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. Class A Shares -17.33% Class B Shares -17.66 Class C Shares -17.66 Class R Shares -17.45 S&P 500 Index(triangle) (Broad Market Index) -11.90 Russell 1000 Value Index(triangle) (Style-Specific Index) -13.57 Lipper Large-Cap Value Funds Index(triangle) (Peer Group Index) -12.62 (triangle)Lipper Inc. The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The RUSSELL 1000--REGISTERED TRADEMARK-- VALUE INDEX measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Company. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Company. The LIPPER LARGE-CAP VALUE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Large-Cap Value Funds category. These funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500 Index. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index does not. ======================================================================================= ========================================== AVERAGE ANNUAL TOTAL RETURNS CLASS R SHARES' INCEPTION DATE IS JUNE 3, REFLECT DEDUCTION OF TAXES A SHAREHOLDER 2002. RETURNS SINCE THAT DATE ARE WOULD PAY ON FUND DISTRIBUTIONS OR SALE OF AS OF 6/30/08, INCLUDING MAXIMUM HISTORICAL RETURNS. ALL OTHER RETURNS ARE FUND SHARES. INVESTMENT RETURN AND APPLICABLE SALES CHARGES BLENDED RETURNS OF HISTORICAL CLASS R PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU SHARE PERFORMANCE AND RESTATED CLASS A MAY HAVE A GAIN OR LOSS WHEN YOU SELL CLASS A SHARES SHARE PERFORMANCE (FOR PERIODS PRIOR TO SHARES. Inception (10/18/95) 9.00% THE INCEPTION DATE OF CLASS R SHARES) AT 10 Years 5.56 NET ASSET VALUE, ADJUSTED TO REFLECT THE THE TOTAL ANNUAL FUND OPERATING EXPENSE 5 Years 4.29 HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS RATIO SET FORTH IN THE MOST RECENT FUND 1 Year -26.67 R SHARES. CLASS A SHARES' INCEPTION DATE PROSPECTUS AS OF THE DATE OF THIS REPORT IS OCTOBER 18, 1995. FOR CLASS A, CLASS B, CLASS C AND CLASS R CLASS B SHARES SHARES WAS 1.14%, 1.89%, 1.89% AND 1.39%, Inception (10/18/95) 9.05% THE PERFORMANCE DATA QUOTED REPRESENT RESPECTIVELY. THE EXPENSE RATIOS PRESENTED 10 Years 5.59 PAST PERFORMANCE AND CANNOT GUARANTEE ABOVE MAY VARY FROM THE EXPENSE RATIOS 5 Years 4.40 COMPARABLE FUTURE RESULTS; CURRENT PRESENTED IN OTHER SECTIONS OF THIS REPORT 1 Year -26.24 PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE THAT ARE BASED ON EXPENSES INCURRED DURING VISIT INVESCOAIM.COM FOR THE MOST RECENT THE PERIOD COVERED BY THIS REPORT. CLASS C SHARES MONTH-END PERFORMANCE. PERFORMANCE FIGURES Inception (5/3/99) 3.99% REFLECT REINVESTED DISTRIBUTIONS, CHANGES CLASS A SHARE PERFORMANCE REFLECTS THE 5 Years 4.74 IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B 1 Year -23.64 MAXIMUM SALES CHARGE UNLESS OTHERWISE AND CLASS C SHARE PERFORMANCE REFLECTS THE STATED. PERFORMANCE FIGURES DO NOT APPLICABLE CONTINGENT DEFERRED SALES CLASS R SHARES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE 10 Years 5.96% CDSC ON CLASS B SHARES DECLINES FROM 5% 5 Years 5.25 BEGINNING AT THE TIME OF PURCHASE TO 0% AT 1 Year -22.62 THE BEGINNING OF THE SEVENTH YEAR. THE ========================================== CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL REDEMPTION OF RETIREMENT PLAN ASSETS WITHIN THE FIRST YEAR. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES.
2 AIM BASIC VALUE FUND Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing considerable investor anxiety, reminding us again that markets are cyclical and the [CROCKETT PHOTO] 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 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 Bruce Crockett 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 Web site (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 e-mail 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 August 11, 2008
3 AIM BASIC VALUE FUND PORTFOLIO COMPOSITION By sector, based on Net Assets, as of June 30, 2008 ------------------------------------------------------------------------- Financials 23.2% ------------------------------------------------------------------------- Information Technology 20.7 ------------------------------------------------------------------------- Consumer Discretionary 19.5 ------------------------------------------------------------------------- Health Care 11.0 ------------------------------------------------------------------------- Industrials 8.8 ------------------------------------------------------------------------- Energy 8.6 ------------------------------------------------------------------------- Consumer Staples 3.9 ------------------------------------------------------------------------- Materials 2.9 ------------------------------------------------------------------------- Money Market Funds Plus Other Assets Less Liabilities 1.4 _________________________________________________________________________ =========================================================================
SCHEDULE OF INVESTMENTS(a) June 30, 2008 (Unaudited)
SHARES VALUE ---------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-98.59% ADVERTISING-5.01% Interpublic Group of Cos., Inc. (The)(b)(c) 8,734,229 $ 75,114,369 ---------------------------------------------------------------------------------- Omnicom Group Inc. 1,612,733 72,379,457 ================================================================================== 147,493,826 ================================================================================== APPAREL RETAIL-1.35% Gap, Inc. (The) 2,379,086 39,659,364 ================================================================================== BREWERS-2.57% Molson Coors Brewing Co.-Class B 1,393,317 75,698,913 ================================================================================== COMPUTER HARDWARE-3.45% Dell Inc.(c) 4,632,675 101,362,929 ================================================================================== CONSTRUCTION MATERIALS-2.94% Cemex S.A.B. de C.V.-ADR (Mexico)(b)(c) 3,501,833 86,495,275 ================================================================================== CONSUMER FINANCE-2.00% SLM Corp.(c) 3,035,021 58,727,656 ================================================================================== DATA PROCESSING & OUTSOURCED SERVICES-3.42% Western Union Co. 4,065,711 100,504,376 ================================================================================== DEPARTMENT STORES-1.65% Kohl's Corp.(c) 1,211,000 48,488,440 ================================================================================== DIVERSIFIED BANKS-0.87% Wachovia Corp.(b) 1,652,151 25,657,905 ================================================================================== EDUCATION SERVICES-1.69% Apollo Group Inc.-Class A(c) 1,119,900 49,566,774 ================================================================================== ELECTRONIC MANUFACTURING SERVICES-1.01% Tyco Electronics Ltd. 831,353 29,779,064 ================================================================================== GENERAL MERCHANDISE STORES-2.17% Target Corp. 1,370,704 63,724,029 ================================================================================== HEALTH CARE DISTRIBUTORS-2.43% Cardinal Health, Inc. 1,386,002 71,489,983 ================================================================================== HOME IMPROVEMENT RETAIL-2.35% Home Depot, Inc. (The) 2,946,020 68,995,788 ================================================================================== HOUSEHOLD APPLIANCES-1.65% Whirlpool Corp.(b) 787,900 48,637,067 ================================================================================== HUMAN RESOURCE & EMPLOYMENT SERVICES-3.05% Robert Half International, Inc. 3,742,186 89,700,198 ================================================================================== INDUSTRIAL CONGLOMERATES-3.16% General Electric Co. 1,587,066 42,358,792 ---------------------------------------------------------------------------------- Tyco International Ltd. 1,266,101 50,694,684 ================================================================================== 93,053,476 ================================================================================== INDUSTRIAL MACHINERY-2.55% Illinois Tool Works Inc. 1,579,287 75,031,925 ================================================================================== INSURANCE BROKERS-2.01% Marsh & McLennan Cos., Inc. 2,226,672 59,118,142 ================================================================================== INVESTMENT BANKING & BROKERAGE-3.46% Merrill Lynch & Co., Inc. 1,534,448 48,657,346 ---------------------------------------------------------------------------------- Morgan Stanley 1,474,208 53,174,683 ================================================================================== 101,832,029 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 4 AIM BASIC VALUE FUND
SHARES VALUE ---------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES-2.00% Waters Corp.(c) 912,910 $ 58,882,695 ================================================================================== MANAGED HEALTH CARE-3.21% UnitedHealth Group Inc. 3,599,586 94,489,133 ================================================================================== MOVIES & ENTERTAINMENT-1.40% Walt Disney Co. (The) 1,317,496 41,105,875 ================================================================================== MULTI-LINE INSURANCE-1.63% American International Group, Inc. 1,815,006 48,025,059 ================================================================================== OIL & GAS DRILLING-1.55% Transocean Inc. 299,087 45,577,868 ================================================================================== OIL & GAS EQUIPMENT & SERVICES-7.08% Halliburton Co. 1,938,736 102,888,719 ---------------------------------------------------------------------------------- Weatherford International Ltd.(c) 2,123,510 105,304,861 ================================================================================== 208,193,580 ================================================================================== OTHER DIVERSIFIED FINANCIAL SERVICES-4.39% Citigroup Inc. 4,081,875 68,412,225 ---------------------------------------------------------------------------------- JPMorgan Chase & Co. 1,771,229 60,770,867 ================================================================================== 129,183,092 ================================================================================== PACKAGED FOODS & MEATS-1.36% Unilever N.V. (Netherlands) 1,408,454 39,982,253 ================================================================================== PHARMACEUTICALS-3.32% Sanofi-Aventis (France)(b)(d) 750,078 49,899,295 ---------------------------------------------------------------------------------- Wyeth 994,659 47,703,846 ================================================================================== 97,603,141 ================================================================================== PROPERTY & CASUALTY INSURANCE-1.55% XL Capital Ltd.-Class A 2,215,837 45,557,609 ================================================================================== PUBLISHING-2.24% McGraw-Hill Cos., Inc. (The) 1,638,900 65,752,668 ================================================================================== SEMICONDUCTOR EQUIPMENT-6.31% ASML Holding N.V. (Netherlands)(d) 3,334,464 81,211,305 ---------------------------------------------------------------------------------- KLA-Tencor Corp.(b) 2,562,598 104,323,364 ================================================================================== 185,534,669 ================================================================================== SEMICONDUCTORS-2.77% Maxim Integrated Products, Inc. 3,852,795 81,486,614 ================================================================================== SPECIALIZED FINANCE-3.59% Moody's Corp.(b) 3,064,293 105,534,251 ================================================================================== SYSTEMS SOFTWARE-3.69% CA Inc. 2,382,922 55,021,669 ---------------------------------------------------------------------------------- Microsoft Corp. 1,950,176 53,649,342 ================================================================================== 108,671,011 ================================================================================== THRIFTS & MORTGAGE FINANCE-3.71% Fannie Mae 4,188,620 81,719,976 ---------------------------------------------------------------------------------- Washington Mutual, Inc.(b) 5,589,321 27,555,353 ================================================================================== 109,275,329 ================================================================================== Total Common Stocks & Other Equity Interests (Cost $2,852,878,893) 2,899,872,006 ================================================================================== MONEY MARKET FUNDS-0.04% Liquid Assets Portfolio-Institutional Class(e) 483,042 483,042 ---------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(e) 483,042 483,042 ---------------------------------------------------------------------------------- Total Money Market Funds (Cost $966,084) 966,084 ================================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-98.63% (Cost $2,853,844,977) 2,900,838,090 ================================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-5.13% Liquid Assets Portfolio-Institutional Class (Cost $150,927,012)(e)(f) 150,927,012 150,927,012 ================================================================================== TOTAL INVESTMENTS-103.76% (Cost $3,004,771,989) 3,051,765,102 ================================================================================== OTHER ASSETS LESS LIABILITIES-(3.76)% (110,480,920) ================================================================================== NET ASSETS-100.00% $2,941,284,182 __________________________________________________________________________________ ==================================================================================
Investment Abbreviations: ADR - American Depositary Receipt
Notes to Schedule of Investments: (a) Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor's. (b) All or a portion of this security was out on loan at June 30, 2008. (c) Non-income producing security. (d) 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 June 30, 2008 was $131,110,600, which represented 4.46% of the Fund's Net Assets. See Note 1A. (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 1I. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 5 AIM BASIC VALUE FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited) ASSETS: Investments, at value (Cost $2,852,878,893)* $2,899,872,006 ------------------------------------------------------- Investments in affiliated money market funds (Cost $151,893,096) 151,893,096 ======================================================= Total investments (Cost $3,004,771,989) 3,051,765,102 ======================================================= Cash 3,203,297 ------------------------------------------------------- Foreign currencies, at value (Cost $590,270) 593,912 ------------------------------------------------------- Receivables for: Investments sold 44,966,891 ------------------------------------------------------- Fund shares sold 3,611,160 ------------------------------------------------------- Dividends 2,379,254 ------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 105,649 ------------------------------------------------------- Other assets 76,072 ======================================================= Total assets 3,106,701,337 _______________________________________________________ ======================================================= LIABILITIES: Payables for: Fund shares reacquired 10,744,665 ------------------------------------------------------- Collateral upon return of securities loaned 150,927,012 ------------------------------------------------------- Accrued fees to affiliates 2,797,564 ------------------------------------------------------- Accrued other operating expenses 426,708 ------------------------------------------------------- Trustee deferred compensation and retirement plans 521,206 ======================================================= Total liabilities 165,417,155 ======================================================= Net assets applicable to shares outstanding $2,941,284,182 _______________________________________________________ ======================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $2,463,750,149 ------------------------------------------------------- Undistributed net investment income 13,981,715 ------------------------------------------------------- Undistributed net realized gain 416,550,619 ------------------------------------------------------- Unrealized appreciation 47,001,699 ======================================================= $2,941,284,182 _______________________________________________________ ======================================================= NET ASSETS: Class A $1,722,404,159 _______________________________________________________ ======================================================= Class B $ 646,774,978 _______________________________________________________ ======================================================= Class C $ 263,523,716 _______________________________________________________ ======================================================= Class R $ 40,619,054 _______________________________________________________ ======================================================= Institutional Class $ 267,962,275 _______________________________________________________ ======================================================= SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 66,145,235 _______________________________________________________ ======================================================= Class B 27,470,060 _______________________________________________________ ======================================================= Class C 11,194,792 _______________________________________________________ ======================================================= Class R 1,580,937 _______________________________________________________ ======================================================= Institutional Class 9,963,063 _______________________________________________________ ======================================================= Class A: Net asset value per share $ 26.04 ------------------------------------------------------- Maximum offering price per share (Net asset value of $26.04 divided by 94.50%) $ 27.56 _______________________________________________________ ======================================================= Class B: Net asset value and offering price per share $ 23.54 _______________________________________________________ ======================================================= Class C: Net asset value and offering price per share $ 23.54 _______________________________________________________ ======================================================= Class R: Net asset value and offering price per share $ 25.69 _______________________________________________________ ======================================================= Institutional Class: Net asset value and offering price per share $ 26.90 _______________________________________________________ =======================================================
* At June 30, 2008, securities with an aggregate value of $146,076,140 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 6 AIM BASIC VALUE FUND STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited) INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $612,251) $ 34,207,817 ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $710,282) 1,235,834 ================================================================================================ Total investment income 35,443,651 ================================================================================================ EXPENSES: Advisory fees 10,943,668 ------------------------------------------------------------------------------------------------ Administrative services fees 296,175 ------------------------------------------------------------------------------------------------ Custodian fees 87,090 ------------------------------------------------------------------------------------------------ Distribution fees: Class A 2,522,504 ------------------------------------------------------------------------------------------------ Class B 4,069,925 ------------------------------------------------------------------------------------------------ Class C 1,632,261 ------------------------------------------------------------------------------------------------ Class R 113,555 ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C and R 4,128,654 ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 142,105 ------------------------------------------------------------------------------------------------ Trustees' and officer's fees and benefits 60,192 ------------------------------------------------------------------------------------------------ Other 752,764 ================================================================================================ Total expenses 24,748,893 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (106,761) ================================================================================================ Net expenses 24,642,132 ================================================================================================ Net investment income 10,801,519 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain from: Investment securities (includes net gains from securities sold to affiliates of $2,342,748) 260,073,906 ------------------------------------------------------------------------------------------------ Foreign currencies 108,003 ================================================================================================ 260,181,909 ================================================================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (946,882,017) ------------------------------------------------------------------------------------------------ Foreign currencies 8,568 ================================================================================================ (946,873,449) ================================================================================================ Net realized and unrealized gain (loss) (686,691,540) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(675,890,021) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 7 AIM BASIC VALUE FUND STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
JUNE 30, DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income $ 10,801,519 $ 3,884,904 ------------------------------------------------------------------------------------------------------------ Net realized gain 260,181,909 758,820,790 ------------------------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) (946,873,449) (685,275,042) ============================================================================================================ Net increase (decrease) in net assets resulting from operations (675,890,021) 77,430,652 ============================================================================================================ Distributions to shareholders from net investment income: Class A -- (1,654,275) ------------------------------------------------------------------------------------------------------------ Institutional Class -- (216,875) ============================================================================================================ Total distributions from net investment income -- (1,871,150) ============================================================================================================ Distributions to shareholders from net realized gains: Class A -- (365,648,122) ------------------------------------------------------------------------------------------------------------ Class B -- (167,237,726) ------------------------------------------------------------------------------------------------------------ Class C -- (65,066,160) ------------------------------------------------------------------------------------------------------------ Class R -- (7,678,455) ------------------------------------------------------------------------------------------------------------ Institutional Class -- (47,936,462) ============================================================================================================ Total distributions from net realized gains -- (653,566,925) ============================================================================================================ Share transactions-net: Class A (294,599,401) (451,904,987) ------------------------------------------------------------------------------------------------------------ Class B (209,756,597) (269,082,080) ------------------------------------------------------------------------------------------------------------ Class C (72,428,818) (48,799,986) ------------------------------------------------------------------------------------------------------------ Class R (2,226,726) 3,042,611 ------------------------------------------------------------------------------------------------------------ Institutional Class (2,977,691) 29,523,641 ============================================================================================================ Net increase (decrease) in net assets resulting from share transactions (581,989,233) (737,220,801) ============================================================================================================ Net increase (decrease) in net assets (1,257,879,254) (1,315,228,224) ============================================================================================================ NET ASSETS: Beginning of period 4,199,163,436 5,514,391,660 ============================================================================================================ End of period (including undistributed net investment income of $13,981,715 and $3,180,196, respectively) $ 2,941,284,182 $ 4,199,163,436 ____________________________________________________________________________________________________________ ============================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 8 AIM BASIC VALUE FUND NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Basic Value Fund (the "Fund") is a series portfolio of AIM Growth Series (the "Trust"). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series 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 to provide long-term growth of capital. 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. 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. 9 AIM BASIC VALUE 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. 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 10 AIM BASIC VALUE 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. 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:
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% ___________________________________________________________________ ===================================================================
Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). 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 (but not cash collateral from securities lending) in such affiliated money market funds. For the six months ended June 30, 2008, the Advisor waived advisory fees of $25,909. 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 six months ended June 30, 2008, Invesco reimbursed expenses of the Fund in the amount of $2,901. 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 six months ended June 30, 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 six months ended June 30, 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 11 AIM BASIC VALUE FUND charges that may be paid by any class of shares of the Fund. For the six months ended June 30, 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 six months ended June 30, 2008, IADI advised the Fund that IADI retained $100,460 in front-end sales commissions from the sale of Class A shares and $2,777, $274,479, $7,330 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--SUPPLEMENTAL INFORMATION The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN INPUT LEVEL SECURITIES ----------------------------------------------------------------------- Level 1 $2,920,654,502 ----------------------------------------------------------------------- Level 2 131,110,600 ----------------------------------------------------------------------- Level 3 -- ======================================================================= $3,051,765,102 _______________________________________________________________________ =======================================================================
NOTE 4--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 six months ended June 30, 2008, the Fund engaged in securities sales of $8,961,508, which resulted in net realized gains of $2,342,748, and securities purchases of $2,359,777. NOTE 5--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 six months ended June 30, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $77,951. NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's 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 Officer's 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 Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the six months ended June 30, 2008, the Fund paid legal fees of $6,683 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. 12 AIM BASIC VALUE FUND NOTE 7--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company ("SSB"), 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 8--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. The Fund did not have a capital loss carryforward as of December 31, 2007. NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2008 was $1,002,103,403 and $1,604,089,064, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $ 561,776,420 ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (523,054,820) ================================================================================================ Net unrealized appreciation of investment securities $ 38,721,600 ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $3,013,043,502.
NOTE 10--SHARE INFORMATION
CHANGES IN SHARES OUTSTANDING ----------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ----------------------------- ------------------------------- SHARES AMOUNT SHARES AMOUNT ----------------------------------------------------------------------------------------------------------------------------- Sold: Class A 3,214,542 $ 92,776,461 6,775,041 $ 254,644,145 ----------------------------------------------------------------------------------------------------------------------------- Class B 535,335 13,913,463 1,025,803 35,573,860 ----------------------------------------------------------------------------------------------------------------------------- Class C 287,394 7,448,613 701,160 24,291,861 ----------------------------------------------------------------------------------------------------------------------------- Class R 224,377 6,397,016 372,110 13,830,638 ----------------------------------------------------------------------------------------------------------------------------- Institutional Class 2,259,805 67,068,001 3,158,529 121,772,791 ============================================================================================================================= Issued as reinvestment of dividends: Class A -- -- 11,163,101 352,931,546 ----------------------------------------------------------------------------------------------------------------------------- Class B -- -- 5,457,199 155,800,362 ----------------------------------------------------------------------------------------------------------------------------- Class C -- -- 2,137,511 60,812,171 ----------------------------------------------------------------------------------------------------------------------------- Class R -- -- 248,012 7,678,455 ----------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 1,319,782 42,628,948 ============================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 2,431,428 69,578,484 3,145,381 117,286,990 ----------------------------------------------------------------------------------------------------------------------------- Class B (2,684,535) (69,578,484) (3,409,196) (117,286,990) ============================================================================================================================= Reacquired: Class A (15,834,624) (456,954,346) (31,455,727) (1,176,767,668) ----------------------------------------------------------------------------------------------------------------------------- Class B (5,906,136) (154,091,576) (9,845,262) (343,169,312) ----------------------------------------------------------------------------------------------------------------------------- Class C (3,058,973) (79,877,431) (3,859,927) (133,904,018) ----------------------------------------------------------------------------------------------------------------------------- Class R (300,581) (8,623,742) (498,251) (18,466,482) ----------------------------------------------------------------------------------------------------------------------------- Institutional Class (2,386,402) (70,045,692) (3,470,740) (134,878,098) ============================================================================================================================= (21,218,370) $(581,989,233) (17,035,474) $ (737,220,801) _____________________________________________________________________________________________________________________________ =============================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 20% of the outstanding shares of the Fund. 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. 13 AIM BASIC VALUE FUND NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------- 2008 2007 2006 2005 2004 ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 31.51 $ 36.61 $ 34.22 $ 32.42 $ 29.24 ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.12(a) 0.12 0.14 0.06 (0.03) ---------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (5.59) 0.24 4.38 1.74 3.21 ====================================================================================================================== Total from investment operations (5.47) 0.36 4.52 1.80 3.18 ====================================================================================================================== Less distributions: Dividends from net investment income -- (0.02) (0.03) -- -- ---------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (5.44) (2.10) -- -- ====================================================================================================================== Total distributions -- (5.46) (2.13) -- -- ====================================================================================================================== Net asset value, end of period $ 26.04 $ 31.51 $ 36.61 $ 34.22 $ 32.42 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) (17.36)% 1.07% 13.20% 5.55% 10.88% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,722,404 $2,404,900 $3,173,889 $3,682,420 $4,480,701 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.19%(c) 1.14% 1.15% 1.19% 1.29% ---------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.19%(c) 1.17% 1.20% 1.25% 1.31% ====================================================================================================================== Ratio of net investment income (loss) to average net assets 0.83%(c) 0.31% 0.36% 0.15% (0.11)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate(d) 29% 23% 14% 12% 15% ______________________________________________________________________________________________________________________ ====================================================================================================================== CLASS A ---------- YEAR ENDED DECEMBER 31, ---------- 2003 ---------------------------------------------------- Net asset value, beginning of period $ 21.86 ---------------------------------------------------- Income from investment operations: Net investment income (loss) (0.06) ---------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 7.44 ==================================================== Total from investment operations 7.38 ==================================================== Less distributions: Dividends from net investment income -- ---------------------------------------------------- Distributions from net realized gains -- ==================================================== Total distributions -- ==================================================== Net asset value, end of period $ 29.24 ____________________________________________________ ==================================================== Total return(b) 33.76% ____________________________________________________ ==================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $3,812,300 ____________________________________________________ ==================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.34% ---------------------------------------------------- Without fee waivers and/or expense reimbursements 1.34% ==================================================== Ratio of net investment income (loss) to average net assets (0.28)% ____________________________________________________ ==================================================== Portfolio turnover rate(d) 20% ____________________________________________________ ====================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $2,029,091,203. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS B ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------- 2008 2007 2006 2005 2004 ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 28.59 $ 33.95 $ 32.09 $ 30.62 $ 27.80 ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.01(a) (0.15) (0.14) (0.19) (0.23) ---------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (5.06) 0.23 4.10 1.66 3.05 ====================================================================================================================== Total from investment operations (5.05) 0.08 3.96 1.47 2.82 ====================================================================================================================== Less distributions from net realized gains -- (5.44) (2.10) -- -- ====================================================================================================================== Net asset value, end of period $ 23.54 $ 28.59 $ 33.95 $ 32.09 $ 30.62 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) (17.66)% 0.31% 12.33% 4.80% 10.14% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $646,775 $1,015,776 $1,436,084 $1,682,608 $1,985,690 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.94%(c) 1.89% 1.90% 1.89% 1.94% ---------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.94%(c) 1.92% 1.95% 1.95% 1.96% ====================================================================================================================== Ratio of net investment income (loss) to average net assets 0.08%(c) (0.44)% (0.39)% (0.55)% (0.76)% ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate(d) 29% 23% 14% 12% 15% ______________________________________________________________________________________________________________________ ====================================================================================================================== CLASS B ---------- YEAR ENDED DECEMBER 31, ---------- 2003 ---------------------------------------------------- Net asset value, beginning of period $ 20.91 ---------------------------------------------------- Income from investment operations: Net investment income (loss) (0.21) ---------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) 7.10 ==================================================== Total from investment operations 6.89 ==================================================== Less distributions from net realized gains -- ==================================================== Net asset value, end of period $ 27.80 ____________________________________________________ ==================================================== Total return(b) 32.95% ____________________________________________________ ==================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,946,590 ____________________________________________________ ==================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.99% ---------------------------------------------------- Without fee waivers and/or expense reimbursements 1.99% ==================================================== Ratio of net investment income (loss) to average net assets (0.93)% ____________________________________________________ ==================================================== Portfolio turnover rate(d) 20% ____________________________________________________ ====================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $818,457,433. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 14 AIM BASIC VALUE FUND NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C --------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 28.59 $ 33.95 $ 32.08 $ 30.61 $ 27.79 $ 20.91 ------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.01(a) (0.15) (0.14) (0.19) (0.23) (0.21) ------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (5.06) 0.23 4.11 1.66 3.05 7.09 =============================================================================================================================== Total from investment operations (5.05) 0.08 3.97 1.47 2.82 6.88 =============================================================================================================================== Less distributions from net realized gains -- (5.44) (2.10) -- -- -- =============================================================================================================================== Net asset value, end of period $ 23.54 $ 28.59 $ 33.95 $ 32.08 $ 30.61 $ 27.79 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Total return(b) (17.66)% 0.31% 12.37% 4.80% 10.15% 32.90% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $263,524 $399,262 $508,775 $566,685 $681,234 $667,412 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.94%(c) 1.89% 1.90% 1.89% 1.94% 1.99% ------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.94%(c) 1.92% 1.95% 1.95% 1.96% 1.99% =============================================================================================================================== Ratio of net investment income (loss) to average net assets 0.08%(c) (0.44)% (0.39)% (0.55)% (0.76)% (0.93)% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Portfolio turnover rate(d) 29% 23% 14% 12% 15% 20% _______________________________________________________________________________________________________________________________ ===============================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $328,245,778. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS R ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 31.12 $ 36.29 $ 34.00 $ 32.28 $ 29.16 $ 21.84 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.08(a) 0.02 0.03 (0.02) (0.06) (0.06) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (5.51) 0.25 4.36 1.74 3.18 7.38 ============================================================================================================================ Total from investment operations (5.43) 0.27 4.39 1.72 3.12 7.32 ============================================================================================================================ Less distributions from net realized gains -- (5.44) (2.10) -- -- -- ============================================================================================================================ Net asset value, end of period $ 25.69 $ 31.12 $ 36.29 $ 34.00 $ 32.28 $ 29.16 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (17.45)% 0.82% 12.91% 5.33% 10.70% 33.52% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $40,619 $51,572 $55,718 $33,049 $29,245 $12,097 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.44%(c) 1.39% 1.40% 1.39% 1.44% 1.49% ---------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.44%(c) 1.42% 1.45% 1.45% 1.46% 1.49% ============================================================================================================================ Ratio of net investment income (loss) to average net assets 0.58%(c) 0.06% 0.11% (0.05)% (0.26)% (0.43)% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(d) 29% 23% 14% 12% 15% 20% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $45,671,432. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 15 AIM BASIC VALUE FUND NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS ------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 32.47 $ 37.43 $ 34.95 $ 32.96 $ 29.56 $21.95 ------------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.18(a) 0.23 0.24 0.17 0.02 0.08 ------------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (5.75) 0.27 4.53 1.82 3.38 7.53 ============================================================================================================================== Total from investment operations (5.57) 0.50 4.77 1.99 3.40 7.61 ============================================================================================================================== Less distributions: Dividends from net investment income -- (0.02) (0.19) -- -- -- ------------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (5.44) (2.10) -- -- -- ============================================================================================================================== Total distributions -- (5.46) (2.29) -- -- -- ============================================================================================================================== Net asset value, end of period $ 26.90 $ 32.47 $ 37.43 $ 34.95 $ 32.96 $29.56 ______________________________________________________________________________________________________________________________ ============================================================================================================================== Total return(b) (17.15)% 1.42% 13.64% 6.04% 11.50% 34.67% ______________________________________________________________________________________________________________________________ ============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $267,962 $327,654 $339,915 $209,208 $103,219 $2,123 ______________________________________________________________________________________________________________________________ ============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.79%(c) 0.76% 0.75% 0.72% 0.71% 0.71% ------------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 0.79%(c) 0.79% 0.80% 0.78% 0.73% 0.71% ============================================================================================================================== Ratio of net investment income to average net assets 1.23%(c) 0.69% 0.76% 0.62% 0.47% 0.35% ______________________________________________________________________________________________________________________________ ============================================================================================================================== Portfolio turnover rate(d) 29% 23% 14% 12% 15% 20% ______________________________________________________________________________________________________________________________ ==============================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $298,718,356. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 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 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 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 16 AIM BASIC VALUE FUND NOTE 12--LEGAL PROCEEDINGS--(CONTINUED) 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 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. 17 AIM BASIC VALUE FUND CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 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.
--------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $826.70 $5.40 $1,018.95 $5.97 1.19% --------------------------------------------------------------------------------------------------- B 1,000.00 823.40 8.80 1,015.22 9.72 1.94 --------------------------------------------------------------------------------------------------- C 1,000.00 823.40 8.80 1,015.22 9.72 1.94 --------------------------------------------------------------------------------------------------- R 1,000.00 825.50 6.54 1,017.70 7.22 1.44 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 18 AIM BASIC VALUE FUND APPROVAL OF INVESTMENT ADVISORY AGREEMENT comparative performance and fee data ent weight to the various factors. The regarding the AIM Funds prepared by an Trustees recognized that the advisory The Board of Trustees (the Board) of AIM independent company, Lipper, Inc. arrangements and resulting advisory fees Growth Series is required under the (Lipper), under the direction and for the Fund and the other AIM Funds are Investment Company Act of 1940 to approve supervision of the independent Senior the result of years of review and annually the renewal of the AIM Basic Officer who also prepares a separate negotiation between the Trustees and Value Fund (the Fund) investment advisory analysis of this information for the Invesco Aim, that the Trustees may focus agreement with Invesco Aim Advisors, Inc. Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of (Invesco Aim). During contract renewal recommendations to the Investments these arrangements in some years than in meetings held on June 18-19, 2008, the Committee regarding the performance, fees others, and that the Trustees' Board as a whole and the disinterested or and expenses of their assigned funds. The deliberations and conclusions in a "independent" Trustees, voting separately, Investments Committee considers each particular year may be based in part on approved the continuance of the Fund's Sub-Committee's recommendations and makes their deliberations and conclusions of investment advisory agreement for another its own recommendations regarding the these same arrangements throughout the year, effective July 1, 2008. In doing so, performance, fees and expenses of the AIM year and in prior years. the 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. Officer 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 Sub-Committee and, at the direction of the Board, has structure permits the Trustees to focus on prepared an independent written The Board reviewed the advisory services the 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 from one addition, based on their ongoing meetings expenses of their assigned funds. During another and attributed differ- throughout the year with the Fund's the contract renewal process, the Trustees portfolio manager or managers, the Board receive concluded that continued
19 AIM BASIC VALUE FUND these individuals are competent and able the Fund's Senior Officer only considered the comparative advisory fee information to continue to carry out their Fund performance through the most recent discussed above, the Board concluded that responsibilities under the Fund's calendar year, the Board also reviewed the Fund's advisory fees were fair and investment advisory agreement. more recent Fund performance and this reasonable. review did not change their conclusions. In determining whether to continue the D. Economies of Scale and Breakpoints Fund's investment advisory agreement, the C. Advisory Fees and Fee Waivers Board considered the prior relationship The Board considered the extent to which between Invesco Aim and the Fund, as well The Board compared the Fund's contractual there are economies of scale in Invesco as the Board's knowledge of Invesco Aim's advisory fee rate to the contractual Aim's provision of advisory services to operations, and concluded that it was advisory fee rates of funds in the Fund's the Fund. The Board also considered beneficial to maintain the current Lipper expense group that are not managed whether the Fund benefits from such relationship, in part, because of such by Invesco Aim, at a common asset level economies of scale through contractual knowledge. The Board also considered the and as of the end of the past calendar breakpoints in the Fund's advisory fee steps that Invesco Aim and its affiliates year. The Board noted that the Fund's schedule or through advisory fee waivers have taken over the last several years to contractual advisory fee rate was above or expense limitations. The Board noted improve the quality and efficiency of the the median contractual advisory fee rate that the Fund's contractual advisory fee services they provide to the AIM Funds in of funds in its expense group. The Board schedule includes seven breakpoints and the areas of investment performance, also reviewed the methodology used by that the level of the Fund's advisory product line diversification, Lipper in determining contractual fee fees, as a percentage of the Fund's net distribution, fund operations, shareholder rates. assets, has decreased as net assets services and compliance. The Board increased because of the breakpoints. concluded that the quality and efficiency The Board also compared the Fund's Based on this information, the Board of the services Invesco Aim and its effective fee rate (the advisory fee after concluded that the Fund's advisory fees affiliates provide to the AIM Funds in any advisory fee waivers and before any appropriately reflect economies of scale each of these areas have generally expense limitations/waivers) to the at current asset levels. The Board also improved, and support the Board's approval advisory fee rates of other clients of noted that the Fund shares directly in of the continuance of the Fund's Invesco Aim and its affiliates with economies of scale through lower fees investment advisory agreement. investment strategies comparable to those charged by third party service providers of the Fund, including three mutual funds based on the combined size of all of the B. Fund Performance advised by Invesco Aim. The Board noted AIM Funds and affiliates. that the Fund's rate was below the rate The Board compared the Fund's performance for one of the mutual funds and above the E. Profitability and Financial during the past one, three and five rates for two of the mutual funds. Resources of Invesco Aim calendar years to the performance of funds in the Fund's performance group that are Additionally, the Board compared the The Board reviewed information from not managed by Invesco Aim, and against Fund's effective fee rate to the total Invesco Aim concerning the costs of the the performance of all funds in the Lipper advisory fees paid by numerous separately advisory and other services that Invesco Large-Cap Value Funds Index. The Board managed accounts/wrap accounts advised by Aim and its affiliates provide to the Fund also reviewed the criteria used by Invesco Invesco Aim affiliates. The Board noted and the profitability of Invesco Aim and Aim to identify the funds in the Fund's that the Fund's rate was generally above its affiliates in providing these performance group for inclusion in the the rates for the separately managed services. The Board also reviewed Lipper reports. The Board noted that the accounts/wrap accounts. The Board information concerning the financial Fund's performance was in the third considered that management of the condition of Invesco Aim and its quintile of its performance group for the separately managed accounts/wrap accounts affiliates. The Board also reviewed with one year period and the fourth quintile by the Invesco Aim affiliates involves Invesco Aim the methodology used to for the three and five year periods (the different levels of services and different prepare the profitability information. The first quintile being the best performing operational and regulatory requirements Board considered the overall profitability funds and the fifth quintile being the than Invesco Aim's management of the Fund. of Invesco Aim, as well as the worst performing funds). The Board noted The Board concluded that these differences profitability of Invesco Aim in connection that the Fund's performance was below the are appropriately reflected in the fee with managing the Fund. The Board noted performance of the Index for the one, structure for the Fund. that Invesco Aim continues to operate at a three and five year periods. The Board net profit, although increased expenses in also noted that Invesco Aim acknowledges The Board noted that Invesco Aim has recent years have reduced the the Fund's underperformance and is focused not proposed any advisory fee waivers or profitability of Invesco Aim and its on the longer term and business issues expense limitations for the Fund. Based affiliates. The Board concluded that the that affect the Fund's performance. The upon amendments to the Fund's contractual Fund's fees were fair and reasonable, and Board also considered the steps Invesco advisory fee schedule in recent years, the that the level of profits realized by Aim has taken over the last several years Board concluded that it was not necessary Invesco Aim and its affiliates from to improve the quality and efficiency of at this time to discuss with Invesco Aim providing services to the Fund was not the services that Invesco Aim provides to whether to amend the contractual advisory excessive in light of the nature, quality the AIM Funds. The Board concluded that fee schedule or implement any fee waivers and extent of the services provided. The Invesco Aim continues to be responsive to or expense limitations for the Fund. Board considered whether Invesco Aim is the Board's focus on fund performance. financially sound and has the resources Although the independent written After taking account of the Fund's necessary to perform its obligations under evaluation of contractual advisory fee rate, as well as the Fund's investment advisory agreement, and concluded that Invesco continued
20 AIM BASIC VALUE FUND Aim has the financial resources necessary shareholders. The Board concluded that recommendations on the markets and to fulfill these obligations. Invesco Aim's soft dollar arrangements economies of various countries and were appropriate. The Board also concluded securities of companies located in such F. Independent Written Evaluation of that, based on their review and countries or on various types of the Fund's Senior Officer representations made by Invesco Aim, these investments and investment techniques, and arrangements were consistent with providing investment advisory services. The Board noted that, at their direction, regulatory requirements. The Board concluded that the sub-advisory the Senior Officer of the Fund, who is agreements will benefit the Fund and its independent of Invesco Aim and Invesco The Board considered the fact that the shareholders by permitting Invesco Aim to Aim's affiliates, had prepared an Fund's uninvested cash and cash collateral utilize the additional resources and independent written evaluation to assist from any securities lending arrangements talent of the Affiliated Sub-Advisers in the Board in determining the may be invested in money market funds managing the Fund. reasonableness of the proposed management advised by Invesco Aim pursuant to fees of the AIM Funds, including the Fund. procedures approved by the Board. The B. Fund Performance The Board noted that they had relied upon Board noted that Invesco Aim will receive the Senior Officer's written evaluation advisory fees from these affiliated money The Board did not view Fund performance as instead of a competitive bidding process. market funds attributable to such a relevant factor in considering whether In determining whether to continue the investments, although Invesco Aim has to approve the sub-advisory agreements for Fund's investment advisory agreement, the contractually agreed to waive through at the Fund, as no Affiliated Sub-Adviser Board considered the Senior Officer's least June 30, 2009, the advisory fees currently manages any portion of the written evaluation. payable by the Fund in an amount equal to Fund's assets. 100% of the net advisory fees Invesco Aim G. Collateral Benefits to Invesco Aim receives from the affiliated money market C. Sub-Advisory Fees and its Affiliates funds with respect to the Fund's investment of uninvested cash, but not The Board considered the services to be The Board considered various other cash collateral. The Board considered the provided by the Affiliated Sub-Advisers benefits received by Invesco Aim and its contractual nature of this fee waiver and pursuant to the sub-advisory agreements affiliates resulting from Invesco Aim's noted that it remains in effect until at and the services to be provided by Invesco relationship with the Fund, including the least June 30, 2009. The Board concluded Aim pursuant to the Fund's investment fees received by Invesco Aim and its that the Fund's investment of uninvested advisory agreement, as well as the affiliates for their provision of cash and cash collateral from any allocation of fees between Invesco Aim and administrative, transfer agency and securities lending arrangements in the the Affiliated Sub-Advisers pursuant to distribution services to the Fund. The affiliated money market funds is in the the sub-advisory agreements. The Board Board considered the performance of best interests of the Fund and its noted that the sub-advisory fees have no Invesco Aim and its affiliates in shareholders. direct effect on the Fund or its providing these services and the shareholders, as they are paid by Invesco organizational structure employed by II. Sub-Advisory Agreements Aim to the Affiliated Sub-Advisers, and Invesco Aim and its affiliates to provide that Invesco Aim and the Affiliated these services. The Board also considered A. Nature, Extent and Quality of Services Sub-Advisers are affiliates. After taking that these services are provided to the Provided by Affiliated Sub-Advisers account of the Fund's contractual Fund pursuant to written contracts which sub-advisory fee rate, as well as other are reviewed and approved on an annual The Board reviewed the services to be relevant factors, the Board concluded that basis by the Board. The Board concluded provided by Invesco Trimark Ltd., Invesco the Fund's sub-advisory fees were fair and that Invesco Aim and its affiliates were Asset Management Deutschland, GmbH, reasonable. providing these services in a satisfactory Invesco Asset Management Limited, Invesco manner and in accordance with the terms of Asset Management (Japan) Limited, Invesco D. Financial Resources of the their contracts, and were qualified to Australia Limited, Invesco Global Asset Affiliated Sub-Advisers continue to provide these services to the Management (N.A.), Inc., Invesco Hong Kong Fund. Limited, Invesco Institutional (N.A.), The Board considered whether each Inc. and Invesco Senior Secured Affiliated Sub-Adviser is financially The Board considered the benefits Management, Inc. (collectively, the sound and has the resources necessary to realized by Invesco Aim as a result of "Affiliated Sub-Advisers") under the perform its obligations under its portfolio brokerage transactions executed sub-advisory agreements and the respective sub-advisory agreement, and through "soft dollar" arrangements. Under credentials and experience of the officers concluded that each Affiliated Sub-Adviser these arrangements, portfolio brokerage and employees of the Affiliated has the financial resources necessary to commissions paid by the Fund and/or other Sub-Advisers who will provide these fulfill these obligations. funds advised by Invesco Aim are used to services. The Board concluded that the pay for research and execution services. nature, extent and quality of the services The Board noted that soft dollar to be provided by the Affiliated arrangements shift the payment obligation Sub-Advisers were appropriate. The Board for the research and execution services noted that the Affiliated Sub-Advisers, from Invesco Aim to the funds and which have offices and personnel that are therefore may reduce Invesco Aim's geographically dispersed in financial expenses. The Board also noted that centers around the world, have been formed research obtained through soft dollar in part for the purpose of researching and arrangements may be used by Invesco Aim in compiling information and making making investment decisions for the Fund and may therefore benefit Fund
21 AIM BASIC VALUE FUND Supplement to Semiannual Report dated 6/30/08 AIM BASIC VALUE FUND ========================================== INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is For periods ended 6/30/08 not indicative of future results. More The following information has been recent returns may be more or less than prepared to provide Institutional Class Inception (3/15/02) 1.91% those shown. All returns assume shareholders with a performance overview 5 Years 5.97 reinvestment of distributions at NAV. specific to their holdings. Institutional 1 Year -22.10 Investment return and principal value will Class shares are offered exclusively to 6 Months* -17.15 fluctuate so your shares, when redeemed, institutional investors, including defined may be worth more or less than their contribution plans that meet certain * Cumulative total return that has not original cost. See full report for criteria. been annualized information on comparative benchmarks. ========================================== Please consult your Fund prospectus for more information. For the most current Institutional Class shares have no sales month-end performance, please call 800 451 charge; therefore, performance is at net 4246 or visit invescoaim.com. 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 0.76%. 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. 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 or shown to the public, nor used in written form as sales literature for public use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com BVA-INS-2 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 January 1, 2008, through June 30, 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.
------------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ----------------------------------------------------------- BEGINNING ENDING EXPENSES ENDING ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE EXPENSES PAID EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) DURING PERIOD(2) RATIO ------------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $828.50 $3.59 $1,020.93 $3.97 0.79% -------------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM BASIC VALUE FUND PROXY RESULTS A Special Meeting ("Meeting") of Shareholders of AIM Basic Value Fund, an investment portfolio of AIM Growth Series, a Delaware statutory trust ("Trust"), was held on February 29, 2008 and adjourned until March 28, 2008. The Meeting 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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** ----------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker...................................................... 259,205,198 10,486,394 Frank S. Bayley................................................... 259,256,384 10,435,208 James T. Bunch.................................................... 258,142,293 11,549,299 Bruce L. Crockett................................................. 258,143,390 11,548,202 Albert R. Dowden.................................................. 259,201,224 10,490,368 Jack M. Fields.................................................... 259,317,796 10,373,796 Martin L. Flanagan................................................ 259,304,758 10,386,834 Carl Frischling................................................... 259,178,445 10,513,147 Prema Mathai-Davis................................................ 259,255,582 10,436,010 Lewis F. Pennock.................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ................................................ 258,048,313 11,643,279 Raymond Stickel, Jr. ............................................. 258,206,591 11,485,001 Philip A. Taylor.................................................. 259,264,092 10,427,500
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................................ 182,780,828 23,098,525 6,564,572 57,247,667 (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. ........................................... 44,320,499 3,671,096 1,772,496 15,154,100
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 22 AIM BASIC VALUE FUND ==================================================================================================================================== EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 mail. 3. Select "Register for eDelivery" and complete the consent - view your documents online anytime at your convenience. process. - 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, 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 [INVESCO AIM LOGO] the products and services represented by Invesco Aim; they each provide investment advisory services to - SERVICE MARK - individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 BVA-SAR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM ALLOCATION FUNDS - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 AIM Conservative Allocation Fund AIM Growth Allocation Fund AIM Moderate Allocation Fund AIM Moderate Growth Allocation Fund AIM Moderately Conservative Allocation Fund [MOUNTAIN GRAPHIC] AIM Investments 2 Letter to Shareholders became INVESCO AIM 3 Fund Performance on March 31, 2008. 8 Portfolio Composition 9 Schedule of Investments For more details, go to 12 Financial Statements invescoaim.com 17 Notes to Financial Statements 26 Financial Highlights 52 Fund Expenses 54 Approval of Investment Advisory Agreement 58 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. 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 Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing considerable investor anxiety, reminding us again that markets are cyclical and the [CROCKETT PHOTO] 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 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 Bruce Crockett 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 Web site (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 e-mail 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 August 11, 2008
2 AIM ALLOCATION FUNDS FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM CONSERVATIVE ALLOCATION FUND AVERAGE ANNUAL TOTAL RETURNS As of 6/30/08, including maximum FUND VS. INDEXES applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance CLASS A SHARES shown does not include applicable contingent deferred sales charges (CDSC) or front-end Inception (4/30/04) 2.69% sales charges, which would have reduced performance. 1 Year -6.45 Class A Shares -2.09% CLASS B SHARES Class B Shares -2.39 Inception (4/30/04) 2.88% Class C Shares -2.48 1 Year -6.43 Class R Shares -2.19 S&P 500 Index(triangle) (Broad Market Index) -11.90 CLASS C SHARES Custom Conservative Allocation Index(square) (Style-Specific Index) -2.20 Inception (4/30/04) 3.29% Lipper Mixed-Asset Target Allocation Conservative Funds Index(triangle) 1 Year -2.70 (Peer Group Index) -1.59 CLASS R SHARES (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. Inception (4/30/04) 3.83% 1 Year -1.17 The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index ========================================== covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, RATIO SET FORTH IN THE MOST RECENT FUND liquidity, and their industry. PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C AND CLASS R The CUSTOM CONSERVATIVE ALLOCATION INDEX, created by Invesco Aim to serve as a SHARES WAS 1.27%, 2.02%, 2.02% AND 1.52%, benchmark for AIM Conservative Allocation Fund, is composed of the following indexes: RESPECTIVELY. (2) THE EXPENSE RATIOS RUSSELL 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT PRESENTED ABOVE MAY VARY FROM THE EXPENSE EQUITY REITS, LEHMAN BROTHERS U.S. UNIVERSAL and THREE-MONTH U.S. TREASURY BILL. The RATIOS PRESENTED IN OTHER SECTIONS OF THIS composition of the index may change from time to time based upon the target asset REPORT THAT ARE BASED ON EXPENSES INCURRED allocation of the Fund. Therefore, the current composition of the index does not DURING THE PERIOD COVERED BY THIS REPORT. reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 Index is an unmanaged index consid- CLASS A SHARE PERFORMANCE REFLECTS THE ered representative of the U.S. stock market. The Russell 3000 Index is a trademark/ MAXIMUM 5.50% SALES CHARGE, AND CLASS B service mark of the Frank Russell Co. Russell--REGISTERED TRADEMARK-- is a trademark of AND CLASS C SHARE PERFORMANCE REFLECTS THE the Frank Russell Co. The MSCI EAFE Index is an unmanaged index considered representa- APPLICABLE CONTINGENT SALES CHARGE (CDSC) tive of stocks of Europe, Australasia and the Far East. The FTSE NAREIT Equity REITs FOR THE PERIOD INVOLVED. THE CDSC ON CLASS Index is an unmanaged index considered representative of U.S. REITs. The Lehman B SHARES DECLINES FROM 5% BEGINNING AT THE Brothers U.S. Universal Index is composed of the following Lehman Brothers indexes: TIME OF PURCHASE TO 0% AT THE BEGINNING OF U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and THE SEVENTH YEAR. THE CDSC ON CLASS C the non-ERISA portion of CMBS. The three-month U.S. Treasury bill Index is compiled by SHARES IS 1% FOR THE FIRST YEAR AFTER Lipper and is derived from secondary market interest rates published by the Federal PURCHASE. CLASS R SHARES DO NOT HAVE A Reserve Bank. FRONT-END SALES CHARGE; RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL weighted representation of the largest funds in the Lipper Mixed-Asset Target Alloca- REDEMPTION OF RETIREMENT PLAN ASSETS tion Conservative Funds category. These funds, by portfolio practice, maintain a mix of WITHIN THE FIRST YEAR. between 20%-40% equity securities, with the remainder invested in bonds, cash, and cash equivalents. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO The Fund is not managed to track the performance of any particular index, including DIFFERENT SALES CHARGE STRUCTURES AND the indexes defined here, and consequently, the performance of the Fund may deviate CLASS EXPENSES. significantly from the performance of the indexes. HAD THE ADVISOR NOT WAIVED FEES AND/OR A direct investment cannot be made in an index. Unless otherwise indicated, index REIMBURSED EXPENSES IN THE PAST, results include reinvested dividends, and they do not reflect sales charges. PERFORMANCE WOULD HAVE BEEN LOWER. Performance of an index of funds reflects fund expenses; performance of a market index does not. (1) Total annual operating expenses less ======================================================================================= any contractual fee waivers and/or expense reimbursements by the advisor THE PERFORMANCE DATA QUOTED REPRESENT PAST PAY ON FUND DISTRIBUTIONS OR SALE OF FUND in effect through at least June 30, PERFORMANCE AND CANNOT GUARANTEE SHARES. INVESTMENT RETURN AND PRINCIPAL 2009. See current prospectus for more COMPARABLE FUTURE RESULTS; CURRENT VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE information. PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE A GAIN OR LOSS WHEN YOU SELL SHARES. VISIT INVESCOAIM.COM FOR THE MOST RECENT (2) The expense ratio includes acquired MONTH-END PERFORMANCE. PERFORMANCE FIGURES THE NET ANNUAL FUND OPERATING EXPENSE fund fees and expenses of the REFLECT REINVESTED DISTRIBUTIONS, CHANGES RATIO SET FORTH IN THE MOST RECENT FUND underlying funds in which the Fund IN NET ASSET VALUE AND THE EFFECT OF THE PROSPECTUS AS OF THE DATE OF THIS REPORT invests of 0.62% for AIM Conservative MAXIMUM SALES CHARGE UNLESS OTHERWISE FOR CLASS A, CLASS B, CLASS C AND CLASS R Allocation Fund. STATED. PERFORMANCE FIGURES DO NOT REFLECT SHARES WAS 1.11%, 1.86%, 1.86% AND 1.36%, DEDUCTION OF TAXES A SHAREHOLDER WOULD RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE
3 AIM CONSERVATIVE ALLOCATION FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM GROWTH ALLOCATION FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance applicable sales charges shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. CLASSA SHARES Inception (4/30/04) 6.85% Class A Shares -11.05% 1 Year -16.29 Class B Shares -11.35 Class C Shares -11.35 CLASS B SHARES Class R Shares -11.14 Inception (4/30/04) 7.13% S&P 500 Index(triangle) (Broad Market Index) -11.90 1 Year -16.33 Custom Growth Allocation Index(square) (Style-Specific Index) -10.02 Lipper Multi-Cap Core Funds Index(triangle) (Peer Group Index) -10.28 CLASS C SHARES (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. Inception (4/30/04) 7.52% 1 Year -12.92 The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but CLASS R SHARES rather the most widely held 500 companies chosen with respect to market size, Inception (4/30/04) 8.06% liquidity, and their industry. 1 Year -11.62 ========================================== The CUSTOM GROWTH ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Growth Allocation Fund, is composed of the following indexes: RUSSELL THE EXPENSE RATIOS PRESENTED IN OTHER 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY SECTIONS OF THIS REPORT THAT ARE BASED ON REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from EXPENSES INCURRED DURING THE PERIOD time to time based upon the target asset allocation of the Fund. Therefore, the current COVERED BY THIS REPORT. composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 CLASS A SHARE PERFORMANCE REFLECTS THE Index is an unmanaged index considered representative of the U.S. stock market. The MAXIMUM 5.50% SALES CHARGE, AND CLASS B Russell 3000 Index is a trademark/service mark of the Frank Russell Co. AND CLASS C SHARE PERFORMANCE REFLECTS THE Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The MSCI EAFE APPLICABLE CONTINGENT SALES CHARGE (CDSC) Index is an unmanaged index considered representative of stocks of Europe, Australasia FOR THE PERIOD INVOLVED. THE CDSC ON CLASS and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index considered B SHARES DECLINES FROM 5% BEGINNING AT THE representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is composed of TIME OF PURCHASE TO 0% AT THE BEGINNING OF the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, THE SEVENTH YEAR. THE CDSC ON CLASS C 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A The LIPPER MULTI-CAP CORE FUNDS INDEX is an equally weighted representation of the FRONT-END SALES CHARGE; RETURNS SHOWN ARE largest funds in the Lipper Multi-Cap Core Funds category. These funds typically have AT NET ASSET VALUE AND DO NOT REFLECT A an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL growth value, compared to the S&P SuperComposite 1500 Index. REDEMPTION OF RETIREMENT PLAN ASSETS WITHIN THE FIRST YEAR. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate THE PERFORMANCE OF THE FUND'S SHARE significantly from the performance of the indexes. CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND A direct investment cannot be made in an index. Unless otherwise indicated, index CLASS EXPENSES. results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index HAD THE ADVISOR NOT WAIVED FEES AND/OR does not. REIMBURSED EXPENSES IN THE PAST, ======================================================================================= PERFORMANCE WOULD HAVE BEEN LOWER. THE PERFORMANCE DATA QUOTED REPRESENT PAST YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL (1) Total annual operating expenses less PERFORMANCE AND CANNOT GUARANTEE SHARES. any contractual fee waivers and/or COMPARABLE FUTURE RESULTS; CURRENT expense reimbursements by the advisor PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE THE NET ANNUAL FUND OPERATING EXPENSE in effect through at least June 30, VISIT INVESCOAIM.COM FOR THE MOST RECENT RATIO SET FORTH IN THE MOST RECENT FUND 2009. See current prospectus for more MONTH-END PERFORMANCE. PERFORMANCE FIGURES PROSPECTUS AS OF THE DATE OF THIS REPORT information. REFLECT REINVESTED DISTRIBUTIONS, CHANGES FOR CLASS A, CLASS B, CLASS C AND CLASS R IN NET ASSET VALUE AND THE EFFECT OF THE SHARES WAS 1.27%, 2.02%, 2.02% AND 1.52%, (2) The expense ratio includes acquired MAXIMUM SALES CHARGE UNLESS OTHERWISE RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND fund fees and expenses of the STATED. PERFORMANCE FIGURES DO NOT REFLECT OPERATING EXPENSE RATIO SET FORTH IN THE underlying funds in which the Fund DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY MOST RECENT FUND PROSPECTUS AS OF THE DATE invests of 0.80% for AIM Growth ON FUND DISTRIBUTIONS OR SALE OF FUND OF THIS REPORT FOR CLASS A, CLASS B, CLASS Allocation Fund. SHARES. INVESTMENT RETURN AND PRINCIPAL C AND CLASS R SHARES WAS 1.36%, 2.11%, VALUE WILL FLUCTUATE SO THAT 2.11% AND 1.61%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM
4 AIM GROWTH ALLOCATION FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM MODERATE ALLOCATION FUND AVERAGE ANNUAL TOTAL RETURNS As of 6/30/08, including maximum FUND VS. INDEXES applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (4/30/04) 5.00% 1 Year -13.14 Class A Shares -8.26% Class B Shares -8.56 CLASS B SHARES Class C Shares -8.56 Inception (4/30/04) 5.26% Class R Shares -8.35 1 Year -13.10 S&P 500 Index(triangle) (Broad Market Index) -11.90 Custom Moderate Allocation Index(square) (Style-Specific Index) -6.35 CLASS C SHARES Lipper Mixed-Asset Target Allocation Moderate Funds Index(triangle) Inception (4/30/04) 5.67% (Peer Group Index) -6.04 1 Year -9.64 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. CLASS R SHARES The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index Inception (4/30/04) 6.20% covering all major areas of the U.S. economy. It is not the 500 largest companies, but 1 Year -8.27 rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. ========================================== The CUSTOM MODERATE ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark VARY FROM THE EXPENSE RATIOS PRESENTED IN for AIM Moderate Allocation Fund, is composed of the following indexes: RUSSELL OTHER SECTIONS OF THIS REPORT THAT ARE 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY BASED ON EXPENSES INCURRED DURING THE REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from PERIOD COVERED BY THIS REPORT. time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be CLASS A SHARE PERFORMANCE REFLECTS altered in the future to better reflect the objective of the Fund. The Russell 3000 THE MAXIMUM 5.50% SALES CHARGE, AND CLASS Index is an unmanaged index considered representative of the U.S. stock market. The B AND CLASS C SHARE PERFORMANCE REFLECTS Russell 3000 Index is a trademark/service mark of the Frank Russell Co. THE APPLICABLE CONTINGENT SALES CHARGE Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The MSCI EAFE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC Index is an unmanaged index considered representative of stocks of Europe, Australasia ON CLASS B SHARES DECLINES FROM 5% and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index considered BEGINNING AT THE TIME OF PURCHASE TO 0% AT representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is composed of THE BEGINNING OF THE SEVENTH YEAR. THE the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, CDSC ON CLASS C SHARES IS 1% FOR THE FIRST 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS The LIPPER MIXED-ASSET TARGET ALLOCATION MODERATE FUNDS INDEX is an equally weighted SHOWN ARE AT NET ASSET VALUE AND DO NOT representation of the largest funds in the Lipper Mixed-Asset Target Allocation REFLECT A 0.75% CDSC THAT MAY BE IMPOSED Moderate Funds category. These funds, by portfolio practice, maintain a mix of between ON A TOTAL REDEMPTION OF RETIREMENT PLAN 40%-60% equity securities, with the remainder invested in bonds, cash, and cash ASSETS WITHIN THE FIRST YEAR. equivalents. THE PERFORMANCE OF THE FUND'S SHARE The Fund is not managed to track the performance of any particular index, including CLASSES WILL DIFFER PRIMARILY DUE TO the indexes defined here, and consequently, the performance of the Fund may deviate DIFFERENT SALES CHARGE STRUCTURES AND significantly from the performance of the indexes. CLASS EXPENSES. A direct investment cannot be made in an index. Unless otherwise indicated, index HAD THE ADVISOR NOT WAIVED FEES results include reinvested dividends, and they do not reflect sales charges. AND/OR REIMBURSED EXPENSES IN THE PAST, Performance of an index of funds reflects fund expenses; performance of a market index PERFORMANCE WOULD HAVE BEEN LOWER. does not. ======================================================================================= (1) Total annual operating expenses less any contractual fee waivers and/or THE PERFORMANCE DATA QUOTED REPRESENT PAST PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU expense reimbursements by the advisor PERFORMANCE AND CANNOT GUARANTEE MAY HAVE A GAIN OR LOSS WHEN YOU SELL in effect through at least June 30, COMPARABLE FUTURE RESULTS; CURRENT SHARES. 2009. See current prospectus for more PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE information. VISIT INVESCOAIM.COM FOR THE MOST RECENT THE NET ANNUAL FUND OPERATING EXPENSE MONTH-END PERFORMANCE. PERFORMANCE FIGURES RATIO SET FORTH IN THE MOST RECENT FUND (2) The expense ratio includes acquired REFLECT REINVESTED DISTRIBUTIONS, CHANGES PROSPECTUS AS OF THE DATE OF THIS REPORT fund fees and expenses of the IN NET ASSET VALUE AND THE EFFECT OF THE FOR CLASS A, CLASS B, CLASS C AND CLASS R underlying funds in which the Fund MAXIMUM SALES CHARGE UNLESS OTHERWISE SHARES WAS 1.14%, 1.89%, 1.89% AND 1.39%, invests of 0.76% for AIM Moderate STATED. PERFORMANCE FIGURES DO NOT REFLECT RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND Allocation Fund. DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY OPERATING EXPENSE RATIO SET FORTH IN THE ON FUND DISTRIBUTIONS OR SALE OF FUND MOST RECENT FUND PROSPECTUS AS OF THE DATE SHARES. INVESTMENT RETURN AND OF THIS REPORT FOR CLASS A, CLASS B, CLASS C AND CLASS R SHARES WAS 1.26%, 2.01%, 2.01% AND 1.51%, RESPECTIVELY.2 THE EXPENSE RATIOS PRESENTED ABOVE MAY
5 AIM MODERATE ALLOCATION FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM MODERATE GROWTH ALLOCATION FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (4/29/05) 5.78% 1 Year -15.11 Class A Shares -9.75% Class B Shares -10.12 CLASS B SHARES Class C Shares -10.12 Inception (4/29/05) 6.08% Class R Shares -9.93 1 Year -15.11 S&P 500 Index(triangle) (Broad Market Index) -11.90 Custom Moderate Growth Allocation Index(square) (Style-Specific Index) -8.48 CLASS C SHARES Lipper Mixed-Asset Target Allocation Growth Funds Index(triangle) Inception (4/29/05) 6.88% (Peer Group Index) -7.32 1 Year -11.67 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. CLASS R SHARES Inception (4/29/05) 7.38% 1 Year -10.41 ========================================== The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but FOR CLASS A, CLASS B, CLASS C AND CLASS R rather the most widely held 500 companies chosen with respect to market size, SHARES WAS 1.32%, 2.07%, 2.07% AND 1.57%, liquidity, and their industry. RESPECTIVELY.2 THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE The CUSTOM MODERATE GROWTH ALLOCATION INDEX, created by Invesco Aim to serve as a RATIOS PRESENTED IN OTHER SECTIONS OF THIS benchmark for AIM Moderate Growth Allocation Fund, is composed of the following REPORT THAT ARE BASED ON EXPENSES INCURRED indexes: RUSSELL 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE DURING THE PERIOD COVERED BY THIS REPORT. NAREIT EQUITY REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical CLASS A SHARE PERFORMANCE REFLECTS THE composition and will likely be altered in the future to better reflect the objective of MAXIMUM 5.50% SALES CHARGE, AND CLASS B the Fund. The Russell 3000 Index is an unmanaged index considered representative of the AND CLASS C SHARE PERFORMANCE REFLECTS THE U.S. stock market. The Russell 3000 Index is a trademark/service mark of the Frank APPLICABLE CONTINGENT SALES CHARGE (CDSC) Russell Co. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The FOR THE PERIOD INVOLVED. THE CDSC ON CLASS MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, B SHARES DECLINES FROM 5% BEGINNING AT THE Australasia and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index TIME OF PURCHASE TO 0% AT THE BEGINNING OF considered representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is THE SEVENTH YEAR. THE CDSC ON CLASS C composed of the following Lehman Brothers indexes: U.S. Aggregate Index, U. S. SHARES IS 1% FOR THE FIRST YEAR AFTER High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of PURCHASE. CLASS R SHARES DO NOT HAVE A CMBS. FRONT-END SALES CHARGE; RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A The LIPPER MIXED-ASSET TARGET ALLOCATION GROWTH FUNDS INDEX is an equally weighted 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL representation of the largest funds in the Lipper Mixed-Asset Target Allocation Growth REDEMPTION OF RETIREMENT PLAN ASSETS Funds category. These funds, by portfolio practice, maintain a mix of between 60%-80% WITHIN THE FIRST YEAR. equity securities, with the remainder invested in bonds, cash, and cash equivalents. THE PERFORMANCE OF THE FUND'S SHARE The Fund is not managed to track the performance of any particular index, including CLASSES WILL DIFFER PRIMARILY DUE TO the indexes defined here, and consequently, the performance of the Fund may deviate DIFFERENT SALES CHARGE STRUCTURES AND significantly from the performance of the indexes. CLASS EXPENSES. A direct investment cannot be made in an index. Unless otherwise indicated, index HAD THE ADVISOR NOT WAIVED FEES AND/OR results include reinvested dividends, and they do not reflect sales charges. REIMBURSED EXPENSES IN THE PAST, Performance of an index of funds reflects fund expenses; performance of a market index PERFORMANCE WOULD HAVE BEEN LOWER. does not. ======================================================================================= (1) Total annual operating expenses less any contractual fee waivers and/or THE PERFORMANCE DATA QUOTED REPRESENT PAST FUND SHARES. INVESTMENT RETURN AND expense reimbursements by the advisor PERFORMANCE AND CANNOT GUARANTEE PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU in effect through at least June 30, COMPARABLE FUTURE RESULTS; CURRENT MAY HAVE A GAIN OR LOSS WHEN YOU SELL 2009. See current prospectus for more PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE SHARES. information. VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES THE NET ANNUAL FUND OPERATING EXPENSE (2) The expense ratio includes acquired REFLECT REINVESTED DISTRIBUTIONS, CHANGES RATIO SET FORTH IN THE MOST RECENT FUND fund fees and expenses of the IN NET ASSET VALUE AND THE EFFECT OF THE PROSPECTUS AS OF THE DATE OF THIS REPORT underlying funds in which the Fund MAXIMUM SALES CHARGE UNLESS OTHERWISE FOR CLASS A, CLASS B, CLASS C AND CLASS R invests of 0.78% for AIM Moderate STATED. PERFORMANCE FIGURES DO NOT REFLECT SHARES WAS 1.15%, 1.90%, 1.90% AND 1.40%, Growth Allocation Fund. DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ON FUND DISTRIBUTIONS OR SALE OF OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT
6 AIM MODERATE GROWTH ALLOCATION FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM MODERATELY CONSERVATIVE ALLOCATION FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (4/29/05) 3.20% 1 Year -8.91 Class A Shares - 4.89% CLASS B SHARES Class B Shares - 5.20 Inception (4/29/05) 3.39% Class C Shares - 5.28 1 Year -8.84 Class R Shares - 5.00 S&P 500 Index(triangle) (Broad Market Index) - 1.90 CLASS C SHARES Custom Moderately Conservative Allocation Index(square) (Style-Specific Index) - 3.98 Inception (4/29/05) 4.26% Lipper Mixed-Asset Target Allocation Conservative Funds 1 Year -5.25 Index(traiangle) (Peer Group Index) -1.59 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. CLASS R SHARES Inception (4/29/05) 4.77% 1 Year -3.89 ========================================== The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index FOR CLASS A, CLASS B, CLASS C AND CLASS R covering all major areas of the U.S. economy. It is not the 500 largest companies, but SHARES WAS 1.37%, 2.12%, 2.12% AND 1.62%, rather the most widely held 500 companies chosen with respect to market size, RESPECTIVELY.2 THE EXPENSE RATIOS liquidity, and their industry. PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS The CUSTOM MODERATELY CONSERVATIVE ALLOCATION INDEX, created by Invesco Aim to serve REPORT THAT ARE BASED ON EXPENSES INCURRED as a benchmark for AIM Moderately Conservative Allocation Fund, is composed of the DURING THE PERIOD COVERED BY THIS REPORT. following indexes: RUSSELL 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The CLASS A SHARE PERFORMANCE REFLECTS THE composition of the index may change from time to time based upon the target asset MAXIMUM 5.50% SALES CHARGE, AND CLASS B allocation of the Fund. Therefore, the current composition of the index does not AND CLASS C SHARE PERFORMANCE REFLECTS THE reflect its historical composition and will likely be altered in the future to better APPLICABLE CONTINGENT SALES CHARGE (CDSC) reflect the objective of the Fund. The Russell 3000 Index is an unmanaged index FOR THE PERIOD INVOLVED. THE CDSC ON CLASS considered representative of the U.S. stock market. The Russell 3000 Index is a B SHARES DECLINES FROM 5% BEGINNING AT THE trademark/service mark of the Frank Russell Co. Russell--REGISTERED TRADEMARK-- is a TIME OF PURCHASE TO 0% AT THE BEGINNING OF trademark of the Frank Russell Co. The MSCI EAFE Index is an unmanaged index considered THE SEVENTH YEAR. THE CDSC ON CLASS C representative of stocks of Europe, Australasia and the Far East. The FTSE NAREIT SHARES IS 1% FOR THE FIRST YEAR AFTER Equity REITs Index is an unmanaged index considered representative of U.S. REITs. The PURCHASE. CLASS R SHARES DO NOT HAVE A Lehman Brothers U.S. Universal Index is composed of the following Lehman Brothers FRONT-END SALES CHARGE; RETURNS SHOWN ARE indexes: U.S. Aggregate Index, U. S. High-Yield Corporate, 144A, Eurodollar, Emerging AT NET ASSET VALUE AND DO NOT REFLECT A Markets and the non-ERISA portion of CMBS. 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL REDEMPTION OF RETIREMENT PLAN ASSETS The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally WITHIN THE FIRST YEAR. weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation Conservative Funds category. These funds, by portfolio practice, maintain a THE PERFORMANCE OF THE FUND'S SHARE mix of between 20%-40% equity securities, with the remainder invested in bonds, cash, CLASSES WILL DIFFER PRIMARILY DUE TO and cash equivalents. DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate HAD THE ADVISOR NOT WAIVED FEES AND/OR significantly from the performance of the indexes. REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. (1) Total annual operating expenses less Performance of an index of funds reflects fund expenses; performance of a market index any contractual fee waivers and/or does not. expense reimbursements by the advisor ======================================================================================= in effect through at least June 30, 2009. See current prospectus for more THE PERFORMANCE DATA QUOTED REPRESENT PAST FUND SHARES. INVESTMENT RETURN AND information. PERFORMANCE AND CANNOT GUARANTEE PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU COMPARABLE FUTURE RESULTS; CURRENT MAY HAVE A GAIN OR LOSS WHEN YOU SELL (2) The expense ratio includes acquired PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE SHARES. fund fees and expenses of the VISIT INVESCOAIM.COM FOR THE MOST RECENT underlying funds in which the Fund MONTH-END PERFORMANCE. PERFORMANCE FIGURES THE NET ANNUAL FUND OPERATING EXPENSE invests of 0.70% for AIM Moderately REFLECT REINVESTED DISTRIBUTIONS, CHANGES RATIO SET FORTH IN THE MOST RECENT FUND Conservative Allocation Fund. IN NET ASSET VALUE AND THE EFFECT OF THE PROSPECTUS AS OF THE DATE OF THIS REPORT MAXIMUM SALES CHARGE UNLESS OTHERWISE FOR CLASS A, CLASS B, CLASS C AND CLASS R STATED. PERFORMANCE FIGURES DO NOT REFLECT SHARES WAS 1.09%, 1.84%, 1.84% AND 1.34%, DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND ON FUND DISTRIBUTIONS OR SALE OF OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT
7 AIM MODERATELY CONSERVATIVE ALLOCATION FUND PORTFOLIO COMPOSITION TABLES As of June 30, 2008 AIM CONSERVATIVE ALLOCATION FUND
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ---------------------------------------------------------------------------------------------- Intermediate-Term Taxable Investment Grade 26.00% 26.29% ---------------------------------------------------------------------------------------------- International/Global Blend 2.50% 2.31% ---------------------------------------------------------------------------------------------- Large-Cap Blend 5.00% 4.84% ---------------------------------------------------------------------------------------------- Large-Cap Growth 5.00% 4.82% ---------------------------------------------------------------------------------------------- Large-Cap Value 5.00% 4.57% ---------------------------------------------------------------------------------------------- Mid-Cap Blend 2.50% 2.30% ---------------------------------------------------------------------------------------------- Real Estate 2.50% 2.35% ---------------------------------------------------------------------------------------------- Sector 2.50% 2.41% ---------------------------------------------------------------------------------------------- Short-Term Taxable Investment Grade 32.00% 32.73% ---------------------------------------------------------------------------------------------- Taxable Noninvestment Grade 7.00% 7.25% ---------------------------------------------------------------------------------------------- Cash Equivalents Plus Other Assets Less Liabilities 10.00% 10.13% ______________________________________________________________________________________________ ==============================================================================================
AIM MODERATE ALLOCATION FUND
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ---------------------------------------------------------------------------------------------- Intermediate-Term Taxable Investment Grade 25.50% 26.74% ---------------------------------------------------------------------------------------------- International/Global Blend 10.00% 9.57% ---------------------------------------------------------------------------------------------- International/Global Growth 7.50% 7.32% ---------------------------------------------------------------------------------------------- Large-Cap Growth 12.50% 12.48% ---------------------------------------------------------------------------------------------- Large-Cap Value 10.00% 9.46% ---------------------------------------------------------------------------------------------- Mid-Cap Growth 4.00% 4.00% ---------------------------------------------------------------------------------------------- Mid-Cap Value 4.00% 3.61% ---------------------------------------------------------------------------------------------- Real Estate 3.00% 2.79% ---------------------------------------------------------------------------------------------- Sector 5.00% 4.99% ---------------------------------------------------------------------------------------------- Short-Term Taxable Investment Grade 2.50% 2.65% ---------------------------------------------------------------------------------------------- Small Cap 4.00% 3.88% ---------------------------------------------------------------------------------------------- Taxable Noninvestment Grade 12.00% 12.57% ---------------------------------------------------------------------------------------------- Other Assets Less Liabilities (0.06)% ______________________________________________________________________________________________ ==============================================================================================
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ---------------------------------------------------------------------------------------------- Intermediate-Term Taxable Investment Grade 39.00% 40.19% ---------------------------------------------------------------------------------------------- International/Global Blend 5.00% 4.69% ---------------------------------------------------------------------------------------------- International/Global Growth 2.50% 2.39% ---------------------------------------------------------------------------------------------- Large-Cap Growth 11.25% 11.01% ---------------------------------------------------------------------------------------------- Large-Cap Value 11.25% 10.44% ---------------------------------------------------------------------------------------------- Mid-Cap Growth 2.50% 2.45% ---------------------------------------------------------------------------------------------- Mid-Cap Value 2.50% 2.22% ---------------------------------------------------------------------------------------------- Real Estate 2.50% 2.39% ---------------------------------------------------------------------------------------------- Sector 2.50% 2.45% ---------------------------------------------------------------------------------------------- Short-Term Taxable Investment Grade 12.00% 12.48% ---------------------------------------------------------------------------------------------- Taxable Noninvestment Grade 9.00% 9.33% ---------------------------------------------------------------------------------------------- Other Assets Less Liabilities (0.04)% ______________________________________________________________________________________________ ==============================================================================================
AIM GROWTH ALLOCATION FUND
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ---------------------------------------------------------------------------------------------- International/Global Blend 12.50% 12.24% ---------------------------------------------------------------------------------------------- International/Global Growth 12.50% 12.48% ---------------------------------------------------------------------------------------------- Large-Cap Growth 20.00% 20.44% ---------------------------------------------------------------------------------------------- Large-Cap Value 17.50% 16.93% ---------------------------------------------------------------------------------------------- Mid-Cap Growth 5.00% 5.16% ---------------------------------------------------------------------------------------------- Real Estate 5.00% 4.61% ---------------------------------------------------------------------------------------------- Sector 12.50% 12.76% ---------------------------------------------------------------------------------------------- Small Cap 10.00% 10.14% ---------------------------------------------------------------------------------------------- Taxable Noninvestment Grade 5.00% 5.32% ---------------------------------------------------------------------------------------------- Other Assets Less Liabilities (0.08)% ______________________________________________________________________________________________ ==============================================================================================
AIM MODERATE GROWTH ALLOCATION FUND
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ---------------------------------------------------------------------------------------------- Intermediate-Term Taxable Investment Grade 10.00% 10.64% ---------------------------------------------------------------------------------------------- International/Global Blend 11.00% 10.67% ---------------------------------------------------------------------------------------------- International/Global Growth 11.00% 10.88% ---------------------------------------------------------------------------------------------- Large-Cap Growth 16.50% 16.71% ---------------------------------------------------------------------------------------------- Large-Cap Value 14.00% 13.43% ---------------------------------------------------------------------------------------------- Mid-Cap Growth 4.50% 4.60% ---------------------------------------------------------------------------------------------- Mid-Cap Value 5.00% 4.58% ---------------------------------------------------------------------------------------------- Real Estate 4.00% 3.65% ---------------------------------------------------------------------------------------------- Sector 7.50% 7.59% ---------------------------------------------------------------------------------------------- Small Cap 6.50% 6.76% ---------------------------------------------------------------------------------------------- Taxable Noninvestment Grade 10.00% 10.54% ---------------------------------------------------------------------------------------------- Other Assets Less Liabilities (0.05)% ______________________________________________________________________________________________ ==============================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 8 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS June 30, 2008 (Unaudited) AIM CONSERVATIVE ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.09%(A)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) ---------------------------------------------------------------------------------------------------------------------------- AIM Charter Fund 4.84% $ 5,927,791 $ 1,032,902 $ (210,435) $ (437,421) ---------------------------------------------------------------------------------------------------------------------------- AIM Core Bond Fund(b) 22.28% 27,455,265 4,567,758 (1,947,506) (785,787) ---------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 7.25% 8,280,864 1,905,132 (295,099) (349,985) ---------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 2.31% 2,985,651 549,668 (102,145) (417,848) ---------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 4.01% 5,267,623 721,450 (857,235) 59,847 ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 2.24% 2,787,949 818,133 (98,748) (568,355) ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 2.42% 3,204,501 434,958 (119,147) (372,533) ---------------------------------------------------------------------------------------------------------------------------- AIM Limited Maturity Treasury Fund 8.16% 10,046,134 1,500,273 (879,834) 15,080 ---------------------------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 2.41% 2,949,052 472,929 (103,686) (177,995) ---------------------------------------------------------------------------------------------------------------------------- AIM Select Real Estate Income Fund 2.35% -- 3,435,447 (51,153) (295,298) ---------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 24.57% 29,519,969 4,976,865 (1,838,619) (358,450) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 2.40% 3,144,633 537,966 (104,358) (433,144) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 2.33% 2,800,602 748,758 (100,414) (389,479) ---------------------------------------------------------------------------------------------------------------------------- AIM Trimark Endeavor Fund 2.30% 5,184,307 803,473 (2,570,082) (415,612) ---------------------------------------------------------------------------------------------------------------------------- Liquid Assets Portfolio 10.22% 12,337,623 1,842,763 (773,411) -- ============================================================================================================================ TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $135,864,675) 100.09% $121,891,964 $24,348,475 $(10,051,872) $(4,926,980) ============================================================================================================================ OTHER ASSETS LESS LIABILITIES (0.09)% ============================================================================================================================ NET ASSETS 100.00% ____________________________________________________________________________________________________________________________ ============================================================================================================================ REALIZED DIVIDEND SHARES VALUE GAIN (LOSS) INCOME 06/30/08 06/30/08 ------------------------------------------------------------------------------------------------------------ AIM Charter Fund $ 37,398 $ -- 402,423 $ 6,350,235 ------------------------------------------------------------------------------------------------------------ AIM Core Bond Fund(b) (62,793) 905,464 2,949,237 29,226,937 ------------------------------------------------------------------------------------------------------------ AIM Floating Rate Fund (34,495) 281,655 1,163,576 9,506,417 ------------------------------------------------------------------------------------------------------------ AIM International Core Equity Fund 14,022 -- 240,807 3,029,348 ------------------------------------------------------------------------------------------------------------ AIM International Total Return Fund 68,884 55,629 473,925 5,260,569 ------------------------------------------------------------------------------------------------------------ AIM Large Cap Basic Value Fund (6,153) -- 249,815 2,932,826 ------------------------------------------------------------------------------------------------------------ AIM Large Cap Growth Fund(c) 22,989 -- 262,698 3,170,768 ------------------------------------------------------------------------------------------------------------ AIM Limited Maturity Treasury Fund 16,918 168,630 1,042,746 10,698,571 ------------------------------------------------------------------------------------------------------------ AIM Multi-Sector Fund 18,023 -- 117,672 3,158,323 ------------------------------------------------------------------------------------------------------------ AIM Select Real Estate Income Fund (539) 41,512 365,931 3,088,457 ------------------------------------------------------------------------------------------------------------ AIM Short Term Bond Fund (69,138) 981,914 3,382,017 32,230,627 ------------------------------------------------------------------------------------------------------------ AIM Structured Growth Fund 8,321 -- 302,922 3,153,418 ------------------------------------------------------------------------------------------------------------ AIM Structured Value Fund (2,832) -- 320,066 3,056,635 ------------------------------------------------------------------------------------------------------------ AIM Trimark Endeavor Fund 13,074 -- 245,935 3,015,160 ------------------------------------------------------------------------------------------------------------ Liquid Assets Portfolio -- 217,977 13,406,975 13,406,975 ============================================================================================================ TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $135,864,675) $ 23,679 $2,652,781 $131,285,266 ============================================================================================================ OTHER ASSETS LESS LIABILITIES (121,581) ============================================================================================================ NET ASSETS $131,163,685 ____________________________________________________________________________________________________________ ============================================================================================================
AIM GROWTH ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.08%(A)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) ---------------------------------------------------------------------------------------------------------------------------- AIM Dynamics Fund(c) 5.16% $ 36,048,799 $ 3,007,757 $ (433,033) $ (4,291,942) ---------------------------------------------------------------------------------------------------------------------------- AIM Global Real Estate Fund 4.61% -- 36,388,843 (75,639) (5,518,175) ---------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 5.32% 36,384,504 2,778,490 (2,043,848) (1,458,163) ---------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 12.24% 92,056,511 2,938,832 (1,539,307) (11,992,291) ---------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 12.48% 93,962,662 2,938,832 (2,217,575) (12,110,289) ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 8.29% 59,960,276 7,592,302 (746,780) (11,369,931) ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 10.25% 79,155,178 2,351,065 (4,605,378) (9,351,590) ---------------------------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 12.76% 90,829,497 2,938,831 (3,563,801) (5,954,342) ---------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.00% 33,168,286 994,950 (37,355,661) 9,841,202 ---------------------------------------------------------------------------------------------------------------------------- AIM Small Cap Growth Fund 10.14% 72,711,325 3,842,314 (886,784) (7,906,286) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 10.19% 77,617,766 2,351,065 (1,630,113) (10,401,558) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 8.64% 60,252,728 6,199,866 (755,350) (7,937,451) ============================================================================================================================ TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $703,907,997) 100.08% $732,147,532 $74,323,147 $(55,853,269) $(78,450,816) ============================================================================================================================ OTHER ASSETS LESS LIABILITIES (0.08)% ============================================================================================================================ NET ASSETS 100.00% ____________________________________________________________________________________________________________________________ ============================================================================================================================ REALIZED DIVIDEND SHARES VALUE GAIN (LOSS) INCOME 06/30/08 06/30/08 ----------------------------------------------------------------------------------------------------------- AIM Dynamics Fund(c) $ 120,878 $ -- 1,580,388 $ 34,452,459 ----------------------------------------------------------------------------------------------------------- AIM Global Real Estate Fund (7,849) 199,703 2,679,476 30,787,180 ----------------------------------------------------------------------------------------------------------- AIM High Yield Fund (148,652) 1,603,213 8,746,880 35,512,331 ----------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 282,766 -- 6,498,133 81,746,511 ----------------------------------------------------------------------------------------------------------- AIM International Growth Fund 762,799 -- 2,918,964 83,336,429 ----------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund (37,958) -- 4,718,732 55,397,909 ----------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 902,699 -- 5,671,249 68,451,974 ----------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 978,315 -- 3,175,428 85,228,500 ----------------------------------------------------------------------------------------------------------- AIM Real Estate Fund (6,648,777) 131,133 -- -- ----------------------------------------------------------------------------------------------------------- AIM Small Cap Growth Fund 4,613 -- 2,528,551 67,765,182 ----------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 140,022 -- 6,539,595 68,077,182 ----------------------------------------------------------------------------------------------------------- AIM Structured Value Fund (22,119) -- 6,045,830 57,737,674 =========================================================================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $703,907,997) $(3,673,263) $1,934,049 $668,493,331 =========================================================================================================== OTHER ASSETS LESS LIABILITIES (550,886) =========================================================================================================== NET ASSETS $667,942,445 ___________________________________________________________________________________________________________ ===========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM MODERATE ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.06%(A)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) ---------------------------------------------------------------------------------------------------------------------------- AIM Capital Development Fund 4.00% $ 37,430,178 $ 973,714 $ (5,118,129) $ (3,955,668) ---------------------------------------------------------------------------------------------------------------------------- AIM Core Bond Fund(b) 24.14% 187,013,322 10,319,005 (17,197,033) (4,317,750) ---------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 3.22% 23,044,053 1,799,064 (449,827) (1,006,541) ---------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 9.35% 69,195,698 4,892,247 (3,190,636) (2,861,846) ---------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 9.57% 77,836,457 2,947,244 (1,451,264) (10,235,487) ---------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 7.32% 59,608,366 1,809,453 (1,159,183) (7,598,476) ---------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 2.60% 21,538,918 715,197 (3,997,830) 238,088 ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 4.63% 36,182,198 4,996,331 (665,899) (6,904,701) ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 6.26% 52,313,375 1,272,401 (2,597,193) (6,239,608) ---------------------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 3.61% 36,935,154 973,714 (4,182,165) (7,555,380) ---------------------------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 4.99% 38,392,019 1,081,701 (1,186,883) (2,429,438) ---------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 2.79% -- 23,298,204 (175,528) (2,855,509) ---------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 2.65% 20,021,197 1,121,873 (1,650,105) (201,189) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 6.22% 51,278,660 1,546,381 (903,456) (6,845,643) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 4.83% 36,352,557 4,154,269 (679,899) (4,799,223) ---------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 3.88% 35,865,195 973,714 (2,245,423) (6,678,147) ---------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $761,955,254) 100.06% $783,007,347 $62,874,512 $(46,850,453) $(74,246,518) ---------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (0.06)% ---------------------------------------------------------------------------------------------------------------------------- NET ASSETS 100.00% ____________________________________________________________________________________________________________________________ ============================================================================================================================ REALIZED DIVIDEND SHARES VALUE GAIN (LOSS) INCOME 06/30/08 06/30/08 ------------------------------------------------------------------------------------------------------------- AIM Capital Development Fund $(345,920) $ -- 1,722,173 $ 28,984,175 ------------------------------------------------------------------------------------------------------------- AIM Core Bond Fund(b) (830,439) 5,653,163 17,657,629 174,987,105 ------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund (55,042) 722,110 2,855,778 23,331,707 ------------------------------------------------------------------------------------------------------------- AIM High Yield Fund (219,249) 3,059,979 16,703,501 67,816,214 ------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 278,098 -- 5,514,710 69,375,048 ------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 384,439 -- 1,857,954 53,044,599 ------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 331,594 206,237 1,696,033 18,825,967 ------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund (26,574) -- 2,860,422 33,581,355 ------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 639,410 -- 3,760,430 45,388,385 ------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 33,826 -- 2,397,543 26,205,149 ------------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 310,162 -- 1,347,525 36,167,561 ------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund (7,150) 138,190 925,961 20,260,017 ------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund (64,770) 612,895 2,017,524 19,227,006 ------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 63,503 -- 4,336,162 45,139,445 ------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund (26,838) -- 3,665,012 35,000,866 ------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 213,605 -- 2,322,786 28,128,944 ------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $761,955,254) $ 678,655 $10,392,574 $725,463,543 ------------------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (468,163) ------------------------------------------------------------------------------------------------------------- NET ASSETS $724,995,380 _____________________________________________________________________________________________________________ =============================================================================================================
AIM MODERATE GROWTH ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.05%(A)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) ---------------------------------------------------------------------------------------------------------------------------- AIM Core Bond Fund(b) 10.64% $ 52,719,527 $ 4,156,738 $ (4,637,248) $ (1,330,775) ---------------------------------------------------------------------------------------------------------------------------- AIM Dynamics Fund(c) 4.60% 24,752,482 1,242,606 (1,277,541) (3,047,417) ---------------------------------------------------------------------------------------------------------------------------- AIM Global Real Estate Fund 3.65% -- 20,658,833 (87,933) (3,126,798) ---------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 10.54% 49,939,002 4,783,591 (2,207,945) (2,079,238) ---------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 10.67% 55,588,814 3,040,948 (512,149) (7,248,845) ---------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 10.88% 56,719,771 2,807,163 (659,870) (7,115,574) ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 6.58% 32,954,012 5,131,397 (313,436) (6,347,415) ---------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 8.38% 44,779,891 2,094,501 (2,078,263) (5,060,843) ---------------------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 4.58% 24,025,178 3,759,499 (224,516) (5,672,474) ---------------------------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 7.59% 37,407,786 1,946,966 (1,090,960) (2,229,741) ---------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.00% 11,384,984 546,699 (13,057,681) 4,017,250 ---------------------------------------------------------------------------------------------------------------------------- AIM Small Cap Equity Fund 6.76% 36,656,856 1,850,515 (4,696,004) (1,008,781) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 8.33% 43,933,750 2,275,993 (594,231) (5,907,650) ---------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 6.85% 33,121,041 4,350,099 (318,141) (4,442,135) ---------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $521,071,758) 100.05% $503,983,094 $58,645,548 $(31,755,918) $(50,600,436) ---------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (0.05)% ---------------------------------------------------------------------------------------------------------------------------- NET ASSETS 100.00% ____________________________________________________________________________________________________________________________ ============================================================================================================================ REALIZED DIVIDEND SHARES VALUE GAIN (LOSS) INCOME 06/30/08 06/30/08 ------------------------------------------------------------------------------------------------------------ AIM Core Bond Fund(b) $ (142,811) $1,617,561 5,122,647 $ 50,765,431 ------------------------------------------------------------------------------------------------------------ AIM Dynamics Fund(c) 280,021 -- 1,006,888 21,950,151 ------------------------------------------------------------------------------------------------------------ AIM Global Real Estate Fund (8,041) 113,276 1,517,499 17,436,061 ------------------------------------------------------------------------------------------------------------ AIM High Yield Fund (158,487) 2,244,794 12,383,479 50,276,923 ------------------------------------------------------------------------------------------------------------ AIM International Core Equity Fund 55,329 -- 4,048,020 50,924,097 ------------------------------------------------------------------------------------------------------------ AIM International Growth Fund 162,551 -- 1,818,355 51,914,041 ------------------------------------------------------------------------------------------------------------ AIM Large Cap Basic Value Fund (51,396) -- 2,672,331 31,373,162 ------------------------------------------------------------------------------------------------------------ AIM Large Cap Growth Fund(c) 241,905 -- 3,312,112 39,977,191 ------------------------------------------------------------------------------------------------------------ AIM Mid Cap Basic Value Fund (28,720) -- 1,999,905 21,858,967 ------------------------------------------------------------------------------------------------------------ AIM Multi-Sector Fund 165,381 -- 1,348,712 36,199,432 ------------------------------------------------------------------------------------------------------------ AIM Real Estate Fund (2,891,252) 45,944 -- -- ------------------------------------------------------------------------------------------------------------ AIM Small Cap Equity Fund (547,276) -- 2,829,413 32,255,310 ------------------------------------------------------------------------------------------------------------ AIM Structured Growth Fund 50,543 -- 3,819,251 39,758,405 ------------------------------------------------------------------------------------------------------------ AIM Structured Value Fund (12,726) -- 3,423,889 32,698,138 ------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $521,071,758) $(2,884,979) $4,021,575 $477,387,309 ------------------------------------------------------------------------------------------------------------ OTHER ASSETS LESS LIABILITIES (220,526) ------------------------------------------------------------------------------------------------------------ NET ASSETS $477,166,783 ____________________________________________________________________________________________________________ ============================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM MODERATELY CONSERVATIVE ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.04%(A)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) --------------------------------------------------------------------------------------------------------------------------- AIM Capital Development Fund 2.45% $ 2,602,249 $ 574,966 $ (50,314) $ (331,514) --------------------------------------------------------------------------------------------------------------------------- AIM Core Bond Fund(b) 23.14% 25,373,162 3,298,554 (1,531,157) (709,361) --------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 5.26% 5,344,069 995,521 (107,929) (224,360) --------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 4.07% 4,280,082 652,912 (89,602) (191,701) --------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 4.69% 5,398,355 777,377 (105,498) (730,331) --------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 2.39% 2,752,161 374,284 (53,540) (358,233) --------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 3.56% 4,166,486 429,617 (632,863) 48,238 --------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 5.11% 5,668,195 1,418,372 (111,385) (1,131,824) --------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 5.52% 6,527,069 639,508 (158,609) (726,394) --------------------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 2.22% 5,139,067 517,485 (2,279,872) (494,599) --------------------------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 2.45% 2,667,466 322,295 (52,947) (154,975) --------------------------------------------------------------------------------------------------------------------------- AIM Select Real Estate Income Fund 2.39% -- 3,002,992 (14,454) (261,228) --------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 12.48% 13,335,671 1,756,289 (677,497) (165,527) --------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 5.49% 6,403,960 846,820 (121,422) (876,110) --------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 5.33% 5,697,645 1,283,122 (114,215) (791,884) --------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund(b) 13.49% 14,927,695 1,853,642 (1,428,543) 29,244 --------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $121,560,104) 100.04% $110,283,332 $18,743,756 $(7,529,847) $(7,070,559) --------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (0.04)% --------------------------------------------------------------------------------------------------------------------------- NET ASSETS 100.00% ___________________________________________________________________________________________________________________________ =========================================================================================================================== REALIZED DIVIDEND SHARES VALUE GAIN (LOSS) INCOME 06/30/08 06/30/08 ----------------------------------------------------------------------------------------------------------- AIM Capital Development Fund $ (2,230) $ -- 165,963 $ 2,793,157 ----------------------------------------------------------------------------------------------------------- AIM Core Bond Fund(b) (40,126) 812,325 2,663,075 26,391,072 ----------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund (12,478) 176,130 733,760 5,994,823 ----------------------------------------------------------------------------------------------------------- AIM High Yield Fund (5,158) 199,757 1,144,466 4,646,533 ----------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 9,385 -- 425,222 5,349,288 ----------------------------------------------------------------------------------------------------------- AIM International Growth Fund 11,890 -- 95,501 2,726,562 ----------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 52,774 42,900 366,149 4,064,252 ----------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund (17,168) -- 496,268 5,826,190 ----------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(c) 16,918 -- 521,830 6,298,492 ----------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund (356,542) -- 231,065 2,525,539 ----------------------------------------------------------------------------------------------------------- AIM Multi-Sector Fund 6,478 -- 103,887 2,788,317 ----------------------------------------------------------------------------------------------------------- AIM Select Real Estate Income Fund (306) 36,700 323,105 2,727,004 ----------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund (20,911) 430,390 1,492,972 14,228,025 ----------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 10,790 -- 601,733 6,264,038 ----------------------------------------------------------------------------------------------------------- AIM Structured Value Fund (2,768) -- 635,801 6,071,900 ----------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund(b) (1,595) 417,263 1,784,274 15,380,443 ----------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $121,560,104) $(351,047) $2,115,465 $114,075,635 ----------------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (43,457) ----------------------------------------------------------------------------------------------------------- NET ASSETS $114,032,178 ___________________________________________________________________________________________________________ ===========================================================================================================
Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the mutual funds listed. (b) Effective April 30, 2008, AIM Total Return Bond Fund and AIM Intermediate Government Fund name changed to AIM Core Bond Fund and AIM U.S. Government Fund, respectively. (c) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM ALLOCATION FUNDS STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited)
AIM MODERATE AIM MODERATELY AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND --------------------------------------- ---------------- --------------- --------------- --------------- --------------- ASSETS: Investments in affiliated underlying funds, at value $131,285,266 $668,493,331 $725,463,543 $477,387,309 $114,075,635 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Receivables for: Investments sold -- affiliated underlying funds 8,631 161,441 688,354 -- 155,639 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Fund shares sold 265,387 832,789 882,353 764,844 78,009 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Dividends from affiliated funds 28,030 -- -- -- -- --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Fund expenses absorbed -- 6,959 13,122 14,196 -- --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Investment for trustee deferred compensation and retirement plans 10,888 13,181 14,095 9,158 7,970 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Other assets 38,029 54,134 55,210 51,087 35,250 ======================================= ================ =============== =============== =============== =============== Total assets 131,636,231 669,561,835 727,116,677 478,226,594 114,352,503 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== LIABILITIES: Payables for: Investments purchased -- affiliated underlying funds -- -- -- 60,798 -- --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Fund shares reacquired 312,786 995,213 1,480,459 597,614 197,477 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Accrued fees to affiliates 89,389 498,240 510,521 316,821 71,606 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Accrued other operating expenses 55,338 92,951 90,186 65,354 41,370 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Trustee deferred compensation and retirement plans 15,033 32,986 40,131 19,224 9,872 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Total liabilities 472,546 1,619,390 2,121,297 1,059,811 320,325 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Net assets applicable to shares outstanding $131,163,685 $667,942,445 $724,995,380 $477,166,783 $114,032,178 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== NET ASSETS CONSIST OF: Shares of beneficial interest $132,963,453 $675,809,439 $733,287,529 $504,913,093 $118,945,424 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Undistributed net investment income (loss) 2,265,005 (184,290) 8,845,799 2,906,965 2,073,674 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Undistributed net realized gain 514,636 27,731,963 19,353,762 13,031,174 497,549 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Unrealized appreciation (depreciation) (4,579,409) (35,414,667) (36,491,710) (43,684,449) (7,484,469) ======================================= ================ =============== =============== =============== =============== $131,163,685 $667,942,445 $724,995,380 $477,166,783 $114,032,178 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== ===============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM ALLOCATION FUNDS STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED) June 30, 2008 (Unaudited)
AIM MODERATE AIM MODERATELY AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND --------------------------------------- ---------------- --------------- --------------- --------------- --------------- NET ASSETS: Class A $ 81,691,429 $453,591,874 $440,394,862 $342,970,481 $ 85,010,248 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class B $ 20,113,896 $108,311,447 $134,422,547 $ 62,667,604 $ 11,593,682 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class C $ 24,270,370 $ 93,477,959 $129,369,531 $ 65,255,894 $ 16,045,294 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class R $ 5,027,300 $ 12,474,920 $ 20,797,412 $ 6,262,236 $ 1,353,083 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Institutional Class $ 60,690 $ 86,245 $ 11,028 $ 10,568 $ 29,871 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 7,907,139 35,887,641 38,860,911 28,943,746 7,953,967 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class B 1,966,170 8,665,528 11,975,474 5,343,355 1,096,177 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class C 2,373,696 7,480,616 11,527,119 5,568,232 1,516,276 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class R 488,546 990,290 1,840,489 531,010 127,029 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Institutional Class 5,906 6,790 968 889 2,783 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== Class A: Net asset value per share $ 10.33 $ 12.64 $ 11.33 $ 11.85 $ 10.69 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Maximum offering price per share (Net asset value divided by 94.50%) $ 10.93 $ 13.38 $ 11.99 $ 12.54 $ 11.31 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== Class B: Net asset value and offering price per share $ 10.23 $ 12.50 $ 11.22 $ 11.73 $ 10.58 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== Class C: Net asset value and offering price per share $ 10.22 $ 12.50 $ 11.22 $ 11.72 $ 10.58 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== Class R: Net asset value and offering price per share $ 10.29 $ 12.60 $ 11.30 $ 11.79 $ 10.65 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== =============== Institutional Class: Net asset value and offering price per share $ 10.28 $ 12.70 $ 11.39 $ 11.89 $ 10.73 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Cost of Investments in affiliated underlying funds $135,864,675 $703,907,997 $761,955,254 $521,071,758 $121,560,104 _______________________________________ ________________ _______________ _______________ _______________ _______________ ======================================= ================ =============== =============== =============== ===============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM ALLOCATION FUNDS STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited)
AIM MODERATE AIM MODERATELY AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND --------------------------------------- ---------------- --------------- --------------- --------------- --------------- INVESTMENT INCOME: Dividends from affiliated underlying funds $ 2,652,781 $ 1,934,049 $ 10,392,574 $ 4,021,575 $ 2,115,465 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Other Income 89 109 116 74 63 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Total investment income 2,652,870 1,934,158 10,392,690 4,021,649 2,115,528 ======================================= ================ =============== =============== =============== =============== EXPENSES: Administrative services fees 24,863 98,300 105,495 75,428 24,863 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Custodian fees 12,864 8,093 9,716 8,511 8,674 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Distribution fees: Class A 100,207 572,670 557,877 431,095 104,967 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class B 103,544 580,624 717,598 327,289 57,281 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class C 118,962 476,754 669,163 333,290 76,802 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Class R 12,373 30,295 51,804 14,814 3,414 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Transfer agent fees -- A, B, C and R 114,296 849,213 684,524 496,494 101,787 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Transfer agent fees -- Institutional 18 16 6 6 11 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Trustees' and officer's fees and benefits 9,932 17,247 18,112 14,380 10,032 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Registration and filing fees 30,360 54,471 48,952 47,435 29,015 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Professional services fees 19,728 19,075 20,659 21,571 24,660 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Other 14,545 59,788 67,820 37,490 10,663 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Total expenses 561,692 2,766,546 2,951,726 1,807,803 452,169 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Less: Expenses reimbursed and expense offset arrangement(s) (77,305) (385,930) (505,953) (409,411) (130,954) --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Net expenses 484,387 2,380,616 2,445,773 1,398,392 321,215 --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Net investment income (loss) 2,168,483 (446,458) 7,946,917 2,623,257 1,794,313 ======================================= ================ =============== =============== =============== =============== REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) on sales of affiliated underlying fund shares 23,679 (3,673,263) 678,655 (2,884,979) (351,047) --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (4,926,980) (78,450,816) (74,246,518) (50,600,436) (7,070,559) --------------------------------------- ---------------- --------------- --------------- --------------- --------------- Net increase (decrease) in net assets resulting from operations $(2,734,818) $(82,570,537) $(65,620,946) $(50,862,158) $(5,627,293) _______________________________________ ________________ _______________ _______________ _______________ _______________ ===================================== ================ =============== =============== =============== ===============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 14 AIM ALLOCATION FUNDS STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
AIM MODERATE AIM CONSERVATIVE AIM GROWTH ALLOCATION ALLOCATION FUND ALLOCATION FUND FUND ---------------------------- ---------------------------- ------------ JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, 2008 2007 2008 2007 2008 ------------------------------------- ------------ ------------ ------------ ------------ ------------ OPERATIONS: Net investment income (loss) $ 2,168,483 $ 4,305,191 $ (446,458) $ 8,278,242 $ 7,946,917 ------------------------------------- ------------ ------------ ------------ ------------ ------------ Net realized gain (loss) 23,679 2,475,293 (3,673,263) 40,911,886 678,655 ------------------------------------- ------------ ------------ ------------ ------------ ------------ Change in net unrealized appreciation (depreciation) (4,926,980) (2,407,642) (78,450,816) (7,628,788) (74,246,518) ===================================== ============ ============ ============ ============ ============ Net increase (decrease) in net assets resulting from operations (2,734,818) 4,372,842 (82,570,537) 41,561,340 (65,620,946) ===================================== ============ ============ ============ ============ ============ Distributions to shareholders from net investment income: Class A -- (2,712,663) -- (6,440,810) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class B -- (590,695) -- (843,218) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class C -- (657,014) -- (661,995) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class R -- (172,904) -- (135,859) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Institutional Class -- (86,011) -- (1,602) -- ===================================== ============ ============ ============ ============ ============ Total distributions from net investment income -- (4,219,287) -- (8,083,484) -- ===================================== ============ ============ ============ ============ ============ Distributions to shareholders from net realized gains: Class A -- (1,314,422) -- (12,291,555) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class B -- (355,623) -- (3,355,676) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class C -- (395,549) -- (2,634,702) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class R -- (89,604) -- (313,880) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Institutional Class -- (39,182) -- (2,445) -- ===================================== ============ ============ ============ ============ ============ Total distributions from net realized gains -- (2,194,380) -- (18,598,258) -- ===================================== ============ ============ ============ ============ ============ Share transactions-net: Class A 8,498,495 31,577,778 21,541,769 231,711,523 12,434,932 ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class B 803,480 (538,937) (6,800,508) 15,605,194 (7,569,077) ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class C 2,494,521 4,200,015 2,385,194 25,047,092 358,390 ------------------------------------- ------------ ------------ ------------ ------------ ------------ Class R 303,879 715,287 1,706,366 2,318,456 3,146,867 ------------------------------------- ------------ ------------ ------------ ------------ ------------ Institutional Class 50,402 23,801 -- (63,487) -- ------------------------------------- ------------ ------------ ------------ ------------ ------------ Net increase in net assets resulting from share transactions 12,150,777 35,977,944 18,832,821 274,618,778 8,371,112 ===================================== ============ ============ ============ ============ ============ Net increase (decrease) in net assets 9,415,959 33,937,119 (63,737,716) 289,498,376 (57,249,834) _____________________________________ ____________ ____________ ____________ ____________ ____________ =================================== ============ ============ ============ ============ ============ NET ASSETS: Beginning of period 121,747,726 87,810,607 731,680,161 442,181,785 782,245,214 ------------------------------------- ------------ ------------ ------------ ------------ ------------ End of period* $131,163,685 $121,747,726 $667,942,445 $731,680,161 $724,995,380 ------------------------------------- ------------ ------------ ------------ ------------ ------------ * Includes accumulated undistributed net investment income (loss) $ 2,265,005 $ 96,522 $ (184,290) $ 262,168 $ 8,845,799 _____________________________________ ____________ ____________ ____________ ____________ ____________ =================================== ============ ============ ============ ============ ============ AIM MODERATE ALLOCATION FUND ------------ DECEMBER 31, 2007 ------------------------------------- ------------ OPERATIONS: Net investment income (loss) $ 20,924,325 ------------------------------------- ------------ Net realized gain (loss) 30,072,705 ------------------------------------- ------------ Change in net unrealized appreciation (depreciation) (7,128,970) ===================================== ============ Net increase (decrease) in net assets resulting from operations 43,868,060 ===================================== ============ Distributions to shareholders from net investment income: Class A (13,255,061) ------------------------------------- ------------ Class B (3,392,062) ------------------------------------- ------------ Class C (3,058,087) ------------------------------------- ------------ Class R (498,244) ------------------------------------- ------------ Institutional Class (370) ===================================== ============ Total distributions from net investment income (20,203,824) ===================================== ============ Distributions to shareholders from net realized gains: Class A (13,145,250) ------------------------------------- ------------ Class B (4,478,775) ------------------------------------- ------------ Class C (4,039,483) ------------------------------------- ------------ Class R (538,830) ------------------------------------- ------------ Institutional Class (338) ===================================== ============ Total distributions from net realized gains (22,202,676) ===================================== ============ Share transactions-net: Class A 154,849,580 ------------------------------------- ------------ Class B 6,941,328 ------------------------------------- ------------ Class C 25,819,939 ------------------------------------- ------------ Class R 3,996,397 ------------------------------------- ------------ Institutional Class (153,923) ------------------------------------- ------------ Net increase in net assets resulting from share transactions 191,453,321 ===================================== ============ Net increase (decrease) in net assets 192,914,881 _____________________________________ ____________ =================================== ============ NET ASSETS: Beginning of period 589,330,333 ------------------------------------- ------------ End of period* $782,245,214 ------------------------------------- ------------ * Includes accumulated undistributed net investment income (loss) $ 898,882 _____________________________________ ____________ =================================== ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 15 AIM ALLOCATION FUNDS STATEMENT OF CHANGES IN NET ASSETS--(CONTINUED) For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
AIM MODERATE GROWTH AIM MODERATELY CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ---------------------------- ---------------------------- JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2008 2007 2008 2007 ------------------------------------------------------ ------------ ------------ ------------ ------------ OPERATIONS: Net investment income $ 2,623,257 $ 9,693,154 $ 1,794,313 $ 3,384,756 ------------------------------------------------------ ------------ ------------ ------------ ------------ Net realized gain (loss) (2,884,979) 19,046,465 (351,047) 2,168,935 ------------------------------------------------------ ------------ ------------ ------------ ------------ Change in net unrealized appreciation (depreciation) (50,600,436) (5,170,731) (7,070,559) (1,357,132) ====================================================== ============ ============ ============ ============ Net increase (decrease) in net assets resulting from operations (50,862,158) 23,568,888 (5,627,293) 4,196,559 ====================================================== ============ ============ ============ ============ Distributions to shareholders from net investment income: Class A -- (7,353,632) -- (2,458,720) ------------------------------------------------------ ------------ ------------ ------------ ------------ Class B -- (1,018,349) -- (264,969) ------------------------------------------------------ ------------ ------------ ------------ ------------ Class C -- (989,996) -- (342,643) ------------------------------------------------------ ------------ ------------ ------------ ------------ Class R -- (102,750) -- (34,184) ------------------------------------------------------ ------------ ------------ ------------ ------------ Institutional Class -- (267) -- (988) ====================================================== ============ ============ ============ ============ Total distributions from net investment income -- (9,464,994) -- (3,101,504) ====================================================== ============ ============ ============ ============ Distributions to shareholders from net realized gains: Class A -- (6,151,082) -- (1,299,940) ------------------------------------------------------ ------------ ------------ ------------ ------------ Class B -- (1,241,039) -- (177,767) ------------------------------------------------------ ------------ ------------ ------------ ------------ Class C -- (1,206,490) -- (229,877) ------------------------------------------------------ ------------ ------------ ------------ ------------ Class R -- (95,968) -- (19,475) ------------------------------------------------------ ------------ ------------ ------------ ------------ Institutional Class -- (201) -- (491) ====================================================== ============ ============ ============ ============ Total distributions from net realized gains -- (8,694,780) -- (1,727,550) ====================================================== ============ ============ ============ ============ Share transactions-net: Class A 20,672,332 225,281,895 6,058,849 62,115,787 ------------------------------------------------------ ------------ ------------ ------------ ------------ Class B (866,027) 16,875,875 1,043,568 3,203,250 ------------------------------------------------------ ------------ ------------ ------------ ------------ Class C 2,955,650 26,129,286 2,386,885 5,600,512 ------------------------------------------------------ ------------ ------------ ------------ ------------ Class R 1,387,529 3,114,974 31,471 865,609 ------------------------------------------------------ ------------ ------------ ------------ ------------ Institutional Class -- (58,532) -- (28,540) ====================================================== ============ ============ ============ ============ Net increase in net assets resulting from share transactions 24,149,484 271,343,498 9,520,773 71,756,618 ====================================================== ============ ============ ============ ============ Net increase (decrease) in net assets (26,712,674) 276,752,612 3,893,480 71,124,123 ______________________________________________________ ____________ ____________ ____________ ____________ ==================================================== ============ ============ ============ ============ NET ASSETS: Beginning of period 503,879,457 227,126,845 110,138,698 39,014,575 ------------------------------------------------------ ------------ ------------ ------------ ------------ End of period* $477,166,783 $503,879,457 $114,032,178 $110,138,698 ------------------------------------------------------ ------------ ------------ ------------ ------------ * Includes accumulated undistributed net investment income $ 2,906,965 $ 283,708 $ 2,073,674 $ 279,361 ______________________________________________________ ____________ ____________ ____________ ____________ ==================================================== ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 16 AIM ALLOCATION FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Growth Series (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series portfolios (each constituting a "Fund"), each authorized to issue an unlimited number of shares of beneficial interest. The Funds covered in this report are AIM Conservative Allocation Fund, AIM Growth Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth Allocation Fund, and AIM Moderately Conservative Allocation Fund (collectively, the "Funds"). Each 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 investment objective's: to provide total return consistent with a lower level of risk relative to the broad stock market for AIM Conservative Allocation Fund and AIM Moderately Conservative Allocation Fund, to provide long-term growth of capital consistent with a higher level of risk relative to the broad stock market for AIM Growth Allocation Fund and AIM Moderate Growth Allocation Fund and to provide total return consistent with a moderate level of risk relative to the broad stock market for AIM Moderate Allocation Fund. Each Fund is a "fund of funds", that it invest in the Institutional Class of other mutual Funds ("underlying funds") advised by Invesco Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). The Advisor may change the Fund's asset class allocations, the underlying funds or target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund's accounting policies are outlined in the underlying fund's financial statements and are available upon request. A. SECURITY VALUATIONS -- Investments in underlying funds are valued at the end of the day net asset value per share. Securities in the underlying funds, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and 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. 17 AIM ALLOCATION FUNDS Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from net realized capital gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. C. DISTRIBUTIONS -- Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Funds may elect to treat a portion of the proceeds from redemptions as distributions for federal tax purposes. The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. D. FEDERAL INCOME TAXES -- The Funds intend to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Funds' taxable earnings to shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. Each Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. E. EXPENSES -- Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the underlying funds. The results of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. G. 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 Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of indemnification clauses. Each Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against such Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust has entered into a master investment advisory agreement with Invesco Aim. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco Aim indirectly as a shareholder of the underlying funds. Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). Through at least June 30, 2009, the Advisor has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual operating expenses (excluding 12b-1 plan payments and certain items discussed below) of Class A, Class B, Class C, Class R and Institutional Class shares for each Fund as follows: AIM Conservative Allocation Fund 0.23% ------------------------------------------------------------------- AIM Growth Allocation Fund 0.21% ------------------------------------------------------------------- AIM Moderate Allocation Fund 0.12% ------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 0.12% ------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 0.14% ___________________________________________________________________ ===================================================================
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 other expenses to exceed the numbers reflected above: (i) 12b-1 plan payments (ii) interest; (iii) taxes; (iv) dividend expense on short sales; (v) extraordinary items; (vi) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vii) expenses that the Funds have incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement with Invesco Ltd. ("Invesco") described more 18 AIM ALLOCATION FUNDS fully below, the expense offset arrangements from which the Funds may benefit are in the form of credits that the Funds receive from banks where the Funds or its transfer agent have deposit accounts in which it holds uninvested cash. These credits are used to pay certain expenses incurred by the Funds. For the six months ended June 30, 2008, the Advisor reimbursed the following expenses:
INSTITUTIONAL FUND LEVEL CLASS A CLASS B CLASS C CLASS R CLASS ----------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ -- $ 46,502 $12,013 $13,802 $ 2,871 $ 5 ----------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund -- 247,898 62,835 51,595 6,557 -- ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund -- 294,885 94,827 88,427 13,691 3 ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund -- 286,264 54,333 55,329 4,919 3 ----------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 29,156 75,308 10,274 13,775 1,225 10 _____________________________________________________________________________________________________________________________ =============================================================================================================================
The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which each Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to such Fund. For the six months ended June 30, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. At the request of the Trustees of the Trust, Invesco Ltd. ("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 six months ended June 30, 2008, Invesco reimbursed expenses of $129 and $107 for AIM Growth Allocation Fund and AIM Moderate Allocation Fund, respectively and for AIM Conservative Allocation Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund, Invesco did not reimburse any expenses. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which each 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 each Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the six months ended June 30, 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 each Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). Each 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 each Fund. For the six months ended June 30, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC are not recorded as expenses of the Funds. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Funds. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2008, IADI advised the Funds that IADI retained the following in front-end sales commissions from the sale of Class A shares and received the following in CDCS imposed on redemptions by shareholders:
FRONT END SALES CHARGES CONTINGENT DEFERRED SALES CHARGES ------------- -------------------------------------------- CLASS A CLASS A CLASS B CLASS C CLASS R --------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 26,744 $ 11 $ 42,239 $2,006 $-- --------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 157,947 236 108,759 8,864 -- --------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 136,675 1,231 115,377 7,423 -- --------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 110,689 882 44,077 5,147 -- --------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 18,893 4 9,520 864 -- _____________________________________________________________________________________________________________________ =====================================================================================================================
The underlying funds pay no distribution fees and the Fund's pays no sales loads or other similar compensation to ADI for acquiring underlying fund shares. Certain officers and trustees of the Trust are officers and directors of Invesco Aim, IAIS and/or IADI. NOTE 3--SUPPLEMENTAL INFORMATION The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. 19 AIM ALLOCATION FUNDS Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect each Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN SECURITIES ----------------------------------------------------- FUND NAME LEVEL 1 LEVEL 2 LEVEL 3 TOTAL -------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $131,285,266 $-- $-- $131,285,266 -------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 668,493,331 -- -- 668,493,331 -------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 725,463,543 -- -- 725,463,543 -------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 477,387,309 -- -- 477,387,309 -------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 114,075,635 -- -- 114,075,635 ____________________________________________________________________________________________________________________ ====================================================================================================================
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 six months ended June 30, 2008, the Funds received credits from this arrangement, which resulted in the reduction of the Funds' total expenses of:
TRANSFER AGENT CUSTODIAN CREDITS CREDITS ------------------------------------------------------------------------------------------------------ AIM Conservative Allocation Fund $ 1,971 $141 ------------------------------------------------------------------------------------------------------ AIM Growth Allocation Fund 16,720 196 ------------------------------------------------------------------------------------------------------ AIM Moderate Allocation Fund 13,855 158 ------------------------------------------------------------------------------------------------------ AIM Moderate Growth Allocation Fund 8,440 123 ------------------------------------------------------------------------------------------------------ AIM Moderately Conservative Allocation Fund 1,206 -- ______________________________________________________________________________________________________ ======================================================================================================
NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by each Fund to pay remuneration to certain Trustees and Officers of such Fund. Trustees have the option to defer compensation payable by the Funds, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by each Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 Funds may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by each Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Funds. During the six months ended June 30, 2008, the Funds in aggregate paid legal fees of $10,098 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees as shown below. A member of that firm is a Trustee of the Trust. NOTE 6--CASH BALANCES The Funds may borrow for leveraging in an amount up to 5% of each Fund's total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Funds are permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company ("SSB"), 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. The Funds may not purchase additional securities when any borrowings from banks exceeds 5% of each Fund's total assets. NOTE 7--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. The Fund did not have a capital loss carryforward as of December 31, 2007. 20 AIM ALLOCATION FUNDS NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities purchased and sold by each Fund and the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes are as follows:
AT JUNE 30, 2008 FOR THE SIX MONTHS ENDED ------------------------------------------------------------ JUNE 30, 2008* NET UNREALIZED --------------------------- FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION PURCHASES SALES COST APPRECIATION (DEPRECIATION) (DEPRECIATION) ----------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 22,505,712 $ 9,278,461 $ 136,470,666 $ 822,936 $ (6,008,336) $ (5,185,400) ----------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 74,323,147 55,853,269 703,927,674 12,053,545 (47,487,888) (35,434,343) ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 62,874,512 46,850,453 762,223,394 14,517,736 (51,277,587) (36,759,851) ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 58,645,548 31,755,918 521,182,084 1,462,713 (45,257,488) (43,794,775) ----------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 18,743,756 7,529,847 121,714,408 462,063 (8,100,836) (7,638,773) _____________________________________________________________________________________________________________________________ =============================================================================================================================
* Excludes U.S. Treasury obligations and money market funds, if any. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end. NOTE 9--SHARE INFORMATION AIM CONSERVATIVE ALLOCATION FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 1,790,989 $ 18,627,266 4,701,629 $ 51,516,142 ------------------------------------------------------------------------------------------------------------------------ Class B 641,126 6,612,923 627,681 6,793,367 ------------------------------------------------------------------------------------------------------------------------ Class C 611,808 6,301,563 954,471 10,394,277 ------------------------------------------------------------------------------------------------------------------------ Class R 89,457 927,594 198,445 2,171,739 ------------------------------------------------------------------------------------------------------------------------ Institutional Class 4,865 50,402 228,461 2,562,014 ======================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 363,910 3,817,452 ------------------------------------------------------------------------------------------------------------------------ Class B -- -- 81,356 848,548 ------------------------------------------------------------------------------------------------------------------------ Class C -- -- 94,324 983,757 ------------------------------------------------------------------------------------------------------------------------ Class R -- -- 24,992 261,416 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 11,912 125,192 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 188,603 1,961,366 221,709 2,402,405 ------------------------------------------------------------------------------------------------------------------------ Class B (190,070) (1,961,366) (223,433) (2,402,405) ======================================================================================================================== Reacquired: Class A (1,161,369) (12,090,137) (2,388,778) (26,158,221) ------------------------------------------------------------------------------------------------------------------------ Class B (372,993) (3,848,077) (532,433) (5,778,447) ------------------------------------------------------------------------------------------------------------------------ Class C (368,674) (3,807,042) (660,678) (7,178,019) ------------------------------------------------------------------------------------------------------------------------ Class R (60,154) (623,715) (158,109) (1,717,868) ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (250,216) (2,663,405) ======================================================================================================================== 1,173,588 $ 12,150,777 3,295,243 $ 35,977,944 ________________________________________________________________________________________________________________________ ========================================================================================================================
(a) There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund that owns 7% of the outstanding shares of the Fund. IADI has an agreement with this entity to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to this entity, which is 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 this entity are owned beneficially. In addition, 15% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 21 AIM ALLOCATION FUNDS NOTE 9--SHARE INFORMATION--(CONTINUED) AIM GROWTH ALLOCATION FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 3,740,322 $ 49,226,097 19,142,362 $274,937,740 ------------------------------------------------------------------------------------------------------------------------ Class B 935,328 12,146,915 2,821,441 40,448,466 ------------------------------------------------------------------------------------------------------------------------ Class C 1,035,117 13,542,734 2,657,398 38,199,447 ------------------------------------------------------------------------------------------------------------------------ Class R 248,510 3,276,581 456,877 6,636,932 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 8,665 126,671 ======================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 1,317,636 18,367,626 ------------------------------------------------------------------------------------------------------------------------ Class B -- -- 294,407 4,074,532 ------------------------------------------------------------------------------------------------------------------------ Class C -- -- 233,564 3,229,384 ------------------------------------------------------------------------------------------------------------------------ Class R -- -- 32,329 449,688 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 289 4,047 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 608,751 8,013,129 714,866 10,425,005 ------------------------------------------------------------------------------------------------------------------------ Class B (614,437) (8,013,129) (722,234) (10,425,005) ======================================================================================================================== Reacquired: Class A (2,727,313) (35,697,457) (4,872,891) (72,018,848) ------------------------------------------------------------------------------------------------------------------------ Class B (842,989) (10,934,294) (1,284,388) (18,492,799) ------------------------------------------------------------------------------------------------------------------------ Class C (856,103) (11,157,540) (1,135,346) (16,381,739) ------------------------------------------------------------------------------------------------------------------------ Class R (120,879) (1,570,215) (328,318) (4,768,164) ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (12,816) (194,205) ======================================================================================================================== 1,406,307 $ 18,832,821 19,323,841 $274,618,778 ________________________________________________________________________________________________________________________ ========================================================================================================================
(a) 20% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 22 AIM ALLOCATION FUNDS NOTE 9--SHARE INFORMATION--(CONTINUED) AIM MODERATE ALLOCATION FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 3,982,425 $ 46,658,117 14,863,957 $189,608,287 ------------------------------------------------------------------------------------------------------------------------ Class B 1,604,598 18,636,967 3,040,515 38,727,508 ------------------------------------------------------------------------------------------------------------------------ Class C 1,417,154 16,412,748 3,231,435 41,101,588 ------------------------------------------------------------------------------------------------------------------------ Class R 473,055 5,496,451 618,550 7,923,366 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- -- -- ======================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 2,105,291 25,663,296 ------------------------------------------------------------------------------------------------------------------------ Class B -- -- 620,917 7,524,510 ------------------------------------------------------------------------------------------------------------------------ Class C -- -- 563,570 6,830,042 ------------------------------------------------------------------------------------------------------------------------ Class R -- -- 83,749 1,019,223 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 59 708 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,025,710 11,981,457 1,309,372 16,780,750 ------------------------------------------------------------------------------------------------------------------------ Class B (1,033,960) (11,981,457) (1,320,759) (16,780,750) ======================================================================================================================== Reacquired: Class A (3,951,912) (46,204,642) (6,008,823) (77,202,753) ------------------------------------------------------------------------------------------------------------------------ Class B (1,227,893) (14,224,587) (1,771,007) (22,529,940) ------------------------------------------------------------------------------------------------------------------------ Class C (1,385,922) (16,054,358) (1,738,060) (22,111,691) ------------------------------------------------------------------------------------------------------------------------ Class R (200,813) (2,349,584) (386,398) (4,946,192) ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (11,802) (154,631) ======================================================================================================================== 702,442 $ 8,371,112 15,200,566 $191,453,321 ________________________________________________________________________________________________________________________ ========================================================================================================================
(a) There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund that owns 8% of the outstanding shares of the Fund. IADI has an agreement with this entity to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to this entity, which is 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 this entity are owned beneficially. In addition, 11% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 23 AIM ALLOCATION FUNDS NOTE 9--SHARE INFORMATION--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 3,053,069 $ 37,645,027 18,007,457 $238,631,685 ------------------------------------------------------------------------------------------------------------------------ Class B 859,931 10,491,089 2,141,964 28,363,240 ------------------------------------------------------------------------------------------------------------------------ Class C 820,539 9,972,538 2,528,182 33,500,611 ------------------------------------------------------------------------------------------------------------------------ Class R 154,082 1,891,887 298,566 4,031,967 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- -- -- ======================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 1,025,387 13,268,548 ------------------------------------------------------------------------------------------------------------------------ Class B -- -- 171,081 2,200,088 ------------------------------------------------------------------------------------------------------------------------ Class C -- -- 165,961 2,132,534 ------------------------------------------------------------------------------------------------------------------------ Class R -- -- 15,416 198,717 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 36 468 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 391,213 4,813,162 405,378 5,438,094 ------------------------------------------------------------------------------------------------------------------------ Class B (394,611) (4,813,162) (408,989) (5,438,094) ======================================================================================================================== Reacquired: Class A (1,782,266) (21,785,857) (2,369,948) (32,056,432) ------------------------------------------------------------------------------------------------------------------------ Class B (536,768) (6,543,954) (620,146) (8,249,359) ------------------------------------------------------------------------------------------------------------------------ Class C (574,973) (7,016,888) (710,582) (9,503,859) ------------------------------------------------------------------------------------------------------------------------ Class R (41,376) (504,358) (82,956) (1,115,710) ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (4,291) (59,000) ======================================================================================================================== 1,948,840 $ 24,149,484 20,562,516 $271,343,498 ________________________________________________________________________________________________________________________ ========================================================================================================================
(a) 30% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 24 AIM ALLOCATION FUNDS NOTE 9--SHARE INFORMATION--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
CHANGES IN SHARES OUTSTANDING ---------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ------------------------ ------------------------- SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------------------------------------------- Sold: Class A 997,020 $10,840,683 5,729,536 $65,618,780 ---------------------------------------------------------------------------------------------------------------------- Class B 316,204 3,410,586 510,423 5,820,590 ---------------------------------------------------------------------------------------------------------------------- Class C 304,359 3,275,113 685,102 7,800,557 ---------------------------------------------------------------------------------------------------------------------- Class R 33,013 358,153 266,416 3,087,568 ---------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 1,719 19,981 ====================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 332,695 3,702,895 ---------------------------------------------------------------------------------------------------------------------- Class B -- -- 37,142 410,787 ---------------------------------------------------------------------------------------------------------------------- Class C -- -- 50,177 555,456 ---------------------------------------------------------------------------------------------------------------------- Class R -- -- 4,572 50,800 ---------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 132 1,479 ====================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 74,607 813,571 76,282 875,190 ---------------------------------------------------------------------------------------------------------------------- Class B (75,261) (813,571) (76,968) (875,190) ====================================================================================================================== Reacquired: Class A (513,340) (5,595,405) (701,012) (8,081,078) ---------------------------------------------------------------------------------------------------------------------- Class B (144,353) (1,553,447) (188,927) (2,152,937) ---------------------------------------------------------------------------------------------------------------------- Class C (82,391) (888,228) (241,628) (2,755,501) ---------------------------------------------------------------------------------------------------------------------- Class R (30,469) (326,682) (191,176) (2,272,759) ---------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (4,299) (50,000) ====================================================================================================================== 879,389 $ 9,520,773 6,290,186 $71,756,618 ______________________________________________________________________________________________________________________ ======================================================================================================================
(a) In addition, 42% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 25 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of each Fund outstanding throughout the periods indicated. AIM CONSERVATIVE ALLOCATION FUND
CLASS A ---------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.55 $ 10.64 $ 10.41 $ 10.32 $ 10.00 ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.19(a) 0.46(a) 0.35(a) 0.25(a) 0.06 ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.41) 0.05 0.36 0.11 0.36 ======================================================================================================================= Total from investment operations (0.22) 0.51 0.71 0.36 0.42 ======================================================================================================================= Less distributions: Dividends from net investment income -- (0.40) (0.33) (0.21) (0.10) ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.20) (0.15) (0.06) (0.00) ======================================================================================================================= Total distributions -- (0.60) (0.48) (0.27) (0.10) ======================================================================================================================= Net asset value, end of period $ 10.33 $ 10.55 $ 10.64 $ 10.41 $ 10.32 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) (2.09)% 4.79% 6.84% 3.44% 4.19% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $81,691 $74,783 $44,595 $35,981 $20,124 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.48%(c) 0.49% 0.49% 0.50% 0.55%(d) ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.60%(c) 0.65% 0.72% 0.91% 1.41%(d) ----------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.62% 0.62% 0.61% 0.60% 0.63% ======================================================================================================================= Ratio of net investment income to average net assets 3.61%(c) 4.18% 3.32% 2.36% 1.74%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(f) 8% 22% 34% 24% 9% _______________________________________________________________________________________________________________________ =======================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $80,606,214. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 26 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM CONSERVATIVE ALLOCATION FUND
CLASS B ---------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.48 $ 10.59 $ 10.36 $ 10.28 $ 10.00 ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.15(a) 0.37(a) 0.27(a) 0.17(a) 0.04 ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.40) 0.04 0.37 0.11 0.32 ======================================================================================================================= Total from investment operations (0.25) 0.41 0.64 0.28 0.36 ======================================================================================================================= Less distributions: Dividends from net investment income -- (0.32) (0.26) (0.14) (0.08) ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.20) (0.15) (0.06) (0.00) ======================================================================================================================= Total distributions -- (0.52) (0.41) (0.20) (0.08) ======================================================================================================================= Net asset value, end of period $ 10.23 $ 10.48 $ 10.59 $ 10.36 $ 10.28 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) (2.39)% 3.88% 6.14% 2.76% 3.59% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $20,114 $19,796 $20,482 $18,281 $10,436 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.23%(c) 1.24% 1.24% 1.20% 1.20%(d) ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.35%(c) 1.40% 1.47% 1.61% 2.06%(d) ----------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.62% 0.62% 0.61% 0.60% 0.63% ======================================================================================================================= Ratio of net investment income to average net assets 2.86%(c) 3.43% 2.57% 1.66% 1.09%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(f) 8% 22% 34% 24% 9% _______________________________________________________________________________________________________________________ =======================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $20,822,625. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 27 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM CONSERVATIVE ALLOCATION FUND
CLASS C ---------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.48 $ 10.58 $ 10.36 $ 10.28 $ 10.00 ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.15(a) 0.37(a) 0.27(a) 0.17(a) 0.04 ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.41) 0.05 0.36 0.11 0.32 ======================================================================================================================= Total from investment operations (0.26) 0.42 0.63 0.28 0.36 ======================================================================================================================= Less distributions: Dividends from net investment income -- (0.32) (0.26) (0.14) (0.08) ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.20) (0.15) (0.06) (0.00) ======================================================================================================================= Total distributions -- (0.52) (0.41) (0.20) (0.08) ======================================================================================================================= Net asset value, end of period $ 10.22 $ 10.48 $ 10.58 $ 10.36 $ 10.28 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) (2.48)% 3.98% 6.04% 2.76% 3.59% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $24,270 $22,327 $18,436 $13,726 $11,751 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.23%(c) 1.24% 1.24% 1.20% 1.20%(d) ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.35%(c) 1.40% 1.47% 1.61% 2.06%(d) ----------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.62% 0.62% 0.61% 0.60% 0.63% ======================================================================================================================= Ratio of net investment income to average net assets 2.86%(c) 3.43% 2.57% 1.66% 1.09%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(f) 8% 22% 34% 24% 9% _______________________________________________________________________________________________________________________ =======================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $23,923,213. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 28 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM CONSERVATIVE ALLOCATION FUND
CLASS R ------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.52 $10.62 $10.39 $10.31 $10.00 --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.17(a) 0.43(a) 0.33(a) 0.22(a) 0.06 --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.40) 0.04 0.36 0.11 0.34 ===================================================================================================================== Total from investment operations (0.23) 0.47 0.69 0.33 0.40 ===================================================================================================================== Less distributions: Dividends from net investment income -- (0.37) (0.31) (0.19) (0.09) --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.20) (0.15) (0.06) (0.00) ===================================================================================================================== Total distributions -- (0.57) (0.46) (0.25) (0.09) ===================================================================================================================== Net asset value, end of period $10.29 $10.52 $10.62 $10.39 $10.31 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) (2.19)% 4.46% 6.60% 3.18% 4.05% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $5,027 $4,831 $4,182 $3,584 $1,584 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.73%(c) 0.74% 0.74% 0.70% 0.70%(d) --------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.85%(c) 0.90% 0.97% 1.11% 1.56%(d) --------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.62% 0.62% 0.61% 0.60% 0.63% ===================================================================================================================== Ratio of net investment income to average net assets 3.36%(c) 3.93% 3.07% 2.16% 1.59%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate(f) 8% 22% 34% 24% 9% _____________________________________________________________________________________________________________________ =====================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $4,976,580. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 29 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM CONSERVATIVE ALLOCATION FUND
INSTITUTIONAL CLASS ------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.48 $10.66 $10.42 $10.32 $10.00 --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.20(a) 0.50(a) 0.38(a) 0.28(a) 0.14 --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.40) (0.05) 0.37 0.11 0.29 ===================================================================================================================== Total from investment operations (0.20) 0.45 0.75 0.39 0.43 ===================================================================================================================== Less distributions: Dividends from net investment income -- (0.43) (0.36) (0.23) (0.11) --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.20) (0.15) (0.06) (0.00) ===================================================================================================================== Total distributions -- (0.63) (0.51) (0.29) (0.11) ===================================================================================================================== Net asset value, end of period $10.28 $10.48 $10.66 $10.42 $10.32 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) (1.91)% 4.13% 7.16% 3.79% 4.31% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 61 $ 11 $ 116 $ 108 $ 104 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.23%(c) 0.21% 0.23% 0.20% 0.20%(d) --------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.25%(c) 0.21% 0.31% 0.45% 0.96%(d) --------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.62% 0.62% 0.61% 0.60% 0.63% ===================================================================================================================== Ratio of net investment income to average net assets 3.86%(c) 4.45% 3.57% 2.66% 2.09%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate(f) 8% 22% 34% 24% 9% _____________________________________________________________________________________________________________________ =====================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $44,894. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 30 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM GROWTH ALLOCATION FUND
CLASS A ------------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 14.21 $ 13.73 $ 12.22 $ 11.26 $ 10.00 ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.01 0.22(a) 0.10 0.10(a) 0.03(a) ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.58) 0.83 1.93 1.05 1.28 ======================================================================================================================== Total from investment operations (1.57) 1.05 2.03 1.15 1.31 ======================================================================================================================== Less distributions: Dividends from net investment income -- (0.19) (0.10) (0.07) (0.05) ------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (0.38) (0.42) (0.12) (0.00) ======================================================================================================================== Total distributions -- (0.57) (0.52) (0.19) (0.05) ======================================================================================================================== Net asset value, end of period $ 12.64 $ 14.21 $ 13.73 $ 12.22 $ 11.26 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) (11.05)% 7.75% 16.63% 10.24% 13.12% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $453,592 $486,834 $246,635 $132,159 $39,368 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.46%(c) 0.47% 0.47% 0.46% 0.52%(d) ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 0.57%(c) 0.56% 0.63% 0.75% 1.31%(d) ------------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.83% 0.87% 0.96% ======================================================================================================================== Ratio of net investment income to average net assets 0.10%(c) 1.53% 0.90% 0.89% 0.40%(d) ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate(f) 8% 5% 24% 14% 2% ________________________________________________________________________________________________________________________ ========================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $460,652,899. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 31 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM GROWTH ALLOCATION FUND
CLASS B ------------------------------------------------------------------------ SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, --------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 14.10 $ 13.64 $ 12.16 $ 11.23 $ 10.00 ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) (0.04) 0.11(a) 0.02 0.02(a) (0.02)(a) ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.56) 0.82 1.90 1.05 1.28 ======================================================================================================================== Total from investment operations (1.60) 0.93 1.92 1.07 1.26 ======================================================================================================================== Less distributions: Dividends from net investment income -- (0.09) (0.02) (0.02) (0.03) ------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (0.38) (0.42) (0.12) (0.00) ======================================================================================================================== Total distributions -- (0.47) (0.44) (0.14) (0.03) ======================================================================================================================== Net asset value, end of period $ 12.50 $ 14.10 $ 13.64 $ 12.16 $ 11.23 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) (11.35)% 6.89% 15.77% 9.49% 12.61% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $108,311 $129,577 $110,172 $68,411 $22,384 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.21%(c) 1.22% 1.22% 1.17% 1.17%(d) ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 1.32%(c) 1.31% 1.38% 1.46% 1.96%(d) ------------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.83% 0.87% 0.96% ======================================================================================================================== Ratio of net investment income (loss) to average net assets (0.65)%(c) 0.78% 0.15% 0.18% (0.25)%(d) ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate(f) 8% 5% 24% 14% 2% ________________________________________________________________________________________________________________________ ========================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $116,762,884. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 32 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM GROWTH ALLOCATION FUND
CLASS C ----------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, -------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.10 $ 13.63 $ 12.15 $ 11.23 $ 10.00 ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.04) 0.11(a) 0.02 0.02(a) (0.02)(a) ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.56) 0.83 1.90 1.04 1.28 ======================================================================================================================= Total from investment operations (1.60) 0.94 1.92 1.06 1.26 ======================================================================================================================= Less distributions: Dividends from net investment income -- (0.09) (0.02) (0.02) (0.03) ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.38) (0.42) (0.12) (0.00) ======================================================================================================================= Total distributions -- (0.47) (0.44) (0.14) (0.03) ======================================================================================================================= Net asset value, end of period $ 12.50 $ 14.10 $ 13.63 $ 12.15 $ 11.23 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) (11.35)% 6.97% 15.78% 9.40% 12.61% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $93,478 $102,941 $75,611 $39,271 $11,543 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.21%(c) 1.22% 1.22% 1.17% 1.17%(d) ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.32%(c) 1.31% 1.38% 1.46% 1.96%(d) ----------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.83% 0.87% 0.96% ======================================================================================================================= Ratio of net investment income (loss) to average net assets (0.65)%(c) 0.78% 0.15% 0.18% (0.25)%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(f) 8% 5% 24% 14% 2% _______________________________________________________________________________________________________________________ =======================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $95,874,792. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 33 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM GROWTH ALLOCATION FUND
CLASS R -------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ---------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.18 $ 13.70 $12.20 $11.25 $10.00 ---------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.01) 0.19(a) 0.07 0.08(a) 0.02(a) ---------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.57) 0.83 1.92 1.05 1.28 ====================================================================================================================== Total from investment operations (1.58) 1.02 1.99 1.13 1.30 ====================================================================================================================== Less distributions: Dividends from net investment income -- (0.16) (0.07) (0.06) (0.05) ---------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.38) (0.42) (0.12) (0.00) ====================================================================================================================== Total distributions -- (0.54) (0.49) (0.18) (0.05) ====================================================================================================================== Net asset value, end of period $ 12.60 $ 14.18 $13.70 $12.20 $11.25 ______________________________________________________________________________________________________________________ ====================================================================================================================== Total return(b) (11.14)% 7.52% 16.34% 10.01% 12.98% ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $12,475 $12,231 $9,617 $6,285 $1,342 ______________________________________________________________________________________________________________________ ====================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.71%(c) 0.72% 0.72% 0.67% 0.67%(d) ---------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.82%(c) 0.81% 0.88% 0.96% 1.46%(d) ---------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.83% 0.87% 0.96% ====================================================================================================================== Ratio of net investment income (loss) to average net assets (0.15)%(c) 1.28% 0.65% 0.68% 0.25%(d) ______________________________________________________________________________________________________________________ ====================================================================================================================== Portfolio turnover rate(f) 8% 5% 24% 14% 2% ______________________________________________________________________________________________________________________ ======================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $12,184,435. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 34 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM GROWTH ALLOCATION FUND
INSTITUTIONAL CLASS ------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.25 $13.77 $12.25 $11.28 $10.00 --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.28(a) 0.16 0.14(a) 0.05(a) --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.58) 0.82 1.92 1.05 1.29 ===================================================================================================================== Total from investment operations (1.55) 1.10 2.08 1.19 1.34 ===================================================================================================================== Less distributions: Dividends from net investment income -- (0.24) (0.14) (0.10) (0.06) --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.38) (0.42) (0.12) (0.00) ===================================================================================================================== Total distributions -- (0.62) (0.56) (0.22) (0.06) ===================================================================================================================== Net asset value, end of period $ 12.70 $14.25 $13.77 $12.25 $11.28 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) (10.88)% 8.09% 16.98% 10.52% 13.44% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 86 $ 97 $ 147 $ 125 $ 113 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.11%(c) 0.08% 0.12% 0.17% 0.17%(d) --------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.11%(c) 0.08% 0.12% 0.19% 0.75%(d) --------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.83% 0.87% 0.96% ===================================================================================================================== Ratio of net investment income to average net assets 0.45%(c) 1.91% 1.24% 1.18% 0.75%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate(f) 8% 5% 24% 14% 2% _____________________________________________________________________________________________________________________ =====================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $89,776. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 35 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE ALLOCATION FUND
CLASS A ------------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.35 $ 12.23 $ 11.49 $ 10.89 $ 10.00 ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income(a) 0.14 0.41 0.31 0.24 0.11 ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.16) 0.45 1.04 0.57 0.87 ======================================================================================================================== Total from investment operations (1.02) 0.86 1.35 0.81 0.98 ======================================================================================================================== Less distributions: Dividends from net investment income -- (0.37) (0.28) (0.18) (0.09) ------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (0.37) (0.33) (0.03) (0.00) ======================================================================================================================== Total distributions -- (0.74) (0.61) (0.21) (0.09) ======================================================================================================================== Net asset value, end of period $ 11.33 $ 12.35 $ 12.23 $ 11.49 $ 10.89 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) (8.26)% 7.14% 11.73% 7.47% 9.85% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $440,395 $466,753 $312,300 $208,841 $71,431 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.37%(c) 0.38% 0.38% 0.34% 0.40%(d) ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 0.50%(c) 0.50% 0.53% 0.62% 0.87%(d) ------------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.76% 0.76% 0.80% 0.82% 0.92% ======================================================================================================================== Ratio of net investment income to average net assets 2.42%(c) 3.20% 2.56% 2.19% 1.56%(d) ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate(f) 6% 6% 21% 2% 1% ________________________________________________________________________________________________________________________ ========================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $448,754,058. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 36 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE ALLOCATION FUND
CLASS B ------------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.27 $ 12.17 $ 11.45 $ 10.87 $ 10.00 ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income(a) 0.10 0.31 0.21 0.16 0.06 ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.15) 0.44 1.03 0.57 0.88 ======================================================================================================================== Total from investment operations (1.05) 0.75 1.24 0.73 0.94 ======================================================================================================================== Less distributions: Dividends from net investment income -- (0.28) (0.19) (0.12) (0.07) ------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (0.37) (0.33) (0.03) (0.00) ======================================================================================================================== Total distributions -- (0.65) (0.52) (0.15) (0.07) ======================================================================================================================== Net asset value, end of period $ 11.22 $ 12.27 $ 12.17 $ 11.45 $ 10.87 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) (8.56)% 6.24% 10.86% 6.75% 9.44% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $134,423 $155,059 $146,751 $117,373 $45,846 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.12%(c) 1.13% 1.13% 1.05% 1.05%(d) ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 1.25%(c) 1.25% 1.28% 1.33% 1.52%(d) ------------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.76% 0.76% 0.80% 0.82% 0.92% ======================================================================================================================== Ratio of net investment income to average net assets 1.67%(c) 2.45% 1.81% 1.48% 0.91%(d) ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate(f) 6% 6% 21% 2% 1% ________________________________________________________________________________________________________________________ ========================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $144,308,232. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 37 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE ALLOCATION FUND
CLASS C ------------------------------------------------------------------------ SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, --------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 12.27 $ 12.17 $ 11.45 $ 10.87 $ 10.00 ------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income(a) 0.10 0.31 0.21 0.16 0.06 ------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.15) 0.44 1.03 0.57 0.88 ======================================================================================================================== Total from investment operations (1.05) 0.75 1.24 0.73 0.94 ======================================================================================================================== Less distributions: Dividends from net investment income -- (0.28) (0.19) (0.12) (0.07) ------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (0.37) (0.33) (0.03) (0.00) ======================================================================================================================== Total distributions -- (0.65) (0.52) (0.15) (0.07) ======================================================================================================================== Net asset value, end of period $ 11.22 $ 12.27 $ 12.17 $ 11.45 $ 10.87 ________________________________________________________________________________________________________________________ ======================================================================================================================== Total return(b) (8.56)% 6.24% 10.86% 6.75% 9.44% ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $129,370 $141,090 $114,828 $77,801 $27,339 ________________________________________________________________________________________________________________________ ======================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.12%(c) 1.13% 1.13% 1.05% 1.05%(d) ------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 1.25%(c) 1.25% 1.28% 1.33% 1.52%(d) ------------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.76% 0.76% 0.80% 0.82% 0.92% ======================================================================================================================== Ratio of net investment income to average net assets 1.67%(c) 2.45% 1.81% 1.48% 0.91%(d) ________________________________________________________________________________________________________________________ ======================================================================================================================== Portfolio turnover rate(f) 6% 6% 21% 2% 1% ________________________________________________________________________________________________________________________ ========================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $134,567,981. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 38 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE ALLOCATION FUND
CLASS R ---------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 12.33 $ 12.21 $ 11.48 $ 10.89 $10.00 ----------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.13 0.38 0.28 0.22 0.10 ----------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.16) 0.45 1.03 0.57 0.88 ======================================================================================================================= Total from investment operations (1.03) 0.83 1.31 0.79 0.98 ======================================================================================================================= Less distributions: Dividends from net investment income -- (0.34) (0.25) (0.17) (0.09) ----------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.37) (0.33) (0.03) (0.00) ======================================================================================================================= Total distributions -- (0.71) (0.58) (0.20) (0.09) ======================================================================================================================= Net asset value, end of period $ 11.30 $ 12.33 $ 12.21 $ 11.48 $10.89 _______________________________________________________________________________________________________________________ ======================================================================================================================= Total return(b) (8.35)% 6.90% 11.41% 7.21% 9.80% _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $20,797 $19,332 $15,294 $10,332 $2,161 _______________________________________________________________________________________________________________________ ======================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.62%(c) 0.63% 0.63% 0.55% 0.55%(d) ----------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.75%(c) 0.75% 0.78% 0.83% 1.02%(d) ----------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.76% 0.76% 0.80% 0.82% 0.92% ======================================================================================================================= Ratio of net investment income to average net assets 2.17%(c) 2.95% 2.31% 1.98% 1.41%(d) _______________________________________________________________________________________________________________________ ======================================================================================================================= Portfolio turnover rate(f) 6% 6% 21% 2% 1% _______________________________________________________________________________________________________________________ =======================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $20,835,387. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 39 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE ALLOCATION FUND
INSTITUTIONAL CLASS ------------------------------------------------------------------- SIX MONTHS APRIL 30, 2004 ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ---------------------------- TO DECEMBER 31, 2008 2007 2006 2005 2004 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $12.39 $12.26 $11.52 $10.91 $10.00 --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.16 0.45 0.34 0.28 0.13 --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.16) 0.46 1.04 0.57 0.88 ===================================================================================================================== Total from investment operations (1.00) 0.91 1.38 0.85 1.01 ===================================================================================================================== Less distributions: Dividends from net investment income -- (0.41) (0.31) (0.21) (0.10) --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.37) (0.33) (0.03) (0.00) ===================================================================================================================== Total distributions -- (0.78) (0.64) (0.24) (0.10) ===================================================================================================================== Net asset value, end of period $11.39 $12.39 $12.26 $11.52 $10.91 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) (8.07)% 7.49% 11.96% 7.76% 10.16% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 11 $ 12 $ 156 $ 141 $ 110 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.13%(c) 0.09% 0.10% 0.05% 0.05%(d) --------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.18%(c) 0.09% 0.10% 0.15% 0.40%(d) --------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.76% 0.76% 0.80% 0.82% 0.92% ===================================================================================================================== Ratio of net investment income to average net assets 2.66%(c) 3.49% 2.83% 2.48% 1.91%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate(f) 6% 6% 21% 2% 1% _____________________________________________________________________________________________________________________ =====================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $11,387. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 40 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
CLASS A ------------------------------------------------------------ SIX MONTHS YEAR ENDED DECEMBER APRIL 29, 2005 ENDED 31, (COMMENCEMENT DATE) JUNE 30, --------------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 13.13 $ 12.74 $ 11.35 $ 10.06 ------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income 0.08 0.34(a) 0.24(a) 0.20(a) ------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.36) 0.57 1.45 1.19 ================================================================================================================== Total from investment operations (1.28) 0.91 1.69 1.39 ================================================================================================================== Less distributions: Dividends from net investment income -- (0.28) (0.16) (0.10) ------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (0.24) (0.14) (0.00) ================================================================================================================== Total distributions -- (0.52) (0.30) (0.10) ================================================================================================================== Net asset value, end of period $ 11.85 $ 13.13 $ 12.74 $ 11.35 __________________________________________________________________________________________________________________ ================================================================================================================== Total return(b) (9.75)% 7.19% 14.92% 13.78% __________________________________________________________________________________________________________________ ================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $342,970 $358,335 $130,088 $33,667 __________________________________________________________________________________________________________________ ================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.37%(c) 0.37% 0.38% 0.37%(d) ------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 0.54%(c) 0.54% 0.71% 1.16%(d) ------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.82% 0.78% ================================================================================================================== Ratio of net investment income to average net assets 1.29%(c) 2.54% 1.97% 2.65%(d) __________________________________________________________________________________________________________________ ================================================================================================================== Portfolio turnover rate(f) 7% 2% 21% 1% __________________________________________________________________________________________________________________ ==================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $346,771,251. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 41 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
CLASS B ---------------------------------------------------------- SIX MONTHS YEAR ENDED DECEMBER APRIL 29, 2005 ENDED 31, (COMMENCEMENT DATE) JUNE 30, ------------------- TO DECEMBER 31, 2008 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.05 $ 12.67 $ 11.32 $ 10.06 ----------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.24(a) 0.15(a) 0.14(a) ----------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.35) 0.57 1.44 1.19 ================================================================================================================= Total from investment operations (1.32) 0.81 1.59 1.33 ================================================================================================================= Less distributions: Dividends from net investment income -- (0.19) (0.10) (0.07) ----------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.24) (0.14) (0.00) ================================================================================================================= Total distributions -- (0.43) (0.24) (0.07) ================================================================================================================= Net asset value, end of period $ 11.73 $ 13.05 $ 12.67 $ 11.32 _________________________________________________________________________________________________________________ ================================================================================================================= Total return(b) (10.12)% 6.44% 14.04% 13.26% _________________________________________________________________________________________________________________ ================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $62,668 $70,657 $52,329 $17,221 _________________________________________________________________________________________________________________ ================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.12%(c) 1.12% 1.13% 1.12%(d) ----------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.29%(c) 1.29% 1.46% 1.91%(d) ----------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.82% 0.78% ================================================================================================================= Ratio of net investment income to average net assets 0.54%(c) 1.79% 1.22% 1.90%(d) _________________________________________________________________________________________________________________ ================================================================================================================= Portfolio turnover rate(f) 7% 2% 21% 1% _________________________________________________________________________________________________________________ =================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $65,817,513. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 42 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
CLASS C ---------------------------------------------------------- SIX MONTHS YEAR ENDED DECEMBER APRIL 29, 2005 ENDED 31, (COMMENCEMENT DATE) JUNE 30, ------------------- TO DECEMBER 31, 2008 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 13.04 $ 12.66 $ 11.31 $ 10.06 ----------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.03 0.24(a) 0.15(a) 0.14(a) ----------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.35) 0.57 1.44 1.18 ================================================================================================================= Total from investment operations (1.32) 0.81 1.59 1.32 ================================================================================================================= Less distributions: Dividends from net investment income -- (0.19) (0.10) (0.07) ----------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.24) (0.14) (0.00) ================================================================================================================= Total distributions -- (0.43) (0.24) (0.07) ================================================================================================================= Net asset value, end of period $ 11.72 $ 13.04 $ 12.66 $ 11.31 _________________________________________________________________________________________________________________ ================================================================================================================= Total return(b) (10.12)% 6.45% 14.05% 13.16% _________________________________________________________________________________________________________________ ================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $65,256 $69,400 $42,266 $11,656 _________________________________________________________________________________________________________________ ================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.12%(c) 1.12% 1.13% 1.12%(d) ----------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.29%(c) 1.29% 1.46% 1.91%(d) ----------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.82% 0.78% ================================================================================================================= Ratio of net investment income to average net assets 0.54%(c) 1.79% 1.22% 1.90%(d) _________________________________________________________________________________________________________________ ================================================================================================================= Portfolio turnover rate(f) 7% 2% 21% 1% _________________________________________________________________________________________________________________ =================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $67,024,194. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 43 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
CLASS R -------------------------------------------------------- SIX MONTHS YEAR ENDED APRIL 29, 2005 ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $13.09 $12.70 $11.34 $10.06 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.06 0.31(a) 0.21(a) 0.18(a) ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.36) 0.57 1.43 1.19 ================================================================================================================ Total from investment operations (1.30) 0.88 1.64 1.37 ================================================================================================================ Less distributions: Dividends from net investment income -- (0.25) (0.14) (0.09) ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.24) (0.14) (0.00) ================================================================================================================ Total distributions -- (0.49) (0.28) (0.09) ================================================================================================================ Net asset value, end of period $11.79 $13.09 $12.70 $11.34 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) (9.93)% 6.98% 14.47% 13.61% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $6,262 $5,475 $2,378 $ 380 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.62%(c) 0.62% 0.63% 0.62%(d) ---------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.79%(c) 0.79% 0.96% 1.41%(d) ---------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.82% 0.78% ================================================================================================================ Ratio of net investment income to average net assets 1.04%(c) 2.29% 1.72% 2.40%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate(f) 7% 2% 21% 1% ________________________________________________________________________________________________________________ ================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $5,957,963. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 44 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
INSTITUTIONAL CLASS -------------------------------------------------------- SIX MONTHS YEAR ENDED APRIL 29, 2005 ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $13.16 $12.76 $11.36 $10.06 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.09 0.38(a) 0.27(a) 0.21(a) ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.36) 0.57 1.45 1.19 ================================================================================================================ Total from investment operations (1.27) 0.95 1.72 1.40 ================================================================================================================ Less distributions: Dividends from net investment income -- (0.31) (0.18) (0.10) ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.24) (0.14) (0.00) ================================================================================================================ Total distributions -- (0.55) (0.32) (0.10) ================================================================================================================ Net asset value, end of period $11.89 $13.16 $12.76 $11.36 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) (9.65)% 7.42% 15.17% 13.95% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $ 11 $ 12 $ 66 $ 57 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.13%(c) 0.10% 0.12% 0.12%(d) ---------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.19%(c) 0.12% 0.26% 0.69%(d) ---------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.82% 0.78% ================================================================================================================ Ratio of net investment income to average net assets 1.53%(c) 2.82% 2.22% 2.90%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate(f) 7% 2% 21% 1% ________________________________________________________________________________________________________________ ================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $10,963. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 45 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
CLASS A ---------------------------------------------------------- SIX MONTHS YEAR ENDED DECEMBER APRIL 29, 2005 ENDED 31, (COMMENCEMENT DATE) JUNE 30, ------------------- TO DECEMBER 31, 2008 2007 2006 2005 ----------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.24 $ 11.09 $ 10.60 $10.03 ----------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.18 0.48 0.36 0.22 ----------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.73) 0.21 0.50 0.49 ================================================================================================================= Total from investment operations (0.55) 0.69 0.86 0.71 ================================================================================================================= Less distributions: Dividends from net investment income -- (0.35) (0.27) (0.13) ----------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.19) (0.10) (0.01) ================================================================================================================= Total distributions -- (0.54) (0.37) (0.14) ================================================================================================================= Net asset value, end of period $ 10.69 $ 11.24 $ 11.09 $10.60 _________________________________________________________________________________________________________________ ================================================================================================================= Total return(b) (4.89)% 6.23% 8.13% 7.01% _________________________________________________________________________________________________________________ ================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $85,010 $83,101 $21,713 $8,489 _________________________________________________________________________________________________________________ ================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.39%(c) 0.39% 0.40% 0.40%(d) ----------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.62%(c) 0.67% 1.37% 2.81%(d) ----------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.74% 0.69% ================================================================================================================= Ratio of net investment income to average net assets 3.38%(c) 4.12% 3.26% 3.04%(d) _________________________________________________________________________________________________________________ ================================================================================================================= Portfolio turnover rate(f) 7% 8% 29% 5% _________________________________________________________________________________________________________________ =================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $84,434,937. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 46 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
CLASS B --------------------------------------------------------- SIX MONTHS YEAR ENDED APRIL 29, 2005 ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------ TO DECEMBER 31, 2008 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.16 $ 11.03 $10.57 $10.03 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.14 0.39 0.27 0.16 ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.72) 0.21 0.50 0.49 ================================================================================================================ Total from investment operations (0.58) 0.60 0.77 0.65 ================================================================================================================ Less distributions: Dividends from net investment income -- (0.28) (0.21) (0.10) ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.19) (0.10) (0.01) ================================================================================================================ Total distributions -- (0.47) (0.31) (0.11) ================================================================================================================ Net asset value, end of period $ 10.58 $ 11.16 $11.03 $10.57 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) (5.20)% 5.40% 7.29% 6.49% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $11,594 $11,156 $7,916 $3,904 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.14%(c) 1.14% 1.15% 1.14%(d) ---------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.37%(c) 1.42% 2.12% 3.55%(d) ---------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.74% 0.69% ================================================================================================================ Ratio of net investment income to average net assets 2.63%(c) 3.37% 2.51% 2.30%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate(f) 7% 8% 29% 5% ________________________________________________________________________________________________________________ ================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $11,519,102. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 47 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
CLASS C --------------------------------------------------------- SIX MONTHS YEAR ENDED APRIL 29, 2005 ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------ TO DECEMBER 31, 2008 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 11.17 $ 11.03 $10.57 $10.03 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.14 0.39 0.27 0.16 ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.73) 0.22 0.50 0.49 ================================================================================================================ Total from investment operations (0.59) 0.61 0.77 0.65 ================================================================================================================ Less distributions: Dividends from net investment income -- (0.28) (0.21) (0.10) ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.19) (0.10) (0.01) ================================================================================================================ Total distributions -- (0.47) (0.31) (0.11) ================================================================================================================ Net asset value, end of period $ 10.58 $ 11.17 $11.03 $10.57 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) (5.28)% 5.49% 7.29% 6.49% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $16,045 $14,454 $8,833 $2,893 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.14%(c) 1.14% 1.15% 1.14%(d) ---------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.37%(c) 1.42% 2.12% 3.55%(d) ---------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.74% 0.69% ================================================================================================================ Ratio of net investment income to average net assets 2.63%(c) 3.37% 2.51% 2.30%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate(f) 7% 8% 29% 5% ________________________________________________________________________________________________________________ ================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $15,444,837. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 48 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
CLASS R -------------------------------------------------------- SIX MONTHS YEAR ENDED APRIL 29, 2005 ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.21 $11.07 $10.59 $10.03 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.17 0.45 0.33 0.20 ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.73) 0.20 0.50 0.49 ================================================================================================================ Total from investment operations (0.56) 0.65 0.83 0.69 ================================================================================================================ Less distributions: Dividends from net investment income -- (0.32) (0.25) (0.12) ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.19) (0.10) (0.01) ================================================================================================================ Total distributions -- (0.51) (0.35) (0.13) ================================================================================================================ Net asset value, end of period $10.65 $11.21 $11.07 $10.59 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) (5.00)% 5.91% 7.84% 6.84% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $1,353 $1,396 $ 495 $ 144 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.64%(c) 0.64% 0.65% 0.64%(d) ---------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.87%(c) 0.92% 1.62% 3.05%(d) ---------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.74% 0.69% ================================================================================================================ Ratio of net investment income to average net assets 3.13%(c) 3.87% 3.01% 2.80%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate(f) 7% 8% 29% 5% ________________________________________________________________________________________________________________ ================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $1,373,284. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 49 AIM ALLOCATION FUNDS NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
INSTITUTIONAL CLASS -------------------------------------------------------- SIX MONTHS YEAR ENDED APRIL 29, 2005 ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ---------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $11.27 $11.11 $10.61 $10.03 ---------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.20 0.50 0.38 0.23 ---------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.74) 0.22 0.51 0.49 ================================================================================================================ Total from investment operations (0.54) 0.72 0.89 0.72 ================================================================================================================ Less distributions: Dividends from net investment income -- (0.37) (0.29) (0.13) ---------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.19) (0.10) (0.01) ================================================================================================================ Total distributions -- (0.56) (0.39) (0.14) ================================================================================================================ Net asset value, end of period $10.73 $11.27 $11.11 $10.61 ________________________________________________________________________________________________________________ ================================================================================================================ Total return(b) (4.79)% 6.51% 8.41% 7.19% ________________________________________________________________________________________________________________ ================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $ 30 $ 31 $ 58 $ 54 ________________________________________________________________________________________________________________ ================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.14%(c) 0.14% 0.14% 0.14%(d) ---------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.26%(c) 0.27% 0.99% 2.40%(d) ---------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.74% 0.69% ================================================================================================================ Ratio of net investment income to average net assets 3.63%(c) 4.37% 3.51% 3.30%(d) ________________________________________________________________________________________________________________ ================================================================================================================ Portfolio turnover rate(f) 7% 8% 29% 5% ________________________________________________________________________________________________________________ ================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $30,441. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (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 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. 50 AIM ALLOCATION FUNDS NOTE 11--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 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. 51 AIM ALLOCATION FUNDS CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher. AIM CONSERVATIVE ALLOCATION FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $979.10 $2.36 $1,022.48 $2.41 0.48% --------------------------------------------------------------------------------------------------- B 1,000.00 976.10 6.04 1,018.75 6.17 1.23 --------------------------------------------------------------------------------------------------- C 1,000.00 975.20 6.04 1,018.75 6.17 1.23 --------------------------------------------------------------------------------------------------- R 1,000.00 978.10 3.59 1,021.23 3.67 0.73 ---------------------------------------------------------------------------------------------------
52 AIM ALLOCATION FUNDS AIM GROWTH ALLOCATION FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $889.50 $2.16 $1,022.58 $2.31 0.46% --------------------------------------------------------------------------------------------------- B 1,000.00 886.50 5.68 1,018.85 6.07 1.21 --------------------------------------------------------------------------------------------------- C 1,000.00 886.50 5.68 1,018.85 6.07 1.21 --------------------------------------------------------------------------------------------------- R 1,000.00 888.60 3.33 1,021.33 3.57 0.71 ---------------------------------------------------------------------------------------------------
AIM MODERATE ALLOCATION FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $917.40 $1.76 $1,023.02 $1.86 0.37% --------------------------------------------------------------------------------------------------- B 1,000.00 914.40 5.33 1,019.29 5.62 1.12 --------------------------------------------------------------------------------------------------- C 1,000.00 914.40 5.33 1,019.29 5.62 1.12 --------------------------------------------------------------------------------------------------- R 1,000.00 916.50 2.95 1,021.78 3.12 0.62 ---------------------------------------------------------------------------------------------------
AIM MODERATE GROWTH ALLOCATION FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $902.50 $1.75 $1,023.02 $1.86 0.37% --------------------------------------------------------------------------------------------------- B 1,000.00 898.80 5.29 1,019.29 5.62 1.12 --------------------------------------------------------------------------------------------------- C 1,000.00 898.80 5.29 1,019.29 5.62 1.12 --------------------------------------------------------------------------------------------------- R 1,000.00 900.70 2.93 1,021.78 3.12 0.62 ---------------------------------------------------------------------------------------------------
AIM MODERATELY CONSERVATIVE ALLOCATION FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $951.10 $1.89 $1,022.92 $1.96 0.39% --------------------------------------------------------------------------------------------------- B 1,000.00 948.00 5.52 1,019.19 5.72 1.14 --------------------------------------------------------------------------------------------------- C 1,000.00 947.20 5.52 1,019.19 5.72 1.14 --------------------------------------------------------------------------------------------------- R 1,000.00 950.00 3.10 1,021.68 3.22 0.64 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 53 AIM ALLOCATION FUNDS APPROVAL OF INVESTMENT ADVISORY AGREEMENT (AIM CONSERVATIVE ALLOCATION FUND, AIM GROWTH ALLOCATION FUND, AIM MODERATE ALLOCATION FUND, AIM MODERATE GROWTH ALLOCATION FUND AND AIM MODERATELY CONSERVATIVE ALLOCATION FUND) The Board of Trustees (the Board) of AIM of the performance, fees and expenses of deliberations. The Board considered all of Growth Series (the Trust) is required their assigned funds. During the contract the information provided to them and did under the Investment Company Act of 1940 renewal process, the Trustees receive not identify any particular factor that to approve annually the renewal of each comparative performance and fee data was controlling. Each Trustee may have series portfolio of the Trust's (each, a regarding the AIM Funds prepared by an evaluated the information provided Fund) investment advisory agreement with independent company, Lipper, Inc. differently from one another and Invesco Aim Advisors, Inc. (Invesco Aim). (Lipper), under the direction and attributed different weight to the various During contract renewal meetings held on supervision of the independent Senior factors. The Trustees recognized that the June 18-19, 2008, the Board as a whole and Officer who also prepares a separate advisory arrangements and resulting the disinterested or "independent" analysis of this information for the advisory fees for each Fund and the other Trustees, voting separately, approved the Trustees. Each Sub-Committee then makes AIM Funds are the result of years of continuance of each Fund's investment recommendations to the Investments review and negotiation between the advisory agreement for another year, Committee regarding the performance, fees Trustees and Invesco Aim, that the effective July 1, 2008. In doing so, the and expenses of their assigned funds. The Trustees may focus to a greater extent on Board determined that each Fund's Investments Committee considers each certain aspects of these arrangements in investment advisory agreement is in the Sub-Committee's recommendations and makes some years than in others, and that the best interests of the Fund and its its own recommendations regarding the Trustees' deliberations and conclusions in shareholders and that the compensation to performance, fees and expenses of the AIM a particular year may be based in part on Invesco Aim under each Fund's advisory Funds to the full Board. The Investments their deliberations and conclusions of investment agreement is fair and Committee also considers each these same arrangements throughout the reasonable. SubCommittee's recommendations in making year and in prior years. its annual recommendation to the Board The independent Trustees met separately whether to approve the continuance of each FACTORS AND CONCLUSIONS AND SUMMARY OF during their evaluation of Fund's AIM Fund's investment advisory agreement INDEPENDENT WRITTEN FEE EVALUATION investment advisory agreement with and sub-advisory agreements for another independent legal counsel from whom they year. The discussion below serves as a summary received independent legal advice, and the of the Senior Officer's independent independent Trustees also received written evaluation with respect each assistance during their deliberations from The independent Trustees are assisted Fund's investment advisory agreement as the independent Senior Officer, a in their annual evaluation of the Fund's well as a discussion of the material full-time officer of the AIM Funds who investment advisory agreement by the factors and related conclusions that reports directly to the independent independent Senior Officer. One formed the basis for the Board's approval Trustees. responsibility of the Senior Officer is to of each Fund's investment advisory manage the process by which the AIM Funds' agreement and sub-advisory agreements. THE BOARD'S FUND EVALUATION PROCESS proposed management fees are negotiated Unless otherwise stated, information set during the annual contract renewal process forth below is as of June 19, 2008 and The Board's Investments Committee has to ensure that they are negotiated in a does not reflect any changes that may have established three Sub-Committees that are manner that is at arms' length and occurred since that date, including but responsible for overseeing the management reasonable. Accordingly, the Senior not limited to changes to a Fund's of a number of the series portfolios of Officer must either supervise a performance, advisory fees, expense the AIM Funds. This Sub-Committee competitive bidding process or prepare an limitations and/or fee waivers. structure permits the Trustees to focus on independent written evaluation. The Senior the performance of the AIM Funds that have Officer has recommended that an I. Investment Advisory Agreement been assigned to them. The Sub-Committees independent written evaluation be provided meet throughout the year to review the and, at the direction of the Board, has A. Nature, Extent and Quality of performance of their assigned funds, and prepared an independent written Services Provided by Invesco Aim the Sub-Committees review monthly and evaluation. quarterly comparative performance The Board reviewed the advisory services information and periodic asset flow data During the annual contract renewal provided to each Fund by Invesco Aim under for their assigned funds. These materials process, the Board considered the factors the Fund's investment advisory agreement, are prepared under the direction and discussed below under the heading "Factors the performance of Invesco Aim in supervision of the independent Senior and Conclusions and Summary of Independent providing these services, and the Officer. Over the course of each year, the Written Fee Evaluation" in evaluating the credentials and experience of the officers Sub-Committees meet with portfolio fairness and reasonableness of each Fund's and employees of Invesco Aim who provide managers for their assigned funds and investment advisory agreement and these services. The Board's review of the other members of management and review sub-advisory agreements at the contract qualifications of Invesco Aim to provide with these individuals the performance, renewal meetings and at their meetings these services included the Board's investment objective(s), policies, throughout the year as part of their consideration of Invesco Aim's portfolio strategies and limitations of these funds. ongoing oversight of such Fund. Each and product review process, various back Fund's investment advisory agreement and office support functions provided by In addition to their meetings throughout sub-advisory agreements were considered Invesco Aim and its affiliates, and the year, the Sub-Committees meet at separately, although the Board also Invesco Aim's equity and fixed income designated contract renewal meetings each considered the common interests of all of trading operations. The Board concluded year to conduct an in-depth review the AIM Funds in their that the nature, extent and quality of the advisory continued
54 AIMALLOCATION FUNDS services provided to each Fund by Invesco underperform-ance because of shorter term Aim to identify the funds in the Fund's Aim were appropriate and that Invesco Aim performance results and continues to performance group for inclusion in the currently is providing satisfactory monitor the Fund. The Board also Lipper reports. The Board noted that the advisory services in accordance with the considered the steps Invesco Aim has taken Fund's performance was in the second terms of each Fund's investment advisory over the last several years to improve the quintile of its performance group for the agreement. In addition, based on their quality and efficiency of the services one and three year periods (the first ongoing meetings throughout the year with that Invesco Aim provides to the AIM quintile being the best performing funds each Fund's portfolio manager or man- Funds. The Board concluded that Invesco and the fifth quintile being the worst agers, the Board concluded that these Aim continues to be responsive to the performing funds). The Board noted that individuals are competent and able to Board's focus on fund performance. the Fund's performance was above the continue to carry out their Although the independent written performance of the Index for the one and responsibilities under each Fund's evaluation of the Fund's Senior Officer three year periods. The Board also investment advisory agreement. only considered Fund performance through considered the steps Invesco Aim has taken the most recent calendar year, the Board over the last several years to improve the In determining whether to continue each also reviewed more recent Fund performance quality and efficiency of the services Fund's investment advisory agreement, the and this review did not change their that Invesco Aim provides to the AIM Board considered the prior relationship conclusions. Funds. The Board concluded that Invesco between Invesco Aim and the Fund, as well Aim continues to be responsive to the as the Board's knowledge of Invesco Aim's AIM Growth Allocation Fund Board's focus on fund performance. operations, and concluded that it was Although the independent written ben-eficial to maintain the current The Board compared the Fund's performance evaluation of the Fund's Senior Officer relationship, in part, because of such during the past one and three calendar only considered Fund performance through knowledge. The Board also considered the years to the performance of funds in the the most recent calendar year, the Board steps that Invesco Aim and its affiliates Fund's performance group that are not also reviewed more recent Fund performance have taken over the last several years to managed by Invesco Aim, and against the and this review did not change their improve the quality and efficiency of the performance of all funds in the Lipper conclusions. services they provide to the AIM Funds in Multi-Cap Core Funds Index. The Board the areas of investment performance, also reviewed the criteria used by Invesco AIM Moderate Growth Allocation Fund product line diversification, Aim to identify the funds in the Fund's distribution, fund operations, shareholder performance group for inclusion in the The Board noted that the Fund recently services and compliance. The Board Lipper reports. The Board noted that the began operations and that only the last concluded that the quality and efficiency Fund's performance was in the third two calendar years comparative performance of the services Invesco Aim and its quintile of its performance group for the data was available. The Board compared the affiliates provide to the AIM Funds in one year period and the second quintile Fund's performance during the past two each of these areas have generally for the three year period (the first calendar years to the performance of funds improved, and support the Board's approval quintile being the best performing funds in the Fund's performance group that are of the continuance of each Fund's and the fifth quintile being the worst not managed by Invesco Aim, and against investment advisory agreement. performing funds). The Board noted that the performance of all funds in the Lipper the Fund's performance was above the Mixed-Asset Target Allocation Growth Funds B. Fund Performance performance of the Index for the one and Index. The Board also reviewed the three year periods. The Board also criteria used by Invesco Aim to identify AIM Conservative Allocation Fund considered the steps Invesco Aim has taken the funds in the Fund's performance group over the last several years to improve the for inclusion in the Lipper reports. The The Board compared the Fund's performance quality and efficiency of the services Board noted that the Fund's performance during the past one and three calendar that Invesco Aim provides to the AIM was in the third quintile of its years to the performance of funds in the Funds. The Board concluded that Invesco performance group for the one and two year Fund's performance group that are not Aim continues to be responsive to the periods (the first quintile being the best managed by Invesco Aim, and against the Board's focus on fund performance. performing funds and the fifth quintile performance of all funds in the Lipper Although the independent written being the worst performing funds). The Mixed-Asset Target Allocation Conservative evaluation of the Fund's Senior Officer Board noted that the Fund's performance Funds Index. The Board also reviewed the only considered Fund performance through was above the performance of the Index for criteria used by Invesco Aim to identify the most recent calendar year, the Board the one and two year periods. The Board the funds in the Fund's performance group also reviewed more recent Fund performance also considered the steps Invesco Aim has for inclusion in the Lipper reports. The and this review did not change their taken over the last several years to Board noted that the Fund's performance conclusions. improve the quality and efficiency of the was in the fifth quintile of its services that Invesco Aim provides to the performance group for the one year period AIM Moderate Allocation Fund AIM Funds. The Board concluded that and the fourth quintile for the three year Invesco Aim continues to be responsive to period (the first quintile being the best The Board compared the Fund's performance the Board's focus on fund performance. performing funds and the fifth quintile during the past one and three calendar Although the independent written being the worst performing funds). The years to the performance of funds in the evaluation of the Fund's Senior Officer Board noted that the Fund's performance Fund's performance group that are not only considered Fund performance through was below the performance of the Index for managed by Invesco Aim, and against the the most recent calendar year, the Board the one and three year periods. The Board performance of all funds in the Lipper also noted that Invesco Aim acknowledges the Mixed-Asset Target Allocation Moderate Fund's Funds Index. The Board also reviewed the criteria used by Invesco continued
55 AIM ALLOCATION FUNDS reviewed more recent Fund performance and The Board noted that Invesco Aim has F. Independent Written Evaluation of this review did not change their contractually agreed to waive fees and/or the Fund's Senior Officer conclusions. limit expenses of each Fund through at least June 30, 2009 in an amount necessary AIM Moderately Conservative to limit total annual operating expenses The Board noted that, at their direction, to a specified percentage of average daily the Senior Officer of the Funds, who is Allocation Fund net assets for each class of the Fund. The independent of Invesco Aim and Invesco Board considered the contractual nature of Aim's affiliates, had prepared an The Board noted that the Fund recently this fee waiver and noted that it remains independent written evaluation to assist began operations and that only the past in effect until at least June 30, 2009. the Board in determining the two calendar years comparative performance The Board also considered the effect this reasonableness of the proposed management data was available. The Board compared the expense limitation would have on each fees of the AIM Funds, including the Fund's performance during the past two Fund's estimated total expenses. Funds. The Board noted that they had calendar years to the performance of funds relied upon the Senior Officer's written in the Fund's performance group that are D. Economies of Scale and Breakpoints evaluation instead of a competitive not managed by Invesco Aim, and against bidding process. In determining whether to the performance of all funds in the Lipper The Board noted that Invesco Aim does not continue each Fund's investment advisory Mixed-Asset Target Allocation Conservative charge the Funds any advisory fees agreement, the Board considered the Senior Funds Index. The Board also reviewed the pursuant to the Funds' investment advisory Officer's written evaluation. criteria used by Invesco Aim to identify agreement, although the underlying funds the funds in the Fund's performance group in which the Funds invest pay Invesco Aim G. Collateral Benefits to Invesco Aim for inclusion in the Lipper reports. The advisory fees. The Board also noted that and its Affiliates Board noted that the Fund's performance each Fund shares directly in economies of was in the second quintile of its scale through lower fees charged by third The Board considered various other performance group for the one year period party service providers based on the benefits received by Invesco Aim and its and the fourth quintile for the two year combined size of all of the AIM Funds and affiliates resulting from Invesco Aim's period (the first quintile being the best affiliates. relationship with the Funds, including the performing funds and the fifth quintile fees received by Invesco Aim and its being the worst performing funds). The E. Profitability and Financial affiliates for their provision of Board noted that the Fund's performance Resources of Invesco Aim administrative, transfer agency and was above the performance of the Index for distribution services to the Funds. The the one year period and below the The Board reviewed information from Board considered the performance of performance of the Index for the two year Invesco Aim concerning the costs of the Invesco Aim and its affiliates in period. The Board also considered the advisory and other services that Invesco providing these services and the steps Invesco Aim has taken over the last Aim and its affiliates provide to each organizational structure employed by several years to improve the quality and Fund and the profitability of Invesco Aim Invesco Aim and its affiliates to provide efficiency of the services that Invesco and its affiliates in providing these these services. The Board also considered Aim provides to the AIM Funds. The Board services. The Board also reviewed that these services are provided to each concluded that Invesco Aim continues to be information concerning the financial Fund pursuant to written contracts which responsive to the Board's focus on fund condition of Invesco Aim and its are reviewed and approved on an annual performance. Although the independent affiliates. The Board also reviewed with basis by the Board. The Board concluded written evaluation of the Fund's Senior Invesco Aim the methodology used to that Invesco Aim and its affiliates were Officer only considered Fund performance prepare the profitability information. The providing these services in a satisfactory through the most recent calendar year, the Board considered the overall profitability manner and in accordance with the terms of Board also reviewed more recent Fund of Invesco Aim, as well as the their contracts, and were quali-fied to performance and this review did not change profitability of Invesco Aim in connection continue to provide these services to each their conclusions. with managing each Fund. The Board noted Fund. that Invesco Aim continues to operate at a C. Advisory Fees and Fee Waivers net profit, although increased expenses in The Board considered the benefits recent years have reduced the realized by Invesco Aim as a result of The Board noted that each Fund is a fund profitability of Invesco Aim and its portfolio brokerage transactions executed of funds and invests its assets in affiliates. The Board concluded that each through "soft dollar" arrangements. Under underlying funds rather than directly in Fund's fees were fair and reasonable, and these arrangements, portfolio brokerage individual securities. The Board noted that the level of profits realized by commissions paid by the Funds and/or other that Invesco Aim does not charge the Funds Invesco Aim and its affiliates from funds advised by Invesco Aim are used to any advisory fees pursuant to the Funds' providing services to each Fund was not pay for research and execution services. investment advisory agreement, although excessive in light of the nature, quality The Board noted that soft dollar the underlying funds in which the Funds and extent of the services provided. The arrangements shift the payment obligation invest pay Invesco Aim advisory fees. Board considered whether Invesco Aim is for the research and execution services Because Invesco Aim does not charge the financially sound and has the resources from Invesco Aim to the funds and Funds any advisory fees, the Board did not necessary to perform its obligations under therefore may reduce Invesco Aim's rely upon any comparison of services and the Funds' investment advisory agreement, expenses. The Board also noted that fees under advisory contracts with other and concluded that Invesco Aim has the research obtained through soft dollar funds or products advised by Invesco Aim financial resources necessary to fulfill arrangements may be used by Invesco Aim in and its affiliates. these obligations. making investment decisions for each Fund and may therefore benefit Fund shareholders. The Board concluded that Invesco Aim's soft dollar continued
56 AIM ALLOCATION FUNDS arrangements were appropriate. The Board provided by the Affiliated Sub-Advisers also concluded that, based on their review pursuant to the sub-advisory agreements and representations made by Invesco Aim, and the services to be provided by Invesco these arrangements were consistent with Aim pursuant to each Fund's investment regulatory requirements. advisory agreement, as well as the allocation of fees between Invesco Aim and the Affiliated Sub-Advisers pursuant to II. Sub-Advisory Agreements the sub-advisory agreements. The Board noted that the sub-advisory fees have no A. Nature, Extent and Quality of direct effect on each Fund or its Services Provided by Affiliated shareholders, as they are paid by Invesco Sub-Advisers Aim to the Affiliated Sub-Advisers, and that Invesco Aim and the Affiliated The Board reviewed the services to be Sub-Advisers are affiliates. The Board provided by Invesco Trimark Ltd., Invesco also noted that the Affiliated Asset Management Deutschland, GmbH, Sub-Advisers only receive a percentage of Invesco Asset Management Limited, Invesco the compensation that Invesco Aim receives Asset Management (Japan) Limited, Invesco pursuant to each Fund's investment Australia Limited, Invesco Global Asset advisory agreement, and as described Management (N.A.), Inc., Invesco Hong Kong above, each Fund is a fund of funds and Limited, Invesco Institutional (N.A.), Invesco Aim does not charge the Fund any Inc. and Invesco Senior Secured advisory fees. Management, Inc. (collectively, the "Affiliated Sub-Advisers") under the D. Financial Resources of the sub-advisory agreements and the Affiliated Sub-Advisers credentials and experience of the officers and employees of the Affiliated The Board considered whether each Sub-Advisers who will provide these Affiliated Sub-Adviser is financially services. The Board concluded that the sound and has the resources necessary to nature, extent and quality of the services perform its obligations under its to be provided by the Affiliated respective sub-advisory agreement, and Sub-Advisers were appropriate. The Board concluded that each Affiliated Sub-Adviser noted that the Affiliated Sub-Advisers, has the financial resources necessary to which have offices and personnel that are fulfill these obligations. geographically dispersed in financial centers around the world, have been formed in part for the purpose of researching and compiling information and making recommendations on the markets and economies of various countries and securities of companies located in such countries or on various types of investments and investment techniques, and providing investment advisory services. The Board concluded that the sub-advisory agreements will benefit each Fund and its shareholders by permitting Invesco Aim to utilize the additional resources and talent of the Affiliated Sub-Advisers in managing the Fund. B. Fund Performance The Board did not view Fund performance as a relevant factor in considering whether to approve the sub-advisory agreements for each Fund, as no Affiliated Sub-Adviser currently determines the allocation of any portion of each Fund's assets, although an Affiliated Sub-Adviser may indirectly manage a portion of each Fund's assets allocated to an underlying fund. C. Sub-Advisory Fees The Board considered the services to be
57 AIM ALLOCATION FUNDS [INVESCO AIM LOGO] Supplement to Semiannual Report dated 6/30/08 - SERVICE MARK - AIM ALLOCATION FUNDS AIM Conservative Allocation Fund AIM Growth Allocation Fund AIM Moderate Allocation Fund AIM Moderate Growth Allocation Fund AIM Moderately Conservative Allocation 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. Information on your Fund's expenses following the performance pages. 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 or shown to the public, nor used in written form as sales literature for public use. invescoaim.com AAS-INS-2 Invesco Aim Distributors, Inc. Supplement to Semiannual Report dated 6/30/08 ========================================== ========================================== ========================================== AIM CONSERVATIVE ALLOCATION FUND AIM GROWTH ALLOCATION FUND AIM MODERATE ALLOCATION FUND AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS For periods ended 6/30/08 For periods ended 6/30/08 For periods ended 6/30/08 Inception (4/30/04) 4.16% Inception (4/30/04) 8.65% Inception (4/30/04) 6.76% 1 Year -1.55 1 Year -11.15 1 Year -7.74 6 Months* -1.91 6 Months* -10.88 6 Months* -8.07 * Cumulative total return that has not * Cumulative total return that has not * Cumulative total return that has not been annualized been annualized been annualized Net Expense Ratio 0.83% Net Expense Ratio 0.88% Net Expense Ratio 0.85% Total Expense Ratio 0.83% Total Expense Ratio 0.88% Total Expense Ratio 0.85% ========================================== ========================================== ========================================== ========================================== ========================================== AIM MODERATE GROWTH ALLOCATION FUND AIM MODERATELY CONSERVATIVE AVERAGE ANNUAL TOTAL RETURNS ALLOCATION FUND For periods ended 6/30/08 AVERAGE ANNUAL TOTAL RETURNS For periods ended 6/30/08 Inception (4/29/05) 7.96% 1 Year -9.93 Inception (4/29/05) 5.31% 6 Months* -9.65 1 Year -3.38 6 Months* -4.79 * Cumulative total return that has not been annualized * Cumulative total return that has not been annualized Net Expense Ratio 0.90% Total Expense Ratio 0.90% Net Expense Ratio 0.84%(1, 2) ========================================== Total Expense Ratio 0.97%(2) ========================================== Institutional Class shares have no sales report for information on comparative (1) Total annual operating expenses less charge; therefore, performance is at net benchmarks. Please consult your Fund any contractual fee waivers and/or asset value (NAV). Performance of prospectus for more information. For the expense reimbursements by the advisor Institutional Class shares will differ most current month-end performance, please in effect through at least June 30, from performance of other share classes call 800 451 4246 or visit invescoaim.com. 2009. See current prospectus for more primarily due to differing sales charges information. and class expenses. Had the advisor not waived fees and/or reimbursed expenses in the past, for AIM (2) The expense ratio includes acquired Please note that past performance is Conservative Allocation Fund, performance fund fees and expenses of the not indicative of future results. More would have been lower. underlying funds in which the Fund recent returns may be more or less than invests of 0.70% for AIM Moderately those shown. All returns assume Had the advisor not waived fees and/or Conservative Allocation Fund. reinvestment of distributions at NAV. reimbursed expenses, for AIM Moderately Investment return and principal value will Conservative Allocation Fund, performance fluctuate so your shares, when redeemed, would have been lower. may be worth more or less than their original cost. See full
CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur ongoing costs. 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 January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If indirect expenses were included, your costs would have been higher.
----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED INSTITUTIONAL ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO ----------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $1,000.00 $980.90 $1.13 $1,023.72 $1.16 0.23% ----------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 1,000.00 891.20 0.52 1,024.32 0.55 0.11 ----------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 1,000.00 919.30 0.62 1,024.22 0.65 0.13 ----------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 1,000.00 903.50 0.62 1,024.22 0.65 0.13 ----------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 1,000.00 952.10 0.68 1,024.17 0.70 0.14 -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM ALLOCATION FUNDS PROXY RESULTS AIM CONSERVATIVE ALLOCATION FUND AIM GROWTH ALLOCATION FUND AIM MODERATE ALLOCATION FUND AIM MODERATE GROWTH ALLOCATION FUND AIM MODERATELY CONSERVATIVE ALLOCATION FUND Special Meetings ("Meetings") of Shareholders of AIM Conservative Allocation Fund, AIM Growth Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund, all investment portfolios of AIM Growth Series, a Delaware statutory trust ("Trust"), were held on February 29, 2008. The Meetings were held for the following purpose: (1) 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 matter were as follows:
WITH- HELD/ VOTES ABSTEN- BROKER MATTER VOTES FOR AGAINST TIONS NON-VOTES ------------------------------------------------------------------------------------------------------------------------ AIM Conservative Allocation Fund...................... 150,8- 5,058,072 76,166 90 1,378,369 AIM Growth Allocation Fund............................ 20,935,2- 515,8- 80 424,210 51 5,729,424 AIM Moderate Allocation Fund.......................... 26,083,1- 837,9- 76 660,947 63 6,787,973 AIM Moderate Growth Allocation Fund................... 17,109,7- 320,6- 01 237,100 60 4,103,714 AIM Moderately Conservative Allocation Fund........... 120,9- 5,437,548 99,205 61 785,309
The Meetings were adjourned until March 28, 2008, with respect to the following proposals: (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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** ----------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker...................................................... 259,205,198 10,486,394 Frank S. Bayley................................................... 259,256,384 10,435,208 James T. Bunch.................................................... 258,142,293 11,549,299 Bruce L. Crockett................................................. 258,143,390 11,548,202 Albert R. Dowden.................................................. 259,201,224 10,490,368 Jack M. Fields.................................................... 259,317,796 10,373,796 Martin L. Flanagan................................................ 259,304,758 10,386,834 Carl Frischling................................................... 259,178,445 10,513,147 Prema Mathai-Davis................................................ 259,255,582 10,436,010 Lewis F. Pennock.................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ................................................ 258,048,313 11,643,279 Raymond Stickel, Jr. ............................................. 258,206,591 11,485,001 Philip A. Taylor.................................................. 259,264,092 10,427,500
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 23,09- without a shareholder vote..................... 182,780,828 8,525 6,564,572 57,247,667
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 58 AIM ALLOCATION FUNDS ==================================================================================================================================== EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail notification containing links to these docu- ments. 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 mail. 3. Select "Register for eDelivery" and complete the consent - view your documents online anytime at your convenience. process. - 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, 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 [INVESCO AIM LOGO] the products and services represented by Invesco Aim; they each provide investment advisory services to - SERVICE MARK - individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 AAS-SAR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM GLOBAL EQUITY FUND - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 [MOUNTAIN GRAPHIC] AIM Investments became 2 Fund Performance INVESCO AIM 3 Letter to Shareholders on March 31, 2008. 4 Schedule of Investments 6 Financial Statements For more details, go to 9 Notes to Financial Statements invescoaim.com 14 Financial Highlights 18 Fund Expenses 19 Approval of Investment Advisory Agreement 22 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND PERFORMANCE ======================================================================================= PERFORMANCE SUMMARY FUND VS. INDEXES Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. Class A Shares -11.34% Class B Shares -11.61 Class C Shares -11.70 Class R Shares -11.48 MSCI World Index(triangle) (Broad Market Index and Style-Specific Index) -10.57 Lipper Global Multi-Cap Core Funds Index(triangle) (Peer Group Index) -10.15 (triangle)Lipper Inc. The MSCI WORLD INDEX--SERVICE MARK-- is a free float-adjusted market capitalization index that is designed to measure global developed market equity performance. The LIPPER GLOBAL MULTI-CAP CORE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Global Multi-Cap Core Funds category. These funds typically have an average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P/Citigroup BMI. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index does not. ======================================================================================= ========================================== AVERAGE ANNUAL TOTAL RETURNS ADJUSTED TO REFLECT THE HIGHER RULE CLASS A SHARE PERFORMANCE REFLECTS THE 12B-1 FEES APPLICABLE TO CLASS R SHARES. MAXIMUM 5.50% SALES CHARGE, AND CLASS As of 6/30/08, including maximum CLASS A SHARES' INCEPTION B AND CLASS C SHARE PERFORMANCE REFLECTS applicable sales charges DATE IS SEPTEMBER 15, 1997. THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. CLASS A SHARES THE PERFORMANCE DATA QUOTED THE CDSC ON CLASS B SHARES DECLINES Inception (9/15/97) 7.32% REPRESENT PAST PERFORMANCE AND CANNOT FROM 5% BEGINNING AT THE TIME OF PURCHASE 10 Years 7.05 GUARANTEE COMPARABLE FUTURE RESULTS; TO 0% AT THE BEGINNING OF THE SEVENTH 5 Years 11.12 CURRENT PERFORMANCE MAY BE LOWER OR YEAR. THE CDSC ON CLASS C SHARES IS 1 Year -18.77 HIGHER. PLEASE VISIT INVESCOAIM.COM FOR 1% FOR THE FIRST YEAR AFTER PURCHASE. THE MOST RECENT MONTH-END PERFORMANCE. CLASS R SHARES DO NOT HAVE A FRONT-END CLASS B SHARES PERFORMANCE FIGURES REFLECT REINVESTED SALES CHARGE; RETURNS SHOWN ARE AT NET Inception (9/15/97) 7.48% DISTRIBUTIONS, CHANGES IN NET ASSET VALUE ASSET VALUE AND DO NOT REFLECT A 0.75% 10 Years 7.22 AND THE EFFECT OF THE MAXIMUM SALES CDSC THAT MAY BE IMPOSED ON A TOTAL 5 Years 11.39 CHARGE UNLESS OTHERWISE STATED. REDEMPTION OF RETIREMENT PLAN ASSETS 1 Year -18.32 PERFORMANCE FIGURES DO NOT REFLECT WITHIN THE FIRST YEAR. DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY CLASS C SHARES ON FUND DISTRIBUTIONS OR SALE OF FUND THE PERFORMANCE OF THE FUND'S SHARE Inception (1/2/98) 7.79% SHARES. INVESTMENT RETURN AND PRINCIPAL CLASSES WILL DIFFER PRIMARILY DUE TO 10 Years 7.04 VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE DIFFERENT SALES CHARGE STRUCTURES AND 5 Years 11.63 A GAIN OR LOSS WHEN YOU SELL SHARES. CLASS EXPENSES. 1 Year -15.48 A REDEMPTION FEE OF 2% WILL BE IMPOSED CLASS R SHARES THE TOTAL ANNUAL FUND OPERATING ON CERTAIN REDEMPTIONS OR EXCHANGES 10 Years 7.46% EXPENSE RATIO SET FORTH IN THE MOST RECENT OUT OF THE FUND WITHIN 30 DAYS OF 5 Years 12.16 FUND PROSPECTUS AS OF THE DATE OF THIS PURCHASE. EXCEPTIONS TO THE REDEMPTION 1 Year -14.27 REPORT FOR CLASS A, CLASS B, CLASS C AND FEE ARE LISTED IN THE FUND'S PROSPECTUS. ========================================== CLASS R SHARES WAS 1.40%, 2.15%, 2.15% CLASS R SHARES' INCEPTION DATE IS AND 1.65%, RESPECTIVELY. THE EXPENSE OCTOBER 31, 2005. RETURNS SINCE THAT DATE RATIOS PRESENTED ABOVE MAY VARY FROM THE ARE HISTORICAL RETURNS. ALL OTHER RETURNS EXPENSE RATIOS PRESENTED IN OTHER SECTIONS ARE BLENDED RETURNS OF HISTORICAL CLASS R OF THIS REPORT THAT ARE BASED ON EXPENSES SHARE PERFORMANCE AND INCURRED DURING THE PERIOD COVERED BY RESTATED CLASS A SHARE PERFORMANCE (FOR THIS REPORT. PERIODS PRIOR TO THE INCEPTION DATE OF CLASS R SHARES) AT NET ASSET VALUE,
2 AIM GLOBAL EQUITY FUND Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing [CROCKETT PHOTO] 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 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 Bruce Crockett 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 Web site (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 e-mail 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 August 11, 2008
3 AIM GLOBAL EQUITY FUND PORTFOLIO COMPOSITION By sector, based on Net Assets As of June 30, 2008 ------------------------------------------------------------------------- Financials 20.0% ------------------------------------------------------------------------- Information Technology 16.8 ------------------------------------------------------------------------- Energy 14.3 ------------------------------------------------------------------------- Consumer Discretionary 11.3 ------------------------------------------------------------------------- Health Care 9.6 ------------------------------------------------------------------------- Materials 9.4 ------------------------------------------------------------------------- Industrials 7.1 ------------------------------------------------------------------------- Consumer Staples 3.9 ------------------------------------------------------------------------- Utilities 2.9 ------------------------------------------------------------------------- Telecommunication Services 1.2 ------------------------------------------------------------------------- U.S. Treasury Bills, Money Market Funds Plus Other Assets Less Liabilities 3.5 _________________________________________________________________________ =========================================================================
SCHEDULE OF INVESTMENTS(a) June 30, 2008 (Unaudited)
SHARES VALUE -------------------------------------------------------------------------------- COMMON STOCKS-96.50% AUSTRALIA-4.25% Commonwealth Bank of Australia(b) 154,160 $ 5,921,765 -------------------------------------------------------------------------------- Westpac Banking Corp.(b) 461,165 8,820,154 ================================================================================ 14,741,919 ================================================================================ AUSTRIA-0.78% Immofinanz Immobilien Anlagen A.G. 262,104 2,702,986 ================================================================================ BELGIUM-1.44% Dexia S.A.(b)(c) 315,144 5,002,568 ================================================================================ CANADA-3.20% Fairfax Financial Holdings Ltd. 10,275 2,597,353 -------------------------------------------------------------------------------- Methanex Corp. 303,915 8,499,015 ================================================================================ 11,096,368 ================================================================================ DENMARK-0.90% Novo Nordisk A.S.-Class B(b) 47,402 3,122,970 ================================================================================ FINLAND-2.44% Nokia Oyj(b) 345,988 8,475,373 ================================================================================ FRANCE-2.23% BNP Paribas(b) 21,669 1,941,374 -------------------------------------------------------------------------------- Legrand S.A.(b) 138,231 3,468,635 -------------------------------------------------------------------------------- UbiSoft Entertainment S.A.(b)(d) 26,815 2,336,485 ================================================================================ 7,746,494 ================================================================================ GERMANY-5.73% BASF S.E.(b) 47,436 3,266,806 -------------------------------------------------------------------------------- Daimler A.G.(b) 115,296 7,116,949 -------------------------------------------------------------------------------- Deutsche Lufthansa A.G.(b)(c) 101,973 2,190,241 -------------------------------------------------------------------------------- Norddeutsche Affinerie A.G 133,509 7,287,747 ================================================================================ 19,861,743 ================================================================================ IRELAND-1.83% Anglo Irish Bank Corp. PLC(b) 685,150 6,355,614 ================================================================================ ITALY-1.84% Eni S.p.A.(b) 171,749 6,395,488 ================================================================================ JAPAN-11.55% Astellas Pharma Inc.(b) 85,700 3,641,012 -------------------------------------------------------------------------------- Daihatsu Motor Co., Ltd. 170,000 1,947,066 -------------------------------------------------------------------------------- Hisamitsu Pharmaceutical Co., Inc.(c) 110,000 4,786,663 -------------------------------------------------------------------------------- ITOCHU Corp.(b) 658,000 6,985,487 -------------------------------------------------------------------------------- JTEKT Corp. 91,000 1,443,383 -------------------------------------------------------------------------------- Matsushita Electric Industrial Co., Ltd.(b) 97,000 2,080,452 -------------------------------------------------------------------------------- Minebea Co., Ltd.(b) 20,600 1,183,474 -------------------------------------------------------------------------------- Resona Holdings, Inc.(b) 1,309 2,004,796 -------------------------------------------------------------------------------- Seiko Epson Corp.(b)(c) 252,700 6,931,655 -------------------------------------------------------------------------------- Sumco Corp.(b) 67,600 1,491,445 -------------------------------------------------------------------------------- Takefuji Corp.(c) 279,470 3,887,889 -------------------------------------------------------------------------------- Yokogawa Electric Corp.(b)(c) 402,000 3,685,925 ================================================================================ 40,069,247 ================================================================================ NORWAY-3.85% StatoilHydro A.S.A. 115,631 4,311,218 -------------------------------------------------------------------------------- Yara International A.S.A.(b) 102,454 9,037,021 ================================================================================ 13,348,239 ================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 4 AIM GLOBAL EQUITY FUND
SHARES VALUE -------------------------------------------------------------------------------- SINGAPORE-0.20% Jardine Matheson Holdings Ltd.(b) 22,000 $ 683,706 ================================================================================ SWITZERLAND-0.44% Nestle S.A.(b) 13,480 607,736 -------------------------------------------------------------------------------- Novartis A.G.(b) 16,505 905,245 ================================================================================ 1,512,981 ================================================================================ UNITED KINGDOM-8.49% Antofagasta PLC(b) 173,510 2,256,137 -------------------------------------------------------------------------------- British American Tobacco PLC(b) 218,940 7,550,001 -------------------------------------------------------------------------------- Ladbrokes PLC(b) 890,472 4,522,682 -------------------------------------------------------------------------------- Royal Dutch Shell PLC-Class B(b) 39,876 1,602,691 -------------------------------------------------------------------------------- Standard Chartered PLC(b) 203,360 5,750,968 -------------------------------------------------------------------------------- Tesco PLC(b) 495,337 3,637,526 -------------------------------------------------------------------------------- Vodafone Group PLC(b) 1,401,241 4,128,862 ================================================================================ 29,448,867 ================================================================================ UNITED STATES-47.33% Aeropostale, Inc.(d) 98,081 3,072,878 -------------------------------------------------------------------------------- Aetna Inc. 50,271 2,037,484 -------------------------------------------------------------------------------- AK Steel Holding Corp. 14,013 966,897 -------------------------------------------------------------------------------- Bank of New York Mellon Corp. 113,789 4,304,638 -------------------------------------------------------------------------------- Capital One Financial Corp. 103,356 3,928,562 -------------------------------------------------------------------------------- Chevron Corp. 136,975 13,578,332 -------------------------------------------------------------------------------- ConocoPhillips 75,526 7,128,899 -------------------------------------------------------------------------------- Discover Financial Services 182,138 2,398,757 -------------------------------------------------------------------------------- Endurance Specialty Holdings Ltd. 102,764 3,164,104 -------------------------------------------------------------------------------- Energen Corp. 92,151 7,190,543 -------------------------------------------------------------------------------- Express Scripts, Inc.(d) 47,356 2,970,168 -------------------------------------------------------------------------------- Exxon Mobil Corp. 189,565 16,706,363 -------------------------------------------------------------------------------- Gap, Inc. (The) 601,671 10,029,856 -------------------------------------------------------------------------------- General Motors Corp. 97,110 1,116,765 -------------------------------------------------------------------------------- Goldman Sachs Group, Inc. (The) 25,808 4,513,819 -------------------------------------------------------------------------------- GrafTech International Ltd.(d) 20,086 538,907 -------------------------------------------------------------------------------- International Business Machines Corp. 95,441 11,312,622 -------------------------------------------------------------------------------- Johnson & Johnson 13,364 859,840 -------------------------------------------------------------------------------- Lockheed Martin Corp. 45,736 4,512,314 -------------------------------------------------------------------------------- MasterCard, Inc.-Class A 9,493 2,520,581 -------------------------------------------------------------------------------- McDonald's Corp. 156,311 8,787,804 -------------------------------------------------------------------------------- Microsoft Corp. 472,797 13,006,646 -------------------------------------------------------------------------------- Mirant Corp.(d) 68,617 2,686,356 -------------------------------------------------------------------------------- Northrop Grumman Corp. 23,628 1,580,713 -------------------------------------------------------------------------------- Pediatrix Medical Group, Inc.(d) 65,849 3,241,746 -------------------------------------------------------------------------------- Perrigo Co. 15,108 479,981 -------------------------------------------------------------------------------- Pfizer Inc. 651,128 11,375,206 -------------------------------------------------------------------------------- Procter & Gamble Co. (The) 19,337 1,175,883 -------------------------------------------------------------------------------- RadioShack Corp. 42,583 522,493 -------------------------------------------------------------------------------- State Street Corp. 94,565 6,051,214 -------------------------------------------------------------------------------- Terra Industries Inc. 27,861 1,374,940 -------------------------------------------------------------------------------- Texas Instruments Inc. 299,864 8,444,170 -------------------------------------------------------------------------------- Walter Industries, Inc. 24,274 2,640,283 ================================================================================ 164,219,764 ================================================================================ Total Common Stocks (Cost $357,896,619) 334,784,327 ================================================================================ PRINCIPAL AMOUNT U.S. TREASURY BILLS-0.54% 3.12%, 07/10/08(f) $ 850,000 849,338 -------------------------------------------------------------------------------- 1.10%, 09/11/08(e)(f) 210,000 209,303 -------------------------------------------------------------------------------- 1.30%, 09/18/08(e)(f) 25,000 24,903 -------------------------------------------------------------------------------- 1.48%, 09/18/08(e)(f) 10,000 9,961 -------------------------------------------------------------------------------- 1.50%, 09/25/08(e)(f) 800,000 796,752 ================================================================================ Total U.S. Treasury Bills (Cost $1,890,896) 1,890,257 ================================================================================ TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-97.04% (Cost $359,787,515) 336,674,584 ================================================================================ INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN SHARES MONEY MARKET FUNDS-3.70% Liquid Assets Portfolio-Institutional Class (Cost $12,836,342)(g)(h) 12,836,342 12,836,342 ================================================================================ TOTAL INVESTMENTS-100.74% (Cost $372,623,857) 349,510,926 ================================================================================ OTHER ASSETS LESS LIABILITIES-(0.74)% (2,570,863) ================================================================================ NET ASSETS-100.00% $346,940,063 ________________________________________________________________________________ ================================================================================
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 June 30, 2008 was $133,101,243, which represented 38.36% of the Fund's Net Assets. See Note 1A. (c) All or a portion of this security was out on loan at June 30, 2008. (d) Non-income producing security. (e) 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 June 30, 2008 was $1,040,919, which represented 0.30% of the Fund's Net Assets. See Note 1A. (f) Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. (g) The money market fund and the Fund are affiliated by having the same investment advisor. (h) 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. 5 AIM GLOBAL EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited) ASSETS: Investments, at value (Cost $359,787,515)* $336,674,584 ------------------------------------------------------ Investments in affiliated money market funds (Cost $12,836,342) 12,836,342 ====================================================== Total investments (Cost $372,623,857) 349,510,926 ====================================================== Cash 1,485,550 ------------------------------------------------------ Foreign currencies, at value (Cost $9,041,697) 9,196,787 ------------------------------------------------------ Receivables for: Fund shares sold 324,299 ------------------------------------------------------ Dividends 908,626 ------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 22,536 ------------------------------------------------------ Other assets 36,050 ====================================================== Total assets 361,484,774 ______________________________________________________ ====================================================== LIABILITIES: Payables for: Fund shares reacquired 1,202,460 ------------------------------------------------------ Collateral upon return of securities loaned 12,836,342 ------------------------------------------------------ Accrued fees to affiliates 289,703 ------------------------------------------------------ Accrued other operating expenses 165,024 ------------------------------------------------------ Trustee deferred compensation and retirement plans 51,182 ====================================================== Total liabilities 14,544,711 ====================================================== Net assets applicable to shares outstanding $346,940,063 ______________________________________________________ ====================================================== NET ASSETS CONSIST OF: Shares of beneficial interest $375,424,635 ------------------------------------------------------ Undistributed net investment income 2,292,956 ------------------------------------------------------ Undistributed net realized gain (loss) (7,831,076) ------------------------------------------------------ Unrealized appreciation (depreciation) (22,946,452) ====================================================== $346,940,063 ______________________________________________________ ====================================================== NET ASSETS: Class A $246,193,035 ______________________________________________________ ====================================================== Class B $ 49,564,768 ______________________________________________________ ====================================================== Class C $ 29,418,140 ______________________________________________________ ====================================================== Class R $ 876,132 ______________________________________________________ ====================================================== Institutional Class $ 20,887,988 ______________________________________________________ ====================================================== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 18,752,487 ______________________________________________________ ====================================================== Class B 3,995,121 ______________________________________________________ ====================================================== Class C 2,375,563 ______________________________________________________ ====================================================== Class R 66,810 ______________________________________________________ ====================================================== Institutional Class 1,573,696 ______________________________________________________ ====================================================== Class A: Net asset value per share $ 13.13 ------------------------------------------------------ Maximum offering price per share (Net asset value of $13.13 divided by 94.50%) $ 13.89 ______________________________________________________ ====================================================== Class B: Net asset value and offering price per share $ 12.41 ______________________________________________________ ====================================================== Class C: Net asset value and offering price per share $ 12.38 ______________________________________________________ ====================================================== Class R: Net asset value and offering price per share $ 13.11 ______________________________________________________ ====================================================== Institutional Class: Net asset value and offering price per share $ 13.27 ______________________________________________________ ======================================================
* At June 30, 2008, securities with an aggregate value of $12,377,199 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 6 AIM GLOBAL EQUITY FUND STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited) INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $495,244) $ 6,094,496 ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $373,500) 557,163 ------------------------------------------------------------------------------------------------ Interest 26,013 ================================================================================================ Total investment income 6,677,672 ================================================================================================ EXPENSES: Advisory fees 1,740,193 ------------------------------------------------------------------------------------------------ Administrative services fees 70,471 ------------------------------------------------------------------------------------------------ Custodian fees 67,690 ------------------------------------------------------------------------------------------------ Distribution fees: Class A 338,620 ------------------------------------------------------------------------------------------------ Class B 304,553 ------------------------------------------------------------------------------------------------ Class C 170,121 ------------------------------------------------------------------------------------------------ Class R 1,688 ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C and R 506,037 ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 27,993 ------------------------------------------------------------------------------------------------ Trustees' and officer's fees and benefits 14,718 ------------------------------------------------------------------------------------------------ Other 205,833 ================================================================================================ Total expenses 3,447,917 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (18,479) ================================================================================================ Net expenses 3,429,438 ================================================================================================ Net investment income 3,248,234 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) from: Investment securities (19,533,242) ------------------------------------------------------------------------------------------------ Foreign currencies 987,411 ------------------------------------------------------------------------------------------------ Futures contracts (2,172,653) ================================================================================================ (20,718,484) ================================================================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (37,724,831) ------------------------------------------------------------------------------------------------ Foreign currencies 162,338 ------------------------------------------------------------------------------------------------ Futures contracts 343,764 ================================================================================================ (37,218,729) ================================================================================================ Net realized and unrealized gain (loss) (57,937,213) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(54,688,979) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 7 AIM GLOBAL EQUITY FUND STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
JUNE 30, DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 3,248,234 $ 6,418,007 ------------------------------------------------------------------------------------------------------- Net realized gain (loss) (20,718,484) 74,097,880 ------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (37,218,729) (51,690,367) ======================================================================================================= Net increase (decrease) in net assets resulting from operations (54,688,979) 28,825,520 ======================================================================================================= Distributions to shareholders from net investment income: Class A -- (5,939,578) ------------------------------------------------------------------------------------------------------- Class B -- (858,998) ------------------------------------------------------------------------------------------------------- Class C -- (435,707) ------------------------------------------------------------------------------------------------------- Class R -- (8,313) ------------------------------------------------------------------------------------------------------- Institutional Class -- (1,600,517) ======================================================================================================= Total distributions from net investment income -- (8,843,113) ======================================================================================================= Distributions to shareholders from net realized gains: Class A -- (41,556,306) ------------------------------------------------------------------------------------------------------- Class B -- (10,873,397) ------------------------------------------------------------------------------------------------------- Class C -- (5,515,532) ------------------------------------------------------------------------------------------------------- Class R -- (68,352) ------------------------------------------------------------------------------------------------------- Institutional Class -- (9,127,643) ======================================================================================================= Total distributions from net realized gains -- (67,141,230) ======================================================================================================= Share transactions-net: Class A (36,527,405) 23,552,976 ------------------------------------------------------------------------------------------------------- Class B (20,536,000) (14,781,365) ------------------------------------------------------------------------------------------------------- Class C (6,650,379) 3,282,172 ------------------------------------------------------------------------------------------------------- Class R 470,490 395,091 ------------------------------------------------------------------------------------------------------- Institutional Class (51,363,689) 19,245,458 ======================================================================================================= Net increase (decrease) in net assets resulting from share transactions (114,606,983) 31,694,332 ======================================================================================================= Net increase (decrease) in net assets (169,295,962) (15,464,491) _______________________________________________________________________________________________________ ======================================================================================================= NET ASSETS: Beginning of period 516,236,025 531,700,516 ======================================================================================================= End of period (including undistributed net investment income of $2,292,956 and $(955,278), respectively) $ 346,940,063 $516,236,025 _______________________________________________________________________________________________________ =======================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 8 AIM GLOBAL EQUITY FUND NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Global Equity Fund (the "Fund") is a series portfolio of AIM Growth Series (the "Trust"). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series 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 to provide long-term growth of capital. 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. 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. 9 AIM GLOBAL EQUITY 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. 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. K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations 10 AIM GLOBAL EQUITY FUND 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 (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. L. 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. M. 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. 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:
AVERAGE NET ASSETS RATE ------------------------------------------------------------------- First $250 million 0.80% ------------------------------------------------------------------- Next $250 million 0.78% ------------------------------------------------------------------- Next $500 million 0.76% ------------------------------------------------------------------- Next $1.5 billion 0.74% ------------------------------------------------------------------- Next $2.5 billion 0.72% ------------------------------------------------------------------- Next $2.5 billion 0.70% ------------------------------------------------------------------- Next $2.5 billion 0.68% ------------------------------------------------------------------- Over $10 billion 0.66% ___________________________________________________________________ ===================================================================
Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). 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 (but not cash collateral from securities lending) in such affiliated money market funds. For the six months ended June 30, 2008, the Advisor waived advisory fees of $7,826. 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 six months ended June 30, 2008, Invesco reimbursed expenses of the Fund in the amount of $757. 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 six months ended June 30, 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 11 AIM GLOBAL EQUITY FUND 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2008, IADI advised the Fund that IADI retained $17,618 in front-end sales commissions from the sale of Class A shares and $3,014, $32,193, $1,950 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--SUPPLEMENTAL INFORMATION The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN INPUT LEVEL SECURITIES ------------------------------------------------- Level 1 $214,519,427 ------------------------------------------------- Level 2 134,991,499 ------------------------------------------------- Level 3 -- ================================================= $349,510,926 _________________________________________________ =================================================
NOTE 4--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 six months ended June 30, 2008, the Fund received credits from this arrangement, which resulted in the reduction of the Fund's total expenses of $9,896. NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's 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 Officer's 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 Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the six months ended June 30, 2008, the Fund paid legal fees of $2,132 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. 12 AIM GLOBAL EQUITY FUND NOTE 6--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company ("SSB"), 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 7--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. The Fund did not have a capital loss carryforward as of December 31, 2007. NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2008 was $285,589,057 and $399,286,114, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $ 18,395,076 ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (43,030,326) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(24,635,250) ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $374,146,176.
NOTE 9--SHARE INFORMATION
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ---------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------- Sold: Class A 686,062 $ 9,445,716 2,695,620 $ 46,498,238 ------------------------------------------------------------------------------------------------------------------------- Class B 162,165 2,110,361 595,531 9,814,196 ------------------------------------------------------------------------------------------------------------------------- Class C 90,846 1,177,025 473,706 7,801,642 ------------------------------------------------------------------------------------------------------------------------- Class R 43,499 603,005 27,712 486,177 ------------------------------------------------------------------------------------------------------------------------- Institutional Class 928,383 12,870,299 2,897,972 50,074,391 ========================================================================================================================= Issued as reinvestment of dividends: Class A -- -- 3,033,601 44,836,660 ------------------------------------------------------------------------------------------------------------------------- Class B -- -- 785,736 11,023,881 ------------------------------------------------------------------------------------------------------------------------- Class C -- -- 400,405 5,605,731 ------------------------------------------------------------------------------------------------------------------------- Class R -- -- 5,187 76,665 ------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 711,186 10,603,784 ========================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 694,789 9,557,507 838,355 14,456,246 ------------------------------------------------------------------------------------------------------------------------- Class B (734,081) (9,557,507) (881,595) (14,456,246) ========================================================================================================================= Reacquired:(b) Class A (4,051,196) (55,530,628) (4,820,592) (82,238,168) ------------------------------------------------------------------------------------------------------------------------- Class B (1,010,059) (13,088,854) (1,288,797) (21,163,196) ------------------------------------------------------------------------------------------------------------------------- Class C (602,729) (7,827,404) (613,782) (10,125,201) ------------------------------------------------------------------------------------------------------------------------- Class R (9,627) (132,515) (10,296) (167,751) ------------------------------------------------------------------------------------------------------------------------- Institutional Class (4,694,561) (64,233,988) (2,246,043) (41,432,717) ========================================================================================================================= (8,496,509) $(114,606,983) 2,603,906 $ 31,694,332 _________________________________________________________________________________________________________________________ =========================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 16% of the outstanding shares of the Fund. IADI has an agreement with these entities to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco Aim and/or Invesco Aim affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. (b) Net of redemption fees of $4,045 and $14,787 which were allocated among the classes based on relative net assets of each class for the six months ended June 30, 2008 and the year ended December 31, 2007, respectively. 13 AIM GLOBAL EQUITY FUND NOTE 10--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A --------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.81 $ 16.47 $ 15.54 $ 15.65 $ 13.54 $ 9.95 ------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.11(a) 0.22(a) 0.19 0.15(a) (0.02)(a) (0.06)(a) ------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.79) 0.63 2.73 1.34 2.93 3.79 =============================================================================================================================== Total from investment operations (1.68) 0.85 2.92 1.49 2.91 3.73 =============================================================================================================================== Less distributions: Dividends from net investment income -- (0.31) (0.20) (0.13) -- -- ------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (2.20) (1.79) (1.47) (0.80) (0.14) =============================================================================================================================== Total distributions -- (2.51) (1.99) (1.60) (0.80) (0.14) =============================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 0.00 =============================================================================================================================== Net asset value, end of period $ 13.13 $ 14.81 $ 16.47 $ 15.54 $ 15.65 $ 13.54 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Total return(b) (11.34)% 5.19% 18.88% 9.43% 21.64% 37.51% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $246,193 $317,181 $324,111 $264,868 $182,416 $109,205 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.48%(c) 1.39% 1.45% 1.50% 1.94% 2.00% ------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.48%(c) 1.49% 1.64% 1.68% 1.96% 2.05% =============================================================================================================================== Ratio of net investment income (loss) to average net assets 1.56%(c) 1.27% 1.09% 0.91% (0.11)% (0.50)% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Portfolio turnover rate(d) 67% 160% 166% 120% 115% 178% _______________________________________________________________________________________________________________________________ ===============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $272,384,638. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS B ----------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, -------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.04 $ 15.73 $ 14.92 $ 15.10 $ 13.15 $ 9.71 ----------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.05(a) 0.09(a) 0.06 0.03(a) (0.09)(a) (0.11)(a) ----------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.68) 0.59 2.62 1.28 2.84 3.69 ============================================================================================================================= Total from investment operations (1.63) 0.68 2.68 1.31 2.75 3.58 ============================================================================================================================= Less distributions: Dividends from net investment income -- (0.17) (0.08) (0.03) -- -- ----------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (2.20) (1.79) (1.46) (0.80) (0.14) ============================================================================================================================= Total distributions -- (2.37) (1.87) (1.49) (0.80) (0.14) ============================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 0.00 ============================================================================================================================= Net asset value, end of period $ 12.41 $ 14.04 $ 15.73 $ 14.92 $ 15.10 $ 13.15 _____________________________________________________________________________________________________________________________ ============================================================================================================================= Total return(b) (11.61)% 4.33% 18.02% 8.65% 21.06% 36.90% _____________________________________________________________________________________________________________________________ ============================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $49,565 $78,326 $100,141 $95,379 $74,120 $62,424 _____________________________________________________________________________________________________________________________ ============================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.23%(c) 2.14% 2.20% 2.21% 2.44% 2.50% ----------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.23%(c) 2.24% 2.39% 2.39% 2.46% 2.55% ============================================================================================================================= Ratio of net investment income (loss) to average net assets 0.81%(c) 0.52% 0.34% 0.20% (0.61)% (1.00)% _____________________________________________________________________________________________________________________________ ============================================================================================================================= Portfolio turnover rate(d) 67% 160% 166% 120% 115% 178% _____________________________________________________________________________________________________________________________ =============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $61,245,295. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 14 AIM GLOBAL EQUITY FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C --------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.02 $ 15.71 $ 14.89 $ 15.08 $ 13.14 $ 9.71 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.05(a) 0.09(a) 0.06 0.03(a) (0.09)(a) (0.11)(a) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.69) 0.59 2.63 1.27 2.83 3.68 ============================================================================================================================ Total from investment operations (1.64) 0.68 2.69 1.30 2.74 3.57 ============================================================================================================================ Less distributions: Dividends from net investment income -- (0.17) (0.08) (0.03) -- -- ---------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (2.20) (1.79) (1.46) (0.80) (0.14) ============================================================================================================================ Total distributions -- (2.37) (1.87) (1.49) (0.80) (0.14) ============================================================================================================================ Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 0.00 ============================================================================================================================ Net asset value, end of period $ 12.38 $ 14.02 $ 15.71 $ 14.89 $ 15.08 $13.14 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (11.70)% 4.35% 18.12% 8.58% 21.00% 36.79% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $29,418 $40,480 $41,261 $35,313 $20,375 $9,993 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 2.23%(c) 2.14% 2.20% 2.21% 2.44% 2.50% ---------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 2.23%(c) 2.24% 2.39% 2.39% 2.46% 2.55% ============================================================================================================================ Ratio of net investment income (loss) to average net assets 0.81%(c) 0.52% 0.34% 0.20% (0.61)% (1.00)% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(d) 67% 160% 166% 120% 115% 178% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $34,211,133. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS R ------------------------------------------------------------------- YEAR ENDED DECEMBER OCTOBER 31, 2005 SIX MONTHS ENDED 31, (COMMENCEMENT DATE) JUNE 30, ---------------------- TO DECEMBER 31, 2008 2007 2006 2005 --------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.81 $16.46 $15.53 $16.07 --------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.09(a) 0.18(a) 0.12 0.02(a) --------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.79) 0.63 2.76 1.03 ===================================================================================================================== Total from investment operations (1.70) 0.81 2.88 1.05 ===================================================================================================================== Less distributions: Dividends from net investment income -- (0.26) (0.16) (0.13) --------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (2.20) (1.79) (1.46) ===================================================================================================================== Total distributions -- (2.46) (1.95) (1.59) ===================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 -- ===================================================================================================================== Net asset value, end of period $ 13.11 $14.81 $16.46 $15.53 _____________________________________________________________________________________________________________________ ===================================================================================================================== Total return(b) (11.48)% 4.97% 18.62% 6.46% _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 876 $ 488 $ 170 $ 15 _____________________________________________________________________________________________________________________ ===================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.73%(c) 1.64% 1.70% 1.73%(d) --------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.73%(c) 1.74% 1.89% 1.91%(d) ===================================================================================================================== Ratio of net investment income to average net assets 1.31%(c) 1.02% 0.84% 0.68%(d) _____________________________________________________________________________________________________________________ ===================================================================================================================== Portfolio turnover rate(e) 67% 160% 166% 120% _____________________________________________________________________________________________________________________ =====================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $679,066. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 15 AIM GLOBAL EQUITY FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS ---------------------------------------------------------------------------------- APRIL 30, 2004 SIX MONTHS ENDED YEAR ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------------------------- TO DECEMBER 31 2008 2007 2006 2005 2004 ----------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.94 $ 16.60 $ 15.64 $ 15.73 $ 13.98 ----------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.14(a) 0.29(a) 0.23 0.23(a) 0.07(a) ----------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.81) 0.63 2.79 1.34 2.48 ============================================================================================================================= Total from investment operations (1.67) 0.92 3.02 1.57 2.55 ============================================================================================================================= Less distributions: Dividends from net investment income -- (0.38) (0.27) (0.21) -- ----------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (2.20) (1.79) (1.45) (0.80) ============================================================================================================================= Total distributions -- (2.58) (2.06) (1.66) (0.80) ============================================================================================================================= Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 0.00 0.00 ============================================================================================================================= Net asset value, end of period $ 13.27 $ 14.94 $ 16.60 $ 15.64 $ 15.73 _____________________________________________________________________________________________________________________________ ============================================================================================================================= Total return(b) (11.18)% 5.58% 19.40% 9.97% 18.39% _____________________________________________________________________________________________________________________________ ============================================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $20,888 $79,762 $66,018 $39,803 $13,158 _____________________________________________________________________________________________________________________________ ============================================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.03%(c) 0.99% 1.03% 0.99% 1.18%(d) ----------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.03%(c) 1.09% 1.22% 1.17% 1.20%(d) ============================================================================================================================= Ratio of net investment income to average net assets 2.01%(c) 1.67% 1.50% 1.42% 0.65%(d) _____________________________________________________________________________________________________________________________ ============================================================================================================================= Portfolio turnover rate(e) 67% 160% 166% 120% 115% _____________________________________________________________________________________________________________________________ =============================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $73,724,523. (d) Annualized. (e) 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. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On May 23, 2008, the Securities and Exchange Commission ("SEC") publicly posted its final approval of the Distribution Plans ("Distribution Plans") for the distribution of monies placed into two separate Fair Funds created pursuant to a settlement reached on October 8, 2004 between Invesco Funds Group, Inc. ("IFG"), Invesco Aim Advisors, Inc. ("Invesco Aim") and Invesco Aim Distributors, Inc. ("IADI") and the SEC (the "Order"). One of the Fair Funds consists of $325 million, plus interest and any contributions by other settling parties, for distribution to shareholders of certain mutual funds formerly advised by IFG who may have been harmed by market timing and related activity. The second Fair Fund consists of $50 million, plus interest and any contributions by other settling parties, for distribution to shareholders of mutual funds advised by Invesco Aim who may have been harmed by market timing and related activity. The Distribution Plans provide for the distribution to all eligible investors to compensate such investors for injury they may have suffered as a result of market timing in the affected funds. The Distribution Plans include a provision for any residual amounts in the Fair Funds to be distributed in the future to the affected funds. Because the distribution of the Fair Funds has not yet commenced, management of Invesco Aim and the Fund are unable to estimate the amount of distribution to be made to the Fund, if any. At the request of the trustees of the AIM Funds, Invesco Ltd. ("Invesco"), the parent company of IFG and Invesco Aim, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. 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. 16 AIM GLOBAL EQUITY FUND NOTE 11--LEGAL PROCEEDINGS--(CONTINUED) Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, 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 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 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. 17 AIM GLOBAL EQUITY FUND CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 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.
--------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $886.60 $ 6.94 $1,017.50 $ 7.42 1.48% --------------------------------------------------------------------------------------------------- B 1,000.00 883.90 10.45 1,013.77 11.17 2.23 --------------------------------------------------------------------------------------------------- C 1,000.00 883.00 10.44 1,013.77 11.17 2.23 --------------------------------------------------------------------------------------------------- R 1,000.00 885.20 8.11 1,016.26 8.67 1.73 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 18 AIM GLOBAL EQUITY 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 Growth Series is required under the comparative performance and fee data weight to the various factors. The Investment Company Act of 1940 to approve regarding the AIM Funds prepared by an Trustees recognized that the advisory annually the renewal of the AIM Global independent company, Lipper, Inc. arrangements and resulting advisory fees Equity Fund (the Fund) investment advisory (Lipper), under the direction and for the Fund and the other AIM Funds are agreement with Invesco Aim Advisors, Inc. supervision of the independent Senior the result of years of review and (Invesco Aim). During contract renewal Officer who also prepares a separate negotiation between the Trustees and meetings held on June 18-19, 2008, the analysis of this information for the Invesco Aim, that the Trustees may focus Board as a whole and the disinterested or Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of "independent" Trustees, voting separately, recommendations to the Investments these arrangements in some years than in approved the continuance of the Fund's Committee regarding the performance, fees others, and that the Trustees' investment advisory agreement for another and expenses of their assigned funds. The deliberations and conclusions in a year, effective July 1, 2008. In doing so, Investments Committee considers each particular year may be based in part on the 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. SubCommittee'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 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 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 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 continued
19 AIM GLOBAL EQUITY FUND managers, the Board concluded that these and will continue to focus on the longer D. Economies of Scale and Breakpoints individuals are competent and able to term and business issues that affect the continue to carry out their Fund's performance. The Board also The Board considered the extent to which responsibilities under the Fund's considered the steps Invesco Aim has taken there are economies of scale in Invesco investment advisory agreement. over the last several years to improve the Aim's provision of advisory services to quality and efficiency of the services the Fund. The Board also considered In determining whether to continue the that Invesco Aim provides to the AIM whether the Fund benefits from such Fund's investment advisory agreement, the Funds. The Board concluded that Invesco economies of scale through contractual Board considered the prior relationship Aim continues to be responsive to the breakpoints in the Fund's advisory fee between Invesco Aim and the Fund, as well Board's focus on fund performance. schedule or through advisory fee waivers as the Board's knowledge of Invesco Aim's However, due to the Fund's or expense limitations. The Board noted operations, and concluded that it was underperformance, the Board also that the Fund's contractual advisory fee beneficial to maintain the current concluded that it would be appropriate for schedule includes seven breakpoints and relationship, in part, because of such the Board to continue to monitor more that the level of the Fund's advisory knowledge. The Board also considered the closely the performance of the Fund. fees, as a percentage of the Fund's net steps that Invesco Aim and its affiliates Although the independent written assets, has decreased as net assets have taken over the last several years to evaluation of the Fund's Senior Officer increased because of the breakpoints. improve the quality and efficiency of the only considered Fund performance through Based on this information, the Board services they provide to the AIM Funds in the most recent calendar year, the Board concluded that the Fund's advisory fees the areas of investment performance, also reviewed more recent Fund performance appropriately reflect economies of scale product line diversification, and this review did not change their at current asset levels. The Board also distribution, fund operations, shareholder conclusions. noted that the Fund shares directly in services and compliance. The Board economies of scale through lower fees concluded that the quality and efficiency C. Advisory Fees and Fee Waivers charged by third party service providers of the services Invesco Aim and its based on the combined size of all of the affiliates provide to the AIM Funds in The Board compared the Fund's contractual AIM Funds and affiliates. each of these areas generally have advisory fee rate to the contractual improved, and support the Board's approval advisory fee rates of funds in the Fund's E. Profitability and Financial of the continuance of the Fund's Lipper expense group that are not managed Resources of Invesco Aim investment advisory agreement. by Invesco Aim, at a common asset level and as of the end of the past calendar The Board reviewed information from B. Fund Performance year. The Board noted that the Fund's Invesco Aim concerning the costs of the contractual advisory fee rate was below advisory and other services that Invesco Because there were only four funds the median contractual advisory fee rate Aim and its affiliates provide to the Fund identified by Invesco Aim in the Fund's of funds in its expense group. The Board and the profitability of Invesco Aim and performance group for inclusion in the also reviewed the methodology used by its affiliates in providing these Lipper reports, the Board compared the Lipper in determining contractual fee services. The Board also reviewed Fund's performance during the past one, rates. information concerning the financial three and five calendar years to the condition of Invesco Aim and its performance of funds in the Fund's The Board also compared the Fund's affiliates. The Board also reviewed with performance universe identified by effective fee rate (the advisory fee after Invesco Aim the methodology used to Lipper, and against the performance of all any advisory fee waivers and before any prepare the profitability information. The funds in the Lipper Global Multi-Cap Core expense limitations/waivers) to the Board considered the overall profitability Funds Index. The Board also reviewed the advisory fee rates of other clients of of Invesco Aim, as well as the criteria used by Invesco Aim to identify Invesco Aim and its affiliates with profitability of Invesco Aim in connection the funds in the Fund's performance group investment strategies comparable to those with managing the Fund. The Board noted for inclusion in the Lipper reports and of the Fund, including one mutual fund that Invesco Aim continues to operate at a the methodology used by Lipper to identify advised by Invesco Aim. The Board noted net profit, although increased expenses in the performance universe. The Board noted that the Fund's rate was below the rate recent years have reduced the that the Fund's performance was in the for the mutual fund. profitability of Invesco Aim and its fifth quintile of its performance universe affiliates. The Board concluded that the for the one year period, the fourth The Board noted that Invesco Aim has Fund's fees were fair and reasonable, and quintile for the three year period, and not proposed any advisory fee waivers or that the level of profits realized by the first quintile for the five year expense limitations for the Fund. The Invesco Aim and its affiliates from period (the first quintile being the best Board concluded that it was not necessary providing services to the Fund was not performing funds and the fifth quintile at this time to discuss with Invesco Aim excessive in light of the nature, quality being the worst performing funds). The whether to implement any fee waivers or and extent of the services provided. The Board noted that the Fund's performance expense limitations because the Fund's Board considered whether Invesco Aim is was below the performance of the Index for total expenses were below the median total financially sound and has the resources the one and three year periods, and above expenses of the funds in the Fund's Lipper necessary to perform its obligations under the performance of the Index for the five expense group that are not managed by the Fund's investment advisory agreement, year period. The Board also noted that Invesco Aim. and concluded that Invesco Aim has the Invesco Aim acknowledges the Fund's financial resources necessary to fulfill underperformance, appointed an affiliated After taking account of the Fund's these obligations. sub-advisor to manage the Fund's assets contractual advisory fee rate, as well as effective on May 1, 2008 the comparative advisory fee information discussed above, the Board concluded that the Fund's advisory fees were fair and reasonable. continued
20 AIM GLOBAL EQUITY FUND F. Independent Written Evaluation of concluded that, based on their review and types of investments and investment the Fund's Senior Officer representations made by Invesco Aim, these techniques, and providing investment arrangements were consistent with advisory services. The Board concluded The Board noted that, at their direction, regulatory requirements. that the sub-advisory agreements will the Senior Officer of the Fund, who is benefit the Fund and its shareholders by independent of Invesco Aim and Invesco The Board considered the fact that the permitting Invesco Aim to utilize the Aim's affiliates, had prepared an Fund's uninvested cash and cash collateral additional resources and talent of the independent written evaluation to assist from any securities lending arrangements Affiliated Sub-Advisers in managing the the Board in determining the may be invested in money market funds Fund. reasonableness of the proposed management advised by Invesco Aim pursuant to fees of the AIM Funds, including the Fund. procedures approved by the Board. The B. Fund Performance The Board noted that they had relied upon Board noted that Invesco Aim will receive the Senior Officer's written evaluation advisory fees from these affiliated money The Board did not view Fund performance as instead of a competitive bidding process. market funds attributable to such a relevant factor in considering whether In determining whether to continue the investments, although Invesco Aim has to approve the sub-advisory agreements for Fund's investment advisory agreement, the contractually agreed to waive through at the Fund, as no Affiliated Sub-Adviser Board considered the Senior Officer's least June 30, 2009, the advisory fees served as a sub-adviser to the Fund prior written evaluation. payable by the Fund in an amount equal to to May 1, 2008. 100% of the net advisory fees Invesco Aim G. Collateral Benefits to Invesco Aim receives from the affiliated money market C. Sub-Advisory Fees and its Affiliates funds with respect to the Fund's investment of uninvested cash, but not The Board considered the services to be The Board considered various other cash collateral. The Board considered the provided by the Affiliated Sub-Advisers benefits received by Invesco Aim and its contractual nature of this fee waiver and pursuant to the sub-advisory agreements affiliates resulting from Invesco Aim's noted that it remains in effect until at and the services to be provided by Invesco relationship with the Fund, including the least June 30, 2009. The Board concluded Aim pursuant to the Fund's investment fees received by Invesco Aim and its that the Fund's investment of uninvested advisory agreement, as well as the affiliates for their provision of cash and cash collateral from any allocation of fees between Invesco Aim and administrative, transfer agency and securities lending arrangements in the the Affiliated Sub-Advisers pursuant to distribution services to the Fund. The affiliated money market funds is in the the sub-advisory agreements. The Board Board considered the performance of best interests of the Fund and its noted that the sub-advisory fees have no Invesco Aim and its affiliates in shareholders. direct effect on the Fund or its providing these services and the shareholders, as they are paid by Invesco organizational structure employed by II. Sub-Advisory Agreements Aim to the Affiliated Sub-Advisers, and Invesco Aim and its affiliates to provide that Invesco Aim and the Affiliated these services. The Board also considered A. Nature, Extent and Quality of Sub-Advisers are affiliates. After taking that these services are provided to the Services Provided by Affiliated account of the Fund's contractual Fund pursuant to written contracts which Sub-Advisers sub-advisory fee rate, as well as other are reviewed and approved on an annual relevant factors, the Board concluded that basis by the Board. The Board concluded The Board reviewed the services to be the Fund's sub-advisory fees were fair and that Invesco Aim and its affiliates were provided by Invesco Trimark Ltd., Invesco reasonable. providing these services in a satisfactory Asset Management Deutschland, GmbH, manner and in accordance with the terms of Invesco Asset Management Limited, Invesco D. Financial Resources of the their contracts, and were qualified to Asset Management (Japan) Limited, Invesco Affiliated Sub-Advisers continue to provide these services to the Australia Limited, Invesco Global Asset Fund. Management (N.A.), Inc., Invesco Hong Kong The Board considered whether each Limited, Invesco Institutional (N.A.), Affiliated Sub-Adviser is financially The Board considered the benefits Inc. and Invesco Senior Secured sound and has the resources necessary to realized by Invesco Aim as a result of Management, Inc. (collectively, the perform its obligations under its portfolio brokerage transactions executed "Affiliated Sub-Advisers") under the respective sub-advisory agreement, and through "soft dollar" arrangements. Under sub-advisory agreements and the concluded that each Affiliated Sub-Adviser these arrangements, portfolio brokerage credentials and experience of the officers has the financial resources necessary to commissions paid by the Fund and/or other and employees of the Affiliated fulfill these obligations. funds advised by Invesco Aim are used to Sub-Advisers who will provide these 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 arrangements shift the payment obligation to be provided by the Affiliated for the research and execution services Sub-Advisers were appropriate. The Board from Invesco Aim to the funds and noted that the Affiliated Sub-Advisers, therefore may reduce Invesco Aim's which have offices and personnel that are expenses. The Board also noted that geographically dispersed in financial research obtained through soft dollar centers around the world, have been formed arrangements may be used by Invesco Aim in in part for the purpose of researching and making investment decisions for the Fund compiling information and making and may therefore benefit Fund recommendations on the markets and shareholders. The Board concluded that economies of various countries and Invesco Aim's soft dollar arrangements securities of companies located in such were appropriate. The Board also countries or on various
21 AIM GLOBAL EQUITY FUND Supplement to Semiannual Report dated 6/30/08 AIM GLOBAL EQUITY FUND ========================================== INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is For periods ended 6/30/08 not indicative of future results. More The following information has been 10 Years 7.87% recent returns may be more or less than prepared to provide Institutional Class 5 Years 12.84 those shown. All returns assume shareholders with a performance overview 1 Year -13.75 reinvestment of distributions at NAV. specific to their holdings. Institutional 6 Months* -11.18 Investment return and principal value will Class shares are offered exclusively to fluctuate so your shares, when redeemed, institutional investors, including defined * Cumulative total return that has not may be worth more or less than their contribution plans that meet certain been annualized original cost. See full report for criteria. ========================================== information on comparative benchmarks. Please consult your Fund prospectus for Institutional Class shares' inception date more information. For the most current is April 30, 2004. Returns since that date month-end performance, please call 800 451 are historical returns. All other returns 4246 or visit invescoaim.com. are blended returns of historical Institutional Class share performance and restated Class A share performance (for periods prior to the inception date of Institutional Class shares) at net asset value (NAV) and reflect the Rule 12b-1 fees applicable to Class A shares. Class A shares' inception date is September 15, 1997. Institutional Class shares have no sales charge; therefore, performance is at 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 1.00%. 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. A redemption fee of 2% will be imposed on certain redemptions or exchanges out of the Fund within 30 days of purchase. Exceptions to the redemption fee are listed in the Fund's prospectus. 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 or shown to the public, nor used in written form as sales literature for public use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com GEQ-INS-2 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 January 1, 2008, through June 30, 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.
----------------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $888.20 $4.84 $1,019.74 $5.17 1.03% -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM GLOBAL EQUITY FUND PROXY RESULTS A Special Meeting ("Meeting") of Shareholders of AIM Global Equity Fund, an investment portfolio of AIM Growth Series, a Delaware statutory trust ("Trust"), was held on February 29, 2008. The Meeting was held for the following purpose: (1) 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 matter were as follows:
VOTES WITHHELD/ BROKER MATTER VOTES FOR AGAINST ABSTENTIONS NON-VOTES ------------------------------------------------------------------------------------------------------------------------ (1) 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. .......... 11,049,903 527,604 387,087 3,737,920
The Meeting was adjourned until March 28, 2008, with respect to the following proposals: (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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** ----------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker...................................................... 259,205,198 10,486,394 Frank S. Bayley................................................... 259,256,384 10,435,208 James T. Bunch.................................................... 258,142,293 11,549,299 Bruce L. Crockett................................................. 258,143,390 11,548,202 Albert R. Dowden.................................................. 259,201,224 10,490,368 Jack M. Fields.................................................... 259,317,796 10,373,796 Martin L. Flanagan................................................ 259,304,758 10,386,834 Carl Frischling................................................... 259,178,445 10,513,147 Prema Mathai-Davis................................................ 259,255,582 10,436,010 Lewis F. Pennock.................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ................................................ 258,048,313 11,643,279 Raymond Stickel, Jr. ............................................. 258,206,591 11,485,001 Philip A. Taylor.................................................. 259,264,092 10,427,500
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................................ 182,780,828 23,098,525 6,564,572 57,247,667
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 22 AIM GLOBAL EQUITY FUND ==================================================================================================================================== EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 mail. 3. Select "Register for eDelivery" and complete the consent - view your documents online anytime at your convenience. process. - 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, 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 [INVESCO AIM LOGO] for the products and services represented by Invesco Aim; they each provide investment advisory services - SERVICE MARK - to individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 GEQ-SAR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM INCOME ALLOCATION FUND - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 [MOUNTAIN GRAPHIC] AIM Investments 2 Fund Performance became INVESCO AIM 3 Letter to Shareholders on March 31, 2008. 4 Schedule of Investments 5 Financial Statements For more details, go to 8 Notes to Financial Statements invescoaim.com 13 Financial Highlights 19 Fund Expenses 20 Approval of Investment Advisory Agreement 23 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND PERFORMANCE ======================================================================================= PERFORMANCE SUMMARY PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL FUND VS. INDEXES SHARES. Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance THE NET ANNUAL FUND OPERATING EXPENSE shown does not include applicable contingent deferred sales charges (CDSC) or front-end RATIO SET FORTH IN THE MOST RECENT FUND sales charges, which would have reduced performance. PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C AND CLASS R Class A Shares -2.19% SHARES WAS 0.97%, 1.72%, 1.72% AND 1.22%, Class B Shares -2.55 RESPECTIVELY.(1, 2) THE TOTAL ANNUAL FUND Class C Shares -2.55 OPERATING EXPENSE RATIO SET FORTH IN THE Class R Shares -2.31 MOST RECENT FUND PROSPECTUS AS OF THE DATE S&P 500 Index(triangle) (Broad Market Index) -11.90 OF THIS REPORT FOR CLASS A, CLASS B, CLASS Custom Income Allocation Index(square) (Style-Specific Index) -2.73 C AND CLASS R SHARES WAS 1.39%, 2.14%, Lipper Mixed-Asset Target Allocation Conservative Funds Index(triangle) (Peer 2.14% AND 1.64%, RESPECTIVELY. (2) THE Group Index) -1.59 EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index COVERED BY THIS REPORT. covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, CLASS A SHARE PERFORMANCE REFLECTS THE liquidity, and their industry. MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE The CUSTOM INCOME ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark APPLICABLE CONTINGENT DEFERRED SALES for AIM Income Allocation Fund, is composed of the following indexes: Russell 3000, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE MSCI EAFE, FTSE NAREIT Equity REITs and Lehman Brothers U.S. Universal. The composition CDSC ON CLASS B SHARES DECLINES FROM 5% of the index may change from time to time based upon the target asset allocation of the BEGINNING AT THE TIME OF PURCHASE TO 0% AT fund. Therefore, the current composition of the index does not reflect its historical THE BEGINNING OF THE SEVENTH YEAR. THE composition and will likely be altered in the future to better reflect the objective of CDSC ON CLASS C SHARES IS 1% FOR THE FIRST the fund. The Russell 3000--REGISTERED TRADEMARK-- Index is an unmanaged index YEAR AFTER PURCHASE. CLASS R SHARES DO NOT considered representative of the U.S. stock market. The Russell 3000 Index is a HAVE A FRONT-END SALES CHARGE; RETURNS trademark/service mark of the Frank Russell Co. Russell--REGISTERED TRADEMARK-- is a SHOWN ARE AT NET ASSET VALUE AND DO NOT trademark of the Frank Russell Co. The MSCI EAFE--REGISTERED TRADEMARK-- Index is an REFLECT A 0.75% CDSC THAT MAY BE IMPOSED unmanaged index considered representative of stocks of Europe, Australasia and the Far ON A TOTAL REDEMPTION OF RETIREMENT PLAN East. The FTSE NAREIT Equity REITs Index is an unmanaged index considered ASSETS WITHIN THE FIRST YEAR. representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is composed of the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, THE PERFORMANCE OF THE FUND'S SHARE 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally CLASS EXPENSES. weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation Conservative Funds category. These funds, by portfolio practice, maintain a HAD THE ADVISOR NOT WAIVED FEES AND/OR mix of between 20%-40% equity securities, with the remainder invested in bonds, cash, REIMBURSED EXPENSES, PERFORMANCE WOULD and cash equivalents. HAVE BEEN LOWER. The Fund is not managed to track the performance of any particular index, including (1) Total annual operating expenses less the indexes defined here, and consequently, the performance of the Fund may deviate any contractual fee waivers and/or significantly from the performance of the indexes. expense reimbursements by the advisor are in effect through at least June A direct investment cannot be made in an index. Unless otherwise indicated, index 30, 2009. See current prospectus for results include reinvested dividends, and they do not reflect sales charges. more information. Performance of an index of funds reflects fund expenses; performance of a market index does not. (2) The expense ratio includes acquired fund fees and expenses of the ======================================================================================= underlying funds in which the Fund invests of 0.69% for AIM Income ========================================== Allocation Fund. AVERAGE ANNUAL TOTAL RETURNS THE PERFORMANCE DATA QUOTED REPRESENT PAST As of 6/30/08, including maximum PERFORMANCE AND CANNOT GUARANTEE applicable sales charges COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE CLASS A SHARES VISIT INVESCOAIM.COM FOR THE MOST RECENT Inception (10/31/05) 3.32% MONTH-END PERFORMANCE. PERFORMANCE FIGURES 1 Year -7.44 REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE CLASS B SHARES MAXIMUM SALES CHARGE UNLESS OTHERWISE Inception (10/31/05) 3.70% STATED. PERFORMANCE FIGURES DO NOT REFLECT 1 Year -7.22 DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR SALE OF FUND CLASS C SHARES SHARES. INVESTMENT RETURN AND Inception (10/31/05) 4.75% 1 Year -3.67 CLASS R SHARES Inception (10/31/05) 5.29% 1 Year -2.18 ==========================================
2 AIM INCOME ALLOCATION FUND Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing considerable investor anxiety, reminding us again that markets are cyclical and the [CROCKETT PHOTO] 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 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 Bruce Crockett 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 Web site (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 e-mail 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 August 11, 2008
3 AIM INCOME ALLOCATION FUND AIM INCOME ALLOCATION FUND PORTFOLIO COMPOSITION By asset class, based on Net Assets as of June 30, 2008
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ----------------------------------------------------------------------------------------------- Intermediate-Term Taxable Investment Grade 38.00% 38.85% ----------------------------------------------------------------------------------------------- International/Global Blend 5.00 4.67 ----------------------------------------------------------------------------------------------- Large-Cap Blend 15.00 14.08 ----------------------------------------------------------------------------------------------- Real Estate 7.00 6.66 ----------------------------------------------------------------------------------------------- Sector 8.00 8.24 ----------------------------------------------------------------------------------------------- Short-Term Taxable Investment Grade 6.00 6.20 ----------------------------------------------------------------------------------------------- Taxable Noninvestment Grade 21.00 21.51 ----------------------------------------------------------------------------------------------- Other Assets Less Liabilities (0.21) _______________________________________________________________________________________________ ===============================================================================================
SCHEDULE OF INVESTMENTS June 30, 2008 (Unaudited)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME ----------------------------------------------------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.21% AIM Core Bond Fund(b) 17.91% $17,670,860 $ 1,736,789 $ (2,100,768) $ (475,221) $ (17,767) $ 531,408 ----------------------------------------------------------------------------------------------------------------------------- AIM Diversified Dividend Fund 14.08% 13,820,701 2,129,482 (1,173,683) (1,468,925) (89,961) 169,960 ----------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 7.32% 6,710,731 1,038,820 (569,446) (239,035) (66,991) 209,042 ----------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 14.19% 13,438,008 1,646,514 (1,155,946) (541,051) (66,092) 590,893 ----------------------------------------------------------------------------------------------------------------------------- AIM Income Fund 8.65% 8,365,675 973,651 (713,349) (460,632) (47,199) 301,617 ----------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 4.67% 4,848,999 559,227 (395,444) (629,145) (1,835) -- ----------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 5.07% 5,330,845 395,438 (1,110,266) 47,534 92,514 51,104 ----------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.00% 6,130,868 369,392 (7,078,748) 2,328,146 (1,749,658) 23,946 ----------------------------------------------------------------------------------------------------------------------------- AIM Select Real Estate Fund 6.66% -- 7,037,444 (177,754) (600,715) (5,098) 84,773 ----------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 6.20% 5,973,936 595,224 (662,200) (65,565) (14,285) 182,018 ----------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund(b) 7.22% 7,197,462 672,294 (1,105,544) (1,904) 21,573 190,226 ----------------------------------------------------------------------------------------------------------------------------- AIM Utilities Fund 8.24% 8,290,752 633,023 (845,334) (551,910) 208,317 82,088 ----------------------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $100,738,358) 100.21% 97,778,837 17,787,298 (17,088,482) (2,658,423) (1,736,482) 2,417,075 ----------------------------------------------------------------------------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (0.21)% ----------------------------------------------------------------------------------------------------------------------------- NET ASSETS 100.00% _____________________________________________________________________________________________________________________________ ============================================================================================================================= SHARES VALUE 06/30/08 06/30/08 ------------------------------------------------------- SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.21% AIM Core Bond Fund(b) 1,696,659 $16,813,893 ------------------------------------------------------- AIM Diversified Dividend Fund 1,178,041 13,217,614 ------------------------------------------------------- AIM Floating Rate Fund 841,381 6,874,079 ------------------------------------------------------- AIM High Yield Fund 3,281,141 13,321,433 ------------------------------------------------------- AIM Income Fund 1,441,944 8,118,146 ------------------------------------------------------- AIM International Core Equity Fund 348,315 4,381,802 ------------------------------------------------------- AIM International Total Return Fund 428,474 4,756,065 ------------------------------------------------------- AIM Real Estate Fund -- -- ------------------------------------------------------- AIM Select Real Estate Fund 740,981 6,253,877 ------------------------------------------------------- AIM Short Term Bond Fund 611,449 5,827,110 ------------------------------------------------------- AIM U.S. Government Fund(b) 786,993 6,783,881 ------------------------------------------------------- AIM Utilities Fund 406,883 7,734,848 ------------------------------------------------------- TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $100,738,358) 94,082,748 ------------------------------------------------------- OTHER ASSETS LESS LIABILITIES (201,502) ------------------------------------------------------- NET ASSETS $93,881,246 _______________________________________________________ =======================================================
Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Effective April 30, 2008, AIM Total Return Bond Fund and AIM Intermediate Government Fund were renamed AIM Core Bond Fund and AIM U.S. Government Fund, respectively. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 4 AIM INCOME ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited) ASSETS: Investments in affiliated underlying funds, at value (Cost $100,738,358) $ 94,082,748 -------------------------------------------------------------------------------- Receivables for: Investments sold -- affiliated underlying funds 123,760 -------------------------------------------------------------------------------- Fund shares sold 197,791 -------------------------------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 6,756 -------------------------------------------------------------------------------- Other assets 22,905 ================================================================================ Total assets 94,433,960 ________________________________________________________________________________ ================================================================================ LIABILITIES: Payables for: Fund shares reacquired 436,560 -------------------------------------------------------------------------------- Accrued fees to affiliates 64,009 -------------------------------------------------------------------------------- Accrued operating expenses 43,838 -------------------------------------------------------------------------------- Trustee deferred compensation and retirement plans 8,307 ================================================================================ Total liabilities 552,714 ================================================================================ Net assets applicable to shares outstanding $ 93,881,246 ________________________________________________________________________________ ================================================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $102,168,778 -------------------------------------------------------------------------------- Undistributed net investment income 262,875 -------------------------------------------------------------------------------- Undistributed net realized gain (loss) (1,894,797) -------------------------------------------------------------------------------- Unrealized appreciation (depreciation) (6,655,610) ================================================================================ $ 93,881,246 ________________________________________________________________________________ ================================================================================ NET ASSETS: Class A $ 58,858,423 ________________________________________________________________________________ ================================================================================ Class B $ 10,302,915 ________________________________________________________________________________ ================================================================================ Class C $ 24,239,859 ________________________________________________________________________________ ================================================================================ Class R $ 469,982 ________________________________________________________________________________ ================================================================================ Institutional Class $ 10,067 ________________________________________________________________________________ ================================================================================ SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 5,919,491 ________________________________________________________________________________ ================================================================================ Class B 1,035,504 ________________________________________________________________________________ ================================================================================ Class C 2,435,247 ________________________________________________________________________________ ================================================================================ Class R 47,235 ________________________________________________________________________________ ================================================================================ Institutional Class 1,012 ________________________________________________________________________________ ================================================================================ Class A: Net asset value per share $ 9.94 -------------------------------------------------------------------------------- Maximum offering price per share (Net asset value of $9.94 divided by 94.50%) $ 10.52 ________________________________________________________________________________ ================================================================================ Class B: Net asset value and offering price per share $ 9.95 ________________________________________________________________________________ ================================================================================ Class C: Net asset value and offering price per share $ 9.95 ________________________________________________________________________________ ================================================================================ Class R: Net asset value and offering price per share $ 9.95 ________________________________________________________________________________ ================================================================================ Institutional Class: Net asset value and offering price per share $ 9.95 ________________________________________________________________________________ ================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 5 AIM INCOME ALLOCATION FUND STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited) INVESTMENT INCOME: Dividends from affiliated underlying funds $ 2,417,075 ------------------------------------------------------------------------------------------------ Other Income 54 ================================================================================================ Total investment income 2,417,129 ================================================================================================ EXPENSES: Administrative services fees 24,863 ------------------------------------------------------------------------------------------------ Custodian fees 7,539 ------------------------------------------------------------------------------------------------ Distribution fees: Class A 73,896 ------------------------------------------------------------------------------------------------ Class B 54,527 ------------------------------------------------------------------------------------------------ Class C 122,904 ------------------------------------------------------------------------------------------------ Class R 1,065 ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C and R 73,537 ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 5 ------------------------------------------------------------------------------------------------ Trustees' and officer's fees and benefits 9,159 ------------------------------------------------------------------------------------------------ Registration and filing fees 33,692 ------------------------------------------------------------------------------------------------ Professional services fees 24,029 ------------------------------------------------------------------------------------------------ Other 17,186 ================================================================================================ Total expenses 442,402 ================================================================================================ Less: Expenses reimbursed and expense offset arrangement(s) (175,614) ================================================================================================ Net expenses 266,788 ================================================================================================ Net investment income 2,150,341 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) on sales of affiliated underlying fund shares (1,736,482) ================================================================================================ Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (2,658,423) ================================================================================================ Net gain (loss) from affiliated underlying funds (4,394,905) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(2,244,564) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 6 AIM INCOME ALLOCATION FUND STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
JUNE 30, DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 2,150,341 $ 3,605,908 ------------------------------------------------------------------------------------------------------- Net realized gain (loss) (1,736,482) 2,463,474 ------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (2,658,423) (4,790,323) ======================================================================================================= Net increase (decrease) in net assets resulting from operations (2,244,564) 1,279,059 ======================================================================================================= Distributions to shareholders from net investment income: Class A (1,324,183) (2,309,555) ------------------------------------------------------------------------------------------------------- Class B (199,961) (381,445) ------------------------------------------------------------------------------------------------------- Class C (457,014) (815,332) ------------------------------------------------------------------------------------------------------- Class R (8,678) (10,702) ------------------------------------------------------------------------------------------------------- Institutional Class (238) (879) ======================================================================================================= Total distributions from net investment income (1,990,074) (3,517,913) ======================================================================================================= Distributions to shareholders from net realized gains: Class A (1,151,418) (768,827) ------------------------------------------------------------------------------------------------------- Class B (204,200) (151,841) ------------------------------------------------------------------------------------------------------- Class C (472,679) (323,589) ------------------------------------------------------------------------------------------------------- Class R (9,077) (4,173) ------------------------------------------------------------------------------------------------------- Institutional Class (195) (137) ======================================================================================================= Total distributions from net realized gains (1,837,569) (1,248,567) ======================================================================================================= Share transactions-net: Class A 2,450,360 41,386,756 ------------------------------------------------------------------------------------------------------- Class B (424,599) 5,781,101 ------------------------------------------------------------------------------------------------------- Class C 526,562 16,255,572 ------------------------------------------------------------------------------------------------------- Class R 105,658 297,851 ------------------------------------------------------------------------------------------------------- Institutional Class 433 (48,001) ======================================================================================================= Net increase in net assets resulting from share transactions 2,658,414 63,673,279 ======================================================================================================= Net increase (decrease) in net assets (3,413,793) 60,185,858 ======================================================================================================= NET ASSETS: Beginning of period 97,295,039 37,109,181 ======================================================================================================= End of period (including undistributed net investment income of $262,875 and $102,608, respectively) $93,881,246 $97,295,039 _______________________________________________________________________________________________________ =======================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 7 AIM INCOME ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Income Allocation Fund (the "Fund") is a series portfolio of AIM Growth Series (the "Trust"). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series 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 to achieve a high level of current income with growth of capital as a secondary objective. The Fund is a "fund of funds", in that it invests in the Institutional Class of other mutual funds ("underlying funds") advised by Invesco Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). The Advisor may change the Fund's asset class allocations, the underlying funds or the target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund's accounting policies are outlined in the underlying fund's financial statements and are available upon request. A. SECURITY VALUATIONS -- Investments in underlying funds are valued at the end of the day net asset value per share. Securities in the underlying funds, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and 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. 8 AIM INCOME ALLOCATION 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. Distributions from income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from net realized capital gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. 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. The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. C. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex- dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. E. EXPENSES -- Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the underlying funds. The results of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. G. 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. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust has entered into a master investment advisory agreement with Invesco Aim. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco Aim indirectly as a shareholder of the underlying funds. Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). The Advisor has contractually agreed to reimburse expenses to the extent necessary to limit other expenses (excluding certain items discussed below which includes 12b-1 plan payments) of Class A, Class B, Class C, Class R and Institutional Class shares to 0.03% of average daily net assets, respectively, through at least June 30, 2009. In determining the advisor's obligation to reimburse expenses, the following expenses are not taken into account, and will cause other expenses to exceed the numbers reflected above: (i) 12b-1 plan payments; (ii) interest; (iii) taxes; (iv) dividend expense on short sales; (v) extraordinary items; (vi) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; (vii) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds; and (viii) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement 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. To the extent that the annualized expense ratio does not exceed the expense limitation, the Advisor will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year. For the six months ended June 30, 2008, the Advisor reimbursed fund level expenses of $102,072 and reimbursed class level expenses of $44,917, $8,286, $18,676, $324 and $5 for Class A, Class B, Class C, Class R and Institutional Class shares, respectively. 9 AIM INCOME ALLOCATION FUND 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 six months ended June 30, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. At the request of the Trustees of the Trust, Invesco 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 six months ended June 30, 2008, Invesco did not reimburse any expenses. 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2008, IADI advised the Fund that IADI retained $18,801 in front-end sales commissions from the sale of Class A shares and $2,166, $13,649, $6,692 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed on redemptions by shareholders. The underlying funds pay no distribution fees and the Fund pays no sales loads or other similar compensation to ADI for acquiring underlying fund shares. Certain officers and trustees of the Trust are officers and directors of Invesco Aim, IAIS and/or IADI. NOTE 3--SUPPLEMENTAL INFORMATION The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN INPUT LEVEL SECURITIES -------------------------------------- Level 1 $94,082,748 -------------------------------------- Level 2 -- -------------------------------------- Level 3 -- ====================================== $94,082,748 ______________________________________ ======================================
NOTE 4--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 six months ended June 30, 2008, the Fund received credits from the arrangement, which resulted in the reduction of the Fund's total expenses of $1,334. 10 AIM INCOME ALLOCATION FUND NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's 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 Officer's 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 Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the six months ended June 30, 2008, the Fund paid legal fees of $1,612 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 ("SSB"), 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 7--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. The Fund did not have a capital loss carryforward as of December 31, 2007. NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2008 was $17,787,298 and $17,088,482, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $ 696,744 ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (7,636,146) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(6,939,402) ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $101,022,150.
11 AIM INCOME ALLOCATION FUND NOTE 9--SHARE INFORMATION
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 1,188,031 $ 12,338,907 5,130,980 $ 56,581,689 ------------------------------------------------------------------------------------------------------------------------ Class B 185,509 1,916,744 799,736 8,821,716 ------------------------------------------------------------------------------------------------------------------------ Class C 391,587 4,063,547 1,845,603 20,353,103 ------------------------------------------------------------------------------------------------------------------------ Class R 25,947 268,672 32,811 358,816 ======================================================================================================================== Issued as reinvestment of dividends: Class A 210,042 2,114,223 244,883 2,632,745 ------------------------------------------------------------------------------------------------------------------------ Class B 36,177 364,441 43,684 469,636 ------------------------------------------------------------------------------------------------------------------------ Class C 78,955 795,297 88,454 950,169 ------------------------------------------------------------------------------------------------------------------------ Class R 1,764 17,754 1,390 14,875 ------------------------------------------------------------------------------------------------------------------------ Institutional Class 43 433 92 1,017 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 116,186 1,194,835 113,934 1,243,065 ------------------------------------------------------------------------------------------------------------------------ Class B (116,207) (1,194,835) (113,945) (1,243,065) ======================================================================================================================== Reacquired: Class A (1,272,834) (13,197,605) (1,748,799) (19,070,743) ------------------------------------------------------------------------------------------------------------------------ Class B (145,880) (1,510,949) (207,894) (2,267,186) ------------------------------------------------------------------------------------------------------------------------ Class C (418,215) (4,332,282) (463,254) (5,047,700) ------------------------------------------------------------------------------------------------------------------------ Class R (17,636) (180,768) (6,882) (75,840) ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (4,413) (49,018) ======================================================================================================================== 263,469 $ 2,658,414 5,756,380 $ 63,673,279 ________________________________________________________________________________________________________________________ ========================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% of the outstanding shares of the Fund. 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. 12 AIM INCOME ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ----------------------------------------------------------------- YEAR ENDED OCTOBER 31, 2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------- TO DECEMBER 31, 2008 2007 2006 2005 -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.60 $ 10.85 $ 10.12 $10.03 -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.25 0.54(a) 0.39 0.11(a) -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.48) (0.17) 0.75 0.13 ==================================================================================================================== Total from investment operations (0.23) 0.37 1.14 0.24 ==================================================================================================================== Less distributions: Dividends from net investment income (0.23) (0.47) (0.39) (0.15) -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.20) (0.15) (0.02) -- ==================================================================================================================== Total distributions (0.43) (0.62) (0.41) (0.15) ==================================================================================================================== Net asset value, end of period $ 9.94 $ 10.60 $ 10.85 $10.12 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) (2.19)% 3.40% 11.48% 2.35% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $58,858 $60,193 $21,022 $1,634 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.28%(c) 0.28% 0.29% 0.29%(d) -------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.65%(c) 0.70% 1.96% 20.85%(d) -------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.69% 0.69% 0.64% 0.69% ==================================================================================================================== Ratio of net investment income to average net assets 4.80%(c) 4.92% 4.86% 6.45%(d) ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate(f) 18% 10% 21% 0.99% ____________________________________________________________________________________________________________________ ====================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $59,441,778. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 13 AIM INCOME ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS B ---------------------------------------------------------------- YEAR ENDED OCTOBER 31, 2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------ TO DECEMBER 31, 2008 2007 2006 2005 -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.61 $ 10.86 $10.12 $10.03 -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.21 0.46(a) 0.31 0.10(a) -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.48) (0.17) 0.76 0.12 ==================================================================================================================== Total from investment operations (0.27) 0.29 1.07 0.22 ==================================================================================================================== Less distributions: Dividends from net investment income (0.19) (0.39) (0.31) (0.13) -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.20) (0.15) (0.02) -- ==================================================================================================================== Total distributions (0.39) (0.54) (0.33) (0.13) ==================================================================================================================== Net asset value, end of period $ 9.95 $ 10.61 $10.86 $10.12 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) (2.55)% 2.62% 10.74% 2.17% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $10,303 $11,412 $6,018 $ 210 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.03%(c) 1.03% 1.04% 1.04%(d) -------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.40%(c) 1.45% 2.71% 21.60%(d) -------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.69% 0.69% 0.64% 0.69% ==================================================================================================================== Ratio of net investment income to average net assets 4.05%(c) 4.17% 4.11% 5.70%(d) ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate(f) 18% 10% 21% 0.99% ____________________________________________________________________________________________________________________ ====================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $10,965,370. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 14 AIM INCOME ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C ---------------------------------------------------------------- YEAR ENDED OCTOBER 31, 2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ------------------ TO DECEMBER 31, 2008 2007 2006 2005 -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 10.61 $ 10.86 $10.12 $10.03 -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.21 0.46(a) 0.31 0.10(a) -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.48) (0.17) 0.76 0.12 ==================================================================================================================== Total from investment operations (0.27) 0.29 1.07 0.22 ==================================================================================================================== Less distributions: Dividends from net investment income (0.19) (0.39) (0.31) (0.13) -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.20) (0.15) (0.02) -- ==================================================================================================================== Total distributions (0.39) (0.54) (0.33) (0.13) ==================================================================================================================== Net asset value, end of period $ 9.95 $ 10.61 $10.86 $10.12 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) (2.55)% 2.62% 10.74% 2.17% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $24,240 $25,286 $9,905 $ 521 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.03%(c) 1.03% 1.04% 1.04%(d) -------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.40%(c) 1.45% 2.71% 21.60%(d) -------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.69% 0.69% 0.64% 0.69% ==================================================================================================================== Ratio of net investment income to average net assets 4.05%(c) 4.17% 4.11% 5.70%(d) ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate(f) 18% 10% 21% 0.99% ____________________________________________________________________________________________________________________ ====================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $24,715,840. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 15 AIM INCOME ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS R --------------------------------------------------------------- YEAR ENDED OCTOBER 31, 2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.61 $10.86 $10.11 $10.03 ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.24 0.51(a) 0.43 0.11(a) ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.48) (0.17) 0.70 0.11 =================================================================================================================== Total from investment operations (0.24) 0.34 1.13 0.22 =================================================================================================================== Less distributions: Dividends from net investment income (0.22) (0.44) (0.36) (0.14) ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.20) (0.15) (0.02) -- =================================================================================================================== Total distributions (0.42) (0.59) (0.38) (0.14) =================================================================================================================== Net asset value, end of period $ 9.95 $10.61 $10.86 $10.11 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(b) (2.31)% 3.14% 11.41% 2.20% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 470 $ 394 $ 107 $ 51 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.53%(c) 0.53%(d) 0.54% 0.54%(d) ------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.90%(c) 0.95%(d) 2.21% 21.10%(d) ------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.69% 0.69% 0.64% 0.69% =================================================================================================================== Ratio of net investment income to average net assets 4.55%(c) 4.67%(d) 4.61% 6.20%(d) ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate(f) 18% 10% 21% 0.99% ___________________________________________________________________________________________________________________ ===================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $428,442. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 16 AIM INCOME ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS --------------------------------------------------------------- YEAR ENDED OCTOBER 31, 2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.60 $10.85 $10.11 $10.03 ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.26 0.57(a) 0.53 0.12(a) ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.47) (0.17) 0.65 0.11 =================================================================================================================== Total from investment operations (0.21) 0.40 1.18 0.23 =================================================================================================================== Less distributions: Dividends from net investment income (0.24) (0.50) (0.42) (0.15) ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.20) (0.15) (0.02) -- =================================================================================================================== Total distributions (0.44) (0.65) (0.44) (0.15) =================================================================================================================== Net asset value, end of period $ 9.95 $10.60 $10.85 $10.11 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(b) (1.97)% 3.66% 11.87% 2.29% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 10 $ 10 $ 57 $ 51 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.04%(c) 0.03%(d) 0.03% 0.04%(d) ------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.34%(c) 0.33%(d) 1.58% 20.58%(d) ------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.69% 0.69% 0.64% 0.69% =================================================================================================================== Ratio of net investment income to average net assets 5.04%(c) 5.17%(d) 5.11% 6.70%(d) ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate(f) 18% 10% 21% 0.99% ___________________________________________________________________________________________________________________ ===================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $10,139. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (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 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 17 AIM INCOME ALLOCATION FUND NOTE 11--LEGAL PROCEEDINGS--(CONTINUED) 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 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. 18 AIM INCOME ALLOCATION FUND CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $978.10 $1.38 $1,023.47 $1.41 0.28% --------------------------------------------------------------------------------------------------- B 1,000.00 974.50 5.06 1,019.74 5.17 1.03 --------------------------------------------------------------------------------------------------- C 1,000.00 974.50 5.06 1,019.74 5.17 1.03 --------------------------------------------------------------------------------------------------- R 1,000.00 976.90 2.61 1,022.23 2.66 0.53 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 19 AIM INCOME ALLOCATION 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 Growth Series is required under the comparative performance and fee data weight to the various factors. The Investment Company Act of 1940 to approve regarding the AIM Funds prepared by an Trustees recognized that the advisory annually the renewal of the AIM Income independent company, Lipper, Inc. arrangements and resulting advisory fees Allocation 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 The discussion below serves as a summary whether to approve the continuance of each of the Senior Officer's independent The independent Trustees met separately AIM Fund's investment advisory agreement written evaluation with respect to the during their evaluation of the Fund's and sub-advisory agreements for another Fund's investment advisory agreement as investment advisory agreement with year. well as a discussion of the material independent legal counsel from whom they factors and related conclusions that received independent legal advice, and the The independent Trustees are assisted formed the basis for the Board's approval independent Trustees also received in their annual evaluation of the Fund's of the Fund's investment advisory assistance during their deliberations from investment advisory agreement by the agreement and sub-advisory agreements. the independent Senior Officer, a independent Senior Officer. One Unless otherwise stated, information set full-time officer of the AIM Funds who responsibility of the Senior Officer is to forth below is as of June 19, 2008 and reports directly to the independent manage the process by which the AIM Funds' does not reflect any changes that may have Trustees. proposed management fees are negotiated occurred since that date, including but during the annual contract renewal process not limited to changes to the Fund's THE BOARD'S FUND EVALUATION PROCESS to ensure that they are negotiated in a performance, advisory fees, expense manner that is at arms' length and limitations and/or fee waivers. The Board's Investments Committee has reasonable. Accordingly, the Senior established three Sub-Committees that are Officer must either supervise a I. Investment Advisory Agreement responsible for overseeing the management competitive bidding process or prepare an of a number of the series portfolios of independent written evaluation. The Senior A. Nature, Extent and Quality of the AIM Funds. This Sub-Committee Officer has recommended that an Services Provided by Invesco Aim structure permits the Trustees to focus on independent written evaluation be provided the performance of the AIM Funds that have and, at the direction of the Board, has The Board reviewed the advisory services been assigned to them. The Sub-Committees prepared an independent written provided to the Fund by Invesco Aim under meet throughout the year to review the evaluation. the Fund's investment advisory agreement, performance of their assigned funds, and the performance of Invesco Aim in the Sub-Committees review monthly and During the annual contract renewal providing these services, and the quarterly comparative performance process, the Board considered the factors credentials and experience of the officers information and periodic asset flow data discussed below under the heading "Factors and employees of Invesco Aim who provide for their assigned funds. These materials and Conclusions and Summary of Independent these services. The Board's review of the are prepared under the direction and Written Fee Evaluation" in evaluating the qualifications of Invesco Aim to provide supervision of the independent Senior fairness and reasonableness of the Fund's these services included the Board's Officer. Over the course of each year, the investment advisory agreement and the consideration of Invesco Aim's portfolio Sub-Committees meet with portfolio sub-advisory agreements at the contract and product review process, various back managers for their assigned funds and renewal meetings and at their meetings office support functions provided by other members of management and review throughout the year as part of their Invesco Aim and its affiliates, and with these individuals the performance, ongoing oversight of the Fund. The Fund's Invesco Aim's equity and fixed income investment objective(s), policies, investment advisory agreement and trading operations. The Board concluded strategies and limitations of these funds. sub-advisory agreements were considered that the nature, extent and quality of the separately, although the Board also advisory services provided to the Fund by In addition to their meetings considered the common interests of all of Invesco Aim were appropriate and that throughout the year, the Sub-Committees the AIM Funds in their deliberations. The Invesco Aim currently is providing meet at designated contract renewal Board considered all of the information satisfactory advisory services in meetings each year to conduct an in-depth provided to them and did not identify any accordance with the terms of the Fund's review of the performance, fees and particular factor that was controlling. investment advisory agreement. In expenses of their assigned funds. During Each Trustee may have evaluated the addition, based on their ongoing meetings the contract information provided differently throughout the year with the Fund's portfolio manager or continued
20 AIM INCOME ALLOCATION FUND managers, the Board concluded that these services that Invesco Aim provides to the concerning the financial condition of individuals are competent and able to AIM Funds. The Board concluded that Invesco Aim and its affiliates. The Board continue to carry out their Invesco Aim continues to be responsive to also reviewed with Invesco Aim the responsibilities under the Fund's the Board's focus on fund performance. methodology used to prepare the investment advisory agreement. Although the independent written profitability information. The Board evaluation of the Fund's Senior Officer considered the overall profitability of In determining whether to continue the only considered Fund performance through Invesco Aim, as well as the profitability Fund's investment advisory agreement, the the most recent calendar year, the Board of Invesco Aim in connection with managing Board considered the prior relationship also reviewed more recent Fund performance the Fund. The Board noted that Invesco Aim between Invesco Aim and the Fund, as well and this review did not change their continues to operate at a net profit, as the Board's knowledge of Invesco Aim's conclusions. although increased expenses in recent operations, and concluded that it was years have reduced the profitability of beneficial to maintain the current C. Advisory Fees and Fee Waivers Invesco Aim and its affiliates. The Board relationship, in part, because of such concluded that the Fund's fees were fair knowledge. The Board also considered the The Board noted that the Fund is a fund of and reasonable, and that the level of steps that Invesco Aim and its affiliates funds and invests its assets in underlying profits realized by Invesco Aim and its have taken over the last several years to funds rather than directly in individual affiliates from providing services to the improve the quality and efficiency of the securities. The Board noted that Invesco Fund was not excessive in light of the services they provide to the AIM Funds in Aim does not charge the Fund any advisory nature, quality and extent of the services the areas of investment performance, fees pursuant to the Fund's investment provided. The Board considered whether product line diversification, advisory agreement, although the Invesco Aim is financially sound and has distribution, fund operations, shareholder underlying funds in which the Fund invests the resources necessary to perform its services and compliance. The Board pay Invesco Aim advisory fees. Because obligations under the Fund's investment concluded that the quality and efficiency Invesco Aim does not charge the Fund any advisory agreement, and concluded that of the services Invesco Aim and its advisory fees, the Board did not rely upon Invesco Aim has the financial resources affiliates provide to the AIM Funds in any comparison of services and fees under necessary to fulfill these obligations. each of these areas have generally advisory contracts with other funds or improved, and support the Board's approval products advised by Invesco Aim and its F. Independent Written Evaluation of of the continuance of the Fund's affiliates. the Fund's Senior Officer investment advisory agreement. The Board noted that Invesco Aim has The Board noted that, at their direction, B. Fund Performance contractually agreed to waive fees and/or the Senior Officer of the Fund, who is limit expenses of the Fund through at independent of Invesco Aim and Invesco The Board noted that the Fund recently least June 30, 2009 in an amount necessary Aim's affiliates, had prepared an began operations and that only the past to limit total annual operating expenses independent written evaluation to assist two calendar years comparative performance to a specified percentage of average daily the Board in determining the data was available. The Board compared the net assets for each class of the Fund. The reasonableness of the proposed management Fund's performance during the past two Board considered the contractual nature of fees of the AIM Funds, including the Fund. calendar years to the performance of funds this fee waiver and noted that it remains The Board noted that they had relied upon in the Fund's performance group that are in effect until at least June 30, 2009. the Senior Officer's written evaluation not managed by Invesco Aim, and against The Board also considered the effect this instead of a competitive bidding process. the performance of all funds in the Lipper expense limitation would have on the In determining whether to continue the Mixed-Asset Target Allocation Conservative Fund's estimated total expenses. Fund's investment advisory agreement, the Funds Index. The Board also reviewed the Board considered the Senior Officer's criteria used by Invesco Aim to identify D. Economies of Scale and Breakpoints written evaluation. the funds in the Fund's performance group for inclusion in the Lipper reports. The The Board noted that Invesco Aim does not G. Collateral Benefits to Invesco Aim Board noted that the Fund's performance charge the Fund any advisory fees pursuant and its Affiliates was in the fifth quintile of its to the Fund's investment advisory performance group for the one year period agreement, although the underlying funds The Board considered various other and the fourth quintile for the two year in which the Fund invests pay Invesco Aim benefits received by Invesco Aim and its period (the first quintile being the best advisory fees. The Board also noted that affiliates resulting from Invesco Aim's performing funds and the fifth quintile the Fund shares directly in economies of relationship with the Fund, including the being the worst performing funds). The scale through lower fees charged by third fees received by Invesco Aim and its Board noted that the Fund's performance party service providers based on the affiliates for their provision of was below the performance of the Index for combined size of all of the AIM Funds and administrative, transfer agency and the one year period and above the affiliates distribution services to the Fund. The performance of the Index for the two year Board considered the performance of period. The Board noted that Invesco Aim E. Profitability and Financial Invesco Aim and its affiliates in acknowledges the Fund's underperformance Resources of Invesco Aim providing these services and the because of shorter term performance organizational structure employed by results and continues to monitor the Fund. The Board reviewed information from Invesco Aim and its affiliates to provide The Board also considered the steps Invesco Aim concerning the costs of the these services. The Board also considered Invesco Aim has taken over the last advisory and other services that Invesco that these services are provided to the several years to improve the quality and Aim and its affiliates provide to the Fund Fund pursuant to written contracts which efficiency of the and the profitability of Invesco Aim and are reviewed and approved on an annual its affiliates in providing these basis by the Board. The Board services. The Board also reviewed information continued
21 AIM INCOME ALLOCATION FUND concluded that Invesco Aim and its in such countries or on various types of affiliates were providing these services investments and investment techniques, and in a satisfactory manner and in accordance providing investment advisory services. with the terms of their contracts, and The Board concluded that the sub-advisory were qualified to continue to provide agreements will benefit the Fund and its these services to the Fund. shareholders by permitting Invesco Aim to utilize the additional resources and The Board considered the benefits talent of the Affiliated Sub-Advisers in realized by Invesco Aim as a result of managing the Fund. portfolio brokerage transactions executed through "soft dollar" arrangements. Under B. Fund Performance these arrangements, portfolio brokerage commissions paid by the Fund and/or other The Board did not view Fund performance as funds advised by Invesco Aim are used to a relevant factor in considering whether pay for research and execution services. to approve the sub-advisory agreements for The Board noted that soft dollar the Fund, as no Affiliated Sub-Adviser arrangements shift the payment obligation currently determines the allocation of any for the research and execution services portion of the Fund's assets, although an from Invesco Aim to the funds and Affiliated Sub-Adviser may indirectly therefore may reduce Invesco Aim's manage a portion of the Fund's assets expenses. The Board also noted that allocated to an underlying fund. research obtained through soft dollar arrangements may be used by Invesco Aim in C. Sub-Advisory Fees making investment decisions for the Fund and may therefore benefit Fund The Board considered the services to be shareholders. The Board concluded that provided by the Affiliated Sub-Advisers Invesco Aim's soft dollar arrangements pursuant to the sub-advisory agreements were appropriate. The Board also concluded and the services to be provided by Invesco that, based on their review and Aim pursuant to the Fund's investment representations made by Invesco Aim, these advisory agreement, as well as the arrangements were consistent with allocation of fees between Invesco Aim and regulatory requirements. the Affiliated Sub-Advisers pursuant to the sub-advisory agreements. The Board II. Sub-Advisory Agreements noted that the sub-advisory fees have no direct effect on the Fund or its A. Nature, Extent and Quality of shareholders, as they are paid by Invesco Services Provided by Affiliated Aim to the Affiliated Sub-Advisers, and Sub-Advisers that Invesco Aim and the Affiliated Sub-Advisers are affiliates. The Board The Board reviewed the services to be also noted that the Affiliated provided by AIM Funds Management Inc., Sub-Advisers only receive a percentage of Invesco Trimark Ltd., Invesco Asset the compensation that Invesco Aim receives Management Deutschland, GmbH, Invesco pursuant to the Fund's investment advisory Asset Management Limited, Invesco Asset agreement, and as described above, the Management (Japan) Limited, Invesco Fund is a fund of funds and Invesco Aim Australia Limited, Invesco Global Asset does not charge the Fund any advisory Management (N.A.), Inc., Invesco Hong Kong fees. Limited, Invesco Institutional (N.A.), Inc. and Invesco Senior Secured D. Financial Resources of the Management, Inc. (collectively, the Affiliated Sub-Advisers "Affiliated Sub-Advisers") under the sub-advisory agreements and the The Board considered whether each credentials and experience of the officers Affiliated Sub-Adviser is financially and employees of the Affiliated sound and has the resources necessary to Sub-Advisers who will provide these perform its obligations under its services. The Board concluded that the respective sub-advisory agreement, and nature, extent and quality of the services concluded that each Affiliated Sub-Adviser to be provided by the Affiliated has the financial resources necessary to Sub-Advisers were appropriate. The Board fulfill these obligations. noted that the Affiliated Sub-Advisers, which have offices and personnel that are geographically dispersed in financial centers around the world, have been formed in part for the purpose of researching and compiling information and making recommendations on the markets and economies of various countries and securities of companies located
22 AIM INCOME ALLOCATION FUND Supplement to Semiannual Report dated 6/30/08 AIM INCOME ALLOCATION FUND ========================================== INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is For periods ended 6/30/08 not indicative of future results. More The following information has been Inception (10/31/05) 5.83% recent returns may be more or less than prepared to provide Institutional Class 1 Year -1.68 those shown. All returns assume shareholders with a performance overview 6 Months* -1.97 reinvestment of distributions at NAV. specific to their holdings. Institutional * Cumulative total return that has not Investment return and principal value will Class shares are offered exclusively to been annualized fluctuate so your shares, when redeemed, institutional investors, including defined ========================================== may be worth more or less than their contribution plans that meet certain original cost. See full report for criteria. Institutional Class shares have no sales information on comparative benchmarks. charge; therefore, performance is at net Please consult your Fund prospectus for asset value (NAV). Performance of more information. For the most current Institutional Class shares will differ month-end performance, please call 800 451 from performance of other share classes 4246 or visit invescoaim.com. primarily due to differing sales charges and class expenses. (1) Total annual operating expenses less any contractual fee waivers and/or The net annual Fund operating expense expense reimbursements by the advisor ratio set forth in the most recent Fund in effect through at least June 30, prospectus as of the date of this 2009. See current prospectus for more supplement for Institutional Class shares information. was 0.72%.(1, 2) The total annual Fund operating expense ratio set forth in the (2) The expense ratio includes acquired most recent Fund prospectus as of the date fund fees and expenses of the of this supplement for Institutional Class underlying funds in which the Fund shares was 1.02%. The expense ratios invests of 0.69% for AIM Income presented above may vary from the expense Allocation Fund. ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. 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 or shown to the public, nor used in written form as sales literature for public use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com INCAL-INS-2 Invesco Aim Distributors, Inc.
CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur ongoing costs. 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 January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If indirect expenses were included, your costs would have been higher.
----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $980.30 $0.20 $1,024.66 $0.20 0.04% -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM INCOME ALLOCATION SERIES PROXY RESULTS A Special Meeting ("Meeting") of Shareholders of AIM Income Allocation Fund, an investment portfolio of AIM Growth Series, a Delaware statutory trust ("Trust"), was held on February 29, 2008 and adjourned until March 28, 2008. The Meeting 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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** ----------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker...................................................... 259,205,198 10,486,394 Frank S. Bayley................................................... 259,256,384 10,435,208 James T. Bunch.................................................... 258,142,293 11,549,299 Bruce L. Crockett................................................. 258,143,390 11,548,202 Albert R. Dowden.................................................. 259,201,224 10,490,368 Jack M. Fields.................................................... 259,317,796 10,373,796 Martin L. Flanagan................................................ 259,304,758 10,386,834 Carl Frischling................................................... 259,178,445 10,513,147 Prema Mathai-Davis................................................ 259,255,582 10,436,010 Lewis F. Pennock.................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ................................................ 258,048,313 11,643,279 Raymond Stickel, Jr. ............................................. 258,206,591 11,485,001 Philip A. Taylor.................................................. 259,264,092 10,427,500
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................................ 182,780,828 23,098,525 6,564,572 57,247,667 (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............................................. 4,357,735 137,657 285,658 1,680,628
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 23 AIM INCOME ALLOCATION FUND ==================================================================================================================================== EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 mail. 3. Select "Register for eDelivery" and complete the consent - view your documents online anytime at your convenience. process. - 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, 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 [INVESCO AIM LOGO] the products and services represented by Invesco Aim; they each provide investment advisory services to - SERVICE MARK - individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 INCAL-SAR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM INDEPENDENCE FUNDS - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 AIM Independence Now Fund AIM Independence 2010 Fund AIM Independence 2020 Fund AIM Independence 2030 Fund AIM Independence 2040 Fund AIM Independence 2050 Fund [MOUNTAIN GRAPHIC] AIM Investments 2 Letter to Shareholders became INVESCO AIM 3 Fund Performance on March 31, 2008. 9 Portfolio Composition 10 Schedule of Investments For more details, go to 16 Financial Statements invescoaim.com 21 Notes to Financial Statements 32 Financial Highlights 51 Fund Expenses 54 Approval of Investment Advisory Agreement 57 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. 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 Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing considerable investor anxiety, reminding us again that markets are cyclical and the [CROCKETT PHOTO] 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 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 Bruce Crockett 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 Web site (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 e-mail 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 August 11, 2008
2 AIM INDEPENDENCE FUNDS FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM INDEPENDENCE NOW FUND AVERAGE ANNUAL TOTAL RETURNS As of 6/30/08, including maximum FUND VS. INDEXES applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance CLASS A SHARES shown does not include applicable contingent deferred sales charges (CDSC) or front-end Inception (1/31/07) -4.25% sales charges, which would have reduced performance. 1 Year -8.56 CLASS B SHARES Class A Shares -3.84% Inception (1/31/07) -3.69% Class B Shares -4.20 1 Year -8.47 Class C Shares -4.30 CLASS C SHARES Class R Shares -3.97 Inception (1/31/07) -1.16% S&P 500 Index(triangle)(Broad Market Index) -11.90 1 Year -4.98 Custom Independence Now Index(square) (Style-Specific Index) -3.40 CLASS R SHARES Lipper Mixed-Asset Target Allocation Conservative Funds Index(triangle) (Peer Inception (1/31/07) -0.63% Group Index) -1.59 1 Year -3.51 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. ========================================== The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index RATIO SET FORTH IN THE MOST RECENT FUND covering all major areas of the U.S. economy. It is not the 500 largest companies, but PROSPECTUS AS OF THE DATE OF THIS REPORT rather the most widely held 500 companies chosen with respect to market size, FOR CLASS A, CLASS B, CLASS C AND CLASS R liquidity, and their industry. SHARES WAS 29.43%, 30.18%, 30.18% AND 29.68%, RESPECTIVELY.(2) THE EXPENSE The CUSTOM INDEPENDENCE NOW INDEX, created by Invesco Aim to serve as a benchmark RATIOS PRESENTED ABOVE MAY VARY FROM THE for AIM Independence Now Fund, is composed of the following indexes: RUSSELL EXPENSE RATIOS PRESENTED IN OTHER SECTIONS 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY OF THIS REPORT THAT ARE BASED ON EXPENSES REITS, LEHMAN BROTHERS U.S. UNIVERSAL and the THREE-MONTH U.S. TREASURY BILL. The INCURRED DURING THE PERIOD COVERED BY THIS composition of the index may change from time to time based upon the target asset REPORT. allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better CLASS A SHARE PERFORMANCE REFLECTS THE reflect the objective of the Fund. The Russell 3000 Index is an unmanaged index MAXIMUM 5.50% SALES CHARGE, AND CLASS B considered representative of the U.S. stock market. The Russell 3000 Index is a AND CLASS C SHARE PERFORMANCE REFLECTS THE trademark/service mark of the Frank Russell Co. Russell--REGISTERED TRADEMARK-- is a APPLICABLE CONTINGENT DEFERRED SALES trademark of the Frank Russell Co. The MSCI EAFE Index is an unmanaged index considered CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE representative of stocks of Europe, Australasia and the Far East. The FTSE NAREIT CDSC ON CLASS B SHARES DECLINES FROM 5% Equity REITs Index is an unmanaged index considered representative of U.S. REITs. The BEGINNING AT THE TIME OF PURCHASE TO 0% AT Lehman Brothers U.S. Universal Index is composed of the following Lehman Brothers THE BEGINNING OF THE SEVENTH YEAR. THE indexes: U.S. Aggregate Index, U. S. High-Yield Corporate, 144A, Eurodollar, Emerging CDSC ON CLASS C SHARES IS 1% FOR THE FIRST Markets and the non-ERISA portion of CMBS. The three-month U.S. Treasury bill index is YEAR AFTER PURCHASE. CLASS R SHARES DO NOT compiled by Lipper and is derived from secondary market interest rates published by the HAVE A FRONT-END SALES CHARGE; RETURNS Federal Reserve Bank. SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally ON A TOTAL REDEMPTION OF RETIREMENT PLAN weighted representation of the largest funds in the Lipper Mixed-Asset Target ASSETS WITHIN THE FIRST YEAR. Allocation Conservative Funds category. These funds, by portfolio practice, maintain a mix of between 20%-40% equity securities, with the remainder invested in bonds, cash, THE PERFORMANCE OF THE FUND'S SHARE and cash equivalents. CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND The Fund is not managed to track the performance of any particular index, including CLASS EXPENSES. the indexes defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD A direct investment cannot be made in an index. Unless otherwise indicated, index HAVE BEEN LOWER. results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index 1 Total annual operating expenses less does not. any contractual fee waivers by the ======================================================================================= distributor in effect through at least June 30, 2009. See current prospectus THE PERFORMANCE DATA QUOTED REPRESENT PAST PAY ON FUND DISTRIBUTIONS OR SALE OF FUND for more information. PERFORMANCE AND CANNOT GUARANTEE SHARES. INVESTMENT RETURN AND PRINCIPAL COMPARABLE FUTURE RESULTS; CURRENT VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE 2 The expense ratio includes estimated PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE A GAIN OR LOSS WHEN YOU SELL SHARES. acquired fund fees and expenses of the VISIT INVESCOAIM.COM FOR THE MOST RECENT underlying funds in which the Fund MONTH-END PERFORMANCE. PERFORMANCE FIGURES THE NET ANNUAL FUND OPERATING EXPENSE invests of 0.68% for AIM Independence REFLECT REINVESTED DISTRIBUTIONS, CHANGES RATIO SET FORTH IN THE MOST RECENT FUND Now Fund. IN NET ASSET VALUE AND THE EFFECT OF THE PROSPECTUS AS OF THE DATE OF THIS REPORT MAXIMUM SALES CHARGE UNLESS OTHERWISE FOR CLASS A, CLASS B, CLASS C AND CLASS R STATED. PERFORMANCE FIGURES DO NOT REFLECT SHARES WAS 0.95%, 1.70%, 1.70% AND 1.20%, DEDUCTION OF TAXES A SHAREHOLDER WOULD RESPECTIVELY.(1, 2) THE TOTAL ANNUAL FUND OPERATING EXPENSE
3 AIM INDEPENDENCE NOW FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM INDEPENDENCE 2010 FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (1/31/07) -4.59% 1 Year -9.33 Class A Shares -4.49% Class B Shares -4.80 CLASS B SHARES Class C Shares -4.80 Inception (1/31/07) -4.16% Class R Shares -4.60 1 Year -9.39 S&P 500 Index(triangle) (Broad Market Index) -11.90 Custom Independence 2010 Index(square) (Style-Specific Index) -3.94 CLASS C SHARES Lipper Mixed-Asset Target 2010 Funds Index(triangle) (Peer Group Index) -4.10 Inception (1/31/07) -1.37% 1 Year -5.61 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. CLASS R SHARES The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index Inception (1/31/07) -0.96% covering all major areas of the U.S. economy. It is not the 500 largest companies, but 1 Year -4.31 rather the most widely held 500 companies chosen with respect to market size, ========================================== liquidity, and their industry. 1.74% AND 1.24%, RESPECTIVELY.(1, 2) THE The CUSTOM INDEPENDENCE 2010 INDEX, created by Invesco Aim to serve as a benchmark TOTAL ANNUAL FUND OPERATING EXPENSE RATIO for AIM Independence 2010 Fund, is composed of the following indexes: RUSSELL SET FORTH IN THE MOST RECENT FUND 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY PROSPECTUS AS OF THE DATE OF THIS REPORT REITS, LEHMAN BROTHERS U.S. UNIVERSAL and the THREE-MONTH U.S. TREASURY BILL. The FOR CLASS A, CLASS B, CLASS C AND CLASS R composition of the index may change from time to time based upon the target asset SHARES WAS 17.12%, 17.87%, 17.87% AND allocation of the Fund. Therefore, the current composition of the index does not 17.37%, RESPECTIVELY.(2) THE EXPENSE reflect its historical composition and likely will be altered in the future to reflect RATIOS PRESENTED ABOVE MAY VARY FROM THE the increasingly conservative allocations of the Fund over time. The Russell 3000 Index EXPENSE RATIOS PRESENTED IN OTHER SECTIONS is an unmanaged index considered representative of the U.S. stock market. The Russell OF THIS REPORT THAT ARE BASED ON EXPENSES 3000 Index is a trademark/service mark of the Frank Russell Co. Russell--REGISTERED INCURRED DURING THE PERIOD COVERED BY THIS TRADEMARK-- is a trademark of the Frank Russell Co. The MSCI EAFE Index is an unmanaged REPORT. index considered representative of stocks of Europe, Australasia and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index considered representative of U.S. CLASS A SHARE PERFORMANCE REFLECTS THE REITs. The Lehman Brothers U.S. Universal Index is composed of the following Lehman MAXIMUM 5.50% SALES CHARGE, AND CLASS B Brothers indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, AND CLASS C SHARE PERFORMANCE REFLECTS THE Emerging Markets and the non-ERISA portion of CMBS. The three-month U.S. Treasury bill APPLICABLE CONTINGENT DEFERRED SALES index is compiled by Lipper and is derived from secondary market interest rates CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE published by the Federal Reserve Bank. CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT The LIPPER MIXED-ASSET TARGET 2010 FUNDS INDEX is an equally weighted representation THE BEGINNING OF THE SEVENTH YEAR. THE of the largest funds in the Lipper Mixed-Asset Target Allocation 2010 Funds category. CDSC ON CLASS C SHARES IS 1% FOR THE FIRST These funds seek to maximize assets for retirement or other purposes with an extended YEAR AFTER PURCHASE. CLASS R SHARES DO NOT time horizon not to exceed the year 2010. HAVE A FRONT-END SALES CHARGE; RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT The Fund is not managed to track the performance of any particular index, including REFLECT A 0.75% CDSC THAT MAY BE IMPOSED the indexes defined here, and consequently, the performance of the Fund may deviate ON A TOTAL REDEMPTION OF RETIREMENT PLAN significantly from the performance of the indexes. ASSETS WITHIN THE FIRST YEAR. A direct investment cannot be made in an index. Unless otherwise indicated, index THE PERFORMANCE OF THE FUND'S SHARE results include reinvested dividends, and they do not reflect sales charges. CLASSES WILL DIFFER PRIMARILY DUE TO Performance of an index of funds reflects fund expenses; performance of a market index DIFFERENT SALES CHARGE STRUCTURES AND does not. CLASS EXPENSES. ======================================================================================= HAD THE ADVISOR NOT WAIVED FEES AND/OR THE PERFORMANCE DATA QUOTED REPRESENT PAST DEDUCTION OF TAXES A SHARE HOLDER WOULD REIMBURSED EXPENSES, PERFORMANCE WOULD PERFORMANCE AND CANNOT GUARANTEE PAY ON FUND DISTRIBUTIONS OR SALE OF FUND HAVE BEEN LOWER. COMPARABLE FUTURE RESULTS; CURRENT SHARES. INVESTMENT RETURN AND PRINCIPAL PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE (1) Total annual operating expenses less VISIT INVESCOAIM.COM FOR THE MOST RECENT A GAIN OR LOSS WHEN YOU SELL SHARES. any contractual fee waivers by the MONTH-END PERFORMANCE. PERFORMANCE FIGURES distributor in effect through at least REFLECT REINVESTED DISTRIBUTIONS, CHANGES THE NET ANNUAL FUND OPERATING EXPENSE June 30, 2009. See current prospectus IN NET ASSET VALUE AND THE EFFECT OF THE RATIO SET FORTH IN THE MOST RECENT FUND for more information. MAXIMUM SALES CHARGE UNLESS OTHERWISE PROSPECTUS AS OF THE DATE OF THIS REPORT STATED. PERFORMANCE FIGURES DO NOT REFLECT FOR CLASS A, CLASS B, CLASS C AND CLASS R (2) The expense ratio includes estimated SHARES WAS 0.99%, 1.74%, acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.70% for AIM Independence 2010 Fund.
4 AIM INDEPENDENCE 2010 FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM INDEPENDENCE 2020 FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (1/31/07) -7.42% 1 Year -13.65 Class A Shares -7.33% Class B Shares -7.66 CLASS B SHARES Class C Shares -7.76 Inception (1/31/07) -7.03% Class R Shares -7.44 1 Year -13.62 S&P 500 Index(triangle) (Broad Market Index) -11.90 Custom Independence 2020 Index(square) (Style-Specific Index) -6.09 CLASS C SHARES Lipper Mixed-Asset Target 2020 Funds Index(triangle) (Peer Group Index) -5.64 Inception (1/31/07) -4.45% 1 Year -10.18 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. CLASS R SHARES The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index Inception (1/31/07) -3.86% covering all major areas of the U.S. economy. It is not the 500 largest companies, but 1 Year -8.77 rather the most widely held 500 companies chosen with respect to market size, ========================================== liquidity, and their industry. 11.57% AND 11.07%, RESPECTIVELY.(2) THE The CUSTOM INDEPENDENCE 2020 INDEX, created by Invesco Aim to serve as a benchmark EXPENSE RATIOS PRESENTED ABOVE MAY VARY for AIM Independence 2020 Fund, is composed of the following indexes: RUSSELL FROM THE EXPENSE RATIOS PRESENTED IN OTHER 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY SECTIONS OF THIS REPORT THAT ARE BASED ON REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from EXPENSES INCURRED DURING THE PERIOD time to time based upon the target asset allocation of the Fund. Therefore, the current COVERED BY THIS REPORT. composition of the index does not reflect its historical composition and will likely be altered in the future to reflect the increasingly conservative allocations of the Fund CLASS A SHARE PERFORMANCE REFLECTS THE over time. The Russell 3000 Index is an unmanaged index considered representative of MAXIMUM 5.50% SALES CHARGE, AND CLASS B the U.S. stock market. The Russell 3000 Index is a trademark/service mark of the Frank AND CLASS C SHARE PERFORMANCE REFLECTS THE Russell Co. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The APPLICABLE CONTINGENT DEFERRED SALES MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE Australasia and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index CDSC ON CLASS B SHARES DECLINES FROM 5% considered representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is BEGINNING AT THE TIME OF PURCHASE TO 0% AT composed of the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. THE BEGINNING OF THE SEVENTH YEAR. THE High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CDSC ON CLASS C SHARES IS 1% FOR THE FIRST CMBS. YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS The LIPPER MIXED-ASSET TARGET 2020 FUNDS INDEX is an equally weighted representation SHOWN ARE AT NET ASSET VALUE AND DO NOT of the largest funds in the Lipper Mixed-Asset Target Allocation 2020 Funds category. REFLECT A 0.75% CDSC THAT MAY BE IMPOSED These funds seek to maximize assets for retirement or other purposes with an extended ON A TOTAL REDEMPTION OF RETIREMENT PLAN time horizon not to exceed the year 2020. ASSETS WITHIN THE FIRST YEAR. The Fund is not managed to track the performance of any particular index, including THE PERFORMANCE OF THE FUND'S SHARE the indexes defined here, and consequently, the performance of the Fund may deviate CLASSES WILL DIFFER PRIMARILY DUE TO significantly from the performance of the indexes. DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. HAD THE ADVISOR NOT WAIVED FEES AND/OR Performance of an index of funds reflects fund expenses; performance of a market index REIMBURSED EXPENSES, PERFORMANCE WOULD does not. HAVE BEEN LOWER. ======================================================================================= (1) Total annual operating expenses less THE PERFORMANCE DATA QUOTED REPRESENT PAST PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU any contractual fee waivers by the PERFORMANCE AND CANNOT GUARANTEE MAY HAVE A GAIN OR LOSS WHEN YOU SELL distributor in effect through at least COMPARABLE FUTURE RESULTS; CURRENT SHARES. June 30, 2009. See current prospectus PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE for more information. VISIT INVESCOAIM.COM FOR THE MOST RECENT THE NET ANNUAL FUND OPERATING EXPENSE MONTH-END PERFORMANCE. PERFORMANCE FIGURES RATIO SET FORTH IN THE MOST RECENT FUND (2) The expense ratio includes estimated REFLECT REINVESTED DISTRIBUTIONS, CHANGES PROSPECTUS AS OF THE DATE OF THIS REPORT acquired fund fees and expenses of the IN NET ASSET VALUE AND THE EFFECT OF THE FOR CLASS A, CLASS B, CLASS C AND CLASS R underlying funds in which the Fund MAXIMUM SALES CHARGE UNLESS OTHERWISE SHARES WAS 1.11%, 1.86%, 1.86% AND 1.36%, invests of 0.78% for AIM Independence STATED. PERFORMANCE FIGURES DO NOT REFLECT RESPECTIVELY.(1, 2) THE TOTAL ANNUAL FUND 2020 Fund. DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY OPERATING EXPENSE RATIO SET FORTH IN THE ON FUND DISTRIBUTIONS OR SALE OF FUND MOST RECENT FUND PROSPECTUS AS OF THE DATE SHARES. INVESTMENT RETURN AND OF THIS REPORT FOR CLASS A, CLASS B, CLASS C AND CLASS R SHARES WAS 10.82%, 11.57%,
5 AIM INDEPENDENCE 2020 FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM INDEPENDENCE 2030 FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (1/31/07) -9.50% 1 Year -17.20 Class A Shares -9.91% CLASS B SHARES Class B Shares -10.33 Class C Shares -10.33 Inception (1/31/07) -9.10% Class R Shares -10.12 1 Year -17.28 S&P 500 Index(triangle) (Broad Market Index) -11.90 CLASS C SHARES Custom Independence 2030 Index(square) (Style-Specific Index) -8.45 Lipper Mixed-Asset Target 2030 Funds Index(triangle) (Peer Group Index) -9.19 Inception (1/31/07) -6.51% 1 Year -13.90 (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. CLASS R SHARES The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index Inception (1/31/07) -6.11% covering all major areas of the U.S. economy. It is not the 500 largest companies, but 1 Year -12.70 rather the most widely held 500 companies chosen with respect to market size, ========================================== liquidity, and their industry. 15.08% AND 14.58%, RESPECTIVELY.(2) THE The CUSTOM INDEPENDENCE 2030 INDEX, created by Invesco Aim to serve as a benchmark EXPENSE RATIOS PRESENTED ABOVE MAY VARY for AIM Independence 2030 Fund, is composed of the following indexes: RUSSELL FROM THE EXPENSE RATIOS PRESENTED IN OTHER 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY SECTIONS OF THIS REPORT THAT ARE BASED ON REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from EXPENSES INCURRED DURING THE PERIOD time to time based upon the target asset allocation of the Fund. Therefore, the current COVERED BY THIS REPORT. composition of the index does not reflect its historical composition and will likely be altered in the future to reflect the increasingly conservative allocations of the Fund CLASS A SHARE PERFORMANCE REFLECTS THE over time. The Russell 3000 Index is an unmanaged index considered representative of MAXIMUM 5.50% SALES CHARGE, AND CLASS B the U.S. stock market. The Russell 3000 Index is a trademark/service mark of the Frank AND CLASS C SHARE PERFORMANCE REFLECTS THE Russell Co. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The APPLICABLE CONTINGENT DEFERRED SALES MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE Australasia and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index CDSC ON CLASS B SHARES DECLINES FROM 5% considered representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is BEGINNING AT THE TIME OF PURCHASE TO 0% AT composed of the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. THE BEGINNING OF THE SEVENTH YEAR. THE High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CDSC ON CLASS C SHARES IS 1% FOR THE FIRST CMBS. YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS The LIPPER MIXED-ASSET TARGET 2030 FUNDS INDEX is an equally weighted representation SHOWN ARE AT NET ASSET VALUE AND DO NOT of the largest funds in the Lipper Mixed-Asset Target Allocation 2030 Funds category. REFLECT A 0.75% CDSC THAT MAY BE IMPOSED These funds seek to maximize assets for retirement or other purposes with an extended ON A TOTAL REDEMPTION OF RETIREMENT PLAN time horizon not to exceed the year 2030. ASSETS WITHIN THE FIRST YEAR. The Fund is not managed to track the performance of any particular index, including THE PERFORMANCE OF THE FUND'S SHARE the indexes defined here, and consequently, the performance of the Fund may deviate CLASSES WILL DIFFER PRIMARILY DUE TO significantly from the performance of the indexes. DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. HAD THE ADVISOR NOT WAIVED FEES AND/OR Performance of an index of funds reflects fund expenses; performance of a market index REIMBURSED EXPENSES, PERFORMANCE WOULD does not. HAVE BEEN LOWER. ======================================================================================= (1) Total annual operating expenses less THE PERFORMANCE DATA QUOTED REPRESENT PAST PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU any contractual fee waivers by the PERFORMANCE AND CANNOT GUARANTEE MAY HAVE A GAIN OR LOSS WHEN YOU SELL distributor in effect through at least COMPARABLE FUTURE RESULTS; CURRENT SHARES. June 30, 2009. See current prospectus PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE for more information. VISIT INVESCOAIM.COM FOR THE MOST RECENT THE NET ANNUAL FUND OPERATING EXPENSE MONTH-END PERFORMANCE. PERFORMANCE FIGURES RATIO SET FORTH IN THE MOST RECENT FUND (2) The expense ratio includes estimated REFLECT REINVESTED DISTRIBUTIONS, CHANGES PROSPECTUS AS OF THE DATE OF THIS REPORT acquired fund fees and expenses of the IN NET ASSET VALUE AND THE EFFECT OF THE FOR CLASS A, CLASS B, CLASS C AND CLASS R underlying funds in which the Fund MAXIMUM SALES CHARGE UNLESS OTHERWISE SHARES WAS 1.16%, 1.91%, 1.91% AND 1.41%, invests of 0.80% for AIM Independence STATED. PERFORMANCE FIGURES DO NOT REFLECT RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND 2030 Fund. DEDUCTION OF TAXES A SHAREHOLDER WOULD PAY OPERATING EXPENSE RATIO SET FORTH IN THE ON FUND DISTRIBUTIONS OR SALE OF FUND MOST RECENT FUND PROSPECTUS AS OF THE DATE SHARES. INVESTMENT RETURN AND OF THIS REPORT FOR CLASS A, CLASS B, CLASS C AND CLASS R SHARES WAS 14.33%, 15.08%,
6 AIM INDEPENDENCDE 2030 FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM INDEPENDENCE 2040 FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (1/31/07) -10.60% 1 Year -18.77 Class A Shares -11.29% CLASS B SHARES Class B Shares -11.53 Inception (1/31/07) -10.12% Class C Shares -11.53 1 Year -18.74 Class R Shares -11.41 CLASS C SHARES S&P 500 Index(triangle) (Broad Market Index) -11.90 Inception (1/31/07) -7.57% Custom Independence 2040 Index(square) (Style-Specific Index) -9.54 1 Year -15.43 Lipper Mixed-Asset Target 2040 Funds Index(triangle) (Peer Group Index) -9.57 CLASS R SHARES Inception (1/31/07) -7.19% (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. 1 Year -14.27 ========================================== The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but RATIO SET FORTH IN THE MOST RECENT FUND rather the most widely held 500 companies chosen with respect to market size, PROSPECTUS AS OF THE DATE OF THIS REPORT liquidity, and their industry. FOR CLASS A, CLASS B, CLASS C AND CLASS R SHARES WAS 23.24%, 23.99%, 23.99% AND The CUSTOM INDEPENDENCE 2040 INDEX, created by Invesco Aim to serve as a benchmark 23.49%, RESPECTIVELY.(2) THE EXPENSE for AIM Independence 2040 Fund, is composed of the following indexes: RUSSELL RATIOS PRESENTED ABOVE MAY VARY FROM THE 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY EXPENSE RATIOS PRESENTED IN OTHER SECTIONS REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from OF THIS REPORT THAT ARE BASED ON EXPENSES time to time based upon the target asset allocation of the Fund. Therefore, the current INCURRED DURING THE PERIOD COVERED BY THIS composition of the index does not reflect its historical composition and will likely be REPORT. altered in the future to reflect the increasingly conservative allocations of the Fund over time. The Russell 3000 Index is an unmanaged index considered representative of CLASS A SHARE PERFORMANCE REFLECTS THE the U.S. stock market. The Russell 3000 Index is a trademark/service mark of the Frank MAXIMUM 5.50% SALES CHARGE, AND CLASS B Russell Co. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The AND CLASS C SHARE PERFORMANCE REFLECTS THE MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, APPLICABLE CONTINGENT DEFERRED SALES Australasia and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE considered representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is CDSC ON CLASS B SHARES DECLINES FROM 5% composed of the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. BEGINNING AT THE TIME OF PURCHASE TO 0% AT High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of THE BEGINNING OF THE SEVENTH YEAR. THE CMBS. CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R SHARES DO NOT The LIPPER MIXED-ASSET TARGET 2040 FUNDS INDEX is an equally weighted representation HAVE A FRONT-END SALES CHARGE; RETURNS of the largest funds in the Lipper Mixed-Asset Target 2040 Funds category. The funds SHOWN ARE AT NET ASSET VALUE AND DO NOT seek to maximize assets for retirement or other purposes with an expected time horizon REFLECT A 0.75% CDSC THAT MAY BE IMPOSED from January 1, 2036, to December 31, 2040. The Lipper Peer Group Benchmarked changed ON A TOTAL REDEMPTION OF RETIREMENT PLAN effective 5/23/08 in response to Lipper's refinement of their existing classifications ASSETS WITHIN THE FIRST YEAR. to ensure meaningful peer groups. THE PERFORMANCE OF THE FUND'S SHARE The Fund is not managed to track the performance of any particular index, including CLASSES WILL DIFFER PRIMARILY DUE TO the indexes defined here, and consequently, the performance of the Fund may deviate DIFFERENT SALES CHARGE STRUCTURES AND significantly from the performance of the indexes. CLASS EXPENSES. A direct investment cannot be made in an index. Unless otherwise indicated, index HAD THE ADVISOR NOT WAIVED FEES AND/OR results include reinvested dividends, and they do not reflect sales charges. REIMBURSED EXPENSES, PERFORMANCE WOULD Performance of an index of funds reflects fund expenses; performance of a market index HAVE BEEN LOWER. does not. (1) Total annual operating expenses less ======================================================================================= any contractual fee waivers by the distributor in effect through at least THE PERFORMANCE DATA QUOTED REPRESENT PAST PAY ON FUND DISTRIBUTIONS OR SALE OF FUND June 30, 2009. See current prospectus PERFORMANCE AND CANNOT GUARANTEE SHARES. INVESTMENT RETURN AND PRINCIPAL for more information. COMPARABLE FUTURE RESULTS; CURRENT VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE A GAIN OR LOSS WHEN YOU SELL SHARES. (2) The expense ratio includes estimated VISIT INVESCOAIM.COM FOR THE MOST RECENT acquired fund fees and expenses of the MONTH-END PERFORMANCE. PERFORMANCE FIGURES THE NET ANNUAL FUND OPERATING EXPENSE underlying funds in which the Fund REFLECT REINVESTED DISTRIBUTIONS, CHANGES RATIO SET FORTH IN THE MOST RECENT FUND invests of 0.81% for AIM Independence IN NET ASSET VALUE AND THE EFFECT OF THE PROSPECTUS AS OF THE DATE OF THIS REPORT 2040 Fund. MAXIMUM SALES CHARGE UNLESS OTHERWISE FOR CLASS A, CLASS B, CLASS C AND CLASS R STATED. PERFORMANCE FIGURES DO NOT REFLECT SHARES WAS 1.16%, 1.91%, 1.91% AND 1.41%, DEDUCTION OF TAXES A SHAREHOLDER WOULD RESPECTIVELY.(1, 2) THE TOTAL ANNUAL FUND OPERATING EXPENSE
7 AIM INDEPENDENCE 2040 FUND FUND PERFORMANCE ======================================================================================= ========================================== PERFORMANCE SUMMARY - AIM INDEPENDENCE 2050 FUND AVERAGE ANNUAL TOTAL RETURNS FUND VS. INDEXES As of 6/30/08, including maximum applicable sales charges Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end CLASS A SHARES sales charges, which would have reduced performance. Inception (1/31/07) -11.24% 1 Year -19.66 Class A Shares -11.96% CLASS B SHARES Class B Shares -12.21 Inception (1/31/07) -10.82% Class C Shares -12.30 1 Year -19.70 Class R Shares -12.08 CLASS C SHARES S&P 500 Index(triangle) (Broad Market Index) -11.90 Inception (1/31/07) -8.30% Custom Independence 2050 Index(square) (Style-Specific Index) -10.34 1 Year -16.44 Lipper Mixed-Asset Target 2050+ Funds Category Average(triangle) (Peer Group) -10.31 CLASS R SHARES Inception (1/31/07) -7.88% (triangle)Lipper Inc.; (square)Invesco Aim, Lipper Inc. 1 Year -15.25 ========================================== The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but 1.91% AND 1.41%, RESPECTIVELY.(1, 2) THE rather the most widely held 500 companies chosen with respect to market size, TOTAL ANNUAL FUND OPERATING EXPENSE liquidity, and their industry. RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT The CUSTOM INDEPENDENCE 2050 INDEX, created by Invesco Aim to serve as a benchmark FOR CLASS A, CLASS B, CLASS C AND CLASS R for AIM Independence 2050 Fund, is composed of the following indexes: RUSSELL SHARES WAS 25.45%, 26.20%, 26.20% AND 3000--REGISTERED TRADEMARK--, MSCI EAFE--REGISTERED TRADEMARK--, FTSE NAREIT EQUITY 25.70%, RESPECTIVELY.(2) THE EXPENSE REITS and LEHMAN BROTHERS U.S. UNIVERSAL. The composition of the index may change from RATIOS PRESENTED ABOVE MAY VARY FROM THE time to time based upon the target asset allocation of the Fund. Therefore, the current EXPENSE RATIOS PRESENTED IN OTHER SECTIONS composition of the index does not reflect its historical composition and will likely be OF THIS REPORT THAT ARE BASED ON EXPENSES altered in the future to reflect the increasingly conservative allocations of the Fund INCURRED DURING THE PERIOD COVERED BY THIS over time. The Russell 3000 Index is an unmanaged index considered representative of REPORT. the U.S. stock market. The Russell 3000 Index is a trademark/service mark of the Frank Russell Co. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Co. The CLASS A SHARE PERFORMANCE REFLECTS THE MSCI EAFE Index is an unmanaged index considered representative of stocks of Europe, MAXIMUM 5.50% SALES CHARGE, AND CLASS B Australasia and the Far East. The FTSE NAREIT Equity REITs Index is an unmanaged index AND CLASS C SHARE PERFORMANCE REFLECTS THE considered representative of U.S. REITs. The Lehman Brothers U.S. Universal Index is APPLICABLE CONTINGENT DEFERRED SALES composed of the following Lehman Brothers indexes: U.S. Aggregate Index, U.S. CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CDSC ON CLASS B SHARES DECLINES FROM 5% CMBS. BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE The LIPPER MIXED-ASSET TARGET 2050+ FUNDS CATEGORY AVERAGE represents an average of CDSC ON CLASS C SHARES IS 1% FOR THE FIRST all of the funds in the Lipper Mixed-Asset Target 2050+ Funds category. These funds YEAR AFTER PURCHASE. CLASS R SHARES DO NOT seek to maximize assets for retirement or other purposes with an expected time horizon HAVE A FRONT-END SALES CHARGE; RETURNS exceeding the year 2045. The Lipper Peer Group Benchmark changed effective 05/23/08 in SHOWN ARE AT NET ASSET VALUE AND DO NOT response to Lipper's refinement of their existing classifications to ensure meaningful REFLECT A 0.75% CDSC THAT MAY BE IMPOSED peer groups. For those funds where the new Lipper index has less than a 5-year history, ON A TOTAL REDEMPTION OF RETIREMENT PLAN the category average will be used until the Lipper index has sufficient history. ASSETS WITHIN THE FIRST YEAR. The Fund is not managed to track the performance of any particular index, including THE PERFORMANCE OF THE FUND'S SHARE the indexes defined here, and consequently, the performance of the Fund may deviate CLASSES WILL DIFFER PRIMARILY DUE TO significantly from the performance of the indexes. DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. HAD THE ADVISOR NOT WAIVED FEES AND/OR Performance of an index of funds reflects fund expenses; performance of a market index REIMBURSED EXPENSES, PERFORMANCE WOULD does not. HAVE BEEN LOWER. ======================================================================================= (1) Total annual operating expenses less any contractual fee waivers by the THE PERFORMANCE DATA QUOTED REPRESENT PAST DEDUCTION OF TAXES A SHARE- HOLDER WOULD distributor in effect through at least PERFORMANCE AND CANNOT GUARANTEE PAY ON FUND DISTRIBUTIONS OR SALE OF FUND June 30, 2009. See current prospectus COMPARABLE FUTURE RESULTS; CURRENT SHARES. INVESTMENT RETURN AND PRINCIPAL for more information. PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE VISIT INVESCOAIM.COM FOR THE MOST RECENT A GAIN OR LOSS WHEN YOU SELL SHARES. (2) The expense ratio includes estimated MONTH-END PERFORMANCE. PERFORMANCE FIGURES acquired fund fees and expenses of the REFLECT REINVESTED DISTRIBUTIONS, CHANGES THE NET ANNUAL FUND OPERATING EXPENSE underlying funds in which the Fund IN NET ASSET VALUE AND THE EFFECT OF THE RATIO SET FORTH IN THE MOST RECENT FUND invests of 0.82% for AIM Independence MAXIMUM SALES CHARGE UNLESS OTHERWISE PROSPECTUS AS OF THE DATE OF THIS REPORT 2050 Fund. STATED. PERFORMANCE FIGURES DO NOT REFLECT FOR CLASS A, CLASS B, CLASS C AND CLASS R SHARES WAS 1.16%, 1.91%,
8 AIM INDEPENDENCE 2050 FUND PORTFOLIO COMPOSITION As of June 30, 2008 AIM INDEPENDENCE NOW FUND
TARGET % OF TOTAL ASSET CLASS ALLOCATION NET ASSETS ------------------------------------------------------------------------------------------ Domestic Equity 25.73% 24.15% ------------------------------------------------------------------------------------------ Foreign Equity 6.24% 5.80% ------------------------------------------------------------------------------------------ Real Estate 3.00% 2.86% ------------------------------------------------------------------------------------------ High Yield Fixed Income 8.33% 8.66% ------------------------------------------------------------------------------------------ Investment Grade Fixed Income 53.35% 55.00% ------------------------------------------------------------------------------------------ Money Market Funds 3.35% 3.83% ------------------------------------------------------------------------------------------ Other Assets Less Liabilities (0.30)% __________________________________________________________________________________________ ==========================================================================================
AIM INDEPENDENCE 2020 FUND
TARGET % OF TOTAL ASSET CLASS ALLOCATION NET ASSETS ------------------------------------------------------------------------------------------ Domestic Equity 40.25% 37.79% ------------------------------------------------------------------------------------------ Foreign Equity 14.75% 13.70% ------------------------------------------------------------------------------------------ Real Estate 3.00% 2.76% ------------------------------------------------------------------------------------------ High Yield Fixed Income 11.70% 11.99% ------------------------------------------------------------------------------------------ Investment Grade Fixed Income 30.30% 31.10% ------------------------------------------------------------------------------------------ Money Market Funds 0.00% 1.10% ------------------------------------------------------------------------------------------ Other Assets Less Liabilities 1.56% __________________________________________________________________________________________ ==========================================================================================
AIM INDEPENDENCE 2040 FUND
TARGET % OF TOTAL ASSET CLASS ALLOCATION NET ASSETS ------------------------------------------------------------------------------------------ Domestic Equity 60.20% 59.87% ------------------------------------------------------------------------------------------ Foreign Equity 23.08% 22.69% ------------------------------------------------------------------------------------------ Real Estate 4.52% 4.23% ------------------------------------------------------------------------------------------ High Yield Fixed Income 7.40% 7.94% ------------------------------------------------------------------------------------------ Investment Grade Fixed Income 4.80% 5.21% ------------------------------------------------------------------------------------------ Money Market Funds 0.00% 1.18% ------------------------------------------------------------------------------------------ Other Assets Less Liabilities (1.12)% __________________________________________________________________________________________ ==========================================================================================
AIM INDEPENDENCE 2010 FUND
TARGET % OF TOTAL ASSET CLASS ALLOCATION NET ASSETS ------------------------------------------------------------------------------------------ Domestic Equity 28.41% 26.91% ------------------------------------------------------------------------------------------ Foreign Equity 7.69% 7.22% ------------------------------------------------------------------------------------------ Real Estate 3.00% 2.87% ------------------------------------------------------------------------------------------ High Yield Fixed Income 8.88% 9.24% ------------------------------------------------------------------------------------------ Investment Grade Fixed Income 51.42% 53.26% ------------------------------------------------------------------------------------------ Money Market Funds 0.60% 0.53% ------------------------------------------------------------------------------------------ Other Assets Less Liabilities (0.03)% __________________________________________________________________________________________ ==========================================================================================
AIM INDEPENDENCE 2030 FUND
TARGET % OF TOTAL ASSET CLASS ALLOCATION NET ASSETS ------------------------------------------------------------------------------------------ Domestic Equity 53.65% 52.66% ------------------------------------------------------------------------------------------ Foreign Equity 20.45% 19.88% ------------------------------------------------------------------------------------------ Real Estate 3.90% 3.64% ------------------------------------------------------------------------------------------ High Yield Fixed Income 10.20% 10.86% ------------------------------------------------------------------------------------------ Investment Grade Fixed Income 11.80% 12.69% ------------------------------------------------------------------------------------------ Money Market Funds 0.00% 0.92% ------------------------------------------------------------------------------------------ Other Assets Less Liabilities (0.65)% __________________________________________________________________________________________ ==========================================================================================
AIM INDEPENDENCE 2050 FUND
TARGET % OF TOTAL ASSET CLASS ALLOCATION NET ASSETS ------------------------------------------------------------------------------------------ Domestic Equity 65.00% 64.51% ------------------------------------------------------------------------------------------ Foreign Equity 25.00% 24.56% ------------------------------------------------------------------------------------------ Real Estate 5.00% 4.68% ------------------------------------------------------------------------------------------ High Yield Fixed Income 5.00% 5.37% ------------------------------------------------------------------------------------------ Investment Grade Fixed Income 0.00% 0.00% ------------------------------------------------------------------------------------------ Money Market Funds 0.00% 1.18% ------------------------------------------------------------------------------------------ Other Assets Less Liabilities (0.30)% __________________________________________________________________________________________ ==========================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS June 30, 2008 (Unaudited) AIM INDEPENDENCE NOW FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/08 --------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-24.15% AIM Diversified Dividend Fund 4.08% $ 55,462 $ 25,985 $ (3,910) $ (6,443) $ (614) $ 905 6,282 --------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 2.64% 35,842 17,107 (2,441) (4,868) (65) -- 4,378 --------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 2.56% 35,402 16,349 (2,441) (4,798) (335) -- 4,626 --------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 0.72% 17,258 7,402 (9,202) (612) (2,453) -- 1,023 --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 2.65% 34,649 15,414 (841) (3,298) (91) 40 2,704 --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 2.53% 34,255 15,746 (961) (5,236) (98) 469 2,454 --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 0.97% 22,312 8,735 (11,791) (1,224) (1,309) -- 1,093 --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 0.93% 20,703 8,683 (12,645) 156 (903) 62 1,091 --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 5.90% 82,151 38,800 (1,645) (17,129) (227) 895 2,093 --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 1.17% 27,089 10,762 (15,227) (1,302) (1,044) 110 430 ================================================================================================================================= Subtotal Domestic Equity Funds 365,123 164,983 (61,104) (44,754) (7,139) 2,481 ================================================================================================================================= FIXED-INCOME FUNDS-63.66% AIM Core Bond Fund 22.92% 291,778 140,816 (25,032) (10,831) (698) 11,670 39,963 --------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 5.95% 73,813 37,495 (5,115) (2,709) (657) 3,016 12,586 --------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 2.71% 34,976 17,397 (3,959) (1,279) (395) 2,045 11,512 --------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 3.73% 46,782 21,874 (5,197) 560 353 637 5,799 --------------------------------------------------------------------------------------------------------------------------------- AIM Limited Maturity Treasury Fund 2.77% 34,865 16,220 (3,250) (80) 92 701 4,663 --------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 16.63% 209,628 100,962 (19,649) (3,198) (519) 8,328 30,139 --------------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 8.95% 113,015 53,912 (12,019) (428) 152 3,923 17,939 ================================================================================================================================= Subtotal Fixed Income Funds 804,857 388,676 (74,221) (17,965) (1,672) 30,320 ================================================================================================================================= FOREIGN EQUITY FUNDS-5.80% AIM International Core Equity Fund 0.70% 39,332 16,580 (42,046) 1,981 (3,730) -- 963 --------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 1.83% 20,112 16,135 (1,566) (3,110) (2) -- 1,106 --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 1.83% -- 35,473 (49) (3,772) -- 290 731 --------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 1.44% 19,527 9,425 (326) (3,647) (40) 680 1,421 ================================================================================================================================= Subtotal Foreign Equity Funds 78,971 77,613 (43,987) (8,548) (3,772) 970 ================================================================================================================================= REAL ESTATE FUNDS-2.86% AIM Select Real Estate Income Fund 2.86% -- 55,493 (1,262) (4,678) (54) 660 5,865 ================================================================================================================================= MONEY MARKET FUNDS-3.83% Liquid Assets Portfolio 3.52% 52,068 77,873 (69,075) -- -- 926 60,866 --------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.31% 11,463 58,638 (64,764) -- -- 69 5,337 ================================================================================================================================= Subtotal Money Market Funds 63,531 136,511 (133,839) -- -- 995 ================================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $1,826,176) 100.30% 1,312,482 823,276 (314,413) (75,945) (12,637) 35,426 ================================================================================================================================= OTHER ASSETS LESS LIABILITIES (0.30)% ================================================================================================================================= NET ASSETS 100.00% _________________________________________________________________________________________________________________________________ ================================================================================================================================= VALUE 06/30/08 ------------------------------------------ DOMESTIC EQUITY FUNDS-24.15% AIM Diversified Dividend Fund $ 70,480 ------------------------------------------ AIM Structured Growth Fund 45,575 ------------------------------------------ AIM Structured Value Fund 44,177 ------------------------------------------ AIM Trimark Small Companies Fund 12,393 ------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 45,833 ------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 43,706 ------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 16,723 ------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 15,994 ------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 101,950 ------------------------------------------ PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 20,278 ========================================== Subtotal Domestic Equity Funds 417,109 ========================================== FIXED-INCOME FUNDS-63.66% AIM Core Bond Fund 396,033 ------------------------------------------ AIM Floating Rate Fund 102,827 ------------------------------------------ AIM High Yield Fund 46,740 ------------------------------------------ AIM International Total Return Fund 64,372 ------------------------------------------ AIM Limited Maturity Treasury Fund 47,847 ------------------------------------------ AIM Short Term Bond Fund 287,224 ------------------------------------------ AIM U.S. Government Fund 154,632 ========================================== Subtotal Fixed Income Funds 1,099,675 ========================================== FOREIGN EQUITY FUNDS-5.80% AIM International Core Equity Fund 12,117 ------------------------------------------ AIM International Growth Fund 31,569 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 31,652 ------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 24,939 ========================================== Subtotal Foreign Equity Funds 100,277 ========================================== REAL ESTATE FUNDS-2.86% AIM Select Real Estate Income Fund 49,499 ========================================== MONEY MARKET FUNDS-3.83% Liquid Assets Portfolio 60,866 ------------------------------------------ Premier Portfolio 5,337 ========================================== Subtotal Money Market Funds 66,203 ========================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $1,826,176) 1,732,763 ========================================== OTHER ASSETS LESS LIABILITIES (5,158) ========================================== NET ASSETS $1,727,605 __________________________________________ ==========================================
Investment Abbreviation: ETF-Exchange Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM INDEPENDENCE 2010 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/08 ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-26.91% AIM Diversified Dividend Fund 4.42% $ 121,795 $ 75,932 $ (11,406) $ (14,782) $ (1,642) $ 2,110 15,142 ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 2.89% 79,709 47,999 (5,679) (11,013) (81) -- 10,656 ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 2.80% 78,624 46,618 (5,806) (11,160) (789) -- 11,255 ---------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 0.91% 38,956 22,702 (19,451) (1,916) (5,245) -- 2,894 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 2.93% 76,824 49,526 (6,914) (6,484) (506) 98 6,634 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 2.79% 75,871 50,733 (7,150) (11,603) (581) 1,103 6,023 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 1.18% 51,059 27,819 (28,034) (1,865) (3,568) -- 2,968 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 1.13% 47,293 27,839 (29,328) 765 (3,117) 155 2,964 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 6.48% 180,641 124,513 (15,962) (38,368) (1,916) 2,181 5,110 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 1.38% 62,620 34,691 (38,574) (2,854) (2,687) 271 1,128 ================================================================================================================================== Subtotal Domestic Equity Funds 813,392 508,372 (168,304) (99,280) (20,132) 5,918 ================================================================================================================================== FIXED-INCOME FUNDS-62.50% AIM Core Bond Fund 23.18% 588,568 375,019 (49,163) (22,137) (1,356) 24,950 89,902 ---------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 5.40% 130,372 91,491 (9,681) (3,567) (1,025) 5,561 25,409 ---------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 3.84% 105,345 68,102 (21,038) (2,684) (2,019) 6,143 36,381 ---------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 3.60% 89,342 56,467 (8,150) 429 478 1,309 12,483 ---------------------------------------------------------------------------------------------------------------------------------- AIM Limited Maturity Treasury Fund 0.50% -- 19,733 (497) (90) (3) 70 1,866 ---------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 13.26% 314,529 224,649 (23,684) (5,031) (619) 13,308 53,499 ---------------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 12.72% 340,333 213,421 (63,745) (1,918) 723 12,055 56,707 ================================================================================================================================== Subtotal Fixed Income Funds 1,568,489 1,048,882 (175,958) (34,998) (3,821) 63,396 ================================================================================================================================== FOREIGN EQUITY FUNDS-7.22% AIM International Core Equity Fund 0.90% 102,261 58,667 (122,799) 6,237 (9,858) -- 2,743 ---------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 2.30% 50,901 49,951 (4,233) (8,336) (39) -- 3,091 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 2.24% -- 100,011 (3,751) (10,242) 19 789 1,987 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 1.78% 49,365 33,688 (5,006) (9,183) (419) 1,807 3,900 ================================================================================================================================== Subtotal Foreign Equity Funds 202,527 242,317 (135,789) (21,524) (10,297) 2,596 ================================================================================================================================== REAL ESTATE FUNDS-2.87% AIM Select Real Estate Income Fund 2.87% -- 124,338 (3,117) (10,424) (245) 1,494 13,099 ================================================================================================================================== MONEY MARKET FUNDS-0.53% Liquid Assets Portfolio 0.34% 7,403 179,212 (173,342) -- -- 176 13,273 ---------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.19% 7,403 172,557 (172,744) -- -- 153 7,216 ================================================================================================================================== Subtotal Money Market Funds 14,806 351,769 (346,086) -- -- 329 ================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $4,058,897) 100.03% 2,599,214 2,275,678 (829,254) (166,226) (34,495) 73,733 ================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.03)% ================================================================================================================================== NET ASSETS 100.00% __________________________________________________________________________________________________________________________________ ================================================================================================================================== VALUE 06/30/08 ------------------------------------------ DOMESTIC EQUITY FUNDS-26.91% AIM Diversified Dividend Fund $ 169,897 ------------------------------------------ AIM Structured Growth Fund 110,935 ------------------------------------------ AIM Structured Value Fund 107,487 ------------------------------------------ AIM Trimark Small Companies Fund 35,046 ------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 112,446 ------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 107,270 ------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 45,411 ------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 43,452 ------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 248,908 ------------------------------------------ PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 53,196 ========================================== Subtotal Domestic Equity Funds 1,034,048 ========================================== FIXED-INCOME FUNDS-62.50% AIM Core Bond Fund 890,931 ------------------------------------------ AIM Floating Rate Fund 207,590 ------------------------------------------ AIM High Yield Fund 147,706 ------------------------------------------ AIM International Total Return Fund 138,566 ------------------------------------------ AIM Limited Maturity Treasury Fund 19,143 ------------------------------------------ AIM Short Term Bond Fund 509,844 ------------------------------------------ AIM U.S. Government Fund 488,814 ========================================== Subtotal Fixed Income Funds 2,402,594 ========================================== FOREIGN EQUITY FUNDS-7.22% AIM International Core Equity Fund 34,508 ------------------------------------------ AIM International Growth Fund 88,244 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 86,037 ------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 68,445 ========================================== Subtotal Foreign Equity Funds 277,234 ========================================== REAL ESTATE FUNDS-2.87% AIM Select Real Estate Income Fund 110,552 ========================================== MONEY MARKET FUNDS-0.53% Liquid Assets Portfolio 13,273 ------------------------------------------ Premier Portfolio 7,216 ========================================== Subtotal Money Market Funds 20,489 ========================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $4,058,897) 3,844,917 ========================================== OTHER ASSETS LESS LIABILITIES (1,302) ========================================== NET ASSETS $3,843,615 __________________________________________ ==========================================
Investment Abbreviation: ETF-Exchange Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM INDEPENDENCE 2020 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/08 ----------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-37.79% AIM Diversified Dividend Fund 5.11% $ 270,265 $ 172,694 $ (37,144) $ (30,253) $ (6,959) $ 4,411 32,852 ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 3.31% 174,581 110,782 (21,259) (23,783) (1,960) -- 22,897 ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 3.21% 172,414 110,782 (24,856) (22,358) (4,682) -- 24,220 ----------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 2.44% 136,718 88,622 (18,312) (25,320) (5,540) -- 14,547 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 3.32% 165,739 108,584 (17,940) (14,669) (2,533) 203 14,111 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 3.17% 163,956 110,591 (18,401) (24,990) (2,547) 2,285 12,836 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 3.16% 168,278 118,013 (33,974) (17,428) (6,873) -- 14,903 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 3.03% 156,294 111,971 (33,387) (9,768) (6,559) 656 14,908 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 7.31% 387,794 269,941 (42,912) (80,605) (7,078) 4,504 10,822 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 3.73% 200,683 134,640 (37,975) (22,483) (6,006) 1,123 5,701 =================================================================================================================================== Subtotal Domestic Equity Funds 1,996,722 1,336,620 (286,160) (271,657) (50,737) 13,182 =================================================================================================================================== FIXED-INCOME FUNDS-43.09% AIM Core Bond Fund 23.54% 1,152,339 745,445 (155,829) (41,049) (4,427) 46,301 171,189 ----------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 3.35% 149,781 117,310 (18,832) (3,946) (2,764) 6,221 29,565 ----------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 8.64% 453,638 292,989 (102,142) (10,916) (11,301) 25,214 153,268 ----------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 2.64% 122,418 83,448 (17,531) 924 1,184 1,722 17,157 ----------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 3.58% 125,442 151,487 (16,714) (2,299) (361) 5,594 27,026 ----------------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 1.34% -- 99,065 (1,693) (592) (5) 651 11,227 =================================================================================================================================== Subtotal Fixed Income Funds 2,003,618 1,489,744 (312,741) (57,878) (17,674) 85,703 =================================================================================================================================== FOREIGN EQUITY FUNDS-13.70% AIM International Core Equity Fund 1.47% 306,444 157,711 (341,894) 21,556 (37,894) -- 8,420 ----------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 3.25% 225,826 131,303 (96,962) (17,615) (8,402) -- 8,201 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 2.49% -- 201,066 (1,080) (20,563) (21) 1,964 8,275 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 3.74% -- 313,927 (12,261) (31,893) (144) 2,413 6,227 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 2.75% 215,540 121,544 (107,078) (22,730) (8,943) 5,971 11,301 =================================================================================================================================== Subtotal Foreign Equity Funds 747,810 925,551 (559,275) (71,245) (55,404) 10,348 =================================================================================================================================== REAL ESTATE FUNDS-2.76% AIM Global Real Estate Fund 0.00% 142,647 71,636 (216,535) 21,911 (19,659) 835 -- ----------------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 2.47% -- 205,599 (3,516) (24,278) (46) 1,179 8,124 ----------------------------------------------------------------------------------------------------------------------------------- AIM Select Real Estate Income Fund 0.29% -- 22,982 (391) (1,934) -- 271 2,448 =================================================================================================================================== Subtotal Real Estate Funds 142,647 300,217 (220,442) (4,301) (19,705) 2,285 =================================================================================================================================== MONEY MARKET FUNDS-1.10% Liquid Assets Portfolio 0.55% 64,560 629,093 (653,768) -- -- 400 39,885 ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.55% 64,560 629,093 (653,768) -- -- 400 39,885 =================================================================================================================================== Subtotal Money Market Funds 129,120 1,258,186 (1,307,536) -- -- 800 =================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $7,681,017) 98.44% 5,019,917 5,310,318 (2,686,154) (405,081) (143,519) 112,318 =================================================================================================================================== OTHER ASSETS LESS LIABILITIES 1.56% =================================================================================================================================== NET ASSETS 100.00% ___________________________________________________________________________________________________________________________________ =================================================================================================================================== VALUE 06/30/08 ------------------------------------------ DOMESTIC EQUITY FUNDS-37.79% AIM Diversified Dividend Fund $ 368,603 ------------------------------------------ AIM Structured Growth Fund 238,361 ------------------------------------------ AIM Structured Value Fund 231,300 ------------------------------------------ AIM Trimark Small Companies Fund 176,168 ------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 239,181 ------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 228,609 ------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 228,016 ------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 218,551 ------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 527,140 ------------------------------------------ PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 268,859 ========================================== Subtotal Domestic Equity Funds 2,724,788 ========================================== FIXED-INCOME FUNDS-43.09% AIM Core Bond Fund 1,696,479 ------------------------------------------ AIM Floating Rate Fund 241,549 ------------------------------------------ AIM High Yield Fund 622,268 ------------------------------------------ AIM International Total Return Fund 190,443 ------------------------------------------ AIM Short Term Bond Fund 257,555 ------------------------------------------ AIM U.S. Government Fund 96,775 ========================================== Subtotal Fixed Income Funds 3,105,069 ========================================== FOREIGN EQUITY FUNDS-13.70% AIM International Core Equity Fund 105,923 ------------------------------------------ AIM International Growth Fund 234,150 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 179,402 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 269,629 ------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 198,333 ========================================== Subtotal Foreign Equity Funds 987,437 ========================================== REAL ESTATE FUNDS-2.76% AIM Global Real Estate Fund -- ------------------------------------------ AIM Real Estate Fund 177,759 ------------------------------------------ AIM Select Real Estate Income Fund 20,657 ========================================== Subtotal Real Estate Funds 198,416 ========================================== MONEY MARKET FUNDS-1.10% Liquid Assets Portfolio 39,885 ------------------------------------------ Premier Portfolio 39,885 ========================================== Subtotal Money Market Funds 79,770 ========================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $7,681,017) 7,095,480 ========================================== OTHER ASSETS LESS LIABILITIES 112,574 ========================================== NET ASSETS $7,208,054 __________________________________________ ==========================================
Investment Abbreviation: ETF-Exchange Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM INDEPENDENCE 2030 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/08 ----------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-52.66% AIM Diversified Dividend Fund 6.55% $ 233,868 $ 224,877 $ (6,332) $ (37,969) $ (1,044) $ 4,858 36,845 ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 4.26% 151,921 145,062 (3,587) (24,406) (189) -- 25,821 ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 4.13% 150,158 141,646 (3,302) (27,037) (564) -- 27,320 ----------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 4.07% 148,806 151,444 (3,275) (38,951) (1,054) -- 21,220 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 4.24% 146,782 144,108 (7,010) (15,691) (413) 233 15,798 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 4.07% 145,259 146,393 (7,487) (26,907) (616) 2,543 14,410 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 5.11% 180,505 186,317 (16,456) (25,542) (2,667) -- 21,056 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 4.90% 168,384 178,321 (15,652) (19,089) (2,506) 920 21,109 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 9.42% 345,352 356,083 (16,183) (89,187) (1,803) 5,195 12,200 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 5.91% 211,315 212,041 (14,809) (33,921) (1,780) 1,538 7,906 =================================================================================================================================== Subtotal Domestic Equity Funds 1,882,350 1,886,292 (94,093) (338,700) (12,636) 15,287 =================================================================================================================================== FIXED-INCOME FUNDS-23.55% AIM Core Bond Fund 12.15% 353,592 439,873 (8,360) (17,960) (338) 18,017 77,377 ----------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 0.33% -- 20,750 (119) 103 1 144 2,538 ----------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 10.53% 355,589 347,564 (17,319) (19,429) (1,728) 23,504 163,714 ----------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 0.27% -- 17,253 (99) (310) (2) 86 1,517 ----------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 0.27% -- 17,320 (99) (114) -- 146 1,795 =================================================================================================================================== Subtotal Fixed Income Funds 709,181 842,760 (25,996) (37,710) (2,067) 41,897 =================================================================================================================================== FOREIGN EQUITY FUNDS-19.88% AIM International Core Equity Fund 1.89% 294,023 196,213 (358,092) 17,173 (30,257) -- 9,464 ----------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 5.13% 215,315 180,984 (42,034) (28,541) (1,993) -- 11,339 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 3.76% -- 263,044 -- (26,038) -- 2,658 10,932 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 5.15% -- 371,017 (8,719) (37,029) (86) 2,982 7,510 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 3.95% 208,963 166,541 (91,855) (29,222) (5,603) 7,339 14,178 =================================================================================================================================== Subtotal Foreign Equity Funds 718,301 1,177,799 (500,700) (103,657) (37,939) 12,979 =================================================================================================================================== REAL ESTATE FUNDS-3.64% AIM Global Real Estate Fund 3.35% 134,118 121,355 (13,238) (27,526) (3,386) 2,326 18,392 ----------------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.29% -- 20,740 (119) (2,465) (14) 123 829 =================================================================================================================================== Subtotal Real Estate Funds 134,118 142,095 (13,357) (29,991) (3,400) 2,449 =================================================================================================================================== MONEY MARKET FUNDS-0.92% Liquid Assets Portfolio 0.46% 79,249 746,094 (796,376) -- -- 549 28,967 ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.46% 79,249 746,094 (796,376) -- -- 546 28,967 =================================================================================================================================== Subtotal Money Market Funds 158,498 1,492,188 (1,592,752) -- -- 1,095 =================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $7,000,839) 100.65% 3,602,448 5,541,134 (2,226,898) (510,058) (56,042) 73,707 =================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.65)% =================================================================================================================================== NET ASSETS 100.00% ___________________________________________________________________________________________________________________________________ =================================================================================================================================== VALUE 06/30/08 ------------------------------------------ DOMESTIC EQUITY FUNDS-52.66% AIM Diversified Dividend Fund $ 413,400 ------------------------------------------ AIM Structured Growth Fund 268,801 ------------------------------------------ AIM Structured Value Fund 260,901 ------------------------------------------ AIM Trimark Small Companies Fund 256,970 ------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 267,776 ------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 256,642 ------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 322,157 ------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 309,458 ------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 594,262 ------------------------------------------ PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 372,846 ========================================== Subtotal Domestic Equity Funds 3,323,213 ========================================== FIXED-INCOME FUNDS-23.55% AIM Core Bond Fund 766,807 ------------------------------------------ AIM Floating Rate Fund 20,735 ------------------------------------------ AIM High Yield Fund 664,677 ------------------------------------------ AIM International Total Return Fund 16,842 ------------------------------------------ AIM Short Term Bond Fund 17,107 ========================================== Subtotal Fixed Income Funds 1,486,168 ========================================== FOREIGN EQUITY FUNDS-19.88% AIM International Core Equity Fund 119,060 ------------------------------------------ AIM International Growth Fund 323,731 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 237,006 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 325,183 ------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 248,824 ========================================== Subtotal Foreign Equity Funds 1,253,804 ========================================== REAL ESTATE FUNDS-3.64% AIM Global Real Estate Fund 211,323 ------------------------------------------ AIM Real Estate Fund 18,142 ========================================== Subtotal Real Estate Funds 229,465 ========================================== MONEY MARKET FUNDS-0.92% Liquid Assets Portfolio 28,967 ------------------------------------------ Premier Portfolio 28,967 ========================================== Subtotal Money Market Funds 57,934 ========================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $7,000,839) 6,350,584 ========================================== OTHER ASSETS LESS LIABILITIES (40,904) ========================================== NET ASSETS $6,309,680 __________________________________________ ==========================================
Investment Abbreviation: ETF-Exchange Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM INDEPENDENCE 2040 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/08 ----------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-59.87% AIM Diversified Dividend Fund 7.37% $ 140,916 $ 85,326 $ (18,514) $ (16,131) $ (2,836) $ 2,248 16,823 ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 4.78% 91,414 52,457 (7,935) (12,951) (585) -- 11,758 ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 4.64% 90,210 52,075 (9,728) (12,274) (1,535) -- 12,434 ----------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 4.65% 89,359 57,259 (7,935) (17,665) (1,903) -- 9,836 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 4.81% 86,904 53,330 (7,795) (8,243) (1,139) 106 7,260 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 4.59% 85,963 53,721 (7,996) (12,952) (1,083) 1,172 6,606 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 5.91% 107,889 70,290 (11,572) (12,752) (2,569) -- 9,888 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 5.66% 99,911 67,399 (11,198) (8,166) (2,973) 428 9,889 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 10.61% 203,548 131,818 (18,722) (41,837) (3,200) 2,351 5,576 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 6.85% 126,790 79,511 (11,925) (16,348) (2,498) 721 3,722 =================================================================================================================================== Subtotal Domestic Equity Funds 1,122,904 703,186 (113,320) (159,319) (20,321) 7,026 =================================================================================================================================== FIXED-INCOME FUNDS-13.15% AIM Core Bond Fund 5.21% 80,666 63,138 (7,294) (3,080) (154) 3,351 13,449 ----------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 7.94% 137,290 87,717 (14,570) (5,391) (1,616) 7,539 50,106 =================================================================================================================================== Subtotal Fixed Income Funds 217,956 150,855 (21,864) (8,471) (1,770) 10,890 =================================================================================================================================== FOREIGN EQUITY FUNDS-22.69% AIM International Core Equity Fund 2.21% 176,170 80,690 (191,194) 12,547 (21,501) -- 4,508 ----------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 5.98% 130,601 74,251 (34,628) (15,697) (1,422) -- 5,363 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 4.43% -- 126,231 (1,236) (11,452) 17 1,260 5,238 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 5.59% -- 159,930 -- (16,650) -- 1,300 3,309 ----------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 4.48% 124,978 71,384 (63,261) (13,689) (4,565) 3,409 6,544 =================================================================================================================================== Subtotal Foreign Equity Funds 431,749 512,486 (290,319) (44,941) (27,471) 5,969 =================================================================================================================================== REAL ESTATE FUNDS-4.23% AIM Global Real Estate Fund 4.23% 83,422 52,017 (10,371) (13,591) (3,258) 1,163 9,419 =================================================================================================================================== MONEY MARKET FUNDS-1.18% Liquid Assets Portfolio 0.59% 9,463 356,896 (351,286) -- -- 212 15,073 ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.59% 9,463 356,896 (351,286) -- -- 212 15,073 =================================================================================================================================== Subtotal Money Market Funds 18,926 713,792 (702,572) -- -- 424 =================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $2,903,125) 101.12% 1,874,957 2,132,336 (1,138,446) (226,322) (52,820) 25,472 =================================================================================================================================== OTHER ASSETS LESS LIABILITIES (1.12)% =================================================================================================================================== NET ASSETS 100.00% ___________________________________________________________________________________________________________________________________ =================================================================================================================================== VALUE 06/30/08 ------------------------------------------ DOMESTIC EQUITY FUNDS-59.87% AIM Diversified Dividend Fund $ 188,761 ------------------------------------------ AIM Structured Growth Fund 122,400 ------------------------------------------ AIM Structured Value Fund 118,748 ------------------------------------------ AIM Trimark Small Companies Fund 119,115 ------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 123,057 ------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 117,653 ------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 151,286 ------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 144,973 ------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 271,607 ------------------------------------------ PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 175,530 ========================================== Subtotal Domestic Equity Funds 1,533,130 ========================================== FIXED-INCOME FUNDS-13.15% AIM Core Bond Fund 133,276 ------------------------------------------ AIM High Yield Fund 203,430 ========================================== Subtotal Fixed Income Funds 336,706 ========================================== FOREIGN EQUITY FUNDS-22.69% AIM International Core Equity Fund 56,712 ------------------------------------------ AIM International Growth Fund 153,105 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 113,560 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 143,280 ------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 114,847 ========================================== Subtotal Foreign Equity Funds 581,504 ========================================== REAL ESTATE FUNDS-4.23% AIM Global Real Estate Fund 108,219 ========================================== MONEY MARKET FUNDS-1.18% Liquid Assets Portfolio 15,073 ------------------------------------------ Premier Portfolio 15,073 ========================================== Subtotal Money Market Funds 30,146 ========================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $2,903,125) 2,589,705 ========================================== OTHER ASSETS LESS LIABILITIES (28,702) ========================================== NET ASSETS $2,561,003 __________________________________________ ==========================================
Investment Abbreviation: ETF-Exchange Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 14 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) June 30, 2008 (Unaudited) AIM INDEPENDENCE 2050 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 06/30/08 ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-64.51% AIM Diversified Dividend Fund 7.98% $ 139,321 $ 48,195 $ (21,922) $ (13,280) $ (3,371) $ 1,845 13,275 ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 5.16% 90,115 31,130 (12,262) (12,237) (496) -- 9,246 ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 5.01% 88,980 29,435 (12,706) (10,486) (1,827) -- 9,780 ---------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 5.02% 88,085 35,849 (12,262) (15,041) (2,942) -- 7,736 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 5.16% 86,699 28,814 (10,205) (7,832) (1,285) 83 5,675 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 4.93% 85,719 28,904 (10,376) (11,009) (1,250) 951 5,165 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 6.37% 107,976 39,878 (14,089) (11,998) (2,901) -- 7,769 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 6.10% 100,134 37,641 (13,799) (6,836) (3,232) 345 7,770 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 11.36% 202,734 71,570 (24,145) (34,482) (3,788) 1,841 4,350 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 7.42% 127,163 43,693 (15,259) (14,269) (2,866) 584 2,936 ================================================================================================================================== Subtotal Domestic Equity Funds 1,116,926 395,109 (147,025) (137,470) (23,958) 5,649 ================================================================================================================================== FIXED-INCOME FUNDS-5.37% AIM High Yield Fund 5.37% 89,288 33,129 (18,016) (2,242) (1,856) 4,160 24,705 ================================================================================================================================== FOREIGN EQUITY FUNDS-24.56% AIM International Core Equity Fund 2.48% 173,816 44,455 (162,056) 6,906 (16,825) -- 3,680 ---------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 6.57% 129,801 41,681 (33,203) (14,980) (656) -- 4,296 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 4.89% -- 102,113 (1,794) (9,158) 25 1,014 4,206 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 5.80% -- 121,755 (877) (12,533) (9) 985 2,502 ---------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 4.82% 125,679 34,980 (54,646) (13,603) (2,537) 2,787 5,121 ================================================================================================================================== Subtotal Foreign Equity Funds 429,296 344,984 (252,576) (43,368) (20,002) 4,786 ================================================================================================================================== REAL ESTATE FUNDS-4.68% AIM Global Real Estate Fund 4.68% 84,276 30,404 (12,520) (10,988) (3,755) 969 7,608 ================================================================================================================================== MONEY MARKET FUNDS-1.18% Liquid Assets Portfolio 0.59% 8,688 227,646 (225,411) -- -- 152 10,923 ---------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.59% 8,688 227,646 (225,411) -- -- 150 10,923 ================================================================================================================================== Subtotal Money Market Funds 17,376 455,292 (450,822) -- -- 302 ================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $2,116,141) 100.30% 1,737,162 1,258,918 (880,959) (194,068) (49,571) 15,866 ================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.30)% ================================================================================================================================== NET ASSETS 100.00% __________________________________________________________________________________________________________________________________ ================================================================================================================================== VALUE 06/30/08 ------------------------------------------ DOMESTIC EQUITY FUNDS-64.51% AIM Diversified Dividend Fund $ 148,943 ------------------------------------------ AIM Structured Growth Fund 96,250 ------------------------------------------ AIM Structured Value Fund 93,396 ------------------------------------------ AIM Trimark Small Companies Fund 93,689 ------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 96,191 ------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 91,988 ------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 118,866 ------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 113,908 ------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 211,889 ------------------------------------------ PowerShares FTSE RAFI US 1500 Small-Mid Portfolio-ETF 138,462 ========================================== Subtotal Domestic Equity Funds 1,203,582 ========================================== FIXED-INCOME FUNDS-5.37% AIM High Yield Fund 100,303 ========================================== FOREIGN EQUITY FUNDS-24.56% AIM International Core Equity Fund 46,296 ------------------------------------------ AIM International Growth Fund 122,643 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio-ETF 91,186 ------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio-ETF 108,336 ------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 89,873 ========================================== Subtotal Foreign Equity Funds 458,334 ========================================== REAL ESTATE FUNDS-4.68% AIM Global Real Estate Fund 87,417 ========================================== MONEY MARKET FUNDS-1.18% Liquid Assets Portfolio 10,923 ------------------------------------------ Premier Portfolio 10,923 ========================================== Subtotal Money Market Funds 21,846 ========================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $2,116,141) 1,871,482 ========================================== OTHER ASSETS LESS LIABILITIES (5,639) ========================================== NET ASSETS $1,865,843 __________________________________________ ==========================================
Investment Abbreviation: ETF-Exchange Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 15 AIM INDEPENDENCE FUNDS STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited)
AIM AIM AIM AIM AIM AIM INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ ASSETS: Investments in affiliated underlying funds, at value $1,732,763 $3,844,917 $7,095,480 $6,350,584 $2,589,705 $1,871,482 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Receivables for: Investments sold 4,169 -- -- 13,635 6,694 -- ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Fund shares sold 13 47,668 207,297 22,608 12,553 4,787 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Dividends 6,541 14,462 20,955 2,911 1,327 1,810 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Fund expenses absorbed 11,596 8,860 9,771 7,175 11,452 11,051 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Investment for trustee deferred compensation and retirement plans 3,412 3,487 3,417 3,415 3,413 3,413 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Other assets 20,666 17,770 23,029 25,767 23,110 22,643 ==================================== ============ ============ ============ ============ ============ ============ Total assets 1,779,160 3,937,164 7,359,949 6,426,095 2,648,254 1,915,186 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ LIABILITIES: Payables for: Investments purchased 6,364 51,616 63,718 -- 1,255 2,995 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Fund shares reacquired 5,500 1,029 26,156 50,637 35,560 -- ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Amount due custodian -- -- 15,547 21,170 8,425 6,789 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Accrued fees to affiliates 2,354 6,227 10,954 10,964 5,121 3,048 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Accrued operating expenses 33,925 31,191 32,103 30,229 33,477 33,099 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Trustee deferred compensation and retirement plans 3,412 3,486 3,417 3,415 3,413 3,412 ==================================== ============ ============ ============ ============ ============ ============ Total liabilities 51,555 93,549 151,895 116,415 87,251 49,343 ==================================== ============ ============ ============ ============ ============ ============ Net assets applicable to shares outstanding $1,727,605 $3,843,615 $7,208,054 $6,309,680 $2,561,003 $1,865,843 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ NET ASSETS CONSIST OF: Shares of beneficial interest $1,830,509 $4,000,080 $7,792,353 $6,913,342 $2,870,316 $2,109,734 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Undistributed net investment income 4,762 79,260 115,152 70,081 39,085 31,503 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Undistributed net realized gain (loss) (14,253) (21,745) (113,914) (23,488) (34,978) (30,735) ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) (93,413) (213,980) (585,537) (650,255) (313,420) (244,659) ==================================== ============ ============ ============ ============ ============ ============ $1,727,605 $3,843,615 $7,208,054 $6,309,680 $2,561,003 $1,865,843 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 16 AIM INDEPENDENCE FUNDS STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED) June 30, 2008 (Unaudited)
AIM AIM AIM AIM AIM AIM INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ NET ASSETS: Class A $1,141,413 $2,009,109 $3,851,873 $2,654,881 $1,144,321 $1,193,342 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class B $ 364,058 $ 543,815 $1,351,485 $1,241,289 $ 556,057 $ 224,796 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class C $ 103,776 $ 882,698 $ 791,453 $1,157,600 $ 481,771 $ 174,041 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class R $ 68,338 $ 358,180 $1,202,039 $1,244,771 $ 333,407 $ 228,710 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Institutional Class $ 50,020 $ 49,813 $ 11,204 $ 11,139 $ 45,447 $ 44,954 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 125,067 209,887 417,399 298,087 131,160 138,588 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class B 39,843 57,158 147,606 140,268 64,162 26,273 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class C 11,363 92,742 86,464 130,759 55,596 20,325 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class R 7,485 37,493 130,552 140,251 38,334 26,622 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Institutional Class 5,482 5,189 1,209 1,248 5,196 5,210 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class A: Net asset value per share $ 9.13 $ 9.57 $ 9.23 $ 8.91 $ 8.72 $ 8.61 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Maximum offering price per share (Net asset value of divided by 94.50%) $ 9.66 $ 10.13 $ 9.77 $ 9.43 $ 9.23 $ 9.11 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class B: Net asset value and offering price per share $ 9.14 $ 9.51 $ 9.16 $ 8.85 $ 8.67 $ 8.56 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class C: Net asset value and offering price per share $ 9.13 $ 9.52 $ 9.15 $ 8.85 $ 8.67 $ 8.56 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Class R: Net asset value and offering price per share $ 9.13 $ 9.55 $ 9.21 $ 8.88 $ 8.70 $ 8.59 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Institutional Class: Net asset value and offering price per share $ 9.12 $ 9.60 $ 9.26 $ 8.93 $ 8.75 $ 8.63 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============ Cost of Investments in affiliated underlying funds $1,826,176 $4,058,897 $7,681,017 $7,000,839 $2,903,125 $2,116,141 ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 17 AIM INDEPENDENCE FUNDS STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited)
AIM AIM AIM AIM AIM AIM INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ INVESTMENT INCOME: Dividends from affiliated underlying funds $ 35,426 $ 73,733 $ 112,318 $ 73,707 $ 25,472 $ 15,866 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Other income 35 40 35 35 35 35 ==================================== ============ ============ ============ ============ ============ ============ Total investment income 35,461 73,773 112,353 73,742 25,507 15,901 ==================================== ============ ============ ============ ============ ============ ============ EXPENSES: Administrative services fees 24,863 24,863 24,863 24,863 24,863 24,863 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Custodian fees 3,994 3,264 3,556 2,677 3,114 3,295 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Distribution fees: Class A 1,400 2,393 4,072 2,605 1,294 1,441 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Class B 1,647 2,314 5,466 5,105 2,570 1,018 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Class C 429 3,431 3,060 4,814 1,898 781 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Class R 141 783 2,918 2,384 612 437 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Transfer agent fees -- A, B, C and R 1,797 3,838 9,403 9,502 7,256 4,595 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Transfer agent fees -- Institutional 7 7 3 4 8 7 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Trustees' and officer's fees and benefits 8,064 8,079 8,015 8,434 8,414 8,087 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Registration and filing fees 35,194 34,222 34,411 34,367 34,225 34,163 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Professional services fees 20,776 17,556 23,500 20,778 25,114 17,831 ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Other 7,311 3,252 5,625 5,355 2,857 3,236 ==================================== ============ ============ ============ ============ ============ ============ Total expenses 105,623 104,002 124,892 120,888 112,225 99,754 ==================================== ============ ============ ============ ============ ============ ============ Less: Expenses reimbursed and expense offset arrangement(s) (101,104) (93,024) (103,973) (101,338) (103,563) (94,277) ==================================== ============ ============ ============ ============ ============ ============ Net expenses 4,519 10,978 20,919 19,550 8,662 5,477 ==================================== ============ ============ ============ ============ ============ ============ Net investment income 30,942 62,795 91,434 54,192 16,845 10,424 ==================================== ============ ============ ============ ============ ============ ============ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) from affiliated underlying fund shares (includes net gains (losses) from securities sold to affiliates of $(28,850)) (12,637) (34,495) (143,519) (56,042) (52,820) (49,571) ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (75,945) (166,226) (405,081) (510,058) (226,322) (194,068) ------------------------------------ ------------ ------------ ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations $ (57,640) $(137,926) $(457,166) $(511,908) $(262,297) $(233,215) ____________________________________ ____________ ____________ ____________ ____________ ____________ ____________ ================================== ============ ============ ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 18 AIM INDEPENDENCE FUNDS STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE NOW FUND 2010 FUND 2020 FUND -------------------------- -------------------------- -------------------------- JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2008 2007 2008 2007 2008 2007 ---------------------------------------- -------------------------- -------------------------- -------------------------- OPERATIONS: Net investment income $ 30,942 $ 30,836 $ 62,795 $ 56,138 $ 91,434 $ 89,044 ---------------------------------------- -------------------------- -------------------------- -------------------------- Net realized gain (loss) (12,637) 8,584 (34,495) 18,300 (143,519) 49,702 ---------------------------------------- -------------------------- -------------------------- -------------------------- Change in net unrealized appreciation (depreciation) (75,945) (17,468) (166,226) (47,754) (405,081) (180,456) ======================================== ========================== ========================== ========================== Net increase (decrease) in net assets resulting from operations (57,640) 21,952 (137,926) 26,684 (457,166) (41,710) ======================================== ========================== ========================== ========================== Distributions to shareholders from net investment income: Class A (30,827) (33,781) -- (52,594) -- (61,402) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class B (7,714) (11,689) -- (9,793) -- (20,030) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class C (2,002) (2,632) -- (12,420) -- (10,670) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class R (1,541) (2,633) -- (3,660) -- (13,844) ---------------------------------------- -------------------------- -------------------------- -------------------------- Institutional Class (1,392) (3,130) -- (1,762) -- (307) ======================================== ========================== ========================== ========================== Total distributions from net investment income (43,476) (53,865) -- (80,229) -- (106,253) ======================================== ========================== ========================== ========================== Distributions to shareholders from net realized gains: Class A (3,557) (3,061) -- (3,496) -- (11,117) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class B (1,048) (1,184) -- (744) -- (4,130) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class C (319) (241) -- (943) -- (2,200) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class R (211) (213) -- (254) -- (2,597) ---------------------------------------- -------------------------- -------------------------- -------------------------- Institutional Class (154) (212) -- (113) -- (53) ======================================== ========================== ========================== ========================== Total distributions from net realized gains (5,289) (4,911) -- (5,550) -- (20,097) ======================================== ========================== ========================== ========================== Share transactions-net: Class A 404,713 831,360 442,556 1,685,472 1,389,782 2,804,919 --------------------------------------------------------------------------------------------------------------------------------- Class B 76,868 319,205 222,283 349,541 497,132 971,424 ---------------------------------------- -------------------------- -------------------------- -------------------------- Class C 35,001 76,014 479,855 438,505 253,169 615,357 ---------------------------------------- -------------------------- -------------------------- -------------------------- Class R 20,077 53,633 249,382 121,157 589,389 701,808 ---------------------------------------- -------------------------- -------------------------- -------------------------- Institutional Class 1,546 52,417 -- 51,885 -- 10,300 ======================================== ========================== ========================== ========================== Net increase in net assets resulting from share transactions 538,205 1,332,629 1,394,076 2,646,560 2,729,472 5,103,808 ======================================== ========================== ========================== ========================== Net increase in net assets 431,800 1,295,805 1,256,150 2,587,465 2,272,306 4,935,748 ________________________________________ __________________________ __________________________ __________________________ ====================================== ========================== ========================== ========================== NET ASSETS: Beginning of period 1,295,805 -- 2,587,465 -- 4,935,748 -- ======================================== ========================== ========================== ========================== End of period* $1,727,605 $1,295,805 $3,843,615 $2,587,465 $7,208,054 $4,935,748 ======================================== ========================== ========================== ========================== * Includes accumulated undistributed net investment income $ 4,762 $ 17,296 $ 79,260 $ 16,465 $ 115,152 $ 23,718 ________________________________________ __________________________ __________________________ __________________________ ====================================== ========================== ========================== ==========================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 19 AIM INDEPENDENCE FUNDS STATEMENT OF CHANGES IN NET ASSETS--(CONTINUED) For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
AIM INDEPENDENCE AIM INDEPENDENCE AIM INDEPENDENCE 2030 FUND 2040 FUND 2050 FUND -------------------------- -------------------------- -------------------------- JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2008 2007 2008 2007 2008 2007 ---------------------------------------- -------------------------- -------------------------- -------------------------- OPERATIONS: Net investment income $ 54,192 $ 52,616 $ 16,845 $ 28,148 $ 10,424 $ 25,123 ---------------------------------------- -------------------------- -------------------------- -------------------------- Net realized gain (loss) (56,042) 47,660 (52,820) 32,943 (49,571) 34,003 ---------------------------------------- -------------------------- -------------------------- -------------------------- Change in net unrealized appreciation (depreciation) (510,058) (140,197) (226,322) (87,098) (194,068) (50,591) ======================================== ========================== ========================== ========================== Net increase (decrease) in net assets resulting from operations (511,908) (39,921) (262,297) (26,007) (233,215) 8,535 ======================================== ========================== ========================== ========================== Distributions to shareholders from net investment income: Class A -- (42,432) -- (23,717) -- (33,184) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class B -- (16,422) -- (11,405) -- (4,512) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class C -- (10,435) -- (5,758) -- (3,528) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class R -- (7,604) -- (3,843) -- (1,407) ---------------------------------------- -------------------------- -------------------------- -------------------------- Institutional Class -- (347) -- (1,458) -- (1,526) ======================================== ========================== ========================== ========================== Total distributions from net investment income -- (77,240) -- (46,181) -- (44,157) ======================================== ========================== ========================== ========================== Distributions to shareholders from net realized gains: Class A -- (7,830) -- (7,337) -- (11,035) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class B -- (3,515) -- (4,047) -- (1,769) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class C -- (2,234) -- (2,044) -- (1,383) ---------------------------------------- -------------------------- -------------------------- -------------------------- Class R -- (1,466) -- (1,241) -- (494) ---------------------------------------- -------------------------- -------------------------- -------------------------- Institutional Class -- (61) -- (432) -- (486) ======================================== ========================== ========================== ========================== Total distributions from net realized gains -- (15,106) -- (15,101) -- (15,167) ======================================== ========================== ========================== ========================== Share transactions-net: Class A 1,297,269 1,648,097 366,070 946,845 171,010 1,212,088 ---------------------------------------- -------------------------- -------------------------- -------------------------- Class B 585,073 782,082 119,965 525,655 66,531 193,543 ---------------------------------------- -------------------------- -------------------------- -------------------------- Class C 535,050 752,285 246,945 286,342 46,060 154,721 ---------------------------------------- -------------------------- -------------------------- -------------------------- Class R 933,901 409,679 208,268 158,599 102,991 150,881 ---------------------------------------- -------------------------- -------------------------- -------------------------- Institutional Class 2 10,417 -- 51,900 -- 52,022 ======================================== ========================== ========================== ========================== Net increase in net assets resulting from share transactions 3,351,295 3,602,560 941,248 1,969,341 386,592 1,763,255 ======================================== ========================== ========================== ========================== Net increase in net assets 2,839,387 3,470,293 678,951 1,882,052 153,377 1,712,466 ________________________________________ __________________________ __________________________ __________________________ ====================================== ========================== ========================== ========================== NET ASSETS: Beginning of period 3,470,293 -- 1,882,052 -- 1,712,466 -- ======================================== ========================== ========================== ========================== End of period* $6,309,680 $3,470,293 $2,561,003 $1,882,052 $1,865,843 $1,712,466 ======================================== ========================== ========================== ========================== * Includes accumulated undistributed net investment income $ 70,081 $ 15,889 $ 39,085 $ 22,240 $ 31,503 $ 21,079 ________________________________________ __________________________ __________________________ __________________________ ====================================== ========================== ========================== ==========================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 20 AIM INDEPENDENCE FUNDS NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Growth Series (the "Trust") is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series portfolios (each constituting a "Fund"), each authorized to issue an unlimited number of shares of beneficial interest. The Funds covered in this report are AIM Independence Now Fund, AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund (collectively, the "Funds"). Each 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 a 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 Fund or class will be voted on exclusively by the shareholders of such Fund or class. The assets, liabilities and operations of each Fund are accounted for separately. Information presented in these financial statements pertains only to the Funds. The investment objective's: to provide current income and, as a secondary objective, capital appreciation for AIM Independence Now Fund and to provide capital appreciation and current income, consistent with their current asset allocation strategies for AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund. Each Fund is a "fund of funds", that invests in other mutual funds and exchange-traded funds ("underlying funds") advised by Invesco Aim Advisors, Inc. ("Invesco Aim") and Invesco PowerShares Capital Management LLC ("Invesco PowerShares") (collectively the "Advisors"), respectively. Invesco Aim and Invesco PowerShares are affiliates of each other as they are indirect wholly owned subsidiaries of Invesco Ltd. ("Invesco"). Invesco Aim may change each Fund's asset class allocations, the underlying funds or the target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund's accounting policies are outlined in the underlying fund's financial statements and are available upon request. The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements. A. SECURITY VALUATIONS -- Investments in shares of funds that are not traded on an exchange are valued at the closing net asset value per share of such fund. Investments in shares of funds that are traded on an exchange are valued in accordance with valuation policy of such fund. These policies are set forth below. Securities in the underlying funds, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and 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"). Senior secured floating rate loans and senior secured floating rate debt securities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 21 AIM INDEPENDENCE FUNDS 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. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from net realized capital gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. Each Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. C. DISTRIBUTIONS -- AIM Independence Now Fund generally declares and pays dividends, if any, quarterly. AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund generally declare and pay dividends, if any, annually. Distributions from net realized capital gains, if any, are generally paid annually and recorded on ex-dividend date. The Funds may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. FEDERAL INCOME TAXES -- The Funds intend to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Funds' taxable earnings to shareholders. As such, the Funds will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. E. EXPENSES -- Expenses included in the accompanying financial statement reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses of each respective Fund are allocated among the classes of such Fund based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. G. 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 Funds. Additionally, in the normal course of business, the Funds enter into contracts that contain a variety of indemnification clauses. Each Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against such Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust has entered into a master investment advisory agreement with Invesco Aim. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco Aim and/or Invesco Power Shares indirectly as a shareholder of the underlying funds. 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). 22 AIM INDEPENDENCE FUNDS Prior to May 1, 2008, the Advisor had contractually agreed to reimburse expenses to the extent necessary to limit total annual operating expenses (excluding 12b-1 plan payments and certain items discussed below of Class A, Class B, Class C and Class R shares for each Fund as follows:
------------------------------------------------------------------- AIM Independence Now Fund 0.16% ------------------------------------------------------------------- AIM Independence 2010 Fund 0.17% ------------------------------------------------------------------- AIM Independence 2020 Fund 0.24% ------------------------------------------------------------------- AIM Independence 2030 Fund 0.24% ------------------------------------------------------------------- AIM Independence 2040 Fund 0.28% ------------------------------------------------------------------- AIM Independence 2050 Fund 0.28% ___________________________________________________________________ ===================================================================
Effective May 1, 2008, through at least June 30, 2009, the Advisor has contractually agreed to reimburse expenses to the extent necessary to limit other expenses (excluding 12b-1 plan payments and certain items discussed below) of Class A, Class B, Class C and Class R shares for each Fund as shown in the following table under Expense Limit. The Funds direct operating expenses are limited to the Expense Limit plus the 12b-1 Fee.
ESTIMATED ACQUIRED ESTIMATED ACQUIRED FUND FEES AND FUND FEES AND EXPENSE ------------------------------------------- EXPENSES FROM LIMIT CLASS A CLASS B CLASS C CLASS R UNDERLYING FUND --------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund 0.02% 0.25% 1.00% 1.00% 0.50% 0.68% --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 0.04% 0.25% 1.00% 1.00% 0.50% 0.70% --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 0.07% 0.25% 1.00% 1.00% 0.50% 0.78% --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 0.10% 0.25% 1.00% 1.00% 0.50% 0.80% --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 0.09% 0.25% 1.00% 1.00% 0.50% 0.81% --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 0.08% 0.25% 1.00% 1.00% 0.50% 0.82% ___________________________________________________________________________________________________________________________ ===========================================================================================================================
In determining the Advisor's obligation to reimburse expenses, the following expenses are not taken into account, and will cause other expenses to exceed the expense limit 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 Funds have incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement with Invesco described more fully below, the expense offset arrangements from which the Funds may benefit are in the form of credits that the Funds receive from banks where the Funds or its transfer agent have deposit accounts in which it holds uninvested cash. Those credits are used to pay certain expenses incurred by the Funds. Acquired Fund Fees and Expenses are not fees and expenses incurred by the Funds directly but are fees and expenses, including management fees, of the investment companies in which the Funds invest. As a result, the net operating expenses will exceed the expense limits above. You incur these expenses indirectly through the valuation of each Fund's investment in those investment companies. The impact of the Acquired Fund Fees and Expenses are included in the total return of the Funds. For the six months ended June 30, 2008, the Advisor reimbursed the following expenses:
FUND INSTITUTIONAL LEVEL CLASS A CLASS B CLASS C CLASS R CLASS --------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $99,299 $1,265 $ 372 $ 97 $ 64 $7 --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 89,082 2,176 526 780 356 7 --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 94,432 4,903 1,645 921 1,757 2 --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 91,686 3,863 1,892 1,784 1,767 4 --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 96,299 3,379 1,678 1,240 799 8 --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 89,558 3,072 543 416 465 7 ___________________________________________________________________________________________________________________________ ===========================================================================================================================
The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which each Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to such Fund. For the six months ended June 30, 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 each Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to such Fund. For the six months ended June 30, 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 each Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). Each Fund, pursuant to the Plans, pays IADI compensation at the annual rate based on the Fund's average daily net assets for each class as shown in the table above. 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 23 AIM INDEPENDENCE FUNDS cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of each Fund. For the six months ended June 30, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC are not recorded as expenses of the Funds. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Funds. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2008, IADI advised the Funds that IADI retained the following in front-end sales commissions from the sale of Class A shares and received the following in CDSC imposed on redemptions by shareholders:
FRONT END CONTINGENT DEFERRED SALES CHARGES SALES CHARGES ------------------------------------------- CLASS A CLASS A CLASS B CLASS C CLASS R -------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 259 $ 33 $307 $ 30 $-- -------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 730 -- 180 -- -- -------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 3,474 181 75 1,054 -- -------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 3,734 120 116 27 -- -------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 3,046 -- -- 19 -- -------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 1,365 -- -- 36 -- ____________________________________________________________________________________________________________________ ====================================================================================================================
The underlying AIM Funds Institutional Class pay no distribution fees and the Funds pay no sales loads or other similar compensation to IADI for acquiring underlying fund shares. Certain officers and trustees of the Trust are officers and directors of Invesco Aim, IAIS and/or IADI. NOTE 3--SUPPLEMENTAL INFORMATION The Funds adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Funds' fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect each Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN SECURITIES INPUT LEVEL ------------------------------------------------- FUND NAME LEVEL 1 LEVEL 2 LEVEL 3 TOTAL ------------------------------------------------------------------------------------------------------------------ AIM Independence Now Fund $1,732,763 $-- $-- $1,732,763 ------------------------------------------------------------------------------------------------------------------ AIM Independence 2010 Fund 3,844,917 -- -- 3,844,917 ------------------------------------------------------------------------------------------------------------------ AIM Independence 2020 Fund 7,095,480 -- -- 7,095,480 ------------------------------------------------------------------------------------------------------------------ AIM Independence 2030 Fund 6,350,584 -- -- 6,350,584 ------------------------------------------------------------------------------------------------------------------ AIM Independence 2040 Fund 2,589,705 -- -- 2,589,705 ------------------------------------------------------------------------------------------------------------------ AIM Independence 2050 Fund 1,871,482 -- -- 1,871,482 __________________________________________________________________________________________________________________ ==================================================================================================================
24 AIM INDEPENDENCE FUNDS NOTE 4--SECURITY TRANSACTIONS WITH AFFILIATED FUNDS Each 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 each 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. For the six months ended June 30, 2008, each Fund engaged in transactions with affiliates as listed below:
SECURITIES SECURITIES NET REALIZED PURCHASES SALES GAINS/(LOSSES) ------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 1,167 $ 3,988 $ -- ------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 26,447 17,077 (1,901) ------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 32,254 93,991 (15,566) ------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 71,043 1,406 (46) ------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 35,172 50,488 (8,277) ------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 21,215 20,348 (3,060) _____________________________________________________________________________________________________________ =============================================================================================================
NOTE 5--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 six months ended June 30, 2008, the Funds received credits from these arrangements, which resulted in the reduction of the Funds' total expenses of:
TRANSFER AGENT CUSTODIAN CREDITS CREDITS ------------------------------------------------------------------------------------------------------ AIM Independence Now Fund $ -- $ -- ------------------------------------------------------------------------------------------------------ AIM Independence 2010 Fund -- 97 ------------------------------------------------------------------------------------------------------ AIM Independence 2020 Fund 177 136 ------------------------------------------------------------------------------------------------------ AIM Independence 2030 Fund 196 146 ------------------------------------------------------------------------------------------------------ AIM Independence 2040 Fund 160 -- ------------------------------------------------------------------------------------------------------ AIM Independence 2050 Fund 99 117 ______________________________________________________________________________________________________ ======================================================================================================
NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's Fees and Benefits" include amounts accrued by each Fund to pay remuneration to certain Trustees and Officers of such Fund. Trustees have the option to defer compensation payable by the Funds, and "Trustees' and Officer's Fees and Benefits" also include amounts accrued by each Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 Funds may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officer's Fees and Benefits" include amounts accrued by each Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Funds. During the six months ended June 30, 2008, the Funds in aggregate paid legal fees of $7,504 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees as shown below. A member of that firm is a Trustee of the Trust. NOTE 7--CASH BALANCES Each Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company ("SSB"), 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 8--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Funds capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Funds fiscal year-end. The Funds did not have a capital loss carryforward as of December 31, 2007. 25 AIM INDEPENDENCE FUNDS NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities purchased and sold and the aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes for each Fund are as follows:
FOR THE SIX MONTHS AT JUNE 30, 2008 ENDED JUNE 30, 2008* ---------------------------------------------- ------------------------- FEDERAL UNREALIZED UNREALIZED PURCHASES SALES TAX COST** APPRECIATION (DEPRECIATION) ------------------------------------------------------------------------------------------------------------------ AIM Independence Now Fund $ 686,765 $ 180,574 $1,827,693 $2,750 $ (97,680) ------------------------------------------------------------------------------------------------------------------ AIM Independence 2010 Fund 1,923,909 483,168 4,062,802 3,380 (221,265) ------------------------------------------------------------------------------------------------------------------ AIM Independence 2020 Fund 4,052,132 1,378,618 7,700,150 1,506 (606,176) ------------------------------------------------------------------------------------------------------------------ AIM Independence 2030 Fund 4,048,946 634,146 7,016,364 2,385 (668,165) ------------------------------------------------------------------------------------------------------------------ AIM Independence 2040 Fund 1,418,544 435,874 2,908,680 1,295 (320,270) ------------------------------------------------------------------------------------------------------------------ AIM Independence 2050 Fund 803,626 430,137 2,120,131 -- (248,649) __________________________________________________________________________________________________________________ ================================================================================================================== AT JUNE 30, 2008 -------------- NET UNREALIZED APPRECIATION (DEPRECIATION) ---------------------------------------------------- AIM Independence Now Fund $ (94,930) ---------------------------------------------------- AIM Independence 2010 Fund (217,885) ---------------------------------------------------- AIM Independence 2020 Fund (604,670) ---------------------------------------------------- AIM Independence 2030 Fund (665,780) ---------------------------------------------------- AIM Independence 2040 Fund (318,975) ---------------------------------------------------- AIM Independence 2050 Fund (248,649) ____________________________________________________ ====================================================
* Excludes U.S. Treasury obligations and money market funds, if any. ** Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end. NOTE 10--SHARE INFORMATION AIM INDEPENDENCE NOW FUND
CHANGES IN SHARES OUTSTANDING ---------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------------------------------------- Sold: Class A 45,748 $435,729 85,453 $ 862,785 ---------------------------------------------------------------------------------------------------------------- Class B 11,760 110,316 34,525 349,508 ---------------------------------------------------------------------------------------------------------------- Class C 4,584 43,036 7,350 73,311 ---------------------------------------------------------------------------------------------------------------- Class R 1,928 18,325 5,081 50,807 ---------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 9,924 100,030 ================================================================================================================ Issued as reinvestment of dividends: Class A 3,558 33,024 3,726 36,551 ---------------------------------------------------------------------------------------------------------------- Class B 893 8,302 1,242 12,175 ---------------------------------------------------------------------------------------------------------------- Class C 251 2,321 281 2,759 ---------------------------------------------------------------------------------------------------------------- Class R 189 1,752 289 2,846 ---------------------------------------------------------------------------------------------------------------- Institutional Class 167 1,546 363 3,588 ================================================================================================================ Automatic conversion of Class B shares to Class A shares: Class A 133 1,259 2,695 27,219 ---------------------------------------------------------------------------------------------------------------- Class B (133) (1,259) (2,695) (27,219) ================================================================================================================ Reacquired: Class A (6,938) (65,299) (9,308) (95,195) ---------------------------------------------------------------------------------------------------------------- Class B (4,259) (40,491) (1,490) (15,259) ---------------------------------------------------------------------------------------------------------------- Class C (1,097) (10,356) (6) (56) ---------------------------------------------------------------------------------------------------------------- Class R -- -- (2) (20) ---------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (4,972) (51,201) ================================================================================================================ 56,784 $538,205 132,456 $1,332,629 ________________________________________________________________________________________________________________ ================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 37% of the outstanding shares of the Fund. 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, 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, 11% of the outstanding shares are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 26 AIM INDEPENDENCE FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2010 FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ---------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------ Sold: Class A 71,500 693,539 171,813 $1,766,089 ------------------------------------------------------------------------------------------------------------------ Class B 26,867 258,828 41,774 429,020 ------------------------------------------------------------------------------------------------------------------ Class C 59,976 578,380 41,894 425,993 ------------------------------------------------------------------------------------------------------------------ Class R 25,720 250,074 14,971 154,400 ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 5,001 50,010 ================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 5,649 56,090 ------------------------------------------------------------------------------------------------------------------ Class B -- -- 973 9,643 ------------------------------------------------------------------------------------------------------------------ Class C -- -- 1,264 12,543 ------------------------------------------------------------------------------------------------------------------ Class R -- -- 394 3,914 ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 188 1,875 ================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 772 7,518 36 370 ------------------------------------------------------------------------------------------------------------------ Class B (776) (7,518) (36) (370) ================================================================================================================== Reacquired: Class A (26,655) (258,501) (13,228) (137,077) ------------------------------------------------------------------------------------------------------------------ Class B (2,959) (29,027) (8,685) (88,752) ------------------------------------------------------------------------------------------------------------------ Class C (10,389) (98,525) (3) (31) ------------------------------------------------------------------------------------------------------------------ Class R (70) (692) (3,522) (37,157) ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- -- -- ================================================================================================================== 143,986 $1,394,076 258,483 $2,646,560 __________________________________________________________________________________________________________________ ==================================================================================================================
(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, 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, 5% of the outstanding shares are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 27 AIM INDEPENDENCE FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2020 FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ---------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------ Sold: Class A 209,059 $1,996,080 322,922 $3,331,014 ------------------------------------------------------------------------------------------------------------------ Class B 60,487 569,097 109,022 1,120,921 ------------------------------------------------------------------------------------------------------------------ Class C 54,480 508,976 66,394 683,482 ------------------------------------------------------------------------------------------------------------------ Class R 89,079 843,977 70,547 726,797 ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 5,989 60,030 ================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 7,312 72,021 ------------------------------------------------------------------------------------------------------------------ Class B -- -- 2,453 24,064 ------------------------------------------------------------------------------------------------------------------ Class C -- -- 1,312 12,870 ------------------------------------------------------------------------------------------------------------------ Class R -- -- 1,671 16,441 ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 36 359 ================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 3,543 33,874 4,873 50,323 ------------------------------------------------------------------------------------------------------------------ Class B (3,566) (33,874) (4,896) (50,323) ================================================================================================================== Reacquired: Class A (67,425) (640,172) (62,885) (648,439) ------------------------------------------------------------------------------------------------------------------ Class B (4,081) (38,091) (11,813) (123,238) ------------------------------------------------------------------------------------------------------------------ Class C (27,837) (255,807) (7,885) (80,995) ------------------------------------------------------------------------------------------------------------------ Class R (26,771) (254,588) (3,974) (41,430) ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (4,816) (50,0589) ================================================================================================================== 286,968 $2,729,472 496,262 $5,103,808 __________________________________________________________________________________________________________________ ==================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 13% 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, 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. 28 AIM INDEPENDENCE FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2030 FUND
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ---------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------ Sold: Class A 154,745 $1,445,957 182,962 $1,895,799 ------------------------------------------------------------------------------------------------------------------ Class B 68,904 634,328 87,208 893,971 ------------------------------------------------------------------------------------------------------------------ Class C 62,232 583,312 78,331 799,652 ------------------------------------------------------------------------------------------------------------------ Class R 107,495 1,000,050 43,006 441,059 ------------------------------------------------------------------------------------------------------------------ Institutional Class -- 2 5,003 50,029 ================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 4,997 48,768 ------------------------------------------------------------------------------------------------------------------ Class B -- -- 2,049 19,937 ------------------------------------------------------------------------------------------------------------------ Class C -- -- 1,266 12,313 ------------------------------------------------------------------------------------------------------------------ Class R -- -- 931 9,070 ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 42 408 ================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,902 17,861 367 3,750 ------------------------------------------------------------------------------------------------------------------ Class B (1,911) (17,861) (368) (3,750) ================================================================================================================== Reacquired: Class A (17,921) (166,549) (28,965) (300,220) ------------------------------------------------------------------------------------------------------------------ Class B (3,388) (31,394) (12,226) (128,076) ------------------------------------------------------------------------------------------------------------------ Class C (5,343) (48,262) (5,727) (59,680) ------------------------------------------------------------------------------------------------------------------ Class R (7,329) (66,149) (3,852) (40,450) ------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (3,797) (40,020) ================================================================================================================== 359,386 $3,351,295 351,227 $3,602,560 __________________________________________________________________________________________________________________ ==================================================================================================================
(a) There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund that owns 8% of the outstanding shares of the Fund. IADI has an agreement with this entity to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to this entity, which is 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 this entity are owned beneficially. 29 AIM INDEPENDENCE FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2040 FUND
CHANGES IN SHARES OUTSTANDING ----------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ----------------------------------------------------------------------------------------------------------------- Sold: Class A 67,029 $ 614,377 104,656 $1,083,818 ----------------------------------------------------------------------------------------------------------------- Class B 13,547 124,180 49,991 515,565 ----------------------------------------------------------------------------------------------------------------- Class C 30,308 274,014 27,424 278,631 ----------------------------------------------------------------------------------------------------------------- Class R 24,122 220,992 15,078 153,537 ----------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 5,003 50,030 ================================================================================================================= Issued as reinvestment of dividends: Class A -- -- 3,208 31,053 ----------------------------------------------------------------------------------------------------------------- Class B -- -- 1,601 15,452 ----------------------------------------------------------------------------------------------------------------- Class C -- -- 809 7,802 ----------------------------------------------------------------------------------------------------------------- Class R -- -- 526 5,083 ----------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 195 1,890 ================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 436 4,000 168 1,695 ----------------------------------------------------------------------------------------------------------------- Class B (438) (4,000) (168) (1,695) ================================================================================================================= Reacquired: Class A (27,971) (252,307) (16,366) (169,721) ----------------------------------------------------------------------------------------------------------------- Class B (24) (215) (347) (3,667) ----------------------------------------------------------------------------------------------------------------- Class C (2,936) (27,069) (9) (91) ----------------------------------------------------------------------------------------------------------------- Class R (1,390) (12,724) (2) (21) ----------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (2) (20) ================================================================================================================= 102,683 $ 941,248 191,765 $1,969,341 _________________________________________________________________________________________________________________ =================================================================================================================
(a) 7% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 30 AIM INDEPENDENCE FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2050 FUND
CHANGES IN SHARES OUTSTANDING ----------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT ----------------------------------------------------------------------------------------------------------------- Sold: Class A 44,789 $ 407,788 130,666 $1,324,675 ----------------------------------------------------------------------------------------------------------------- Class B 10,169 92,017 19,866 204,069 ----------------------------------------------------------------------------------------------------------------- Class C 7,795 71,007 15,525 156,791 ----------------------------------------------------------------------------------------------------------------- Class R 11,458 105,299 15,221 149,001 ----------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 5,003 50,030 ================================================================================================================= Issued as reinvestment of dividends: Class A -- -- 4,563 43,941 ----------------------------------------------------------------------------------------------------------------- Class B -- -- 654 6,281 ----------------------------------------------------------------------------------------------------------------- Class C -- -- 486 4,668 ----------------------------------------------------------------------------------------------------------------- Class R -- -- 197 1,901 ----------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 209 2,012 ================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 364 3,372 1,146 11,361 ----------------------------------------------------------------------------------------------------------------- Class B (366) (3,372) (1,146) (11,361) ================================================================================================================= Reacquired: Class A (26,931) (240,150) (16,009) (167,889) ----------------------------------------------------------------------------------------------------------------- Class B (2,372) (22,114) (532) (5,446) ----------------------------------------------------------------------------------------------------------------- Class C (2,818) (24,947) (663) (6,738) ----------------------------------------------------------------------------------------------------------------- Class R (252) (2,308) (2) (21) ----------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (2) (20) ================================================================================================================= 41,836 $ 386,592 175,182 $1,763,255 _________________________________________________________________________________________________________________ =================================================================================================================
(a) There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund that owns 18% of the outstanding shares of the Fund. IADI has an agreement with this entity to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to this entity, which is 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 this entity are owned beneficially. In addition, 10% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. 31 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of each Fund outstanding throughout the periods indicated. AIM INDEPENDENCE NOW FUND
CLASS A CLASS B ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.78 $10.02 $ 9.79 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.18 0.41 0.15 0.34 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.55) (0.07) (0.56) (0.06) ========================================================================================================================== Total from investment operations (0.37) 0.34 (0.41) 0.28 ========================================================================================================================== Less distributions: Dividends from net investment income (0.25) (0.54) (0.21) (0.47) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.03) (0.04) (0.03) (0.04) ========================================================================================================================== Total distributions (0.28) (0.58) (0.24) (0.51) ========================================================================================================================== Net asset value, end of period $ 9.13 $ 9.78 $ 9.14 $ 9.79 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (3.84)% 3.47% (4.20)% 2.79% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,141 $ 807 $ 364 $ 309 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.36%(c) 0.41%(d) 1.11%(c) 1.16%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 12.68%(c) 28.75%(d) 13.43%(c) 29.50%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.68% 0.68% 0.68% 0.68% ========================================================================================================================== Ratio of net investment income to average net assets 3.91%(c) 4.41%(d) 3.16%(c) 3.66%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 11% 27% 11% 27% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $1,126,041 and $331,271 for Class A and Class B, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 32 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE NOW FUND
CLASS C CLASS R ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.79 $10.02 $ 9.78 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.15 0.34 0.17 0.39 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.57) (0.06) (0.55) (0.07) ========================================================================================================================== Total from investment operations (0.42) 0.28 (0.38) 0.32 ========================================================================================================================== Less distributions: Dividends from net investment income (0.21) (0.47) (0.24) (0.52) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.03) (0.04) (0.03) (0.04) ========================================================================================================================== Total distributions (0.24) (0.51) (0.27) (0.56) ========================================================================================================================== Net asset value, end of period $ 9.13 $ 9.79 $ 9.13 $ 9.78 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (4.30)% 2.79% (3.97)% 3.21% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 104 $ 75 $ 68 $ 53 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.11%(c) 1.16%(d) 0.61%(c) 0.66%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 13.43%(c) 29.50%(d) 12.93%(c) 29.00%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.68% 0.68% 0.68% 0.68% ========================================================================================================================== Ratio of net investment income to average net assets 3.16%(c) 3.66%(d) 3.66%(c) 4.16%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 11% 27% 11% 27% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $86,205 and $56,579 for Class C and Class R, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 33 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE NOW FUND
INSTITUTIONAL CLASS ---------------------------------------- JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.78 $10.02 ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.20 0.43 ------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.57) (0.07) ======================================================================================================= Total from investment operations (0.37) 0.36 ======================================================================================================= Less distributions: Dividends from net investment income (0.26) (0.56) ------------------------------------------------------------------------------------------------------- Distributions from net realized gains (0.03) (0.04) ======================================================================================================= Total distributions (0.29) (0.60) ======================================================================================================= Net asset value, end of period $ 9.12 $ 9.78 _______________________________________________________________________________________________________ ======================================================================================================= Total return(b) (3.83)% 3.74% _______________________________________________________________________________________________________ ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $ 50 $ 52 _______________________________________________________________________________________________________ ======================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.11%(c) 0.16%(d) ------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 12.24%(c) 28.35%(d) ======================================================================================================= Estimated acquired fund fees from underlying funds(e) 0.68% 0.68% ======================================================================================================= Ratio of net investment income to average net assets 4.16%(c) 4.66%(d) _______________________________________________________________________________________________________ ======================================================================================================= Portfolio turnover rate(f) 11% 27% _______________________________________________________________________________________________________ =======================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $50,803. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 34 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2010 FUND
CLASS A CLASS B ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.02 $10.02 $ 9.99 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.19 0.43 0.15 0.35 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.64) (0.07) (0.63) (0.06) ========================================================================================================================== Total from investment operations (0.45) 0.36 (0.48) 0.29 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.34) -- (0.30) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.02) -- (0.02) ========================================================================================================================== Total distributions -- (0.36) -- (0.32) ========================================================================================================================== Net asset value, end of period $ 9.57 $10.02 $ 9.51 $ 9.99 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (4.49)% 3.65% (4.80)% 2.92% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $2,009 $1,645 $ 544 $ 340 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.38%(c) 0.42%(d) 1.13%(c) 1.17%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 5.81%(c) 16.42%(d) 6.56%(c) 17.17%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.70% 0.70% ========================================================================================================================== Ratio of net investment income to average net assets 3.93%(c) 4.50%(d) 3.18%(c) 3.75%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 14% 15% 14% 15% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $1,924,782 and $465,320 for Class A and Class B, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 35 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2010 FUND
CLASS C CLASS R ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.00 $10.02 $10.01 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.15 0.35 0.18 0.40 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.63) (0.05) (0.64) (0.06) ========================================================================================================================== Total from investment operations (0.48) 0.30 (0.46) 0.34 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.30) -- (0.33) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.02) -- (0.02) ========================================================================================================================== Total distributions -- (0.32) -- (0.35) ========================================================================================================================== Net asset value, end of period $ 9.52 $10.00 $ 9.55 $10.01 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (4.80)% 3.02% (4.60)% 3.41% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 883 $ 431 $ 358 $ 119 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.13%(c) 1.17%(d) 0.63%(c) 0.67%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 6.56%(c) 17.17%(d) 6.06%(c) 16.67%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% 0.70% 0.70% ========================================================================================================================== Ratio of net investment income to average net assets 3.18%(c) 3.75%(d) 3.68%(c) 4.25%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 14% 15% 14% 15% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $689,989 and $314,886 for Class C and Class R, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 36 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2010 FUND
INSTITUTIONAL CLASS ---------------------------------------- JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $10.03 $10.02 ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.20 0.45 ------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.63) (0.07) ======================================================================================================= Total from investment operations (0.43) 0.38 ======================================================================================================= Less distributions: Dividends from net investment income -- (0.35) ------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.02) ======================================================================================================= Total distributions -- (0.37) ======================================================================================================= Net asset value, end of period $ 9.60 $10.03 _______________________________________________________________________________________________________ ======================================================================================================= Total return(ab (4.29)% 3.87% _______________________________________________________________________________________________________ ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $ 50 $ 52 _______________________________________________________________________________________________________ ======================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.13%(c) 0.17%(d) ------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 5.36%(c) 16.02%(d) ======================================================================================================= Estimated acquired fund fees from underlying funds(e) 0.70% 0.70% ======================================================================================================= Ratio of net investment income to average net assets 4.18%(c) 4.75%(d) _______________________________________________________________________________________________________ ======================================================================================================= Portfolio turnover rate(f) 14% 15% _______________________________________________________________________________________________________ =======================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $50,710. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 37 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2020 FUND
CLASS A CLASS B ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.96 $10.02 $ 9.92 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.15 0.41 0.12 0.34 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.88) (0.17) (0.88) (0.17) ========================================================================================================================== Total from investment operations (0.73) 0.24 (0.76) 0.17 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.25) -- (0.22) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.05) -- (0.05) ========================================================================================================================== Total distributions -- (0.30) -- (0.27) ========================================================================================================================== Net asset value, end of period $ 9.23 $ 9.96 $ 9.16 $ 9.92 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (7.33)% 2.38% (7.66)% 1.68% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $3,852 $2,711 $1,351 $ 940 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.44%(c) 0.50%(d) 1.19%(c) 1.25%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 3.82%(c) 10.04%(d) 4.57%(c) 10.79%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.78% 0.78% ========================================================================================================================== Ratio of net investment income to average net assets 3.22%(c) 4.33%(d) 2.47%(c) 3.58%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 22% 37% 22% 37% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $3,275,814 and $1,099,285 for Class A and Class B, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 38 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2020 FUND
CLASS C CLASS R ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.92 $10.02 $ 9.95 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.12 0.34 0.14 0.38 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.89) (0.17) (0.88) (0.16) ========================================================================================================================== Total from investment operations (0.77) 0.17 (0.74) 0.22 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.22) -- (0.24) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.05) -- (0.05) ========================================================================================================================== Total distributions -- (0.27) -- (0.29) ========================================================================================================================== Net asset value, end of period $ 9.15 $ 9.92 $ 9.21 $ 9.95 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (7.76)% 1.68% (7.44)% 2.19% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 791 $ 593 $1,202 $ 679 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.19%(c) 1.25%(d) 0.69%(c) 0.75%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 4.57%(c) 10.79%(d) 4.07%(c) 10.29%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% 0.78% 0.78% ========================================================================================================================== Ratio of net investment income to average net assets 2.47%(c) 3.58%(d) 2.97%(c) 4.08%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 22% 37% 22% 37% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $615,429 and $1,173,652 for Class C and Class R, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 39 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2020 FUND
INSTITUTIONAL CLASS ---------------------------------------- JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.99 $10.02 ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.16 0.43 ------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (0.89) (0.15) ======================================================================================================= Total from investment operations (0.73) 0.28 ======================================================================================================= Less distributions: Dividends from net investment income -- (0.26) ------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.05) ======================================================================================================= Total distributions -- (0.31) ======================================================================================================= Net asset value, end of period $ 9.26 $ 9.99 _______________________________________________________________________________________________________ ======================================================================================================= Total return(b) (7.31)% 2.80% _______________________________________________________________________________________________________ ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $ 11 $ 12 _______________________________________________________________________________________________________ ======================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.19%(c) 0.25%(d) ------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 3.30%(c) 9.67%(d) ======================================================================================================= Estimated acquired fund fees from underlying funds(e) 0.78% 0.78% ======================================================================================================= Ratio of net investment income to average net assets 3.47%(c) 4.58%(d) _______________________________________________________________________________________________________ ======================================================================================================= Portfolio turnover rate(f) 22% 37% _______________________________________________________________________________________________________ =======================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $11,553. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 40 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2030 FUND
CLASS A CLASS B ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.89 $10.02 $ 9.87 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.11 0.34 0.08 0.27 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.09) (0.14) (1.10) (0.13) ========================================================================================================================== Total from investment operations (0.98) 0.20 (1.02) 0.14 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.28) -- (0.24) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.05) -- (0.05) ========================================================================================================================== Total distributions -- (0.33) -- (0.29) ========================================================================================================================== Net asset value, end of period $ 8.91 $ 9.89 $ 8.85 $ 9.87 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (9.91)% 2.00% (10.33)% 1.42% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $2,655 $1,577 $ 1,241 $ 756 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.44%(c) 0.50%(d) 1.19%(c) 1.25%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 4.45%(c) 13.53%(d) 5.20%(c) 14.28%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.80% 0.80% ========================================================================================================================== Ratio of net investment income to average net assets 2.46%(c) 3.60%(d) 1.71%(c) 2.85%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 13% 31% 13% 31% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $2,095,859 and $1,026,569 for Class A and Class B, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 41 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2030 FUND
CLASS C CLASS R ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.87 $10.02 $ 9.88 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.08 0.27 0.10 0.32 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.10) (0.13) (1.10) (0.15) ========================================================================================================================== Total from investment operations (1.02) 0.14 (1.00) 0.17 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.24) -- (0.26) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.05) -- (0.05) ========================================================================================================================== Total distributions -- (0.29) -- (0.31) ========================================================================================================================== Net asset value, end of period $ 8.85 $ 9.87 $ 8.88 $ 9.88 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (10.33)% 1.42% (10.12)% 1.78% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,158 $ 729 $ 1,245 $ 396 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.19%(c) 1.25%(d) 0.69%(c) 0.75%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 5.20%(c) 14.28%(d) 4.70%(c) 13.78%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% 0.80% 0.80% ========================================================================================================================== Ratio of net investment income to average net assets 1.71%(c) 2.85%(d) 2.21%(c) 3.35%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 13% 31% 13% 31% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $968,114 and $958,835 for Class C and Class R, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 42 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2030 FUND
INSTITUTIONAL CLASS ---------------------------------------- JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.90 $10.02 ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.13 0.37 ------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.10) (0.15) ======================================================================================================= Total from investment operations (0.97) 0.22 ======================================================================================================= Less distributions: Dividends from net investment income -- (0.29) ------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.05) ======================================================================================================= Total distributions -- (0.34) ======================================================================================================= Net asset value, end of period $ 8.93 $ 9.90 _______________________________________________________________________________________________________ ======================================================================================================= Total return(b) (9.80)% 2.23% _______________________________________________________________________________________________________ ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $ 11 $ 12 _______________________________________________________________________________________________________ ======================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.19%(c) 0.25%(d) ------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 3.90%(c) 13.07%(d) ======================================================================================================= Estimated acquired fund fees from underlying funds(e) 0.80% 0.80% ======================================================================================================= Ratio of net investment income to average net assets 2.72%(c) 3.85%(d) _______________________________________________________________________________________________________ ======================================================================================================= Portfolio turnover rate(f) 13% 31% _______________________________________________________________________________________________________ =======================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $11,626. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 43 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2040 FUND
CLASS A CLASS B ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.83 $10.02 $ 9.80 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.08 0.31 0.05 0.24 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.19) (0.13) (1.18) (0.13) ========================================================================================================================== Total from investment operations (1.11) 0.18 (1.13) 0.11 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.28) -- (0.24) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.09) -- (0.09) ========================================================================================================================== Total distributions -- (0.37) -- (0.33) ========================================================================================================================== Net asset value, end of period $ 8.72 $ 9.83 $ 8.67 $ 9.80 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (11.29)% 1.81% (11.53)% 1.15% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,144 $ 901 $ 556 $ 500 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.47%(c) 0.54%(d) 1.22%(c) 1.29%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 9.80%(c) 22.43%(d) 10.55%(c) 23.18%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.81% 0.81% 0.81% 0.81% ========================================================================================================================== Ratio of net investment income to average net assets 1.83%(c) 3.26%(d) 1.08%(c) 2.51%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 20% 20% 20% 20% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $1,040,440 and $516,759 for Class A and Class B, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 44 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2040 FUND
CLASS C CLASS R ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.80 $10.02 $ 9.82 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.05 0.24 0.07 0.28 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.18) (0.13) (1.19) (0.13) ========================================================================================================================== Total from investment operations (1.13) 0.11 (1.12) 0.15 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.24) -- (0.26) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.09) -- (0.09) ========================================================================================================================== Total distributions -- (0.33) -- (0.35) ========================================================================================================================== Net asset value, end of period $ 8.67 $ 9.80 $ 8.70 $ 9.82 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (11.53)% 1.15% (11.41)% 1.59% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 482 $ 277 $ 333 $ 153 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.22%(c) 1.29%(d) 0.72%(c) 0.79%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 10.55%(c) 23.18%(d) 10.05%(c) 22.68%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.81% 0.81% 0.81% 0.81% ========================================================================================================================== Ratio of net investment income to average net assets 1.08%(c) 2.51%(d) 1.58%(c) 3.01%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 20% 20% 20% 20% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $381,662 and $246,040 for Class C and Class R, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 45 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2040 FUND
INSTITUTIONAL CLASS ---------------------------------------- JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.84 $10.02 ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.10 0.34 ------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.19) (0.14) ======================================================================================================= Total from investment operations (1.09) 0.20 ======================================================================================================= Less distributions: Dividends from net investment income -- (0.29) ------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.09) ======================================================================================================= Total distributions -- (0.38) ======================================================================================================= Net asset value, end of period $ 8.75 $ 9.84 _______________________________________________________________________________________________________ ======================================================================================================= Total return(b) (11.08)% 2.03% _______________________________________________________________________________________________________ ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $ 45 $ 51 _______________________________________________________________________________________________________ ======================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.21%(c) 0.28%(d) ------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 8.92%(c) 21.86%(d) ======================================================================================================= Estimated acquired fund fees from underlying funds(e) 0.81% 0.81% ======================================================================================================= Ratio of net investment income to average net assets 2.09%(c) 3.53%(d) _______________________________________________________________________________________________________ ======================================================================================================= Portfolio turnover rate(f) 20% 20% _______________________________________________________________________________________________________ =======================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $47,769. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 46 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2050 FUND
CLASS A CLASS B ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.78 $10.02 $ 9.75 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.06 0.29 0.03 0.21 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.23) (0.14) (1.22) (0.13) ========================================================================================================================== Total from investment operations (1.17) 0.15 (1.19) 0.08 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.29) -- (0.25) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.10) -- (0.10) ========================================================================================================================== Total distributions -- (0.39) -- (0.35) ========================================================================================================================== Net asset value, end of period $ 8.61 $ 9.78 $ 8.56 $ 9.75 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (11.96)% 1.55% (12.21)% 0.80% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 1,193 $1,177 $ 225 $ 184 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.49%(c) 0.54%(d) 1.24%(c) 1.29%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 11.35%(c) 24.63%(d) 12.10%(c) 25.38%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.82% 0.82% 0.82% 0.82% ========================================================================================================================== Ratio of net investment income to average net assets 1.35%(c) 3.01%(d) 0.60%(c) 2.26%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 25% 20% 25% 20% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $1,159,405 and $204,794 for Class A and Class B, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 47 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2050 FUND
CLASS C CLASS R ---------------------------------------- ---------------------------------------- JANUARY 31, 2007 JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, JUNE 30, TO DECEMBER 31, 2008 2007 2008 2007 -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.76 $10.02 $ 9.77 $10.02 -------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.03 0.21 0.05 0.26 -------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.23) (0.12) (1.23) (0.14) ========================================================================================================================== Total from investment operations (1.20) 0.09 (1.18) 0.12 ========================================================================================================================== Less distributions: Dividends from net investment income -- (0.25) -- (0.27) -------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.10) -- (0.10) ========================================================================================================================== Total distributions -- (0.35) -- (0.37) ========================================================================================================================== Net asset value, end of period $ 8.56 $ 9.76 $ 8.59 $ 9.77 __________________________________________________________________________________________________________________________ ========================================================================================================================== Total return(b) (12.30)% 0.90% (12.08)% 1.29% __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 174 $ 150 $ 229 $ 151 __________________________________________________________________________________________________________________________ ========================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.24%(c) 1.29%(d) 0.74%(c) 0.79%(d) -------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 12.10%(c) 25.38%(d) 11.60%(c) 24.88%(d) ========================================================================================================================== Estimated acquired fund fees from underlying funds(e) 0.82% 0.82% 0.82% 0.82% ========================================================================================================================== Ratio of net investment income to average net assets 0.60%(c) 2.26%(d) 1.10%(c) 2.76%(d) __________________________________________________________________________________________________________________________ ========================================================================================================================== Portfolio turnover rate(f) 25% 20% 25% 20% __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $156,997 and $175,583 for Class C and Class R, respectively. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 48 AIM INDEPENDENCE FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2050 FUND
INSTITUTIONAL CLASS ---------------------------------------- JANUARY 31, 2007 SIX MONTHS ENDED (COMMENCEMENT DATE) JUNE 30, TO DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 9.79 $10.02 ------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income(a) 0.07 0.31 ------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.23) (0.14) ======================================================================================================= Total from investment operations (1.16) 0.17 ======================================================================================================= Less distributions: Dividends from net investment income -- (0.30) ------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (0.10) ======================================================================================================= Total distributions -- (0.40) ======================================================================================================= Net asset value, end of period $ 8.63 $ 9.79 _______________________________________________________________________________________________________ ======================================================================================================= Total return(b) (11.85)% 1.78% _______________________________________________________________________________________________________ ======================================================================================================= Ratios/supplemental data: Net assets, end of period (000s omitted) $ 45 $ 51 _______________________________________________________________________________________________________ ======================================================================================================= Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.22%(c) 0.28%(d) ------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 10.57%(c) 24.12%(d) ======================================================================================================= Estimated acquired fund fees from underlying funds(e) 0.82% 0.82% ======================================================================================================= Ratio of net investment income to average net assets 1.62%(c) 3.27%(d) _______________________________________________________________________________________________________ ======================================================================================================= Portfolio turnover rate(f) 25% 20% _______________________________________________________________________________________________________ =======================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $47,432. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 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 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 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. 49 AIM INDEPENDENCE FUNDS NOTE 12--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 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. 50 AIM INDEPENDENCE FUNDS CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher. AIM INDEPENDENCE NOW FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,3) RATIO(3) --------------------------------------------------------------------------------------------------- A $1,000.00 $961.60 $1.76 $1,023.07 $1.81 0.36% --------------------------------------------------------------------------------------------------- B 1,000.00 958.00 5.40 1,019.34 5.57 1.11 --------------------------------------------------------------------------------------------------- C 1,000.00 957.00 5.40 1,019.34 5.57 1.11 --------------------------------------------------------------------------------------------------- R 1,000.00 960.30 2.97 1,021.83 3.07 0.61 ---------------------------------------------------------------------------------------------------
AIM INDEPENDENCE 2010 FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,3) RATIO(3) --------------------------------------------------------------------------------------------------- A $1,000.00 $955.10 $1.85 $1,022.97 $1.91 0.38% --------------------------------------------------------------------------------------------------- B 1,000.00 952.00 5.48 1,019.24 5.67 1.13 --------------------------------------------------------------------------------------------------- C 1,000.00 952.00 5.48 1,019.24 5.67 1.13 --------------------------------------------------------------------------------------------------- R 1,000.00 954.00 3.06 1,021.73 3.17 0.63 ---------------------------------------------------------------------------------------------------
51 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE 2020 FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,3) RATIO(3) --------------------------------------------------------------------------------------------------- A $1,000.00 $926.70 $2.11 $1,022.68 $2.21 0.44% --------------------------------------------------------------------------------------------------- B 1,000.00 923.40 5.69 1,018.95 5.97 1.19 --------------------------------------------------------------------------------------------------- C 1,000.00 922.40 5.69 1,018.95 5.97 1.19 --------------------------------------------------------------------------------------------------- R 1,000.00 925.60 3.30 1,021.43 3.47 0.69 ---------------------------------------------------------------------------------------------------
AIM INDEPENDENCE 2030 FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,3) RATIO(3) --------------------------------------------------------------------------------------------------- A $1,000.00 $900.90 $2.08 $1,022.68 $2.21 0.44% --------------------------------------------------------------------------------------------------- B 1,000.00 896.70 5.61 1,018.95 5.97 1.19 --------------------------------------------------------------------------------------------------- C 1,000.00 896.70 5.61 1,018.95 5.97 1.19 --------------------------------------------------------------------------------------------------- R 1,000.00 898.80 3.26 1,021.43 3.47 0.69 ---------------------------------------------------------------------------------------------------
AIM INDEPENDENCE 2040 FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,3) RATIO(3) --------------------------------------------------------------------------------------------------- A $1,000.00 $887.10 $2.21 $1,022.53 $2.36 0.47% --------------------------------------------------------------------------------------------------- B 1,000.00 884.70 5.72 1,018.80 6.12 1.22 --------------------------------------------------------------------------------------------------- C 1,000.00 884.70 5.72 1,018.80 6.12 1.22 --------------------------------------------------------------------------------------------------- R 1,000.00 885.90 3.38 1,021.28 3.62 0.72 ---------------------------------------------------------------------------------------------------
AIM INDEPENDENCE 2050 FUND
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,3) RATIO(3) --------------------------------------------------------------------------------------------------- A $1,000.00 $880.40 $2.29 $1,022.43 $2.46 0.49% --------------------------------------------------------------------------------------------------- B 1,000.00 877.90 5.79 1,018.70 6.22 1.24 --------------------------------------------------------------------------------------------------- C 1,000.00 877.00 5.79 1,018.70 6.22 1.24 --------------------------------------------------------------------------------------------------- R 1,000.00 879.20 3.46 1,021.18 3.72 0.74 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 52 AIM INDEPENDENCE FUNDS (3) Effective on May 1, 2008, the expense limit rate decreased for all classes of each fund. The annualized expense ratios, the actual expenses paid and the hypothetical expenses paid restated as if the rate changes had been in effect throughout the entire most recent fiscal half year for each fund are as follows:
--------------------------------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ---------------------------------------------------------------------------------------------------------- RESTATED EXPENSES RESTATED EXPENSES RESTATED ANNUALIZED PAID DURING PERIOD PAID DURING PERIOD EXPENSE RATIO ---------------------------------------------------------------------------------------------------------- SHARE CLASS CLASS A CLASS B CLASS C CLASS R CLASS A CLASS B CLASS C CLASS R CLASS A CLASS B CLASS C CLASS R --------------------------------------------------------------------------------------------------------------------------------- Independence Now $1.32 $4.97 $4.96 $2.53 $1.36 $5.12 $5.12 $2.61 0.27% 1.02% 1.02% 0.52% --------------------------------------------------------------------------------------------------------------------------------- Independence 2010 1.46 5.10 5.10 2.67 1.51 5.27 5.27 2.77 0.30 1.05 1.05 0.55 --------------------------------------------------------------------------------------------------------------------------------- Independence 2020 1.58 5.16 5.16 2.78 1.66 5.42 5.42 2.92 0.33 1.08 1.08 0.58 --------------------------------------------------------------------------------------------------------------------------------- Independence 2030 1.70 5.23 5.23 2.88 1.81 5.57 5.57 3.07 0.36 1.11 1.11 0.61 --------------------------------------------------------------------------------------------------------------------------------- Independence 2040 1.64 5.15 5.15 2.81 1.76 5.52 5.52 3.02 0.35 1.10 1.10 0.60 --------------------------------------------------------------------------------------------------------------------------------- Independence 2050 1.68 5.18 5.18 2.85 1.81 5.57 5.57 3.07 0.36 1.11 1.11 0.61 ---------------------------------------------------------------------------------------------------------------------------------
53 AIM INDEPENDENCE FUNDS APPROVAL OF INVESTMENT ADVISORY AGREEMENT (AIM INDEPENDENCE NOW FUND, AIM INDEPENDENCE 2010 FUND, AIM INDEPENDENCE 2020 FUND, AIM INDEPENDENCE 2030 FUND, AIM INDEPENDENCE 2040 FUND AND AIM INDEPENDENCE 2050 FUND) The Board of Trustees (the Board) of AIM In addition to their meetings their meetings throughout the year as part Growth Series (the Trust) is required throughout the year, the Sub-Committees of their ongoing oversight of such Fund. under the Investment Company Act of 1940 meet at designated contract renewal Each Fund's investment advisory agreement to approve annually the renewal of each meetings each year to conduct an in-depth and sub-advisory agreements were series portfolio of the Trust's (each, a review of the performance, fees and considered separately, although the Board Fund) investment advisory agreement with expenses of their assigned funds. During also considered the common interests of Invesco Aim Advisors, Inc. (Invesco Aim). the contract renewal process, the Trustees all of the AIM Funds in their During contract renewal meetings held on receive comparative performance and fee deliberations. The Board considered all of June 18-19, 2008, the Board as a whole and data regarding the AIM Funds (other than the information provided to them and did the disinterested or "independent" the Funds) prepared by an independent not identify any particular factor that Trustees, voting separately, approved the company, Lipper, Inc. (Lipper), under the was controlling. Each Trustee may have continuance of each Fund's investment direction and supervision of the evaluated the information provided advisory agreement for another year, independent Senior Officer who also differently from one another and effective July 1, 2008. In doing so, the prepares a separate analysis of this attributed different weight to the various Board determined that each Fund's information for the Trustees. Each factors. The Trustees recognized that the investment advisory agreement is in the Sub-Committee then makes recommendations advisory arrangements and resulting best interests of the Fund and its to the Investments Committee regarding the advisory fees for each Fund and the other shareholders and that the compensation to performance, fees and expenses of their AIM Funds are the result of years of Invesco Aim under each Fund's investment assigned funds. The Investments Committee review and negotiation between the advisory agreement is fair and reasonable. considers each Sub-Committee's Trustees and Invesco Aim, that the recommendations and makes its own Trustees may focus to a greater extent on The independent Trustees met separately recommendations regarding the performance, certain aspects of these arrangements in during their evaluation of each Fund's fees and expenses of the AIM Funds to the some years than in others, and that the investment advisory agreement with full Board. The Investments Committee also Trustees' deliberations and conclusions in independent legal counsel from whom they considers each Sub-Committee's a particular year may be based in part on received independent legal advice, and the recommendations in making its annual their deliberations and conclusions of independent Trustees also received recommendation to the Board whether to these same arrangements throughout the assistance during their deliberations from approve the continuance of each AIM Fund's year and in prior years. the independent Senior Officer, a investment advisory agreement and full-time officer of the AIM Funds who sub-advisory agreements for another year. FACTORS AND CONCLUSIONS AND SUMMARY OF reports directly to the independent INDEPENDENT WRITTEN FEE EVALUATION Trustees. The independent Trustees are assisted The discussion below serves as a summary in their annual evaluation of each Fund's of the Senior Officer's independent THE BOARD'S FUND EVALUATION PROCESS investment advisory agreement by the written evaluation with respect to each The Board's Investments Committee has independent Senior Officer. One Fund's investment advisory agreement as established three Sub-Committees that are responsibility of the Senior Officer is to well as a discussion of the material responsible for overseeing the management manage the process by which the AIM Funds' factors and related conclusions that of a number of the series portfolios of proposed management fees are negotiated formed the basis for the Board's approval the AIM Funds. This Sub-Committee during the annual contract renewal process of each Fund's investment advisory structure permits the Trustees to focus on to ensure that they are negotiated in a agreement and sub-advisory agreements. the performance of the AIM Funds that have manner that is at arms' length and Unless otherwise stated, information set been assigned to them. The Sub-Committees reasonable. Accordingly, the Senior forth below is as of June 19, 2008 and meet throughout the year to review the Officer must either supervise a does not reflect any changes that may have performance of their assigned funds, and competitive bidding process or prepare an occurred since that date, including but the Sub-Committees review monthly and independent written evaluation. The Senior not limited to changes to a Fund's quarterly comparative performance Officer has recommended that an performance, advisory fees, expense information and periodic asset flow data independent written evaluation be provided limitations and/or fee waivers. for their assigned funds. These materials and, at the direction of the Board, has are prepared under the direction and prepared an independent written I. Investment Advisory Agreement supervision of the independent Senior evaluation. Officer. Over the course of each year, the A. Nature, Extent and Quality of Sub-Committees meet with portfolio During the annual contract renewal Services Provided by Invesco Aim managers for their assigned funds and process, the Board considered the factors other members of management and review discussed below under the heading "Factors The Board reviewed the advisory services with these individuals the performance, and Conclusions and Summary of Independent provided to each Fund by Invesco Aim under investment objective(s), policies, Written Fee Evaluation" in evaluating the the Fund's investment advisory agreement, strategies and limitations of these funds. fairness and reasonableness of each Fund's the performance of Invesco Aim in investment advisory agreement and providing these services, and the sub-advisory agreements at the contract credentials and experience of the officers renewal meetings and at and employees of Invesco Aim who provide these services. The Board's review of continued
54 AIM INDEPENDENCE FUNDS the qualifications of Invesco Aim to of funds and invests its assets in each Fund. The Board noted that Invesco provide these services included the underlying funds rather than directly in Aim continues to operate at a net profit, Board's consideration of Invesco Aim's individual securities. The Board noted although increased expenses in recent portfolio and product review process, that Invesco Aim does not charge the Funds years have reduced the profitability of various back office support functions any advisory fees pursuant to the Funds' Invesco Aim and its affiliates. The Board provided by Invesco Aim and its investment advisory agreement, although concluded that each Fund's fees were fair affiliates, and Invesco Aim's equity and the underlying funds in which the Funds and reasonable, and that the level of fixed income trading operations. The Board invest pay Invesco Aim advisory fees. profits realized by Invesco Aim and its concluded that the nature, extent and Because Invesco Aim does not charge the affiliates from providing services to each quality of the advisory services provided Funds any advisory fees, the Board did not Fund was not excessive in light of the to each Fund by Invesco Aim were rely upon any comparison of services and nature, quality and extent of the services appropriate and that Invesco Aim currently fees under advisory contracts with other provided. The Board considered whether is providing satisfactory advisory funds or products advised by Invesco Aim Invesco Aim is financially sound and has services in accordance with the terms of and its affiliates. the resources necessary to perform its each Fund's investment advisory agreement. obligations under the Funds' investment In addition, based on their ongoing The Board noted that Invesco Aim has advisory agreement, and concluded that meetings throughout the year with each contractually agreed to waive fees and/or Invesco Aim has the financial resources Fund's portfolio manager or managers, the limit expenses of each Fund through at necessary to fulfill these obligations. Board concluded that these individuals are least June 30, 2009 in an amount necessary competent and able to continue to carry to limit total annual operating expenses F. Independent Written Evaluation of out their responsibilities under each to a specified percentage of average daily the Fund's Senior Officer Fund's investment advisory agreement. net assets for each class of the Fund. The Board considered the contractual nature of The Board noted that, at their direction, In determining whether to continue each this fee waiver and noted that it remains the Senior Officer of the Funds, who is Fund's investment advisory agreement, the in effect until at least June 30, 2009. independent of Invesco Aim and Invesco Board considered the prior relationship The Board also noted that Invesco Aim had Aim's affiliates, had prepared an between Invesco Aim and the Fund, as well recently increased the amount that it is independent written evaluation to assist as the Board's knowledge of Invesco Aim's contractually waiving. The Board also the Board in determining the operations, and concluded that it was considered the effect this expense reasonableness of the proposed management beneficial to maintain the current limitation would have on each Fund's fees of the AIM Funds, including the relationship, in part, because of such estimated total expenses. Funds. The Board noted that they had knowledge. The Board also considered the relied upon the Senior Officer's written steps that Invesco Aim and its affiliates D. Economies of Scale and Breakpoints evaluation instead of a competitive have taken over the last several years to bidding process. In determining whether to improve the quality and efficiency of the The Board noted that Invesco Aim does not continue each Fund's investment advisory services they provide to the AIM Funds in charge the Funds any advisory fees agreement, the Board considered the Senior the areas of investment performance, pursuant to the Funds' investment advisory Officer's written evaluation. product line diversification, agreement, although the underlying funds distribution, fund operations, shareholder in which the Funds invest pay Invesco Aim G. Collateral Benefits to Invesco Aim services and compliance. The Board advisory fees. The Board also noted that and its Affiliates concluded that the quality and efficiency each Fund shares directly in economies of of the services Invesco Aim and its scale through lower fees charged by third The Board considered various other affiliates provide to the AIM Funds in party service providers based on the benefits received by Invesco Aim and its each of these areas have generally combined size of all of the AIM Funds and affiliates resulting from Invesco Aim's improved, and support the Board's approval affiliates. relationship with the Funds, including the of the continuance of each Fund's fees received by Invesco Aim and its investment advisory agreement. E. Profitability and Financial affiliates for their provision of Resources of Invesco Aim administrative, transfer agency and B. Fund Performance distribution services to the Funds. The The Board reviewed information from Board considered the performance of The Board noted that as of the end of the Invesco Aim concerning the costs of the Invesco Aim and its affiliates in calendar year the Funds had not been in advisory and other services that Invesco providing these services and the operation for a full calendar year. The Aim and its affiliates provide to each organizational structure employed by Board considered the steps Invesco Aim has Fund and the profitability of Invesco Aim Invesco Aim and its affiliates to provide taken over the last several years to and its affiliates in providing these these services. The Board also considered improve the quality and efficiency of the services. The Board also reviewed that these services are provided to each services that Invesco Aim provides to the information concerning the financial Fund pursuant to written contracts which AIM Funds. The Board concluded that condition of Invesco Aim and its are reviewed and approved on an annual Invesco Aim continues to be responsive to affiliates. The Board also reviewed with basis by the Board. The Board concluded the Board's focus on fund performance. Invesco Aim the methodology used to that Invesco Aim and its affiliates were prepare the profitability information. The providing these services in a satisfactory C. Advisory Fees and Fee Waivers Board considered the overall profitability manner and in accordance with the terms of of Invesco Aim, as well as the their contracts, and were qualified to The Board noted that each Fund is a fund profitability of Invesco Aim in connection continue to provide with managing continued
55 AIM INDEPENDENCE FUNDS these services to each Fund. countries or on various types of investments and investment techniques, and The Board considered the benefits providing investment advisory services. realized by Invesco Aim as a result of The Board concluded that the sub-advisory portfolio brokerage transactions executed agreements will benefit each Fund and its through "soft dollar" arrangements. Under shareholders by permitting Invesco Aim to these arrangements, portfolio brokerage utilize the additional resources and commissions paid by the Funds and/or other talent of the Affiliated Sub-Advisers in funds advised by Invesco Aim are used to managing the Fund. pay for research and execution services. The Board noted that soft dollar B. Fund Performance arrangements shift the payment obligation for the research and execution services The Board did not view Fund performance from Invesco Aim to the funds and as a relevant factor in considering therefore may reduce Invesco Aim's whether to approve the sub-advisory expenses. The Board also noted that agreements for each Fund, as no Affiliated research obtained through soft dollar Sub-Adviser currently determines the arrangements may be used by Invesco Aim in allocation of any portion of each Fund's making investment decisions for each Fund assets, although an Affiliated Sub-Adviser and may therefore benefit Fund may indirectly manage a portion of each shareholders. The Board concluded that Fund's assets allocated to an underlying Invesco Aim's soft dollar arrangements fund. were appropriate. The Board also concluded that, based on their review and C. Sub-Advisory Fees representations made by Invesco Aim, these arrangements were consistent with The Board considered the services to be regulatory requirements. provided by the Affiliated Sub-Advisers pursuant to the sub-advisory agreements II. Sub-Advisory Agreements and the services to be provided by Invesco Aim pursuant to each Fund's investment A. Nature, Extent and Quality of advisory agreement, as well as the Services Provided by Affiliated allocation of fees between Invesco Aim and Sub-Advisers the Affiliated Sub-Advisers pursuant to the sub-advisory agreements. The Board The Board reviewed the services to be noted that the sub-advisory fees have no provided by AIM Funds Management Inc., direct effect on each Fund or its Invesco Trimark Ltd., Invesco Asset shareholders, as they are paid by Invesco Management Deutschland, GmbH, Invesco Aim to the Affiliated Sub-Advisers, and Asset Management Limited, Invesco Asset that Invesco Aim and the Affiliated Management (Japan) Limited, Invesco Sub-Advisers are affiliates. The Board Australia Limited, Invesco Global Asset also noted that the Affiliated Management (N.A.), Inc., Invesco Hong Kong Sub-Advisers only receive a percentage of Limited, Invesco Institutional (N.A.), the compensation that Invesco Aim receives Inc. and Invesco Senior Secured pursuant to each Fund's investment Management, Inc. (collectively, the advisory agreement, and as described "Affiliated Sub-Advisers") under the above, each Fund is a fund of funds and sub-advisory agreements and the Invesco Aim does not charge each Fund any credentials and experience of the officers advisory fees. and employees of the Affiliated Sub-Advisers who will provide these D. Financial Resources of the services. The Board concluded that the Affiliated Sub-Advisers nature, extent and quality of the services to be provided by the Affiliated The Board considered whether each Sub-Advisers were appropriate. The Board Affiliated Sub-Adviser is financially noted that the Affiliated Sub-Advisers, sound and has the resources necessary to which have offices and personnel that are perform its obligations under its geographically dispersed in financial respective sub-advisory agreement, and centers around the world, have been formed concluded that each Affiliated Sub-Adviser in part for the purpose of researching and has the financial resources necessary to compiling information and making fulfill these obligations. recommendations on the markets and economies of various countries and securities of companies located in such
56 AIM INDEPENDENCE FUNDS [INVESCO AIM LOGO] Supplement to Semiannual Report dated 6/30/08 - SERVICE MARK - AIM INDEPENDENCE FUNDS AIM Independence Now Fund AIM Independence 2010 Fund AIM Independence 2020 Fund AIM Independence 2030 Fund AIM Independence 2040 Fund AIM Independence 2050 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. Information on your Fund's expenses following the performance pages. 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 or shown to the public, nor used in written form as sales literature for public use. invescoaim.com IND-INS-2 Invesco Aim Distributors, Inc. Supplement to Semiannual Report dated 6/30/08 ========================================== ========================================== ========================================== AIM INDEPENDENCE NOW FUND AIM INDEPENDENCE 2010 FUND AIM INDEPENDENCE 2020 FUND AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS For periods ended 6/30/08 For periods ended 6/30/08 For periods ended 6/30/08 Inception (1/31/07) -0.16% Inception (1/31/07) -0.41% Inception (1/31/07) -3.36% 1 Year -3.12 1 Year -3.75 1 Year -8.28 6 Months* -3.83 6 Months* -4.29 6 Months* -7.31 * Cumulative total return that has not * Cumulative total return that has not * Cumulative total return that has not been annualized been annualized been annualized Net Expense Ratio 0.70%(1, 2) Net Expense Ratio 0.74%(1, 2) Net Expense Ratio 0.86%(1, 2) Total Expense Ratio 29.03%(1, 2) Total Expense Ratio 16.72%(1, 2) Total Expense Ratio 10.45%(1, 2) ========================================== ========================================== ========================================== ========================================== ========================================== ========================================== AIM INDEPENDENCE 2030 FUND AIM INDEPENDENCE 2040 FUND AIM INDEPENDENCE 2050 FUND AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS AVERAGE ANNUAL TOTAL RETURNS For periods ended 6/30/08 For periods ended 6/30/08 For periods ended 6/30/08 Inception (1/31/07) -5.59% Inception (1/31/07) -6.66% Inception (1/31/07) -7.40% 1 Year -12.17 1 Year -13.74 1 Year -14.78 6 Months* -9.80 6 Months* -11.08 6 Months* -11.85 * Cumulative total return that has not * Cumulative total return that has not * Cumulative total return that has not been annualized been annualized been annualized Net Expense Ratio 0.91%(1, 2) Net Expense Ratio 0.90%(1, 2) Net Expense Ratio 0.90%(1, 2) Total Expense Ratio 13.87%(1, 2) Total Expense Ratio 22.67%(1, 2) Total Expense Ratio 24.94%(1, 2) ========================================== ========================================== ========================================== Institutional Class shares have no sales report for information on comparative (1) Total annual operating expenses less charge; therefore, performance is at net benchmarks. Please consult your Fund any contractual fee waivers and/or asset value (NAV). Performance of prospectus for more information. For the expense reimbursements by the advisor Institutional Class shares will differ most current month-end performance, please in effect through at least June 30, from performance of other share classes call 800 451 4246 or visit invescoaim.com. 2009. See current prospectus for more primarily due to differing sales charges information. and class expenses. Had the advisor not waived fees and/or reimbursed expenses, performance would (2) The expense ratio includes estimated Please note that past performance is have been lower. acquired fund fees and expenses of the not indicative of future results. More underlying funds in which the Fund recent returns may be more or less than invests of 0.68% for AIM Independence those shown. All returns assume Now Fund; 0.70% for AIM Independence reinvestment of distributions at NAV. 2010 Fund; 0.78% for AIM Independence Investment return and principal value will 2020 Fund; 0.80% for AIM Independence fluctuate so your shares, when redeemed, 2030 Fund; 0.81% for AIM Independence may be worth more or less than their 2040 Fund and 0.82% for AIM original cost. See full Independence 2050 Fund.
CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur ongoing costs. 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 January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If indirect expenses were included, your costs would have been higher.
----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED INSTITUTIONAL ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2,3) (06/30/08) PERIOD(2,4) RATIO(2) ----------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $1,000.00 $961.70 $0.54 $1,024.32 $0.55 0.11% ----------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 1,000.00 957.10 0.63 1,024.22 0.65 0.13 ----------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 1,000.00 926.90 0.91 1,023.92 0.96 0.19 ----------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 1,000.00 902.00 0.90 1,023.92 0.96 0.19 ----------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 1,000.00 889.20 0.99 1,023.82 1.06 0.21 ----------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 1,000.00 881.50 1.03 1,023.77 1.11 0.22 -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. Effective on May 1, 2008, the expense limit rate decreased for Institutional Class for each Fund. The annualized expense ratio restated as if this change had been in effect throughout the entire most recent fiscal half year is 0.02%, 0.05%, 0.08%, 0.11%, 0.09% and 0.09% for AIM Independence Now Fund, AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund, respectively. (3) The actual expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent fiscal half year are $0.10, $0.24, $0.38, $0.52, $0.42 and $0.42 for AIM Independence Now Fund, AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund, respectively. (4) The hypothetical expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent fiscal half year are $0.10, $0.25, $0.40, $0.55, $0.45 and $0.45 for AIM Independence Now Fund, AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund, respectively. AIM INDEPENDENCE FUNDS PROXY RESULTS AIM INDEPENDENCE NOW FUND AIM INDEPENDENCE 2010 FUND AIM INDEPENDENCE 2020 FUND AIM INDEPENDENCE 2030 FUND AIM INDEPENDENCE 2040 FUND AIM INDEPENDENCE 2050 FUND Special Meetings ("Meetings") of Shareholders of AIM Independence Now Fund, AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund, all investment portfolios of AIM Growth Series, a Delaware statutory trust ("Trust"), were held on February 29, 2008. The Meetings were held for the following purpose: (1) 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 matter were as follows:
VOTES WITHHELD/ BROKER MATTER VOTES FOR AGAINST ABSTENTIONS NON-VOTES -------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund............................ 73,873 128 0 40,569 AIM Independence 2010 Fund........................... 134,828 7,194 1,184 51,157 AIM Independence 2020 Fund........................... 191,367 2,127 4,233 64,975 AIM Independence 2030 Fund........................... 112,254 390 1,609 53,217 AIM Independence 2040 Fund........................... 76,265 145 0 13,998 AIM Independence 2050 Fund........................... 81,173 1,446 502 14,923
The Meetings were adjourned until March 28, 2008, with respect to the following proposals: (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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** ----------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker...................................................... 259,205,198 10,486,394 Frank S. Bayley................................................... 259,256,384 10,435,208 James T. Bunch.................................................... 258,142,293 11,549,299 Bruce L. Crockett................................................. 258,143,390 11,548,202 Albert R. Dowden.................................................. 259,201,224 10,490,368 Jack M. Fields.................................................... 259,317,796 10,373,796 Martin L. Flanagan................................................ 259,304,758 10,386,834 Carl Frischling................................................... 259,178,445 10,513,147 Prema Mathai-Davis................................................ 259,255,582 10,436,010 Lewis F. Pennock.................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ................................................ 258,048,313 11,643,279 Raymond Stickel, Jr. ............................................. 258,206,591 11,485,001 Philip A. Taylor.................................................. 259,264,092 10,427,500
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................................ 182,780,828 23,098,525 6,564,572 57,247,667
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 57 AIM INDEPENDENCE FUNDS ==================================================================================================================================== EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 3. Select "Register for eDelivery" and complete the consent the 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, 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 [INVESCO AIM LOGO] investment advisory services to individual and institutional clients and do not sell - SERVICE MARK - securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 IND-SAR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM INTERNATIONAL ALLOCATION FUND - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 [MOUNTAIN GRAPHIC] AIM Investments 2 Fund Performance became INVESCO AIM 3 Letter to Shareholders on March 31, 2008. 4 Schedule of Investments 5 Financial Statements For more details, go to 8 Notes to Financial Statements invescoaim.com 13 Financial Highlights 19 Fund Expenses 20 Approval of Investment Advisory Agreement 23 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND PERFORMANCE ======================================================================================= PERFORMANCE SUMMARY FUND VS. INDEXES Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. Class A Shares -13.01% Class B Shares -13.37 Class C Shares -13.31 Class R Shares -13.17 MSCI EAFE Index(triangle) (Broad Market Index and Style-Specific Index) -10.96 Lipper International Multi-Cap Core Funds Index(triangle) (Peer Group Index) -10.87 (triangle)Lipper Inc. The MSCI EAFE--REGISTERED TRADEMARK-- INDEX is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the U.S. and Canada. The LIPPER INTERNATIONAL MULTI-CAP CORE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper International Multi-Cap Core Funds category. These funds typically have an average price-to-cash flow ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P/Citigroup World ex-U.S. BMI. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index does not. ======================================================================================= ========================================== DEDUCTION OF TAXES A SHAREHOLDER WOULD SHARES DECLINES FROM 5% BEGINNING AT THE AVERAGE ANNUAL TOTAL RETURNS PAY ON FUND DISTRIBUTIONS OR SALE OF FUND TIME OF PURCHASE TO 0% AT THE BEGINNING SHARES. INVESTMENT RETURN AND PRINCIPAL OF THE SEVENTH YEAR. THE CDSC ON CLASS C As of 6/30/08, including maximum VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE SHARES IS 1% FOR THE FIRST YEAR AFTER applicable sales charges A GAIN OR LOSS WHEN YOU SELL SHARES. PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS SHOWN ARE CLASS A SHARES THE NET ANNUAL FUND OPERATING EXPENSE AT NET ASSET VALUE AND DO NOT REFLECT A Inception (10/31/05) 8.29% RATIO SET FORTH IN THE MOST RECENT FUND 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL 1 Year -18.10 PROSPECTUS AS OF THE DATE OF THIS REPORT REDEMPTION OF RETIREMENT PLAN ASSETS FOR CLASS A, CLASS B, CLASS C AND CLASS R WITHIN THE FIRST YEAR. CLASS B SHARES SHARES WAS 1.40%, 2.15%, 2.15% AND 1.65%, Inception (10/31/05) 8.83% RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND THE PERFORMANCE OF THE FUND'S SHARE 1 Year -18.13 OPERATING EXPENSE RATIO SET FORTH IN THE CLASSES WILL DIFFER PRIMARILY DUE TO MOST RECENT FUND PROSPECTUS AS OF THE DIFFERENT SALES CHARGE STRUCTURES AND CLASS C SHARES DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS EXPENSES. Inception (10/31/05) 9.80% CLASS C AND CLASS R SHARES WAS 1.56%, 1 Year -14.73 2.31%, 2.31% AND 1.81%(2), RESPECTIVELY. HAD THE ADVISOR NOT WAIVED FEES AND/OR THE EXPENSE RATIOS PRESENTED ABOVE MAY REIMBURSED EXPENSES, PERFORMANCE WOULD CLASS R SHARES VARY FROM THE EXPENSE RATIOS PRESENTED IN HAVE BEEN LOWER. Inception (10/31/05) 10.34% OTHER SECTIONS OF THIS REPORT THAT ARE 1 Year -13.48 BASED ON EXPENSES INCURRED DURING THE A REDEMPTION FEE OF 2% WILL BE IMPOSED ========================================== PERIOD COVERED BY THIS REPORT. ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF THE FUND WITHIN 30 DAYS OF PURCHASE. THE PERFORMANCE DATA QUOTED REPRESENT CLASS A SHARE PERFORMANCE REFLECTS THE EXCEPTIONS TO THE REDEMPTION FEE ARE PAST PERFORMANCE AND CANNOT GUARANTEE MAXIMUM 5.50% SALES CHARGE, AND CLASS B LISTED IN THE FUND'S PROSPECTUS. COMPARABLE FUTURE RESULTS; CURRENT AND CLASS C SHARE PERFORMANCE REFLECTS PERFORMANCE MAY BE LOWER OR HIGHER. THE APPLICABLE CONTINGENT DEFERRED SALES (1) Total annual operating expenses less PLEASE VISIT INVESCOAIM.COM FOR THE MOST CHARGE (CDSC) FOR THE PERIOD INVOLVED. any contractual fee waivers and/or RECENT MONTH-END PERFORMANCE. PERFORMANCE THE CDSC ON CLASS B expense reimbursements by the FIGURES REFLECT REINVESTED DISTRIBUTIONS, advisor are in effect through at CHANGES IN NET ASSET VALUE AND THE EFFECT least June 30, 2009. See current OF THE MAXIMUM SALES CHARGE UNLESS prospectus for more information. OTHERWISE STATED. PERFORMANCE FIGURES DO NOT REFLECT (2) The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.96% for AIM International Allocation Fund.
2 AIM INTERNATIONAL ALLOCATION FUND Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing considerable investor anxiety, reminding us again that markets are cyclical and the correction of excess is [CROCKETT PHOTO] often painful, at least in the short-term. Your Board of Trustees believes in the wisdom of a long-term perspective and consistent investment discipline. We continue to put your interests Bruce Crockett 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 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 Web site (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 e-mail 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 August 11, 2008 3 AIM INTERNATIONAL ALLOCATION FUND AIM INTERNATIONAL ALLOCATION FUND PORTFOLIO COMPOSITION By asset class, based on Net Assets as of June 30, 2008
% OF TOTAL NET TARGET ASSETS AS OF ASSET CLASS ALLOCATION 06/30/08 ----------------------------------------------------------------------------------------------- Emerging Markets 5.00% 5.11% ----------------------------------------------------------------------------------------------- International/Global Blend 35.00 34.48 ----------------------------------------------------------------------------------------------- International/Global Growth 32.50 32.35 ----------------------------------------------------------------------------------------------- International/Global Value 27.50 28.46 ----------------------------------------------------------------------------------------------- Other Assets Less Liabilities (0.40) _______________________________________________________________________________________________ ===============================================================================================
SCHEDULE OF INVESTMENTS June 30, 2008 (Unaudited)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME ----------------------------------------------------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.40%(a) AIM Developing Markets Fund 5.11% $ 22,480,628 $ 613,871 $ (1,972,276) $ (3,502,779) $ 539,543 $-- ----------------------------------------------------------------------------------------------------------------------------- AIM Global Core Equity Fund(b) 28.46% 111,578,603 8,987,395 (4,676,398) (14,641,613) (97,158) -- ----------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 34.48% 145,204,135 4,408,653 (8,898,240) (18,642,272) 477,089 -- ----------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 22.59% 95,117,220 2,762,419 (6,224,317) (12,406,273) 1,067,312 -- ----------------------------------------------------------------------------------------------------------------------------- AIM International Small Co. Fund 9.76% 40,595,010 2,087,661 (1,669,083) (6,090,928) (236,797) -- ============================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $408,601,777) 100.40% 414,975,596 18,859,999 (23,440,314) (55,283,865) 1,749,989 -- ============================================================================================================================= OTHER ASSETS LESS LIABILITIES (0.40)% ============================================================================================================================= NET ASSETS 100.00% _____________________________________________________________________________________________________________________________ ============================================================================================================================= SHARES VALUE 06/30/08 06/30/08 -------------------------------------------------------------- SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.40%(a) AIM Developing Markets Fund 622,309 $ 18,158,987 -------------------------------------------------------------- AIM Global Core Equity Fund(b) 7,367,140 101,150,829 -------------------------------------------------------------- AIM International Core Equity Fund 9,741,603 122,549,365 -------------------------------------------------------------- AIM International Growth Fund 2,813,183 80,316,361 -------------------------------------------------------------- AIM International Small Co. Fund 1,823,652 34,685,863 ============================================================== TOTAL INVESTMENTS IN AFFILIATED UNDERLYING FUNDS (Cost $408,601,777) 356,861,405 ============================================================== OTHER ASSETS LESS LIABILITIES (1,417,707) ============================================================== NET ASSETS $355,443,698 ______________________________________________________________ ==============================================================
Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment advisor or an investment advisor under common control with the Fund's investment advisor. The Fund invests in Institutional Class shares of the AIM funds listed. (b) Effective July 24, 2008, AIM Global Value Fund name changed to AIM Global Core Equity Fund. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 4 AIM INTERNATIONAL ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited) ASSETS: Investments in affiliated underlying funds, at value (Cost $408,601,777) $356,861,405 -------------------------------------------------------------------------------- Receivables for: Investments sold -- affiliated underlying funds 414,559 -------------------------------------------------------------------------------- Fund shares sold 475,651 -------------------------------------------------------------------------------- Fund expenses absorbed 6,443 -------------------------------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 7,587 -------------------------------------------------------------------------------- Other assets 27,946 ================================================================================ Total assets 357,793,591 ________________________________________________________________________________ ================================================================================ LIABILITIES: Payables for: Fund shares reacquired 1,991,875 -------------------------------------------------------------------------------- Accrued fees to affiliates 291,567 -------------------------------------------------------------------------------- Accrued operating expenses 51,448 -------------------------------------------------------------------------------- Trustee deferred compensation and retirement plans 15,003 ================================================================================ Total liabilities 2,349,893 ================================================================================ Net assets applicable to shares outstanding $355,443,698 ________________________________________________________________________________ ================================================================================ NET ASSETS CONSIST OF: Shares of beneficial interest $381,086,384 -------------------------------------------------------------------------------- Undistributed net investment income (loss) (1,130,861) -------------------------------------------------------------------------------- Undistributed net realized gain 27,228,547 -------------------------------------------------------------------------------- Unrealized appreciation (depreciation) (51,740,372) ================================================================================ $355,443,698 ________________________________________________________________________________ ================================================================================ NET ASSETS: Class A $242,629,581 ________________________________________________________________________________ ================================================================================ Class B $ 34,312,731 ________________________________________________________________________________ ================================================================================ Class C $ 74,114,627 ________________________________________________________________________________ ================================================================================ Class R $ 4,274,762 ________________________________________________________________________________ ================================================================================ Institutional Class $ 111,997 ________________________________________________________________________________ ================================================================================ SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 19,723,306 ________________________________________________________________________________ ================================================================================ Class B 2,817,045 ________________________________________________________________________________ ================================================================================ Class C 6,086,862 ________________________________________________________________________________ ================================================================================ Class R 348,632 ________________________________________________________________________________ ================================================================================ Institutional Class 9,072 ________________________________________________________________________________ ================================================================================ Class A: Net asset value per share $ 12.30 -------------------------------------------------------------------------------- Maximum offering price per share (Net asset value of $12.30 divided by 94.50%) $ 13.02 ________________________________________________________________________________ ================================================================================ Class B: Net asset value and offering price per share $ 12.18 ________________________________________________________________________________ ================================================================================ Class C: Net asset value and offering price per share $ 12.18 ________________________________________________________________________________ ================================================================================ Class R: Net asset value and offering price per share $ 12.26 ________________________________________________________________________________ ================================================================================ Institutional Class: Net asset value and offering price per share $ 12.35 ________________________________________________________________________________ ================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 5 AIM INTERNATIONAL ALLOCATION FUND STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited) INVESTMENT INCOME: Other Income $ 61 ================================================================================================ EXPENSES: Administrative services fees 63,227 ------------------------------------------------------------------------------------------------ Custodian fees 3,981 ------------------------------------------------------------------------------------------------ Distribution fees: Class A 320,407 ------------------------------------------------------------------------------------------------ Class B 182,330 ------------------------------------------------------------------------------------------------ Class C 398,529 ------------------------------------------------------------------------------------------------ Class R 10,656 ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C and R 472,192 ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 15 ------------------------------------------------------------------------------------------------ Trustees' and officer's fees and benefits 12,900 ------------------------------------------------------------------------------------------------ Other 88,949 ================================================================================================ Total expenses 1,553,186 ================================================================================================ Less: Expenses reimbursed and expense offset arrangement(s) (300,525) ================================================================================================ Net expenses 1,252,661 ================================================================================================ Net investment income (loss) (1,252,600) ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain from affiliated underlying fund shares 1,748,659 ================================================================================================ Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (55,283,865) ================================================================================================ Net gain (loss) from affiliated underlying funds (53,535,206) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(54,787,806) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 6 AIM INTERNATIONAL ALLOCATION FUND STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
JUNE 30, DECEMBER 31, 2008 2007 ------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income (loss) $ (1,252,600) $ 6,627,647 ------------------------------------------------------------------------------------------------------ Net realized gain 1,748,659 27,481,521 ------------------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) (55,283,865) (8,732,328) ====================================================================================================== Net increase (decrease) in net assets resulting from operations (54,787,806) 25,376,840 ====================================================================================================== Distributions to shareholders from net investment income: Class A -- (4,912,958) ------------------------------------------------------------------------------------------------------ Class B -- (482,883) ------------------------------------------------------------------------------------------------------ Class C -- (1,057,738) ------------------------------------------------------------------------------------------------------ Class R -- (64,616) ------------------------------------------------------------------------------------------------------ Institutional Class -- (1,257) ====================================================================================================== Total distributions from net investment income -- (6,519,452) ====================================================================================================== Distributions to shareholders from net realized gains: Class A -- (4,929,576) ------------------------------------------------------------------------------------------------------ Class B -- (724,382) ------------------------------------------------------------------------------------------------------ Class C -- (1,586,910) ------------------------------------------------------------------------------------------------------ Class R -- (73,236) ------------------------------------------------------------------------------------------------------ Institutional Class -- (1,132) ====================================================================================================== Total distributions from net realized gains -- (7,315,236) ====================================================================================================== Share transactions-net: Class A (608,430) 142,842,274 ------------------------------------------------------------------------------------------------------ Class B (728,209) 17,259,257 ------------------------------------------------------------------------------------------------------ Class C (3,863,431) 47,695,599 ------------------------------------------------------------------------------------------------------ Class R 649,803 3,114,835 ------------------------------------------------------------------------------------------------------ Institutional Class 60,501 (11,107) ====================================================================================================== Net increase (decrease) in net assets resulting from share transactions (4,489,766) 210,900,858 ====================================================================================================== Net increase (decrease) in net assets (59,277,572) 222,443,010 ====================================================================================================== NET ASSETS: Beginning of period 414,721,270 192,278,260 ====================================================================================================== End of period (including undistributed net investment income (loss) of $(1,130,861) and $121,739, respectively) $355,443,698 $414,721,270 ______________________________________________________________________________________________________ ======================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 7 AIM INTERNATIONAL ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM International Allocation Fund (the "Fund") is a series portfolio of AIM Growth Series (the "Trust"). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series 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 to provide long-term growth of capital. The Fund is a "fund of funds", in that it invests in the Institutional Class of other mutual funds ("underlying funds") advised by Invesco Aim Advisors, Inc. (the "Advisor" or "Invesco Aim"). The Advisor may change the Fund's asset class allocations, the underlying funds or the target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund's accounting policies are outlined in the underlying fund's financial statements and are available upon request. A. SECURITY VALUATIONS -- Investments in underlying funds are valued at the end of the day net asset value per share. Securities in the underlying funds, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and 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. 8 AIM INTERNATIONAL ALLOCATION 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. Distributions from income from underlying funds, if any, are recorded as dividend income on ex-dividend date. Distributions from net realized capital gains from underlying funds, if any, are recorded as realized gains on the ex-dividend date. Interest income is recorded on the accrual basis from settlement date. The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. C. DISTRIBUTIONS -- Distributions from income and net realized capital gain, if any, are generally paid annually and recorded on ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to 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. E. EXPENSES -- Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include any expenses of the underlying funds. The results of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. G. 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. H. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions, 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. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust has entered into a master investment advisory agreement with Invesco Aim. Under the terms of the investment advisory agreement, the Funds do not pay an advisory fee. However, each Fund pays advisory fees to Invesco Aim indirectly as a shareholder of the underlying funds. Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). The Advisor has contractually agreed to reimburse expenses to the extent necessary to limit other expenses (excluding certain items discussed below) of Class A, Class B, Class C, Class R and Institutional Class shares to 0.18% of average daily net assets, respectively, through at least June 30, 2009. In determining the advisor's obligation to reimburse expenses, the following expenses are not taken into account, and could cause other expenses to exceed the numbers reflected above: (i) 12b-1 plan payments, if any; (ii) interest; (iii) taxes; (iv) dividend expense on short sales; (v) extraordinary items; (vi) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; (vii) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds; and (viii) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement 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. To the extent that the annualized expense ratio does not exceed the expense limitation, the Advisor will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year. For the six months ended June 30, 2008, the Advisor reimbursed class level expenses of $291,812 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 six months ended June 30, 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 six months ended June 30, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. 9 AIM INTERNATIONAL ALLOCATION FUND 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2008, IADI advised the Fund that IADI retained $61,299 in front-end sales commissions from the sale of Class A shares and $13,210, $38,068, $15,878 and $0 from Class A, Class B, Class C and Class R shares, respectively, for CDSC imposed on redemptions by shareholders. The underlying funds pay no distribution fees and the Fund pays no sales loads or other similar compensation to ADI for acquiring underlying fund shares. Certain officers and trustees of the Trust are officers and directors of Invesco Aim, IAIS and/or IADI. NOTE 3--SUPPLEMENTAL INFORMATION The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN INPUT LEVEL SECURITIES -------------------------------------- Level 1 $356,861,405 -------------------------------------- Level 2 -- -------------------------------------- Level 3 -- ====================================== $356,861,405 ______________________________________ ======================================
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 six months ended June 30, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $8,713. 10 AIM INTERNATIONAL ALLOCATION FUND NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's 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 Officer's 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 Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the six months ended June 30, 2008, the Fund paid legal fees of $1,963 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 ("SSB"), 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 7--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. The Fund did not have a capital loss carryforward as of December 31, 2007. NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2008 was $18,859,999 and $23,440,314, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $ 1,111,991 ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (52,853,131) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(51,741,140) ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $408,602,545.
11 AIM INTERNATIONAL ALLOCATION FUND NOTE 9--SHARE INFORMATION
CHANGES IN SHARES OUTSTANDING ------------------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 3,202,070 $ 41,617,068 11,880,798 $169,089,634 ------------------------------------------------------------------------------------------------------------------------ Class B 450,112 5,803,486 1,674,498 23,632,252 ------------------------------------------------------------------------------------------------------------------------ Class C 657,826 8,490,797 3,826,633 54,094,130 ------------------------------------------------------------------------------------------------------------------------ Class R 101,423 1,312,625 237,750 3,410,218 ------------------------------------------------------------------------------------------------------------------------ Institutional Class 4,531 60,500 3,740 53,500 ======================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 670,710 9,282,552 ------------------------------------------------------------------------------------------------------------------------ Class B -- -- 82,234 1,130,716 ------------------------------------------------------------------------------------------------------------------------ Class C -- -- 183,014 2,516,072 ------------------------------------------------------------------------------------------------------------------------ Class R -- -- 9,911 136,869 ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- 172 2,389 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 152,842 1,980,155 220,322 3,154,290 ------------------------------------------------------------------------------------------------------------------------ Class B (154,080) (1,980,155) (222,068) (3,154,290) ======================================================================================================================== Reacquired:(b) Class A (3,437,315) (44,205,653) (2,707,228) (38,684,202) ------------------------------------------------------------------------------------------------------------------------ Class B (357,532) (4,551,540) (306,637) (4,349,421) ------------------------------------------------------------------------------------------------------------------------ Class C (964,031) (12,354,228) (627,331) (8,914,603) ------------------------------------------------------------------------------------------------------------------------ Class R (51,090) (662,822) (30,039) (432,252) ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- 1 (4,567) (66,996) ======================================================================================================================== (395,244) $ (4,489,766) 14,891,912 $210,900,858 ________________________________________________________________________________________________________________________ ========================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% of the outstanding shares of the Fund. IADI has an agreement with these entities to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco Aim and/or Invesco Aim affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. (b) Net of redemption fees of $7,189 and $15,005 which were allocated among the classes based on relative net assets of each class for the six months ended June 30, 2008 and the year ended December 31, 2007, respectively. 12 AIM INTERNATIONAL ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ------------------------------------------------------------------ YEAR ENDED DECEMBER OCTOBER 31,2005 SIX MONTHS ENDED 31, (COMMENCEMENT DATE) JUNE 30, --------------------- TO DECEMBER 31, 2008 2007 2006 2005 -------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.14 $ 13.29 $ 10.71 $10.12 -------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.03) 0.32 0.42 0.32 -------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.81) 1.05 2.41 0.47 ==================================================================================================================== Total from investment operations (1.84) 1.37 2.83 0.79 ==================================================================================================================== Less distributions: Dividends from net investment income - (0.26) (0.23) (0.20) -------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains - (0.26) (0.02) - ==================================================================================================================== Total distributions - (0.52) (0.25) (0.20) ==================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 - ==================================================================================================================== Net asset value, end of period $ 12.30 $ 14.14 $ 13.29 $10.71 ____________________________________________________________________________________________________________________ ==================================================================================================================== Total return(b) (13.01)% 10.37% 26.42% 7.78% ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $242,630 $280,140 $129,474 $5,848 ____________________________________________________________________________________________________________________ ==================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.43%(c) 0.44% 0.44% 0.43%(d) -------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.58%(c) 0.60% 0.84% 7.30%(d) -------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.96% 0.96% 1.01% 1.15% ==================================================================================================================== Ratio of net investment income (loss) to average net assets (0.43)%(c) 2.25% 3.36% 17.87%(d) ____________________________________________________________________________________________________________________ ==================================================================================================================== Portfolio turnover rate(f) 5% 2% 2% 0.3% ____________________________________________________________________________________________________________________ ====================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $257,733,936. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 13 AIM INTERNATIONAL ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS B ---------------------------------------------------------------- YEAR ENDED DECEMBER OCTOBER 31,2005 SIX MONTHS ENDED 31, (COMMENCEMENT DATE) JUNE 30, ------------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.06 $ 13.23 $ 10.70 $10.12 ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.08) 0.21 0.32 0.31 ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.80) 1.05 2.41 0.46 =================================================================================================================== Total from investment operations (1.88) 1.26 2.73 0.77 =================================================================================================================== Less distributions: Dividends from net investment income - (0.17) (0.18) (0.19) ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains - (0.26) (0.02) - =================================================================================================================== Total distributions - (0.43) (0.20) (0.19) =================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 - =================================================================================================================== Net asset value, end of period $ 12.18 $ 14.06 $ 13.23 $10.70 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(b) (13.37)% 9.61% 25.50% 7.65% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $34,313 $40,466 $21,839 $1,430 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.18%(c) 1.19% 1.19% 1.18%(d) ------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.33%(c) 1.34% 1.59% 8.05%(d) ------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.96% 0.96% 1.01% 1.15% =================================================================================================================== Ratio of net investment income (loss) to average net assets (1.18)%(c) 1.50% 2.61% 17.12%(d) ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate(f) 5% 2% 2% 0.3% ___________________________________________________________________________________________________________________ ===================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $36,666,290. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 14 AIM INTERNATIONAL ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C ---------------------------------------------------------------- YEAR ENDED DECEMBER OCTOBER 31,2005 SIX MONTHS ENDED 31, (COMMENCEMENT DATE) JUNE 30, ------------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 14.05 $ 13.23 $ 10.70 $10.12 ------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.08) 0.21 0.32 0.31 ------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.79) 1.04 2.41 0.46 =================================================================================================================== Total from investment operations (1.87) 1.25 2.73 0.77 =================================================================================================================== Less distributions: Dividends from net investment income - (0.17) (0.18) (0.19) ------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains - (0.26) (0.02) - =================================================================================================================== Total distributions - (0.43) (0.20) (0.19) =================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 - =================================================================================================================== Net asset value, end of period $ 12.18 $ 14.05 $ 13.23 $10.70 ___________________________________________________________________________________________________________________ =================================================================================================================== Total return(b) (13.31)% 9.53% 25.50% 7.65% ___________________________________________________________________________________________________________________ =================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $74,115 $89,841 $39,826 $1,937 ___________________________________________________________________________________________________________________ =================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.18%(c) 1.19% 1.19% 1.18%(d) ------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.33%(c) 1.35% 1.59% 8.05%(d) ------------------------------------------------------------------------------------------------------------------- Estimated acquired fund fees from underlying funds(e) 0.96% 0.96% 1.01% 1.15% =================================================================================================================== Ratio of net investment income (loss) to average net assets (1.18)%(c) 1.50% 2.61% 17.12%(d) ___________________________________________________________________________________________________________________ =================================================================================================================== Portfolio turnover rate(f) 5% 2% 2% 0.3% ___________________________________________________________________________________________________________________ ===================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $80,143,826. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 15 AIM INTERNATIONAL ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS R -------------------------------------------------------------- YEAR ENDED OCTOBER 31,2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 14.12 $13.27 $10.71 $10.12 ------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss)(a) (0.04) 0.29 0.39 0.32 ------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.82) 1.05 2.40 0.46 ================================================================================================================== Total from investment operations (1.86) 1.34 2.79 0.78 ================================================================================================================== Less distributions: Dividends from net investment income - (0.23) (0.21) (0.19) ------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains - (0.26) (0.02) - ================================================================================================================== Total distributions - (0.49) (0.23) (0.19) ================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 - ================================================================================================================== Net asset value, end of period $ 12.26 $14.12 $13.27 $10.71 __________________________________________________________________________________________________________________ ================================================================================================================== Total return(b) (13.17)% 10.16% 26.07% 7.77% __________________________________________________________________________________________________________________ ================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 4,275 $4,211 $1,071 $ 74 __________________________________________________________________________________________________________________ ================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.68%(c) 0.69% 0.69% 0.68%(d) ------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 0.83%(c) 0.85% 1.09% 7.55%(d) ------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.96% 0.96% 1.01% 1.15% ================================================================================================================== Ratio of net investment income (loss) to average net assets (0.68)%(c) 2.00% 3.11% 17.62%(d) __________________________________________________________________________________________________________________ ================================================================================================================== Portfolio turnover rate(f) 5% 2% 2% 0.3% __________________________________________________________________________________________________________________ ==================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $4,285,900. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (f) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 16 AIM INTERNATIONAL ALLOCATION FUND NOTE 10--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS -------------------------------------------------------------- YEAR ENDED OCTOBER 31,2005 SIX MONTHS ENDED DECEMBER 31, (COMMENCEMENT DATE) JUNE 30, ----------------- TO DECEMBER 31, 2008 2007 2006 2005 ------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 14.17 $13.31 $10.72 $10.12 ------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss)(a) (0.01) 0.36 0.44 0.32 ------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.81) 1.05 2.41 0.48 ================================================================================================================== Total from investment operations (1.82) 1.41 2.85 0.80 ================================================================================================================== Less distributions: Dividends from net investment income - (0.29) (0.24) (0.20) ------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains - (0.26) (0.02) - ================================================================================================================== Total distributions - (0.55) (0.26) (0.20) ================================================================================================================== Redemption fees added to shares of beneficial interest 0.00 0.00 0.00 - ================================================================================================================== Net asset value, end of period $ 12.35 $14.17 $13.31 $10.72 __________________________________________________________________________________________________________________ ================================================================================================================== Total return(b) (12.91)% 10.66% 26.64% 7.90% __________________________________________________________________________________________________________________ ================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $ 112 $ 64 $ 69 $ 55 __________________________________________________________________________________________________________________ ================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.13%(c) 0.17% 0.18% 0.18%(d) ------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 0.13%(c) 0.17% 0.34% 6.92%(d) ------------------------------------------------------------------------------------------------------------------ Estimated acquired fund fees from underlying funds(e) 0.96% 0.96% 1.01% 1.15% ================================================================================================================== Ratio of net investment income (loss) to average net assets (0.13)%(c) 2.52% 3.62% 18.12%(d) __________________________________________________________________________________________________________________ ================================================================================================================== Portfolio turnover rate(f) 5% 2% 2% 0.3% __________________________________________________________________________________________________________________ ==================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $76,491. (d) Annualized. (e) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. (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 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. 17 AIM INTERNATIONAL ALLOCATION FUND NOTE 11--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 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. 18 AIM INTERNATIONAL ALLOCATION FUND CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
--------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $869.90 $2.00 $1,022.73 $2.16 0.43% --------------------------------------------------------------------------------------------------- B 1,000.00 866.30 5.48 1,019.00 5.92 1.18 --------------------------------------------------------------------------------------------------- C 1,000.00 866.90 5.48 1,019.00 5.92 1.18 --------------------------------------------------------------------------------------------------- R 1,000.00 868.30 3.16 1,021.48 3.42 0.68 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 19 AIM INTERNATIONAL ALLOCATION FUND APPROVAL OF INVESTMENT ADVISORY AGREEMENT The Board of Trustees (the Board) of AIM renewal process, the Trustees receive from one another and attributed Growth Series is required under the comparative performance and fee data different weight to the various factors. Investment Company Act of 1940 to regarding the AIM Funds prepared by an The Trustees recognized that the approve annually the renewal of the AIM independent company, Lipper, Inc. advisory arrangements and resulting International Allocation Fund (the Fund) (Lipper), under the direction and advisory fees for the Fund and the other investment advisory agreement with supervision of the independent Senior AIM Funds are the result of years of Invesco Aim Advisors, Inc. (Invesco Officer who also prepares a separate review and negotiation between the Aim). During contract renewal meetings analysis of this information for the Trustees and Invesco Aim, that the held on June 18-19, 2008, the Board as a Trustees. Each Sub-Committee then makes Trustees may focus to a greater extent whole and the disinterested or recommendations to the Investments on certain aspects of these arrangements "independent" Trustees, voting Committee regarding the performance, in some years than in others, and that separately, approved the continuance of fees and expenses of their assigned the Trustees' deliberations and the Fund's investment advisory agreement funds. The Investments Committee conclusions in a particular year may be for another year, effective July 1, considers each Sub-Committee's based in part on their deliberations and 2008. In doing so, the Board determined recommendations and makes its own conclusions of these same arrangements that the Fund's investment advisory recommendations regarding the throughout the year and in prior years. agreement is in the best interests of performance, fees and expenses of the the Fund and its shareholders and that AIM Funds to the full Board. The FACTORS AND CONCLUSIONS AND SUMMARY OF the compensation to Invesco Aim under Investments Committee also considers INDEPENDENT WRITTEN FEE EVALUATION the Fund's investment advisory agreement each Sub-Committee's recommendations in is fair and reasonable. making its annual recommendation to the The discussion below serves as a summary Board whether to approve the continuance of the Senior Officer's independent The independent Trustees met separately of each AIM Fund's investment advisory written evaluation with respect to the during their evaluation of the Fund's agreement and sub-advisory agreements Fund's investment advisory agreement as investment advisory agreement with for another year. well as a discussion of the material independent legal counsel from whom they factors and related conclusions that received independent legal advice, and The independent Trustees are assisted formed the basis for the Board's the independent Trustees also received in their annual evaluation of the Fund's approval of the Fund's investment assistance during their deliberations investment advisory agreement by the advisory agreement and sub-advisory from the independent Senior Officer, a independent Senior Officer. One agreements. Unless otherwise stated, full-time officer of the AIM Funds who responsibility of the Senior Officer is information set forth below is as of reports directly to the independent to manage the process by which the AIM June 19, 2008 and does not reflect any Trustees. Funds' proposed management fees are changes that may have occurred since negotiated during the annual contract that date, including but not limited to THE BOARD'S FUND EVALUATION PROCESS renewal process to ensure that they are changes to the Fund's performance, negotiated in a manner that is at arms' advisory fees, expense limitations The Board's Investments Committee has length and reasonable. Accordingly, the and/or fee waivers. established three Sub-Committees that Senior Officer must either supervise a are responsible for overseeing the competitive bidding process or prepare I. Investment Advisory Agreement management of a number of the series an independent written evaluation. The A. Nature, Extent and Quality of portfolios of the AIM Funds. This Senior Officer has recommended that an Services Provided by Invesco Aim Sub-Committee structure permits the independent written evaluation be Trustees to focus on the performance of provided and, at the direction of the The Board reviewed the advisory services the AIM Funds that have been assigned to Board, has prepared an independent provided to the Fund by Invesco Aim them. The Sub-Committees meet throughout written evaluation. under the Fund's investment advisory the year to review the performance of agreement, the performance of Invesco their assigned funds, and the During the annual contract renewal Aim in providing these services, and the Sub-Committees review monthly and process, the Board considered the credentials and experience of the quarterly comparative performance factors discussed below under the officers and employees of Invesco Aim information and periodic asset flow data heading "Factors and Conclusions and who provide these services. The Board's for their assigned funds. These Summary of Independent Written Fee review of the qualifications of Invesco materials are prepared under the Evaluation" in evaluating the fairness Aim to provide these services included direction and supervision of the and reasonableness of the Fund's the Board's consideration of Invesco independent Senior Officer. Over the investment advisory agreement and Aim's portfolio and product review course of each year, the Sub-Committees sub-advisory agreements at the contract process, various back office support meet with portfolio managers for their renewal meetings and at their meetings functions provided by Invesco Aim and assigned funds and other members of throughout the year as part of their its affiliates, and Invesco Aim's equity management and review with these ongoing oversight of the Fund. The and fixed income trading operations. The individuals the performance, investment Fund's investment advisory agreement and Board concluded that the nature, extent objective(s), policies, strategies and sub-advisory agreements were considered and quality of the advisory services limitations of these funds. separately, although the Board also provided to the Fund by Invesco Aim were considered the common interests of all appropriate and that Invesco Aim In addition to their meetings of the AIM Funds in their deliberations. currently is providing satisfactory throughout the year, the Sub-Committees The Board considered all of the advisory services in accordance with the meet at designated contract renewal information provided to them and did not terms of the Fund's investment advisory meetings each year to conduct an identify any particular factor that was agreement. In addition, based on their in-depth review of the performance, fees controlling. Each Trustee may have ongoing meetings throughout the year and expenses of their assigned funds. evaluated the information provided with the Fund's portfolio manager or During the contract differently
20 AIM INTERNATIONAL ALLOCATION FUND continued managers, the Board concluded that these ation of the Fund's Senior Officer only information. The Board considered the individuals are competent and able to considered Fund performance through the overall profitability of Invesco Aim, as continue to carry out their most recent calendar year, the Board well as the profitability of Invesco Aim responsibilities under the Fund's also reviewed more recent Fund in connection with managing the Fund. investment advisory agreement. performance and this review did not The Board noted that Invesco Aim change their conclusions. continues to operate at a net profit, In determining whether to continue although increased expenses in recent the Fund's investment advisory C. Advisory Fees and Fee Waivers years have reduced the profitability of agreement, the Board considered the Invesco Aim and its affiliates. The prior relationship between Invesco Aim The Board noted that the Fund is a fund Board concluded that the Fund's fees and the Fund, as well as the Board's of funds and invests its assets in were fair and reasonable, and that the knowledge of Invesco Aim's operations, underlying funds rather than directly in level of profits realized by Invesco Aim and concluded that it was beneficial to individual securities. The Board noted and its affiliates from providing maintain the current relationship, in that Invesco Aim does not charge the services to the Fund was not excessive part, because of such knowledge. The Fund any advisory fees pursuant to the in light of the nature, quality and Board also considered the steps that Fund's investment advisory agreement, extent of the services provided. The Invesco Aim and its affiliates have although the underlying funds in which Board considered whether Invesco Aim is taken over the last several years to the Fund invests pay Invesco Aim financially sound and has the resources improve the quality and efficiency of advisory fees. Because Invesco Aim does necessary to perform its obligations the services they provide to the AIM not charge the Fund any advisory fees, under the Fund's investment advisory Funds in the areas of investment the Board did not rely upon any agreement, and concluded that Invesco performance, product line comparison of services and fees under Aim has the financial resources diversification, distribution, fund advisory contracts with other funds or necessary to fulfill these obligations. operations, shareholder services and products advised by Invesco Aim and its compliance. The Board concluded that the affiliates. F. Independent Written Evaluation of quality and efficiency of the services the Fund's Senior Officer Invesco Aim and its affiliates provide The Board noted that Invesco Aim has to the AIM Funds in each of these areas contractually agreed to waive fees The Board noted that, at their have generally improved, and support the and/or limit expenses of the Fund direction, the Senior Officer of the Board's approval of the continuance of through at least June 30, 2009 in an Fund, who is independent of Invesco Aim the Fund's investment advisory amount necessary to limit total annual and Invesco Aim's affiliates, had agreement. operating expenses to a specified prepared an independent written percentage of average daily net assets evaluation to assist the Board in B. Fund Performance for each class of the Fund. The Board determining the reasonableness of the considered the contractual nature of proposed management fees of the AIM The Board noted that the Fund recently this fee waiver and noted that it Funds, including the Fund. The Board began operations and that only the past remains in effect until at least June noted that they had relied upon the two calendar years comparative 30, 2009. The Board also considered the Senior Officer's written evaluation performance data was available. The effect this expense limitation would instead of a competitive bidding Board compared the Fund's performance have on the Fund's estimated total process. In determining whether to during the past two calendar years to expenses. continue the Fund's investment advisory the performance of funds in the Fund's agreement, the Board considered the performance group that are not managed D. Economies of Scale and Breakpoints Senior Officer's written evaluation. by Invesco Aim, and against the performance of all funds in the Lipper The Board noted that Invesco Aim does G. Collateral Benefits to Invesco Aim International Multi-Cap Core Funds not charge the Fund any advisory fees and its Affiliates Index. The Board also reviewed the pursuant to the Fund's investment criteria used by Invesco Aim to identify advisory agreement, although the The Board considered various other the funds in the Fund's performance underlying funds in which the Fund benefits received by Invesco Aim and its group for inclusion in the Lipper invests pay Invesco Aim advisory fees. affiliates resulting from Invesco Aim's reports. The Board noted that the Fund's The Board also noted that the Fund relationship with the Fund, including performance was in the third quintile of shares directly in economies of scale the fees received by Invesco Aim and its its performance group for the one and through lower fees charged by third affiliates for their provision of two year periods (the first quintile party service providers based on the administrative, transfer agency and being the best performing funds and the combined size of all of the AIM Funds distribution services to the Fund. The fifth quintile being the worst and affiliates. Board considered the performance of performing funds). The Board noted that Invesco Aim and its affiliates in the Fund's performance was below the E. Profitability and Financial providing these services and the performance of the Index for the one and Resources of Invesco Aim organizational structure employed by two year periods. The Board also Invesco Aim and its affiliates to considered the steps Invesco Aim has The Board reviewed information from provide these services. The Board also taken over the last several years to Invesco Aim concerning the costs of the considered that these services are improve the quality and efficiency of advisory and other services that Invesco provided to the Fund pursuant to written the services that Invesco Aim provides Aim and its affiliates provide to the contracts which are reviewed and to the AIM Funds. The Board concluded Fund and the profitability of Invesco approved on an annual basis by the that Invesco Aim continues to be Aim and its affiliates in providing Board. The Board concluded that Invesco responsive to the Board's focus on fund these services. The Board also reviewed Aim and its affiliates were providing performance. Although the independent information concerning the financial these services in a satisfactory manner written evalu- condition of Invesco Aim and its and in accordance with the terms of affiliates. The Board also reviewed with their contracts, and Invesco Aim the methodology used to prepare the profitability
21 AIM INTERNATIONAL ALLOCATION FUND continued were qualified to continue to provide benefit the Fund and its shareholders by these services to the Fund. permitting Invesco Aim to utilize the additional resources and talent of the The Board considered the benefits Affiliated Sub-Advisers in managing the realized by Invesco Aim as a result of Fund. portfolio brokerage transactions executed through "soft dollar" B. Fund Performance arrangements. Under these arrangements, portfolio brokerage commissions paid by The Board did not view Fund performance the Fund and/or other funds advised by as a relevant factor in considering Invesco Aim are used to pay for research whether to approve the sub-advisory and execution services. The Board noted agreements for the Fund, as no that soft dollar arrangements shift the Affiliated Sub-Adviser currently payment obligation for the research and determines the allocation of any portion execution services from Invesco Aim to of the Fund's assets, although an the funds and therefore may reduce Affiliated Sub-Adviser may indirectly Invesco Aim's expenses. The Board also manage a portion of the Fund's assets noted that research obtained through allocated to an underlying fund. soft dollar arrangements may be used by Invesco Aim in making investment C. Sub-Advisory Fees decisions for the Fund and may therefore benefit Fund shareholders. The Board The Board considered the services to be concluded that Invesco Aim's soft dollar provided by the Affiliated Sub-Advisers arrangements were appropriate. The Board pursuant to the sub-advisory agreements also concluded that, based on their and the services to be provided by review and representations made by Invesco Aim pursuant to the Fund's Invesco Aim, these arrangements were investment advisory agreement, as well consistent with regulatory requirements. as the allocation of fees between Invesco Aim and the Affiliated II. Sub-Advisory Agreements Sub-Advisers pursuant to the A.Nature, Extent and Quality of sub-advisory agreements. The Board noted Services Provided by Affiliated that the sub-advisory fees have no Sub-Advisers direct effect on the Fund or its shareholders, as they are paid by The Board reviewed the services to be Invesco Aim to the Affiliated provided by Invesco Trimark Ltd., Sub-Advisers, and that Invesco Aim and Invesco Asset Management Deutschland, the Affiliated Sub-Advisers are GmbH, Invesco Asset Management Limited, affiliates. The Board also noted that Invesco Asset Management (Japan) the Affiliated Sub-Advisers only receive Limited, Invesco Australia Limited, a percentage of the compensation that Invesco Global Asset Management (N.A.), Invesco Aim receives pursuant to the Inc., Invesco Hong Kong Limited, Invesco Fund's investment advisory agreement, Institutional (N.A.), Inc. and Invesco and as described above, the Fund is a Senior Secured Management, Inc. fund of funds and Invesco Aim does not (collectively, the "Affiliated charge the Fund any advisory fees. Sub-Advisers") under the sub-advisory agreements and the credentials and D. Financial Resources of the experience of the officers and employees Affiliated Sub-Advisers of the Affiliated Sub-Advisers who will provide these services. The Board The Board considered whether each concluded that the nature, extent and Affiliated Sub-Adviser is financially quality of the services to be provided sound and has the resources necessary to by the Affiliated Sub-Advisers were perform its obligations under its appropriate. The Board noted that the respective sub-advisory agreement, and Affiliated Sub-Advisers, which have concluded that each Affiliated offices and personnel that are Sub-Adviser has the financial resources geographically dispersed in financial necessary to fulfill these obligations. centers around the world, have been formed in part for the purpose of researching and compiling information and making recommendations on the markets and economies of various countries and securities of companies located in such countries or on various types of investments and investment techniques, and providing investment advisory services. The Board concluded that the sub-advisory agreements will
22 AIM INTERNATIONAL ALLOCATION FUND Supplement to Semiannual Report dated 6/30/08 AIM INTERNATIONAL ALLOCATION FUND ========================================== INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is not indicative of future results. More The following information has been For periods ended 6/30/08 recent returns may be more or less than prepared to provide Institutional Class Inception (10/31/05) 10.89% those shown. All returns assume shareholders with a performance overview 1 Year -13.10 reinvestment of distributions at NAV. specific to their holdings. Institutional 6 Months* -12.91 Investment return and principal value will Class shares are offered exclusively to fluctuate so your shares, when redeemed, institutional investors, including defined * Cumulative total return that has not may be worth more or less than their contribution plans that meet certain been annualized original cost. See full report for criteria. ========================================== information on comparative benchmarks. Please consult your Fund prospectus for Institutional Class shares have no sales more information. For the most current charge; therefore, performance is at net month-end performance, please call 800 451 asset value (NAV). Performance of 4246 or visit invescoaim.com. 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 1.13%. 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. A redemption fee of 2% will be imposed on certain redemptions or exchanges out of the Fund within 30 days of purchase. Exceptions to the redemption fee are listed in the Fund's prospectus. 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 or shown to the public, nor used in written form as sales literature for public use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com INTAL-INS-2 Invesco Aim Distributors, Inc.
CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur ongoing costs. 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 January 1, 2008, through June 30, 2008. In addition to the fees and expenses which the Fund bears directly, the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which your Fund invests. The amount of fees and expenses incurred indirectly by your Fund will vary because the underlying funds have varied expenses and fee levels and the Fund may own different proportions of the underlying funds at different times. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly are included in your Fund's total return. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If indirect expenses were included, your costs would have been higher.
----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $870.90 $0.61 $1,024.21 $0.66 0.13% -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM INTERNATIONAL ALLOCATION FUND PROXY RESULTS A Special Meeting ("Meeting") of Shareholders of AIM International Allocation Fund, an investment portfolio of AIM Growth Series, a Delaware statutory trust ("Trust"), was held on February 29, 2008. The Meeting was held for the following purpose: (1) 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 matter were as follows:
VOTES WITHHELD/ BROKER MATTER VOTES FOR AGAINST ABSTENTIONS NON-VOTES --------------------------------------------------------------------------------------------------------------------------- (1) 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. ..................... 11,297,684 395,816 474,467 4,135,017
The Meeting was adjourned until March 28, 2008, with respect to the following proposals: (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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** --------------------------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker................................................................. 259,205,198 10,486,394 Frank S. Bayley.............................................................. 259,256,384 10,435,208 James T. Bunch............................................................... 258,142,293 11,549,299 Bruce L. Crockett............................................................ 258,143,390 11,548,202 Albert R. Dowden............................................................. 259,201,224 10,490,368 Jack M. Fields............................................................... 259,317,796 10,373,796 Martin L. Flanagan........................................................... 259,304,758 10,386,834 Carl Frischling.............................................................. 259,178,445 10,513,147 Prema Mathai-Davis........................................................... 259,255,582 10,436,010 Lewis F. Pennock............................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ........................................................... 258,048,313 11,643,279 Raymond Stickel, Jr. ........................................................ 258,206,591 11,485,001 Philip A. Taylor............................................................. 259,264,092 10,427,500
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.................... 182,780,828 23,098,525 6,564,572 57,247,667
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 23 AIM INTERNATIONAL ALLOCATION FUND ================================================================================ EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 1. Log in to your account. and postage. 2. Click on the "Service Center" tab. - reduce the amount of paper you 3. Select "Register for eDelivery" receive. and complete the consent process. - gain access to your documents faster by not waiting for the 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 [INVESCO AIM LOGO] market funds represented by Invesco Aim. All entities are - SERVICE MARK - indirect, wholly owned subsidiaries of Invesco Ltd. invescoaim.com INTAL-SAR-1 Invesco Aim Distributors, Inc. [INVESCO AIM LOGO] AIM MID CAP CORE EQUITY FUND - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 [MOUNTAIN GRAPHIC] AIM Investments 2 Fund Performance became INVESCO AIM 3 Letter to Shareholders on March 31, 2008. 4 Schedule of Investments 7 Financial Statements For more details, go to 9 Notes to Financial Statements invescoaim.com 15 Financial Highlights 19 Fund Expenses 20 Approval of Investment Advisory Agreement 23 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND PERFORMANCE ======================================================================================= PERFORMANCE SUMMARY FUND VS. INDEXES Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. Class A Shares -5.37% Class B Shares -5.67 Class C Shares -5.68 Class R Shares -5.47 S&P 500 Index(triangle) (Broad Market Index) -11.90 Russell Midcap Index(triangle) (Style-Specific Index) -7.57 Lipper Mid-Cap Core Funds Index(triangle) (Peer Group Index) -6.97 (triangle) Lipper Inc. The S&P 500--REGISTERED TRADEMARK-- INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The RUSSELL MIDCAP--REGISTERED TRADEMARK-- INDEX measures the performance of the 800 smallest companies in the Russell 1000--REGISTERED TRADEMARK-- Index, which represent approximately 30% of the total market capitalization of the Russell 1000 Index. The Russell Midcap Index and Russell 1000 Index are trademarks/service marks of the Frank Russell Company. Russell--REGISTERED TRADEMARK-- is a trademark of the Frank Russell Company. The LIPPER MID-CAP CORE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mid-Cap Core Funds category. These funds have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index does not. ======================================================================================= ========================================== AVERAGE ANNUAL TOTAL RETURNS CLASS R SHARES' INCEPTION DATE IS JUNE 3, WOULD PAY ON FUND DISTRIBUTIONS OR SALE OF As of 6/30/08, including maximum 2002. RETURNS SINCE THAT DATE ARE FUND SHARES. INVESTMENT RETURN AND applicable sales charges HISTORICAL RETURNS. ALL OTHER RETURNS ARE PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU BLENDED RETURNS OF HISTORICAL CLASS R MAY HAVE A GAIN OR LOSS WHEN YOU SELL CLASS A SHARES SHARE PERFORMANCE AND RESTATED CLASS A SHARES. Inception (6/9/87) 11.70% SHARE PERFORMANCE (FOR PERIODS PRIOR TO 10 Years 7.72 THE INCEPTION DATE OF CLASS R SHARES) AT THE NET ANNUAL FUND OPERATING EXPENSE 5 Years 8.81 NET ASSET VALUE, ADJUSTED TO REFLECT THE RATIO SET FORTH IN THE MOST RECENT FUND 1 Year -10.90 HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS PROSPECTUS AS OF THE DATE OF THIS REPORT R SHARES. CLASS A SHARES' INCEPTION DATE FOR CLASS A, CLASS B, CLASS C AND CLASS R CLASS B SHARES IS JUNE 9, 1987. SHARES WAS 1.22%, 1.97%, 1.97% AND 1.47%, Inception (4/1/93) 11.40% RESPECTIVELY.(1) THE TOTAL ANNUAL FUND 10 Years 7.73 THE PERFORMANCE DATA QUOTED REPRESENT OPERATING EXPENSE RATIO SET FORTH IN THE 5 Years 9.00 PAST PERFORMANCE AND CANNOT GUARANTEE MOST RECENT FUND PROSPECTUS AS OF THE DATE 1 Year -10.18 COMPARABLE FUTURE RESULTS; CURRENT OF THIS REPORT FOR CLASS A, CLASS B, CLASS PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE C AND CLASS R SHARES WAS 1.24%, 1.99%, CLASS C SHARES VISIT INVESCOAIM.COM FOR THE MOST RECENT 1.99% AND 1.49%, RESPECTIVELY. THE EXPENSE Inception (5/3/99) 9.70% MONTH-END PERFORMANCE. PERFORMANCE RATIOS PRESENTED ABOVE MAY VARY FROM THE 5 Years 9.23 FIGURES REFLECT REINVESTED DIS- EXPENSE RATIOS PRESENTED IN OTHER SECTIONS 1 Year -7.19 TRIBUTIONS, CHANGES IN NET ASSET VALUE AND OF THIS REPORT THAT ARE BASED ON EXPENSES THE EFFECT OF THE MAXIMUM SALES CHARGE INCURRED DURING THE PERIOD COVERED BY THIS CLASS R SHARES UNLESS OTHERWISE STATED. PERFORMANCE REPORT. 10 Years 8.13% FIGURES DO NOT REFLECT DEDUCTION OF TAXES 5 Years 9.77 A SHAREHOLDER CLASS A SHARE PERFORMANCE REFLECTS THE 1 Year -6.00 MAXIMUM 5.50% SALES CHARGE, AND CLASS B ========================================== AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL REDEMPTION OF RETIREMENT PLAN ASSETS WITHIN THE FIRST YEAR. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIF- FERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. (1) Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information.
2 AIM MID CAP CORE EQUITY FUND Dear Fellow Shareholders: As I write this letter in July 2008, turbulent financial markets are causing considerable investor anxiety, reminding us again that markets are cyclical and the [CROCKETT PHOTO] 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 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 Bruce Crockett 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 Web site (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 e-mail 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 August 11, 2008
3 AIM MID CAP CORE EQUITY FUND PORTFOLIO COMPOSITION By sector, based on Net Assets as of June 30, 2008 ------------------------------------------------------------------------- Health Care 13.1% ------------------------------------------------------------------------- Financials 12.7 ------------------------------------------------------------------------- Information Technology 12.1 ------------------------------------------------------------------------- Industrials 9.5 ------------------------------------------------------------------------- Consumer Staples 9.4 ------------------------------------------------------------------------- Materials 9.4 ------------------------------------------------------------------------- Consumer Discretionary 7.1 ------------------------------------------------------------------------- Energy 7.0 ------------------------------------------------------------------------- Utilities 1.2 ------------------------------------------------------------------------- Money Market Funds Plus Other Assets Less Liabilities 18.5 _________________________________________________________________________ =========================================================================
SCHEDULE OF INVESTMENTS(a) June 30, 2008 (Unaudited)
SHARES VALUE ---------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-79.07% ADVERTISING-1.17% Omnicom Group Inc. 446,574 $ 20,042,241 ================================================================================== AEROSPACE & DEFENSE-1.26% Goodrich Corp. 246,802 11,713,223 ---------------------------------------------------------------------------------- Precision Castparts Corp. 103,502 9,974,488 ================================================================================== 21,687,711 ================================================================================== APPAREL, ACCESSORIES & LUXURY GOODS-0.93% Polo Ralph Lauren Corp.(b) 254,144 15,955,160 ================================================================================== APPLICATION SOFTWARE-1.06% Amdocs Ltd.(c) 457,477 13,458,974 ---------------------------------------------------------------------------------- Cadence Design Systems, Inc.(c) 465,522 4,701,772 ================================================================================== 18,160,746 ================================================================================== ASSET MANAGEMENT & CUSTODY BANKS-1.69% Legg Mason, Inc. 664,541 28,954,051 ================================================================================== COMMUNICATIONS EQUIPMENT-2.10% Foundry Networks, Inc.(c) 1,057,116 12,495,111 ---------------------------------------------------------------------------------- Motorola, Inc. 1,313,584 9,641,707 ---------------------------------------------------------------------------------- Polycom, Inc.(c) 569,281 13,867,685 ================================================================================== 36,004,503 ================================================================================== COMPUTER STORAGE & PERIPHERALS-1.34% QLogic Corp.(c) 1,572,260 22,939,273 ================================================================================== CONSTRUCTION MATERIALS-0.43% Eagle Materials Inc.(b) 292,822 7,417,181 ================================================================================== CONSUMER ELECTRONICS-1.05% Harman International Industries, Inc. 435,057 18,007,009 ================================================================================== DATA PROCESSING & OUTSOURCED SERVICES-0.40% Alliance Data Systems Corp.(c) 122,329 6,917,705 ================================================================================== DEPARTMENT STORES-0.80% Kohl's Corp.(c) 342,962 13,732,198 ================================================================================== DISTRIBUTORS-1.31% Genuine Parts Co. 567,829 22,531,455 ================================================================================== ELECTRONIC EQUIPMENT MANUFACTURERS-0.51% Agilent Technologies, Inc.(c) 245,089 8,710,463 ================================================================================== ELECTRONIC MANUFACTURING SERVICES-1.64% Molex Inc. 782,476 19,100,239 ---------------------------------------------------------------------------------- Tyco Electronics Ltd. 255,221 9,142,016 ================================================================================== 28,242,255 ================================================================================== ENVIRONMENTAL & FACILITIES SERVICES-1.45% Republic Services, Inc. 837,106 24,862,048 ================================================================================== FOOD RETAIL-1.08% SUPERVALU, Inc. 598,175 18,477,626 ================================================================================== GAS UTILITIES-1.21% UGI Corp. 726,728 20,864,361 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 4 AIM MID CAP CORE EQUITY FUND
SHARES VALUE ---------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT-4.09% Hospira, Inc.(c) 576,581 $ 23,126,664 ---------------------------------------------------------------------------------- Varian Medical Systems, Inc.(c) 445,050 23,075,842 ---------------------------------------------------------------------------------- Zimmer Holdings, Inc.(c) 352,818 24,009,265 ================================================================================== 70,211,771 ================================================================================== HEALTH CARE SERVICES-1.14% Quest Diagnostics Inc. 403,174 19,541,844 ================================================================================== HEALTH CARE TECHNOLOGY-1.16% IMS Health Inc. 854,435 19,908,335 ================================================================================== HOME FURNISHINGS-0.29% Leggett & Platt, Inc.(b) 294,632 4,940,979 ================================================================================== HOMEBUILDING-0.44% Ryland Group, Inc. (The) 347,738 7,584,166 ================================================================================== HOUSEHOLD PRODUCTS-0.38% Energizer Holdings, Inc.(c) 88,463 6,465,761 ================================================================================== HUMAN RESOURCE & EMPLOYMENT SERVICES-1.54% Administaff, Inc.(b) 951,316 26,532,203 ================================================================================== INDUSTRIAL MACHINERY-4.43% Atlas Copco A.B.-Class A (Sweden)(b)(d) 1,058,000 15,549,704 ---------------------------------------------------------------------------------- Dover Corp. 485,877 23,501,870 ---------------------------------------------------------------------------------- ITT Corp. 277,788 17,592,314 ---------------------------------------------------------------------------------- Parker Hannifin Corp. 274,018 19,542,964 ================================================================================== 76,186,852 ================================================================================== INSURANCE BROKERS-1.44% Marsh & McLennan Cos., Inc. 780,434 20,720,523 ---------------------------------------------------------------------------------- National Financial Partners Corp.(b) 206,347 4,089,797 ================================================================================== 24,810,320 ================================================================================== LIFE SCIENCES TOOLS & SERVICES-3.95% PerkinElmer, Inc. 579,679 16,144,060 ---------------------------------------------------------------------------------- Pharmaceutical Product Development, Inc. 623,532 26,749,523 ---------------------------------------------------------------------------------- Techne Corp.(c) 322,681 24,972,283 ================================================================================== 67,865,866 ================================================================================== METAL & GLASS CONTAINERS-1.13% Pactiv Corp.(c) 914,028 19,404,814 ================================================================================== MULTI-SECTOR HOLDINGS-0.15% PICO Holdings, Inc.(b)(c) 59,030 2,564,854 ================================================================================== OFFICE ELECTRONICS-1.02% Xerox Corp. 1,291,135 17,507,791 ================================================================================== OFFICE SERVICES & SUPPLIES-0.77% Pitney Bowes Inc. 389,673 13,287,849 ================================================================================== OIL & GAS EQUIPMENT & SERVICES-1.62% BJ Services Co. 873,367 27,895,342 ================================================================================== OIL & GAS EXPLORATION & PRODUCTION-5.41% Chesapeake Energy Corp. 608,012 40,104,472 ---------------------------------------------------------------------------------- Newfield Exploration Co.(c) 217,138 14,168,254 ---------------------------------------------------------------------------------- Penn West Energy Trust (Canada) 685,309 23,190,857 ---------------------------------------------------------------------------------- Whiting Petroleum Corp.(c) 145,116 15,393,905 ================================================================================== 92,857,488 ================================================================================== PACKAGED FOODS & MEATS-3.12% Cadbury PLC (United Kingdom)(d) 3,747,965 47,031,002 ---------------------------------------------------------------------------------- Del Monte Foods Co. 936,367 6,648,206 ================================================================================== 53,679,208 ================================================================================== PAPER PRODUCTS-1.43% MeadWestvaco Corp. 1,027,926 24,505,756 ================================================================================== PERSONAL PRODUCTS-2.48% Avon Products, Inc. 506,639 18,249,137 ---------------------------------------------------------------------------------- Estee Lauder Cos. Inc. (The)-Class A 523,735 24,327,491 ================================================================================== 42,576,628 ================================================================================== PHARMACEUTICALS-2.76% Barr Pharmaceuticals Inc.(c) 1,052,741 47,457,564 ================================================================================== PRECIOUS METALS & MINERALS-0.71% Coeur d'Alene Mines Corp.(b)(c) 4,228,565 12,262,839 ================================================================================== PROPERTY & CASUALTY INSURANCE-3.92% Axis Capital Holdings Ltd. 1,051,396 31,342,115 ---------------------------------------------------------------------------------- Progressive Corp. (The) 1,924,205 36,021,117 ================================================================================== 67,363,232 ================================================================================== PUBLISHING-1.04% Washington Post Co. (The)-Class B 30,533 17,919,818 ================================================================================== REGIONAL BANKS-1.32% BB&T Corp.(b) 441,883 10,061,676 ---------------------------------------------------------------------------------- PNC Financial Services Group, Inc. 219,456 12,530,938 ================================================================================== 22,592,614 ================================================================================== SEMICONDUCTORS-2.48% Linear Technology Corp.(b) 624,810 20,350,062 ---------------------------------------------------------------------------------- Microchip Technology Inc. 378,300 11,553,282 ---------------------------------------------------------------------------------- Xilinx, Inc. 422,485 10,667,746 ================================================================================== 42,571,090 ================================================================================== SOFT DRINKS-0.00% Dr. Pepper Snapple Group, Inc.(c) 1 20 ================================================================================== SPECIALIZED CONSUMER SERVICES-0.07% Hillenbrand, Inc. 57,090 1,221,726 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 5 AIM MID CAP CORE EQUITY FUND
SHARES VALUE ---------------------------------------------------------------------------------- SPECIALIZED FINANCE-1.60% Moody's Corp.(b) 798,653 $ 27,505,609 ================================================================================== SPECIALTY CHEMICALS-5.66% International Flavors & Fragrances Inc. 960,772 37,527,754 ---------------------------------------------------------------------------------- Rohm and Haas Co. 365,533 16,975,353 ---------------------------------------------------------------------------------- Sigma-Aldrich Corp. 794,327 42,782,452 ================================================================================== 97,285,559 ================================================================================== SYSTEMS SOFTWARE-1.55% McAfee Inc.(c) 431,771 14,693,167 ---------------------------------------------------------------------------------- Symantec Corp.(c) 617,857 11,955,533 ================================================================================== 26,648,700 ================================================================================== THRIFTS & MORTGAGE FINANCE-2.54% People's United Financial Inc. 2,800,929 43,694,492 ================================================================================== Total Common Stocks & Other Equity Interests (Cost $1,283,842,875) 1,358,357,076 ================================================================================== PREFERRED STOCK-2.38% HOUSEHOLD PRODUCTS-2.38% Henkel A.G. & Co. KGaA(Germany)-Pfd. (Cost $40,572,048)(d) 1,029,867 40,897,554 ================================================================================== MONEY MARKET FUNDS-18.70% Liquid Assets Portfolio-Institutional Class(e) 160,590,311 160,590,311 ---------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(e) 160,590,311 160,590,311 ================================================================================== Total Money Market Funds (Cost $321,180,622) 321,180,622 ================================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-100.15% (Cost $1,645,595,545) 1,720,435,252 ================================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-4.45% Liquid Assets Portfolio-Institutional Class (Cost $76,383,936)(e)(f) 76,383,936 76,383,936 ================================================================================== TOTAL INVESTMENTS-104.60% (Cost $1,721,979,481) 1,796,819,188 ================================================================================== OTHER ASSETS LESS LIABILITIES-(4.60)% (79,061,086) ================================================================================== NET ASSETS-100.00% $1,717,758,102 __________________________________________________________________________________ ==================================================================================
Investment Abbreviations: Pfd. - Preferred
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 June 30, 2008. (c) Non-income producing security. (d) 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 June 30, 2008 was $103,478,260, which represented 6.02% of the Fund's Net Assets. See Note 1A. (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 1I. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 6 AIM MID CAP CORE EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited) ASSETS: Investments, at value (Cost $1,324,414,923)* $1,399,254,630 ------------------------------------------------------- Investments in affiliated money market funds (Cost $397,564,558) 397,564,558 ======================================================= Total investments (Cost $1,721,979,481) 1,796,819,188 ======================================================= Foreign currencies, at value (Cost $39,495) 40,103 ------------------------------------------------------- Receivables for: Fund shares sold 2,002,526 ------------------------------------------------------- Dividends 2,762,555 ------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 54,474 ------------------------------------------------------- Other assets 50,121 ======================================================= Total assets 1,801,728,967 _______________________________________________________ ======================================================= LIABILITIES: Payables for: Investments purchased 660,432 ------------------------------------------------------- Fund shares reacquired 4,685,000 ------------------------------------------------------- Foreign currency contracts 194,410 ------------------------------------------------------- Collateral upon return of securities loaned 76,383,936 ------------------------------------------------------- Accrued fees to affiliates 1,523,229 ------------------------------------------------------- Accrued other operating expenses 268,704 ------------------------------------------------------- Trustee deferred compensation and retirement plans 255,154 ======================================================= Total liabilities 83,970,865 ======================================================= Net assets applicable to shares outstanding $1,717,758,102 _______________________________________________________ ======================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $1,533,247,701 ------------------------------------------------------- Undistributed net investment income 7,511,231 ------------------------------------------------------- Undistributed net realized gain 102,354,400 ------------------------------------------------------- Unrealized appreciation 74,644,770 ======================================================= $1,717,758,102 _______________________________________________________ ======================================================= NET ASSETS: Class A $1,123,362,153 _______________________________________________________ ======================================================= Class B $ 311,652,790 _______________________________________________________ ======================================================= Class C $ 154,891,321 _______________________________________________________ ======================================================= Class R $ 64,866,618 _______________________________________________________ ======================================================= Institutional Class $ 62,985,220 _______________________________________________________ ======================================================= SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 50,231,825 _______________________________________________________ ======================================================= Class B 16,866,169 _______________________________________________________ ======================================================= Class C 8,399,820 _______________________________________________________ ======================================================= Class R 2,931,845 _______________________________________________________ ======================================================= Institutional Class 2,717,927 _______________________________________________________ ======================================================= Class A: Net asset value per share $ 22.36 ------------------------------------------------------- Maximum offering price per share (Net asset value of $22.36 divided by 94.50%) $ 23.66 _______________________________________________________ ======================================================= Class B: Net asset value and offering price per share $ 18.48 _______________________________________________________ ======================================================= Class C: Net asset value and offering price per share $ 18.44 _______________________________________________________ ======================================================= Class R: Net asset value and offering price per share $ 22.12 _______________________________________________________ ======================================================= Institutional Class: Net asset value and offering price per share $ 23.17 _______________________________________________________ =======================================================
* At June 30, 2008, securities with an aggregate value of $72,267,372 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 7 AIM MID CAP CORE EQUITY FUND STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited) INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $489,391) $ 12,521,242 ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $481,024) 5,292,784 ================================================================================================ Total investment income 17,814,026 ================================================================================================ EXPENSES: Advisory fees 6,263,931 ------------------------------------------------------------------------------------------------ Administrative services fees 212,301 ------------------------------------------------------------------------------------------------ Custodian fees 47,612 ------------------------------------------------------------------------------------------------ Distribution fees: Class A 1,461,881 ------------------------------------------------------------------------------------------------ Class B 1,740,059 ------------------------------------------------------------------------------------------------ Class C 826,148 ------------------------------------------------------------------------------------------------ Class R 166,685 ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C and R 2,045,976 ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 31,617 ------------------------------------------------------------------------------------------------ Trustees' and officer's fees and benefits 35,140 ------------------------------------------------------------------------------------------------ Other 375,346 ================================================================================================ Total expenses 13,206,696 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (238,667) ================================================================================================ Net expenses 12,968,029 ================================================================================================ Net investment income 4,845,997 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) from: Investment securities 79,059,541 ------------------------------------------------------------------------------------------------ Foreign currencies 170,442 ------------------------------------------------------------------------------------------------ Foreign currency contracts (503,959) ================================================================================================ 78,726,024 ================================================================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (189,249,908) ------------------------------------------------------------------------------------------------ Foreign currencies (19,720) ------------------------------------------------------------------------------------------------ Foreign currency contracts (191,134) ================================================================================================ (189,460,762) ================================================================================================ Net realized and unrealized gain (loss) (110,734,738) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(105,888,741) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 8 AIM MID CAP CORE EQUITY FUND STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
JUNE 30, DECEMBER 31, 2008 2007 ---------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 4,845,997 $ 17,031,757 ---------------------------------------------------------------------------------------------------------- Net realized gain 78,726,024 327,285,489 ---------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (189,460,762) (128,749,023) ========================================================================================================== Net increase (decrease) in net assets resulting from operations (105,888,741) 215,568,223 ========================================================================================================== Distributions to shareholders from net investment income: Class A -- (16,275,716) ---------------------------------------------------------------------------------------------------------- Class B -- (2,444,969) ---------------------------------------------------------------------------------------------------------- Class C -- (1,130,405) ---------------------------------------------------------------------------------------------------------- Class R -- (718,689) ---------------------------------------------------------------------------------------------------------- Institutional Class -- (1,068,419) ========================================================================================================== Total distributions from net investment income -- (21,638,198) ========================================================================================================== Distributions to shareholders from net realized gains: Class A -- (213,526,286) ---------------------------------------------------------------------------------------------------------- Class B -- (77,277,032) ---------------------------------------------------------------------------------------------------------- Class C -- (35,725,927) ---------------------------------------------------------------------------------------------------------- Class R -- (11,722,473) ---------------------------------------------------------------------------------------------------------- Institutional Class -- (10,571,933) ========================================================================================================== Total distributions from net realized gains -- (348,823,651) ========================================================================================================== Share transactions-net: Class A (90,442,473) (187,700,557) ---------------------------------------------------------------------------------------------------------- Class B (62,102,592) (59,508,754) ---------------------------------------------------------------------------------------------------------- Class C (17,404,326) (18,808,145) ---------------------------------------------------------------------------------------------------------- Class R (2,175,756) 4,315,028 ---------------------------------------------------------------------------------------------------------- Institutional Class (626,633) (2,718,185) ========================================================================================================== Net increase (decrease) in net assets resulting from share transactions (172,751,780) (264,420,613) ========================================================================================================== Net increase (decrease) in net assets (278,640,521) (419,314,239) ========================================================================================================== NET ASSETS: Beginning of period 1,996,398,623 2,415,712,862 ========================================================================================================== End of period (including undistributed net investment income of $7,511,231 and $2,665,234, respectively) $1,717,758,102 $1,996,398,623 __________________________________________________________________________________________________________ ==========================================================================================================
NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Mid Cap Core Equity Fund (the "Fund") is a series portfolio of AIM Growth Series (the "Trust"). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series 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. 9 AIM MID CAP CORE EQUITY FUND 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 to provide long-term growth of capital. 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. 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. 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 10 AIM MID CAP CORE EQUITY FUND evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America unless otherwise noted. D. DISTRIBUTIONS -- Distributions from income 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. 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 (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. 11 AIM MID CAP CORE EQUITY 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:
AVERAGE NET ASSETS RATE ------------------------------------------------------------------- First $500 million 0.725% ------------------------------------------------------------------- Next $500 million 0.70% ------------------------------------------------------------------- Next $500 million 0.675% ------------------------------------------------------------------- Over $1.5 billion 0.65% ___________________________________________________________________ ===================================================================
Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). 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 (but not cash collateral from securities lending) in such affiliated money market funds. For the six months ended June 30, 2008, the Advisor waived advisory fees of $203,091. 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 six months ended June 30, 2008, Invesco reimbursed expenses of the Fund in the amount of $1,535. 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 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 six months ended June 30, 2008, IADI advised the Fund that IADI retained $48,353 in front-end sales commissions from the sale of Class A shares and $5,989, $78,633, $2,429 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--SUPPLEMENTAL INFORMATION The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1 -- Quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. 12 AIM MID CAP CORE EQUITY FUND Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN INPUT LEVEL SECURITIES -------------------------------------- Level 1 $1,693,340,928 -------------------------------------- Level 2 103,478,260 -------------------------------------- Level 3 -- ====================================== $1,796,819,188 ______________________________________ ======================================
NOTE 4--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 six months ended June 30, 2008, the Fund received credits from this arrangement, which resulted in the reduction of the Fund's total expenses of $34,041. NOTE 5--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's 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 Officer's 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 Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the six months ended June 30, 2008, the Fund paid legal fees of $3,916 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 ("SSB"), 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 7--FOREIGN CURRENCY CONTRACTS
OPEN FOREIGN CURRENCY CONTRACTS AT PERIOD END ---------------------------------------------------------------------------------------------------------------- CONTRACT TO -------------------------------------- UNREALIZED SETTLEMENT DELIVER RECEIVE VALUE APPRECIATION DATE --------------- --------------- 06/30/08 (DEPRECIATION) ---------------------------------------------------------------------------------------------------------------- 09/10/08 EUR 12,900,000 USD 20,237,139 $20,230,382 $ 6,757 ---------------------------------------------------------------------------------------------------------------- 09/10/08 GBP 12,600,000 USD 24,759,126 $24,957,017 $(197,891) ================================================================================================================ Total open foreign currency contracts $(191,134) ________________________________________________________________________________________________________________ ================================================================================================================ CLOSED FOREIGN CURRENCY CONTRACTS AT PERIOD END ---------------------------------------------------------------------------------------------------------------- CONTRACT TO -------------------------------------- CLOSED DELIVER RECEIVE VALUE REALIZED DATE --------------- --------------- 06/30/08 GAIN (LOSS) ---------------------------------------------------------------------------------------------------------------- 06/30/08 EUR 2,600,000 USD 4,079,738 $ 4,083,014 $ (3,276) ---------------------------------------------------------------------------------------------------------------- Total closed foreign currency contracts $ (3,276) ================================================================================================================ Total foreign currency contracts $(194,410) ________________________________________________________________________________________________________________ ================================================================================================================
Currency Abbreviations: EUR - Euro GBP - British Pound Sterling USD - U.S. Dollar
13 AIM MID CAP CORE EQUITY FUND NOTE 8--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. The Fund did not have a capital loss carryforward as of December 31, 2007. NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2008 was $275,594,412 and $401,097,952, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $ 181,692,160 ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (106,852,453) ================================================================================================ Net unrealized appreciation of investment securities $ 74,839,707 ________________________________________________________________________________________________ ================================================================================================ Cost of investments is the same for tax and financial reporting purposes.
NOTE 10--SHARE INFORMATION
CHANGES IN SHARES OUTSTANDING -------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ---------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- Sold: Class A 3,852,908 $ 88,106,793 6,241,450 $ 173,257,488 -------------------------------------------------------------------------------------------------------------------------- Class B 419,289 7,927,364 535,435 12,686,772 -------------------------------------------------------------------------------------------------------------------------- Class C 517,920 9,874,319 563,606 13,325,886 -------------------------------------------------------------------------------------------------------------------------- Class R 394,825 8,924,565 788,477 21,570,907 -------------------------------------------------------------------------------------------------------------------------- Institutional Class 279,472 6,645,174 1,288,870 37,175,632 ========================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 9,450,420 221,707,505 -------------------------------------------------------------------------------------------------------------------------- Class B -- -- 3,899,443 75,883,852 -------------------------------------------------------------------------------------------------------------------------- Class C -- -- 1,806,333 35,078,987 -------------------------------------------------------------------------------------------------------------------------- Class R -- -- 534,950 12,431,951 -------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 479,817 11,640,352 ========================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,000,894 22,882,842 1,122,892 31,000,501 -------------------------------------------------------------------------------------------------------------------------- Class B (1,209,319) (22,882,842) (1,316,265) (31,000,501) ========================================================================================================================== Reacquired: Class A (8,836,559) (201,432,108) (22,287,869) (613,666,051) -------------------------------------------------------------------------------------------------------------------------- Class B (2,498,144) (47,147,114) (4,955,405) (117,078,877) -------------------------------------------------------------------------------------------------------------------------- Class C (1,448,343) (27,278,645) (2,857,879) (67,213,018) -------------------------------------------------------------------------------------------------------------------------- Class R (494,104) (11,100,321) (1,086,424) (29,687,830) -------------------------------------------------------------------------------------------------------------------------- Institutional Class (310,696) (7,271,807) (1,815,982) (51,534,169) ========================================================================================================================== (8,331,857) $(172,751,780) (7,608,131) $(264,420,613) __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 12% 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. 14 AIM MID CAP CORE EQUITY FUND NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A -------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 23.63 $ 26.08 $ 28.57 $ 28.64 $ 26.92 $ 21.17 ------------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) 0.09 0.32 0.25 0.06(a) (0.01)(a) (0.08)(a) ------------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (1.36) 2.23 2.97 2.08 3.71 5.83 ============================================================================================================================== Total from investment operations (1.27) 2.55 3.22 2.14 3.70 5.75 ============================================================================================================================== Less distributions: Dividends from net investment income -- (0.36) (0.22) -- -- -- ------------------------------------------------------------------------------------------------------------------------------ Distributions from net realized gains -- (4.64) (5.49) (2.21) (1.98) -- ============================================================================================================================== Total distributions -- (5.00) (5.71) (2.21) (1.98) -- ============================================================================================================================== Net asset value, end of period $ 22.36 $ 23.63 $ 26.08 $ 28.57 $ 28.64 $ 26.92 ______________________________________________________________________________________________________________________________ ============================================================================================================================== Total return(b) (5.37)% 9.90% 11.11% 7.43% 13.82% 27.10% ______________________________________________________________________________________________________________________________ ============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $1,123,362 $1,280,918 $1,556,658 $2,186,823 $2,552,041 $2,025,407 ______________________________________________________________________________________________________________________________ ============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.22%(c) 1.21% 1.28% 1.27%(d) 1.30% 1.41% ------------------------------------------------------------------------------------------------------------------------------ Without fee waivers and/or expense reimbursements 1.24%(c) 1.22% 1.28% 1.32% 1.40% 1.41% ============================================================================================================================== Ratio of net investment income (loss) to average net assets 0.74%(c) 0.97% 0.65% 0.23% (0.02)% (0.33)% ______________________________________________________________________________________________________________________________ ============================================================================================================================== Portfolio turnover rate(d) 18% 49% 51% 61% 56% 38% ______________________________________________________________________________________________________________________________ ==============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $1,175,930,646. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS B --------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.59 $ 22.39 $ 25.23 $ 25.73 $ 24.54 $ 19.43 ------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.00 0.08 (0.02) (0.14)(a) (0.19)(a) (0.21)(a) ------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.11) 1.91 2.67 1.85 3.36 5.32 =============================================================================================================================== Total from investment operations (1.11) 1.99 2.65 1.71 3.17 5.11 =============================================================================================================================== Less distributions: Dividends from net investment income -- (0.15) -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (4.64) (5.49) (2.21) (1.98) -- =============================================================================================================================== Total distributions -- (4.79) (5.49) (2.21) (1.98) -- =============================================================================================================================== Net asset value, end of period $ 18.48 $ 19.59 $ 22.39 $ 25.23 $ 25.73 $ 24.54 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Total return(b) (5.67)% 9.03% 10.32% 6.59% 13.00% 26.30% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $311,653 $394,916 $492,311 $609,073 $702,361 $702,267 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.97%(c) 1.96% 2.03% 2.02% 2.04% 2.06% ------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.99%(c) 1.97% 2.03% 2.02% 2.05% 2.06% =============================================================================================================================== Ratio of net investment income (loss) to average net assets (0.01)%(c) 0.22% (0.10)% (0.52)% (0.76)% (0.98)% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Portfolio turnover rate(d) 18% 49% 51% 61% 56% 38% _______________________________________________________________________________________________________________________________ ===============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $349,923,908. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 15 AIM MID CAP CORE EQUITY FUND NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C --------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 19.55 $ 22.35 $ 25.20 $ 25.70 $ 24.51 $ 19.41 ------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.00 0.08 (0.02) (0.14)(a) (0.19)(a) (0.21)(a) ------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.11) 1.91 2.66 1.85 3.36 5.31 =============================================================================================================================== Total from investment operations (1.11) 1.99 2.64 1.71 3.17 5.10 =============================================================================================================================== Less distributions: Dividends from net investment income -- (0.15) -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (4.64) (5.49) (2.21) (1.98) -- =============================================================================================================================== Total distributions -- (4.79) (5.49) (2.21) (1.98) -- =============================================================================================================================== Net asset value, end of period $ 18.44 $ 19.55 $ 22.35 $ 25.20 $ 25.70 $ 24.51 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Total return(b) (5.68)% 9.05% 10.29% 6.60% 13.01% 26.28% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $154,891 $182,444 $219,435 $286,025 $324,873 $303,296 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.97%(c) 1.96% 2.03% 2.02% 2.04% 2.06% ------------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.99%(c) 1.97% 2.03% 2.02% 2.05% 2.06% =============================================================================================================================== Ratio of net investment income (loss) to average net assets (0.01)%(c) 0.22% (0.10)% (0.52)% (0.76)% (0.98)% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Portfolio turnover rate(d) 18% 49% 51% 61% 56% 38% _______________________________________________________________________________________________________________________________ ===============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $166,137,510. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS R ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 23.40 $ 25.88 $ 28.38 $ 28.54 $ 26.89 $ 21.18 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) 0.06 0.22 0.14 (0.01)(a) (0.07)(a) (0.12)(a) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.34) 2.23 2.98 2.06 3.70 5.83 ============================================================================================================================ Total from investment operations (1.28) 2.45 3.12 2.05 3.63 5.71 ============================================================================================================================ Less distributions: Dividends from net investment income -- (0.29) (0.13) -- -- -- ---------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (4.64) (5.49) (2.21) (1.98) -- ============================================================================================================================ Total distributions -- (4.93) (5.62) (2.21) (1.98) -- ============================================================================================================================ Net asset value, end of period $ 22.12 $ 23.40 $ 25.88 $ 28.38 $ 28.54 $ 26.89 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (5.47)% 9.59% 10.83% 7.14% 13.57% 26.96% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $64,867 $70,940 $72,308 $85,631 $61,303 $27,281 ____________________________________________________________________________________________________________________________ ============================================================================================================================ With fee waivers and/or expense reimbursements 1.47%(c) 1.46% 1.53% 1.52% 1.54% 1.56% ---------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.49%(c) 1.47% 1.53% 1.52% 1.55% 1.56% ============================================================================================================================ Ratio of net investment income (loss) to average net assets 0.49%(c) 0.71% 0.40% (0.02)% (0.26)% (0.48)% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(d) 18% 49% 51% 61% 56% 38% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $67,040,392. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 16 AIM MID CAP CORE EQUITY FUND NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
INSTITUTIONAL CLASS ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 24.44 $ 26.82 $ 29.26 $ 29.15 $ 27.23 $ 21.27 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income 0.13 0.43 0.38 0.20(a) 0.14(a) 0.08(a) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (1.40) 2.30 3.06 2.12 3.76 5.88 ============================================================================================================================ Total from investment operations (1.27) 2.73 3.44 2.32 3.90 5.96 ============================================================================================================================ Less distributions: Dividends from net investment income -- (0.47) (0.40) -- -- -- ---------------------------------------------------------------------------------------------------------------------------- Distributions from net realized gains -- (4.64) (5.48) (2.21) (1.98) -- ============================================================================================================================ Total distributions -- (5.11) (5.88) (2.21) (1.98) -- ============================================================================================================================ Net asset value, end of period $ 23.17 $ 24.44 $ 26.82 $ 29.26 $ 29.15 $ 27.23 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (5.20)% 10.33% 11.62% 7.92% 14.40% 28.02% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $62,985 $67,180 $75,000 $88,077 $51,579 $26,056 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.84%(c) 0.82% 0.82% 0.82% 0.80% 0.76% ---------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 0.86%(c) 0.83% 0.82% 0.82% 0.81% 0.76% ============================================================================================================================ Ratio of net investment income to average net assets 1.13%(c) 1.35% 1.10% 0.68% 0.48% 0.32% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(d) 18% 49% 51% 61% 56% 38% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $63,536,348. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. NOTE 12--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On May 23, 2008, the Securities and Exchange Commission ("SEC") publicly posted its final approval of the Distribution Plans ("Distribution Plans") for the distribution of monies placed into two separate Fair Funds created pursuant to a settlement reached on October 8, 2004 between Invesco Funds Group, Inc. ("IFG"), Invesco Aim Advisors, Inc. ("Invesco Aim") and Invesco Aim Distributors, Inc. ("IADI") and the SEC (the "Order"). One of the Fair Funds consists of $325 million, plus interest and any contributions by other settling parties, for distribution to shareholders of certain mutual funds formerly advised by IFG who may have been harmed by market timing and related activity. The second Fair Fund consists of $50 million, plus interest and any contributions by other settling parties, for distribution to shareholders of mutual funds advised by Invesco Aim who may have been harmed by market timing and related activity. The Distribution Plans provide for the distribution to all eligible investors to compensate such investors for injury they may have suffered as a result of market timing in the affected funds. The Distribution Plans include a provision for any residual amounts in the Fair Funds to be distributed in the future to the affected funds. Because the distribution of the Fair Funds has not yet commenced, management of Invesco Aim and the Fund are unable to estimate the amount of distribution to be made to the Fund, if any. At the request of the trustees of the AIM Funds, Invesco Ltd. ("Invesco"), the parent company of IFG and Invesco Aim, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. 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. 17 AIM MID CAP CORE EQUITY FUND NOTE 12--LEGAL PROCEEDINGS--(CONTINUED) Civil lawsuits, including purported class action and shareholder derivative suits, have been filed against certain of the AIM Funds, 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 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 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. 18 AIM MID CAP CORE EQUITY FUND CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 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.
--------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $946.30 $5.90 $1,018.80 $6.12 1.22% --------------------------------------------------------------------------------------------------- B 1,000.00 943.30 9.52 1,015.07 9.87 1.97 --------------------------------------------------------------------------------------------------- C 1,000.00 943.20 9.52 1,015.07 9.87 1.97 --------------------------------------------------------------------------------------------------- R 1,000.00 945.30 7.11 1,017.55 7.37 1.47 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 19 AIM MID CAP CORE EQUITY 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 Growth Series is required under the renewal process, the Trustees receive from one another and attributed different 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 Mid Cap Core Equity 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 invest- Sub-Committee's recommendations and makes their deliberations and conclusions of ment advisory agreement is in the best its own recommendations regarding the these same arrangements throughout the 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 Sub- FACTORS AND CONCLUSIONS AND SUMMARY advisory agreement is fair and reasonable. Committee's recommendations in making its OF INDEPENDENT WRITTEN FEE EVALUATION annual recommendation to the Board whether The independent Trustees met separately to approve the continuance of each AIM The discussion below serves as a summary during their evaluation of the Fund's Fund's investment advisory agreement and of the Senior Officer's independent investment advisory agreement with sub-advisory agreements for another year. written evaluation with respect to the independent legal counsel from whom they Fund's investment advisory agreement and received independent legal advice, and the The independent Trustees are assisted sub-advisory agreements. Unless independent Trustees also received in their annual evaluation of the Fund's otherwise stated, information set forth assistance during their deliberations from investment advisory agreement by the below is as of June 19, 2008 and does not the independent Senior Officer, a independent Senior Officer. One reflect any changes that may have occurred full-time officer of the AIM Funds who responsibility of the Senior Officer is to since that date, including but not reports directly to the independent manage the process by which the AIM Funds' limited to changes to the Fund's Trustees. proposed management fees are negotiated performance, advisory fees, expense during the annual contract renewal process limitations and/or fee waivers. THE BOARD'S FUND EVALUATION PROCESS to ensure that they are negotiated in a manner that is at arms' length and I. Investment Advisory Agreement The Board's Investments Committee has reasonable. Accordingly, the Senior established three Sub-Committees that are Officer must either supervise a A. Nature, Extent and Quality of responsible for overseeing the manage- competitive bidding process or prepare an Services Provided by Invesco Aim ment of a number of the series portfolios independent written evaluation. The Senior of the AIM Funds. This Sub-Committee Officer has recommended that an independ- The Board reviewed the advisory services structure permits the Trustees to focus on ent written evaluation be provided and, at provided to the Fund by Invesco Aim under the performance of the AIM Funds that have the direction of the Board, has prepared the Fund's investment advisory agreement, been assigned to them. The Sub-Com- an independent written evaluation. the performance of Invesco Aim in provid- mittees meet throughout the year to review ing these services, and the credentials the performance of their assigned funds, During the annual contract renewal and experience of the officers and and the Sub-Committees review monthly and process, the Board considered the factors employees of Invesco Aim who provide these quarterly comparative performance discussed below under the heading "Factors services. The Board's review of the information and periodic asset flow data and Conclusions and Summary of Independent qualifications of Invesco Aim to provide for their assigned funds. These materials Written Fee Evaluation" in evaluating the these services included the Board's are prepared under the direction and fairness and reasonableness of the Fund's consideration of Invesco Aim's portfolio supervision of the independent Senior investment advisory agreement and and product review process, various back Officer. Over the course of each year, the sub-advisory agreements at the contract office support functions provided by Sub-Committees meet with portfolio renewal meetings and at their meetings Invesco Aim and its affiliates, and managers for their assigned funds and throughout the year as part of their Invesco Aim's equity and fixed income other members of management and review ongoing oversight of the Fund. The Fund's trading operations. The Board concluded with these individuals the performance, investment advisory agreement and that the nature, extent and quality of the investment objective(s), policies, sub-advisory agreements were considered advisory services provided to the Fund by strategies and limitations of these funds. separately, although the Board also Invesco Aim were appropriate and that considered the common interests of all of Invesco Aim currently is providing In addition to their meetings through- the AIM Funds in their deliberations. The satisfactory advisory services in out the year, the Sub-Committees meet at Board considered all of the information accordance with the terms of the Fund's designated contract renewal meetings each provided to them and did not identify any investment advisory agreement. In year to conduct an in-depth review of the particular factor that was controlling. addition, based on their ongoing meetings performance, fees and expenses of Each Trustee may have evalu- throughout the year with the Fund's portfolio manager or managers, the Board concluded that these individuals are competent and able to continue to carry out their responsibili- continued
20 AIM MID CAP CORE EQUITY FUND ties under the Fund's investment advisory and this review did not change their and reasonable. agreement. conclusions. D. Economies of Scale and Breakpoints In determining whether to continue the C. Advisory Fees and Fee Waivers Fund's investment advisory agreement, the The Board considered the extent to which Board considered the prior relationship The Board compared the Fund's contractual there are economies of scale in Invesco between Invesco Aim and the Fund, as well advisory fee rate to the contractual Aim's provision of advisory services to as the Board's knowledge of Invesco Aim's advisory fee rates of funds in the Fund's the Fund. The Board also considered operations, and concluded that it was ben- Lipper expense group that are not managed whether the Fund benefits from such eficial to maintain the current by Invesco Aim, at a common asset level economies of scale through contractual relationship, in part, because of such and as of the end of the past calendar breakpoints in the Fund's advisory fee knowledge. The Board also considered the year. The Board noted that the Fund's schedule or through advisory fee waivers steps that Invesco Aim and its affiliates contractual advisory fee rate was below or expense limitations. The Board noted have taken over the last several years to the median contractual advisory fee rate that the Fund's contractual advisory fee improve the quality and efficiency of the of funds in its expense group. The Board schedule includes three breakpoints and services they provide to the AIM Funds in also reviewed the methodology used by that the level of the Fund's advisory the areas of investment performance, Lipper in determining contractual fee fees, as a percentage of the Fund's net product line diversification, rates. assets, has decreased as net assets distribution, fund operations, shareholder increased because of the breakpoints. services and compliance. The Board con- The Board also compared the Fund's Based on this information, the Board cluded that the quality and efficiency of effective fee rate (the advisory fee after concluded that the Fund's advisory fees the services Invesco Aim and its any advisory fee waivers and before any appropriately reflect economies of scale affiliates provide to the AIM Funds in expense limitations/waivers) to the at current asset levels. The Board also each of these areas generally have advisory fee rates of other clients of noted that the Fund shares directly in improved, and support the Board's approval Invesco Aim and its affiliates with economies of scale through lower fees of the continuance of the Fund's investment strategies comparable to charged by third party service providers investment advisory agreement. those of the Fund, including two mutual based on the combined size of all of the funds advised by Invesco Aim. The Board AIM Funds and affiliates. B. Fund Performance noted that the Fund's rate was below the rates for the other mutual funds. E. Profitability and Financial The Board compared the Fund's performance Resources of Invesco Aim during the past one, three and five Additionally, the Board compared the calendar years to the performance of funds Fund's effective fee rate to the total The Board reviewed information from in the Fund's performance group that are advisory fees paid by numerous separately Invesco Aim concerning the costs of the not managed by Invesco Aim, and against managed accounts/wrap accounts advised advisory and other services that Invesco the performance of all funds in the Lipper by an Invesco Aim affiliate. The Board Aim and its affiliates provide to the Fund Mid-Cap Core Funds Index. The Board also noted that the Fund's rate was generally and the profitability of Invesco Aim and reviewed the criteria used by Invesco Aim above the rates for the separately managed its affiliates in providing these to identify the funds in the Fund's accounts/ wrap accounts. The Board services. The Board also reviewed performance group for inclusion in the considered that management of the information concerning the financial Lipper reports. The Board noted that the separately managed accounts/wrap accounts condition of Invesco Aim and its Fund's performance was in the second by the Invesco Aim affiliate involves affiliates. The Board also reviewed with quintile of its performance group for the different levels of services and different Invesco Aim the methodology used to one year period, the third quintile for operational and regulatory requirements prepare the profitability information. The the three year period, and the fourth than Invesco Aim's management of the Board considered the overall profitability quintile for the five year period (the Fund. The Board concluded that these of Invesco Aim, as well as the first quintile being the best performing differences are appropriately reflected in profitability of Invesco Aim in connection funds and the fifth quintile being the the fee structure for the Fund. with managing the Fund. The Board noted worst performing funds). The Board noted that Invesco Aim continues to operate at a that the Fund's performance was above the The Board noted that Invesco Aim has net profit, although increased expenses in performance of the Index for the one year not proposed any advisory fee waivers or recent years have reduced the period, and below the performance of the expense limitations for the Fund. The profitability of Invesco Aim and its Index for the three and five year periods. Board concluded that it was not necessary affiliates. The Board concluded that the The Board also considered the steps at this time to discuss with Invesco Aim Fund's fees were fair and reasonable, and Invesco Aim has taken over the last whether to implement any such waivers or that the level of profits realized by several years to improve the quality and expense limitations because, net of Invesco Aim and its affiliates from efficiency of the services that Invesco transfer agent fees above the median, most providing services to the Fund was not Aim provides to the AIM Funds. The Board classes of the Fund's total expenses were excessive in light of the nature, quality concluded that Invesco Aim continues to be at or below the median total expenses of and extent of the services provided. The responsive to the Board's focus on fund the funds in the Fund's expense group that Board considered whether Invesco Aim is performance. Although the independent are not managed by Invesco Aim. financially sound and has the resources written evaluation of the Fund's Senior necessary to perform its obligations Officer only considered Fund performance After taking account of the Fund's under the Fund's investment advisory through the most recent calendar year, the contractual advisory fee rate, as well as agreement, and concluded that Invesco Aim Board also reviewed more recent Fund the comparative advisory fee information has the financial resources necessary to performance discussed above, the Board concluded that fulfill these obligations. the Fund's advisory fees were fair continued
21 AIM MID CAP CORE EQUITY FUND F. Independent Written Evaluation of that, based on their review and countries or on various types of the Fund's Senior Officer representations made by Invesco Aim, investments and investment techniques, and these arrangements were consistent with providing investment advisory services. The Board noted that, at their direction, regulatory requirements. The Board concluded that the sub-advisory the Senior Officer of the Fund, who is agreements will benefit the Fund and its independent of Invesco Aim and Invesco The Board considered the fact that the shareholders by permitting Invesco Aim Aim's affiliates, had prepared an Fund's uninvested cash and cash collat- to utilize the additional resources and independent written evaluation to assist eral from any securities lending arrange- talent of the Affiliated Sub-Advisers in the Board in determining the ments may be invested in money market managing the Fund. reasonableness of the proposed funds advised by Invesco Aim pursuant to management fees of the AIM Funds, procedures approved by the Board. The B. Fund Performance including the Fund. The Board noted that Board noted that Invesco Aim will receive they had relied upon the Senior Officer's advisory fees from these affiliated money The Board did not view Fund performance as written evaluation instead of a market funds attributable to such invest- a relevant factor in considering whether competitive bidding process. In ments, although Invesco Aim has contractu- to approve the sub-advisory agreements for determining whether to continue the Fund's ally agreed to waive through at least June the Fund, as no Affiliated Sub-Adviser investment advisory agreement, the Board 30, 2009, the advisory fees payable by the currently manages any portion of the considered the Senior Officer's written Fund in an amount equal to 100% of the net Fund's assets. evaluation. advisory fees Invesco Aim receives from the affiliated money market funds with C. Sub-Advisory Fees G. Collateral Benefits to Invesco Aim respect to the Fund's investment of and its Affiliates uninvested cash, but not cash collateral. The Board considered the services to be The Board considered the contractual provided by the Affiliated Sub-Advisers The Board considered various other nature of this fee waiver and noted that pursuant to the sub-advisory agreements benefits received by Invesco Aim and its it remains in effect until at least June and the services to be provided by Invesco affiliates resulting from Invesco Aim's 30, 2009. The Board concluded that the Aim pursuant to the Fund's investment relationship with the Fund, including the Fund's investment of uninvested cash and advisory agreement, as well as the fees received by Invesco Aim and its cash collateral from any securities allocation of fees between Invesco Aim and affiliates for their provision of lending arrangements in the affiliated the Affiliated Sub-Advisers pursuant to administrative, transfer agency and money market funds is in the best the sub-advisory agreements. The Board distribution services to the Fund. The interests of the Fund and its noted that the subadvisory fees have no Board considered the performance of shareholders. direct effect on the Fund or its Invesco Aim and its affiliates in provid- shareholders, as they are paid by Invesco ing these services and the organizational II. Sub-Advisory Agreements Aim to the Affiliated Sub-Advisers, and structure employed by Invesco Aim and its that Invesco Aim and the Affiliated Sub- affiliates to provide these services. The A. Nature, Extent and Quality of Advisers are affiliates. After taking Board also considered that these services Services Provided by Affiliated account of the Fund's contractual are provided to the Fund pursuant to Sub-Advisers sub-advisory fee rate, as well as other written contracts which are reviewed and relevant factors, the Board concluded that approved on an annual basis by the Board. The Board reviewed the services to be the Fund's sub-advisory fees were fair The Board concluded that Invesco Aim and provided by Invesco Trimark Ltd., Invesco and reasonable. its affiliates were providing these Asset Management Deutschland, GmbH, services in a satisfactory manner and in Invesco Asset Management Limited, In- D. Financial Resources of the accordance with the terms of their vesco Asset Management (Japan) Limited, Affiliated Sub-Advisers contracts, and were qualified to continue Invesco Australia Limited, Invesco Global to provide these services to the Fund. Asset Management (N.A.), Inc., Invesco The Board considered whether each Affili- Hong Kong Limited, Invesco Institutional ated Sub-Adviser is financially sound and The Board considered the benefits real- (N.A.), Inc. and Invesco Senior Secured has the resources necessary to perform its ized by Invesco Aim as a result of Management, Inc. (collectively, the obligations under its respective sub-advi- portfolio brokerage transactions executed "Affiliated Sub-Advisers") under the sory agreement, and concluded that each through "soft dollar" arrangements. Under sub-advisory agreements and the creden- Affiliated Sub-Adviser has the financial these arrangements, portfolio brokerage tials and experience of the officers and resources necessary to fulfill these commissions paid by the Fund and/or employees of the Affiliated Sub-Advisers obligations. other funds advised by Invesco Aim are who will provide these services. The Board used to pay for research and execution concluded that the nature, extent and services. The Board noted that soft dollar quality of the services to be provided by arrangements shift the payment obligation the Affiliated Sub-Advisers were for the research and execution services appropriate. The Board noted that the from Invesco Aim to the funds and Affiliated Sub-Advisers, which have therefore may reduce Invesco Aim's offices and personnel that are expenses. The Board also noted that geographically dispersed in financial research obtained through soft dollar ar- centers around the world, have been formed rangements may be used by Invesco Aim in in part for the purpose of researching and making investment decisions for the Fund compiling information and making recom- and may therefore benefit Fund sharehold- mendations on the markets and economies of ers. The Board concluded that Invesco various countries and securities of Aim's soft dollar arrangements were companies located in such appropriate. The Board also concluded
22 AIM MID CAP CORE EQUITY FUND Supplement to Semiannual Report dated 6/30/08 AIM MID CAP CORE EQUITY FUND ========================================== INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is not indicative of future results. More The following information has been For periods ended 6/30/08 recent returns may be more or less than prepared to provide Institutional Class Inception (3/15/02) 7.43% those shown. All returns assume shareholders with a performance overview 5 Years 10.55 reinvestment of distributions at NAV. specific to their holdings. Institutional 1 Year -5.39 Investment return and principal value will Class shares are offered exclusively to 6 Months* -5.20 fluctuate so your shares, when redeemed, institutional investors, including defined may be worth more or less than their contribution plans that meet certain * Cumulative total return that has not original cost. See full report for criteria. been annualized information on comparative benchmarks. ========================================== Please consult your Fund prospectus for more information. For the most current Institutional Class shares have no sales month-end performance, please call 800 451 charge; therefore, performance is at net 4246 or visit invescoaim.com. asset value (NAV). Performance of Institutional Class shares will differ (1) Total annual operating expenses less from performance of other share classes any contractual fee waivers and/or primarily due to differing sales charges expense reimbursements by the advisor and class expenses. in effect through at least June 30, 2009. See current prospectus for more The net annual Fund operating expense information. ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.83%.(1) The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.85%. 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. 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 or shown to the public, nor used in written form as sales literature for public use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com MCCE-INS-2 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 January 1, 2008, through June 30, 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.
--------------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $948.00 $4.07 $1,020.69 $4.22 0.84% ---------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM MID CAP CORE EQUITY FUND PROXY RESULTS A Special Meeting ("Meeting") of Shareholders of AIM Mid Cap Core Equity Fund, an investment portfolio of AIM Growth Series, a Delaware statutory trust ("Trust"), was held on February 29, 2008. The Meeting was held for the following purpose: (1) 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 matter were as follows:
VOTES WITHHELD/ BROKER MATTER VOTES FOR AGAINST ABSTENTIONS NON-VOTES ---------------------------------------------------------------------------------------------------------------------------- (1) 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. ..................... 27,423,217 1,430,830 1,177,517 9,999,249
The Meeting was adjourned until March 28, 2008, with respect to the following proposals: (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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** --------------------------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker................................................................. 259,205,198 10,486,394 Frank S. Bayley.............................................................. 259,256,384 10,435,208 James T. Bunch............................................................... 258,142,293 11,549,299 Bruce L. Crockett............................................................ 258,143,390 11,548,202 Albert R. Dowden............................................................. 259,201,224 10,490,368 Jack M. Fields............................................................... 259,317,796 10,373,796 Martin L. Flanagan........................................................... 259,304,758 10,386,834 Carl Frischling.............................................................. 259,178,445 10,513,147 Prema Mathai-Davis........................................................... 259,255,582 10,436,010 Lewis F. Pennock............................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ........................................................... 258,048,313 11,643,279 Raymond Stickel, Jr. ........................................................ 258,206,591 11,485,001 Philip A. Taylor............................................................. 259,264,092 10,427,500
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.................... 182,780,828 23,098,525 6,564,572 57,247,667
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 23 AIM MID CAP CORE EQUITY FUND ==================================================================================================================================== EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 mail. 3. Select "Register for eDelivery" and complete the consent - view your documents online anytime at your convenience. process. - 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc., Invesco Global Asset Management (N.A.), Inc., [Invesco Aim Logo] Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors - service mark - that serve as the subadvisor for some of the products and services represented by [INVESCO AIM LOGO] Invesco Aim. Invesco Aim Distributors, Inc. is the distributor for the retail mutual funds, exchange-traded - SERVICE MARK - funds and U.S. institutional money market funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. invescoaim.com MCCE-SAR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM SMALL CAP GROWTH FUND - SERVICE MARK - Semiannual Report to Shareholders - June 30, 2008 [MOUNTAIN GRAPHIC] AIM Investments became 2 Fund Performance INVESCO AIM 3 Letter to Shareholders on March 31, 2008. 4 Schedule of Investments 8 Financial Statements For more details, go to 11 Notes to Financial Statements invescoaim.com 17 Financial Highlights 21 Fund Expenses 22 Approval of Investment Advisory Agreement 25 Results of Proxy For the most current month-end Fund performance and commentary, please visit invescoaim.com. Unless otherwise noted, all data provided by Invesco Aim. THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND PERFORMANCE ======================================================================================= PERFORMANCE SUMMARY FUND VS. INDEXES Cumulative total returns, 12/31/07 to 6/30/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. Class A Shares -10.86% Class B Shares -11.20 Class C Shares -11.17 Class R Shares -10.96 Investor Class Shares -10.85 S&P 500 Index(triangle) (Broad Market Index) -11.90 Russell 2000 Growth Index(triangle) (Style-Specific Index) -8.93 Lipper Small-Cap Growth Funds Index(triangle) (Peer Group Index) -12.58 (triangle)Lipper Inc. The S&P 500--REGISTERED TRADEMARK--INDEX is a market capitalization-weighted index covering all major areas of the U.S. economy. It is not the 500 largest companies, but rather the most widely held 500 companies chosen with respect to market size, liquidity, and their industry. The RUSSELL 2000--REGISTERED TRADEMARK--GROWTH INDEX measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Growth Index is a trademark/service mark of the Frank Russell Company. Russell--REGISTERED TRADEMARK--is a trademark of the Frank Russell Company. The LIPPER SMALL-CAP GROWTH FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Small-Cap Growth Funds category. These funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales- per-share growth value, compared to the S&P SmallCap 600 Index. The Fund is not managed to track the performance of any particular index, including the indexes defined here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of an index of funds reflects fund expenses; performance of a market index does not. ======================================================================================= ========================================== AVERAGE ANNUAL TOTAL RETURNS CLASS R SHARES' INCEPTION DATE IS JUNE 3, GUARANTEE COMPARABLE FUTURE RESULTS; As of 6/30/08, including maximum 2002. RETURNS SINCE THAT DATE ARE CURRENT PERFORMANCE MAY BE LOWER OR applicable sales charges HISTORICAL RETURNS. ALL OTHER RETURNS ARE HIGHER. PLEASE VISIT INVESCOAIM.COM FOR BLENDED RETURNS OF HISTORICAL CLASS R THE MOST RECENT MONTH-END PERFORMANCE. CLASS A SHARES SHARE PERFORMANCE AND RESTATED CLASS A PERFORMANCE FIGURES REFLECT REINVESTED Inception (10/18/95) 10.13% SHARE PERFORMANCE (FOR PERIODS PRIOR TO DISTRIBUTIONS, CHANGES IN NET ASSET VALUE 10 Years 7.74 THE INCEPTION DATE OF CLASS R SHARES) AT AND THE EFFECT OF THE MAXIMUM SALES CHARGE 5 Years 8.28 NET ASSET VALUE, ADJUSTED TO REFLECT THE UNLESS OTHERWISE STATED. PERFORMANCE 1 Year -16.70 HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS FIGURES DO NOT REFLECT DEDUCTION OF TAXES R SHARES. CLASS A SHARES' INCEPTION DATE A SHAREHOLDER WOULD PAY ON FUND CLASS B SHARES IS OCTOBER 18, 1995. DISTRIBUTIONS OR SALE OF FUND SHARES. Inception (10/18/95) 10.14% INVESTMENT RETURN AND PRINCIPAL VALUE WILL 10 Years 7.72 INVESTOR CLASS SHARES' INCEPTION DATE FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR 5 Years 8.39 IS APRIL 7, 2006. RETURNS SINCE THAT DATE LOSS WHEN YOU SELL SHARES. 1 Year -16.38 ARE HISTORICAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF HISTORICAL INVESTOR THE TOTAL ANNUAL FUND OPERATING EXPENSE CLASS C SHARES CLASS SHARE PERFORMANCE AND RESTATED CLASS RATIO SET FORTH IN THE MOST RECENT FUND Inception (5/3/99) 6.28% A SHARE PERFORMANCE (FOR PERIODS PRIOR TO PROSPECTUS AS OF THE DATE OF THIS REPORT 5 Years 8.70 THE INCEPTION DATE OF INVESTOR CLASS FOR CLASS A, CLASS B, CLASS C, CLASS R 1 Year -13.28 SHARES) AT NET ASSET VALUE, WHICH RESTATED SHARES AND INVESTOR CLASS SHARES WAS PERFORMANCE WILL REFLECT THE RULE 12B-1 1.23%, 1.98%, 1.98%, 1.48% AND 1.23%, CLASS R SHARES FEES APPLICABLE TO CLASS A SHARES FOR THE RESPECTIVELY. THE EXPENSE RATIOS PRESENTED 10 Years 8.12% PERIOD USING BLENDED RETURNS. CLASS A ABOVE MAY VARY FROM THE EXPENSE RATIOS 5 Years 9.24 SHARES' INCEPTION DATE IS OCTOBER 18, PRESENTED IN OTHER SECTIONS OF THIS REPORT 1 Year -12.07 1995. THAT ARE BASED ON EXPENSES INCURRED DUR- ING THE PERIOD COVERED BY THIS REPORT. INVESTOR CLASS SHARES THE PERFORMANCE DATA QUOTED REPRESENT 10 Years 8.35% PAST PERFORMANCE AND CANNOT CLASS A SHARE PERFORMANCE REFLECTS THE 5 Years 9.51 MAXIMUM 5.50% SALES CHARGE, AND CLASS B 1 Year -11.87 AND CLASS C SHARE PERFORMANCE REFLECTS ========================================== THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R SHARES DO NOT HAVE A FRONT-END SALES CHARGE; RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL REDEMPTION OF RETIREMENT PLAN ASSETS WITHIN THE FIRST YEAR. INVESTOR CLASS SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIF- FERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES.
2 AIM SMALL CAP GROWTH FUND Dear Fellow Shareholders: [CROCKETT PHOTO] As I write this letter in July 2008, turbulent financial markets are causing considerable Bruce Crockett 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 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 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 Web site (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'sand 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 e-mail 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 August 11, 2008
3 AIM SMALL CAP GROWTH FUND PORTFOLIO COMPOSITION By sector, based on Net Assets as of June 30, 2008 ------------------------------------------------------------------------- Information Technology 25.2% ------------------------------------------------------------------------- Industrials 18.2 ------------------------------------------------------------------------- Health Care 17.6 ------------------------------------------------------------------------- Consumer Discretionary 12.5 ------------------------------------------------------------------------- Energy 11.0 ------------------------------------------------------------------------- Financials 5.8 ------------------------------------------------------------------------- Materials 3.6 ------------------------------------------------------------------------- Consumer Staples 2.7 ------------------------------------------------------------------------- Telecommunication Services 1.0 ------------------------------------------------------------------------- Utilities 0.8 ------------------------------------------------------------------------- Money Market Funds Plus Other Assets Less Liabilities 1.6 _________________________________________________________________________ =========================================================================
SCHEDULE OF INVESTMENTS(a) June 30, 2008 (Unaudited)
SHARES VALUE ---------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-98.39% ADVERTISING-0.38% National CineMedia, Inc. 525,236 $ 5,599,016 ================================================================================== AEROSPACE & DEFENSE-2.14% Ceradyne, Inc.(b) 233,872 8,021,810 ---------------------------------------------------------------------------------- Hexcel Corp.(b) 536,262 10,349,856 ---------------------------------------------------------------------------------- TransDigm Group, Inc.(b) 382,778 12,857,513 ================================================================================== 31,229,179 ================================================================================== AIR FREIGHT & LOGISTICS-1.82% Forward Air Corp. 365,851 12,658,444 ---------------------------------------------------------------------------------- Hub Group, Inc.-Class A(b) 403,882 13,784,493 ================================================================================== 26,442,937 ================================================================================== APPAREL RETAIL-2.35% AnnTaylor Stores Corp.(b) 450,478 10,793,453 ---------------------------------------------------------------------------------- DSW Inc.-Class A(b)(c) 610,541 7,192,173 ---------------------------------------------------------------------------------- Hot Topic, Inc.(b) 1,253,973 6,783,994 ---------------------------------------------------------------------------------- Zumiez Inc.(b)(c) 571,724 9,479,184 ================================================================================== 34,248,804 ================================================================================== APPAREL, ACCESSORIES & LUXURY GOODS-1.12% Warnaco Group, Inc. (The)(b) 369,950 16,303,696 ================================================================================== APPLICATION SOFTWARE-5.82% ANSYS, Inc.(b) 324,879 15,308,298 ---------------------------------------------------------------------------------- Aspen Technology, Inc.(b) 810,592 10,780,874 ---------------------------------------------------------------------------------- Blackboard Inc.(b) 417,569 15,963,663 ---------------------------------------------------------------------------------- Informatica Corp.(b) 690,671 10,387,692 ---------------------------------------------------------------------------------- JDA Software Group, Inc.(b) 650,978 11,782,702 ---------------------------------------------------------------------------------- Lawson Software, Inc.(b) 1,229,251 8,936,655 ---------------------------------------------------------------------------------- Manhattan Associates, Inc.(b) 489,646 11,619,299 ================================================================================== 84,779,183 ================================================================================== ASSET MANAGEMENT & CUSTODY BANKS-1.47% Affiliated Managers Group, Inc.(b)(c) 162,108 14,599,446 ---------------------------------------------------------------------------------- Riskmetrics Group Inc.(b)(c) 348,614 6,846,779 ================================================================================== 21,446,225 ================================================================================== AUTO PARTS & EQUIPMENT-0.43% Tenneco Inc.(b) 464,601 6,286,052 ================================================================================== BIOTECHNOLOGY-3.53% BioMarin Pharmaceutical Inc.(b) 502,654 14,566,913 ---------------------------------------------------------------------------------- Cepheid, Inc.(b) 355,123 9,986,059 ---------------------------------------------------------------------------------- Human Genome Sciences, Inc.(b) 617,914 3,219,332 ---------------------------------------------------------------------------------- Myriad Genetics, Inc.(b) 247,846 11,281,950 ---------------------------------------------------------------------------------- United Therapeutics Corp.(b) 126,151 12,331,260 ================================================================================== 51,385,514 ================================================================================== COMMODITY CHEMICALS-0.50% Calgon Carbon Corp.(b)(c) 475,072 7,344,613 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 4 AIM SMALL CAP GROWTH FUND
SHARES VALUE ---------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT-3.02% Harmonic Inc.(b) 1,275,805 $ 12,132,905 ---------------------------------------------------------------------------------- NICE Systems Ltd.-ADR (Israel)(b) 380,454 11,250,025 ---------------------------------------------------------------------------------- Polycom, Inc.(b) 519,817 12,662,742 ---------------------------------------------------------------------------------- Starent Networks Corp.(b)(c) 626,832 7,885,547 ================================================================================== 43,931,219 ================================================================================== CONSTRUCTION & ENGINEERING-0.58% Quanta Services, Inc.(b) 254,945 8,482,020 ================================================================================== CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-2.33% Bucyrus International, Inc. 226,354 16,528,369 ---------------------------------------------------------------------------------- Wabtec Corp. 359,330 17,470,625 ================================================================================== 33,998,994 ================================================================================== CONSTRUCTION MATERIALS-1.27% Eagle Materials Inc.(c) 347,422 8,800,199 ---------------------------------------------------------------------------------- Texas Industries, Inc.(c) 172,587 9,687,309 ================================================================================== 18,487,508 ================================================================================== DATA PROCESSING & OUTSOURCED SERVICES-2.82% Euronet Worldwide, Inc.(b)(c) 620,809 10,491,672 ---------------------------------------------------------------------------------- Global Payments Inc. 218,965 10,203,769 ---------------------------------------------------------------------------------- NeuStar, Inc.-Class A(b) 437,561 9,433,815 ---------------------------------------------------------------------------------- Syntel, Inc.(c) 326,860 11,021,719 ================================================================================== 41,150,975 ================================================================================== DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES-3.51% Advisory Board Co. (The)(b) 164,630 6,474,898 ---------------------------------------------------------------------------------- CoStar Group Inc.(b)(c) 337,462 15,000,186 ---------------------------------------------------------------------------------- Pike Electric Corp.(b) 791,362 13,144,523 ---------------------------------------------------------------------------------- Tetra Tech, Inc.(b) 727,694 16,460,438 ================================================================================== 51,080,045 ================================================================================== DRUG RETAIL-0.88% Longs Drug Stores Corp. 306,092 12,889,534 ================================================================================== EDUCATION SERVICES-2.61% DeVry, Inc. 393,338 21,090,783 ---------------------------------------------------------------------------------- Strayer Education, Inc. 81,094 16,954,323 ================================================================================== 38,045,106 ================================================================================== ELECTRIC UTILITIES-0.81% ITC Holdings Corp. 229,958 11,753,153 ================================================================================== ELECTRICAL COMPONENTS & EQUIPMENT-2.02% General Cable Corp.(b) 307,827 18,731,273 ---------------------------------------------------------------------------------- Regal-Beloit Corp. 253,274 10,700,826 ================================================================================== 29,432,099 ================================================================================== ELECTRONIC EQUIPMENT MANUFACTURERS-1.61% Cogent Inc.(b)(c) 938,986 10,676,271 ---------------------------------------------------------------------------------- Coherent, Inc.(b) 429,484 12,837,277 ================================================================================== 23,513,548 ================================================================================== ENVIRONMENTAL & FACILITIES SERVICES-1.19% EnergySolutions Inc. 339,178 7,580,628 ---------------------------------------------------------------------------------- Fuel Tech, Inc.(b)(c) 550,072 9,692,269 ================================================================================== 17,272,897 ================================================================================== GENERAL MERCHANDISE STORES-1.02% Big Lots, Inc.(b) 475,948 14,868,616 ================================================================================== HEALTH CARE EQUIPMENT-5.45% Gen-Probe Inc.(b) 216,437 10,276,429 ---------------------------------------------------------------------------------- Insulet Corp.(b) 305,331 4,802,857 ---------------------------------------------------------------------------------- Mentor Corp.(c) 259,431 7,217,370 ---------------------------------------------------------------------------------- Meridian Bioscience, Inc. 388,422 10,456,320 ---------------------------------------------------------------------------------- NuVasive, Inc.(b)(c) 456,731 20,397,606 ---------------------------------------------------------------------------------- Wright Medical Group, Inc.(b) 543,848 15,450,722 ---------------------------------------------------------------------------------- Zoll Medical Corp.(b) 321,578 10,827,531 ================================================================================== 79,428,835 ================================================================================== HEALTH CARE FACILITIES-1.51% LifePoint Hospitals, Inc.(b) 388,304 10,989,003 ---------------------------------------------------------------------------------- VCA Antech, Inc.(b) 398,293 11,064,580 ================================================================================== 22,053,583 ================================================================================== HEALTH CARE SERVICES-2.15% Chemed Corp. 259,067 9,484,443 ---------------------------------------------------------------------------------- inVentiv Health Inc.(b) 400,627 11,133,424 ---------------------------------------------------------------------------------- Pediatrix Medical Group, Inc.(b) 217,561 10,710,528 ================================================================================== 31,328,395 ================================================================================== HEALTH CARE TECHNOLOGY-0.88% Eclipsys Corp.(b) 700,352 12,858,463 ================================================================================== HOME ENTERTAINMENT SOFTWARE-0.76% THQ Inc.(b) 545,028 11,042,267 ================================================================================== HOTELS, RESORTS & CRUISE LINES-0.51% Choice Hotels International, Inc. 281,475 7,459,088 ================================================================================== HOUSEHOLD PRODUCTS-1.03% Church & Dwight Co., Inc. 267,259 15,060,045 ================================================================================== HUMAN RESOURCE & EMPLOYMENT SERVICES-0.74% Korn/Ferry International(b) 688,106 10,823,907 ================================================================================== INDUSTRIAL MACHINERY-1.35% Barnes Group Inc. 426,358 9,844,606 ---------------------------------------------------------------------------------- Dynamic Materials Corp. 297,302 9,796,101 ================================================================================== 19,640,707 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 5 AIM SMALL CAP GROWTH FUND
SHARES VALUE ---------------------------------------------------------------------------------- INSURANCE BROKERS-0.39% National Financial Partners Corp.(c) 284,120 $ 5,631,258 ================================================================================== INTERNET RETAIL-0.33% Shutterfly, Inc.(b)(c) 391,600 4,781,436 ================================================================================== INTERNET SOFTWARE & SERVICES-1.93% Bankrate, Inc.(b)(c) 261,182 10,204,381 ---------------------------------------------------------------------------------- DealerTrack Holdings Inc.(b) 372,249 5,252,433 ---------------------------------------------------------------------------------- Omniture, Inc.(b) 234,686 4,358,119 ---------------------------------------------------------------------------------- ValueClick, Inc.(b) 549,582 8,326,167 ================================================================================== 28,141,100 ================================================================================== INVESTMENT BANKING & BROKERAGE-1.41% Greenhill & Co., Inc.(c) 211,040 11,366,614 ---------------------------------------------------------------------------------- optionsXpress Holdings Inc. 407,965 9,113,938 ================================================================================== 20,480,552 ================================================================================== IT CONSULTING & OTHER SERVICES-0.67% SRA International, Inc.-Class A(b) 432,225 9,707,774 ================================================================================== LIFE SCIENCES TOOLS & SERVICES-2.65% Affymetrix, Inc.(b) 494,419 5,087,572 ---------------------------------------------------------------------------------- AMAG Pharmaceuticals, Inc.(b)(c) 146,463 4,994,388 ---------------------------------------------------------------------------------- PAREXEL International Corp.(b) 442,926 11,653,383 ---------------------------------------------------------------------------------- Varian Inc.(b) 329,955 16,847,502 ================================================================================== 38,582,845 ================================================================================== MARINE-0.32% American Commercial Lines Inc.(b)(c) 432,387 4,725,990 ================================================================================== METAL & GLASS CONTAINERS-1.10% Greif Inc.-Class A 249,194 15,955,892 ================================================================================== MOVIES & ENTERTAINMENT-1.49% Live Nation Inc.(b)(c) 519,970 5,501,283 ---------------------------------------------------------------------------------- Marvel Entertainment, Inc.(b) 502,194 16,140,515 ================================================================================== 21,641,798 ================================================================================== OFFICE REIT'S-0.93% BioMed Realty Trust, Inc. 554,425 13,600,045 ================================================================================== OFFICE SERVICES & SUPPLIES-0.68% Interface, Inc.-Class A 788,324 9,877,700 ================================================================================== OIL & GAS DRILLING-1.82% Unit Corp.(b) 319,115 26,476,972 ================================================================================== OIL & GAS EQUIPMENT & SERVICES-3.56% Dril-Quip, Inc.(b) 308,076 19,408,788 ---------------------------------------------------------------------------------- FMC Technologies, Inc.(b) 241,054 18,544,284 ---------------------------------------------------------------------------------- ION Geophysical Corp.(b) 801,359 13,983,715 ================================================================================== 51,936,787 ================================================================================== OIL & GAS EXPLORATION & PRODUCTION-5.66% Arena Resources, Inc.(b) 398,832 21,066,306 ---------------------------------------------------------------------------------- Bill Barrett Corp.(b) 400,810 23,812,122 ---------------------------------------------------------------------------------- Carrizo Oil & Gas, Inc.(b) 338,137 23,023,749 ---------------------------------------------------------------------------------- Whiting Petroleum Corp.(b) 137,861 14,624,295 ================================================================================== 82,526,472 ================================================================================== PACKAGED FOODS & MEATS-0.80% Ralcorp Holdings, Inc.(b) 237,164 11,725,388 ================================================================================== PHARMACEUTICALS-1.40% Medicines Co. (The)(b) 477,376 9,461,592 ---------------------------------------------------------------------------------- Sciele Pharma, Inc.(b)(c) 564,205 10,917,367 ================================================================================== 20,378,959 ================================================================================== PROPERTY & CASUALTY INSURANCE-0.67% ProAssurance Corp.(b) 202,260 9,730,729 ================================================================================== REGIONAL BANKS-0.96% SVB Financial Group(b) 290,012 13,952,477 ================================================================================== RESTAURANTS-1.84% Buffalo Wild Wings Inc.(b)(c) 328,118 8,147,170 ---------------------------------------------------------------------------------- Jack in the Box Inc.(b) 506,619 11,353,332 ---------------------------------------------------------------------------------- P.F. Chang's China Bistro, Inc.(b)(c) 327,249 7,310,742 ================================================================================== 26,811,244 ================================================================================== SEMICONDUCTOR EQUIPMENT-1.40% FormFactor Inc.(b) 275,225 5,072,397 ---------------------------------------------------------------------------------- Varian Semiconductor Equipment Associates, Inc.(b) 440,406 15,334,937 ================================================================================== 20,407,334 ================================================================================== SEMICONDUCTORS-4.97% Cirrus Logic, Inc.(b) 1,656,420 9,209,695 ---------------------------------------------------------------------------------- Diodes Inc.(b) 456,992 12,631,259 ---------------------------------------------------------------------------------- Hittite Microwave Corp.(b) 279,031 9,939,084 ---------------------------------------------------------------------------------- Microsemi Corp.(b) 569,844 14,348,672 ---------------------------------------------------------------------------------- Power Integrations, Inc.(b) 392,297 12,400,508 ---------------------------------------------------------------------------------- Silicon Laboratories Inc.(b) 382,743 13,813,195 ================================================================================== 72,342,413 ================================================================================== SPECIALTY STORES-0.37% Dick's Sporting Goods, Inc.(b) 302,332 5,363,370 ================================================================================== STEEL-0.68% Carpenter Technology Corp. 228,200 9,960,930 ================================================================================== SYSTEMS SOFTWARE-1.40% MICROS Systems, Inc.(b) 319,881 9,753,172 ---------------------------------------------------------------------------------- Quality Systems, Inc.(c) 362,700 10,619,856 ================================================================================== 20,373,028 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 6 AIM SMALL CAP GROWTH FUND
SHARES VALUE ---------------------------------------------------------------------------------- TECHNOLOGY DISTRIBUTORS-0.85% Tech Data Corp.(b) 364,561 $ 12,354,972 ================================================================================== TRADING COMPANIES & DISTRIBUTORS-0.58% WESCO International, Inc.(b) 211,804 8,480,632 ================================================================================== TRUCKING-0.92% Knight Transportation, Inc.(c) 735,505 13,459,741 ================================================================================== WIRELESS TELECOMMUNICATION SERVICES-1.00% SBA Communications Corp.-Class A(b) 404,186 14,554,738 ================================================================================== Total Common Stocks & Other Equity Interests (Cost $1,256,536,202) 1,433,628,799 ================================================================================== MONEY MARKET FUNDS-1.70% Liquid Assets Portfolio-Institutional Class(d) 12,403,672 12,403,672 ---------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(d) 12,403,672 12,403,672 ---------------------------------------------------------------------------------- Total Money Market Funds (Cost $24,807,344) 24,807,344 ================================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-100.09% (Cost $1,281,343,546) 1,458,436,143 ================================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-10.75% Liquid Assets Portfolio-Institutional Class (Cost $156,694,920)(d)(e) 156,694,920 156,694,920 ================================================================================== TOTAL INVESTMENTS-110.84% (Cost $1,438,038,466) 1,615,131,063 ================================================================================== OTHER ASSETS LESS LIABILITIES-(10.84)% (157,988,193) ================================================================================== NET ASSETS-100.00% $1,457,142,870 __________________________________________________________________________________ ==================================================================================
Investment Abbreviations: ADR - American Depositary Receipt REIT - Real Estate Investment Trust
Notes to Schedule of Investments: (a) Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor's. (b) Non-income producing security. (c) All or a portion of this security was out on loan at June 30, 2008. (d) The money market fund and the Fund are affiliated by having the same investment advisor. (e) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower's return of the securities loaned. See Note 1I. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 7 AIM SMALL CAP GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 2008 (Unaudited) ASSETS: Investments, at value (Cost $1,256,536,202)* $1,433,628,799 ------------------------------------------------------- Investments in affiliated money market funds (Cost $181,502,264) 181,502,264 ======================================================= Total investments (Cost $1,438,038,466) 1,615,131,063 ======================================================= Cash 510,307 ------------------------------------------------------- Receivables for: Investments sold 2,791,205 ------------------------------------------------------- Fund shares sold 1,982,762 ------------------------------------------------------- Dividends 2,194,808 ------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 129,407 ------------------------------------------------------- Other assets 48,134 ======================================================= Total assets 1,622,787,686 _______________________________________________________ ======================================================= LIABILITIES: Payables for: Investments purchased 4,754,383 ------------------------------------------------------- Fund shares reacquired 2,463,665 ------------------------------------------------------- Collateral upon return of securities loaned 156,694,920 ------------------------------------------------------- Accrued fees to affiliates 1,246,915 ------------------------------------------------------- Accrued other operating expenses 212,359 ------------------------------------------------------- Trustee deferred compensation and retirement plans 272,574 ======================================================= Total liabilities 165,644,816 ======================================================= Net assets applicable to shares outstanding $1,457,142,870 _______________________________________________________ ======================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $1,300,810,011 ------------------------------------------------------- Undistributed net investment income (loss) (4,861,942) ------------------------------------------------------- Undistributed net realized gain (loss) (15,897,796) ------------------------------------------------------- Unrealized appreciation 177,092,597 ======================================================= $1,457,142,870 _______________________________________________________ ======================================================= NET ASSETS: Class A $ 934,499,179 _______________________________________________________ ======================================================= Class B $ 43,359,856 _______________________________________________________ ======================================================= Class C $ 23,475,874 _______________________________________________________ ======================================================= Class R $ 36,587,679 _______________________________________________________ ======================================================= Investor Class $ 236,301,846 _______________________________________________________ ======================================================= Institutional Class $ 182,918,436 _______________________________________________________ ======================================================= SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 36,152,982 _______________________________________________________ ======================================================= Class B 1,898,822 _______________________________________________________ ======================================================= Class C 1,028,711 _______________________________________________________ ======================================================= Class R 1,442,667 _______________________________________________________ ======================================================= Investor Class 8,906,121 _______________________________________________________ ======================================================= Institutional Class 6,824,008 _______________________________________________________ ======================================================= Class A: Net asset value per share $ 25.85 ------------------------------------------------------- Maximum offering price per share (Net asset value of $25.85 divided by 94.50%) $ 27.35 _______________________________________________________ ======================================================= Class B: Net asset value and offering price per share $ 22.84 _______________________________________________________ ======================================================= Class C: Net asset value and offering price per share $ 22.82 _______________________________________________________ ======================================================= Class R: Net asset value and offering price per share $ 25.36 _______________________________________________________ ======================================================= Investor Class: Net asset value and offering price per share $ 26.53 _______________________________________________________ ======================================================= Institutional Class: Net asset value and offering price per share $ 26.81 _______________________________________________________ =======================================================
* At June 30, 2008, securities with an aggregate value of $150,251,148 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 8 AIM SMALL CAP GROWTH FUND STATEMENT OF OPERATIONS For the six months ended June 30, 2008 (Unaudited) INVESTMENT INCOME: Dividends $ 2,481,889 ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $1,543,628) 2,171,375 ================================================================================================ Total investment income 4,653,264 ================================================================================================ EXPENSES: Advisory fees 5,191,140 ------------------------------------------------------------------------------------------------ Administrative services fees 195,393 ------------------------------------------------------------------------------------------------ Custodian fees 22,051 ------------------------------------------------------------------------------------------------ Distribution fees: Class A 1,163,582 ------------------------------------------------------------------------------------------------ Class B 244,938 ------------------------------------------------------------------------------------------------ Class C 124,984 ------------------------------------------------------------------------------------------------ Class R 87,789 ------------------------------------------------------------------------------------------------ Investor Class 305,673 ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C, R and Investor 1,638,759 ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 99,189 ------------------------------------------------------------------------------------------------ Trustees' and officer's fees and benefits 30,515 ------------------------------------------------------------------------------------------------ Other 254,572 ================================================================================================ Total expenses 9,358,585 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (57,538) ================================================================================================ Net expenses 9,301,047 ================================================================================================ Net investment income (loss) (4,647,783) ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain from investment securities (includes net gains (losses) from securities sold to affiliates of $(1,817,172)) 14,020,385 ================================================================================================ Change in net unrealized appreciation (depreciation) (195,936,402) ================================================================================================ Net realized and unrealized gain (loss) (181,916,017) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(186,563,800) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM SMALL CAP GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS For the six months ended June 30, 2008 and the year ended December 31, 2007 (Unaudited)
JUNE 30, DECEMBER 31, 2008 2007 ---------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ (4,647,783) $ (13,803,257) ---------------------------------------------------------------------------------------------------------- Net realized gain 14,020,385 216,189,108 ---------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (195,936,402) (11,203,457) ========================================================================================================== Net increase (decrease) in net assets resulting from operations (186,563,800) 191,182,394 ========================================================================================================== Distributions to shareholders from net realized gains: Class A -- (116,301,535) ---------------------------------------------------------------------------------------------------------- Class B -- (7,490,512) ---------------------------------------------------------------------------------------------------------- Class C -- (3,483,918) ---------------------------------------------------------------------------------------------------------- Class R -- (4,004,380) ---------------------------------------------------------------------------------------------------------- Investor Class -- (29,163,541) ---------------------------------------------------------------------------------------------------------- Institutional Class -- (25,832,340) ========================================================================================================== Total distributions from net realized gains -- (186,276,226) ========================================================================================================== Share transactions-net: Class A (4,841,085) (20,896,701) ---------------------------------------------------------------------------------------------------------- Class B (10,364,110) (43,973,533) ---------------------------------------------------------------------------------------------------------- Class C (2,072,180) (1,515,213) ---------------------------------------------------------------------------------------------------------- Class R 4,073,636 13,958,156 ---------------------------------------------------------------------------------------------------------- Investor Class (7,883,120) (9,311,730) ---------------------------------------------------------------------------------------------------------- Institutional Class (32,594,482) 65,670,923 ========================================================================================================== Net increase (decrease) in net assets resulting from share transactions (53,681,341) 3,931,902 ========================================================================================================== Net increase (decrease) in net assets (240,245,141) 8,838,070 ========================================================================================================== NET ASSETS: Beginning of period 1,697,388,011 1,688,549,941 ========================================================================================================== End of period (including undistributed net investment income (loss) of $(4,861,942) and $(214,159), respectively) $1,457,142,870 $1,697,388,011 __________________________________________________________________________________________________________ ==========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS June 30, 2008 (Unaudited) NOTE 1--SIGNIFICANT ACCOUNTING POLICIES AIM Small Cap Growth Fund (the "Fund") is a series portfolio of AIM Growth Series (the "Trust"). The Trust is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end series management investment company consisting of seventeen separate series 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 a CDSC. Class B shares and Class C shares are sold with a CDSC. Class R shares, Investor Class 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. Effective as of the close of business on March 18, 2002, the Fund's shares were offered on a limited basis to certain investors. The 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. 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. 11 AIM SMALL CAP GROWTH 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. 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. 12 AIM SMALL CAP GROWTH 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:
AVERAGE NET ASSETS RATE ------------------------------------------------------------------- First $500 million 0.725% ------------------------------------------------------------------- Next $500 million 0.70% ------------------------------------------------------------------- Next $500 million 0.675% ------------------------------------------------------------------- Over $1.5 billion 0.65% ___________________________________________________________________ ===================================================================
Under the terms of a master sub-advisory agreement approved by shareholders of the Fund on February 29, 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). 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 (but not cash collateral from securities lending) in such affiliated money market funds. For the six months ended June 30, 2008, the Advisor waived advisory fees of $23,467. 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 six months ended June 30, 2008, Invesco reimbursed expenses of the Fund in the amount of $1,227. 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 six months ended June 30, 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 six months ended June 30, 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 Authority ("FINRA") impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the six months ended June 30, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and contingent deferred sales charges ("CDSC") (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2008, IADI advised the Fund that IADI retained $8,585 in front-end sales commissions from the sale of Class A shares and $69, $23,639, $321 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--SUPPLEMENTAL INFORMATION The Fund adopted the provisions of Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (SFAS 157), effective with the beginning of the Fund's fiscal year. SFAS 157 establishes a hierarchy that prioritizes the inputs to valuation methods giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (level 1) and the lowest priority to unobservable inputs (level 3) market prices are not readily available or are unreliable. Based on the inputs the securities or other instruments are tiered into three levels of hierarchy under SFAS 157. Changes in valuation methods may result in transfers in or out of an investment's assigned level within the hierarchy, Level 1--Quoted prices in an active market for identical assets. Level 2--Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. 13 AIM SMALL CAP GROWTH FUND Level 3--Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered input levels, as of the end of the reporting period, June 30, 2008. The inputs or methods used for valuing securities may not be an indication of the risk associated with investing in those securities.
INVESTMENTS IN INPUT LEVEL SECURITIES -------------------------------------- Level 1 $1,615,131,063 -------------------------------------- Level 2 -- -------------------------------------- Level 3 -- ====================================== $1,615,131,063 ______________________________________ ======================================
NOTE 4--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 six months ended June 30, 2008, the Fund engaged in securities sales of $4,864,928, which resulted in net realized gains (losses) of $(1,817,172), and securities purchases of $11,106,945. NOTE 5--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 six months ended June 30, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $32,844. NOTE 6--TRUSTEES' AND OFFICER'S FEES AND BENEFITS "Trustees' and Officer's 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 Officer's 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 Officer's Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the six months ended June 30, 2008, the Fund paid legal fees of $3,540 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 7--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company ("SSB"), 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 8--TAX INFORMATION The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund's capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund's fiscal year-end. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Fund is limited as to utilizing $42,675,560 of capital loss carryforward in the fiscal year ended December 31, 2008. 14 AIM SMALL CAP GROWTH FUND The Fund had a capital loss carryforward as of December 31, 2007 which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD* ----------------------------------------------------------------------------------------------- December 31, 2010 $78,206,572 _______________________________________________________________________________________________ ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of April 10, 2006, the date of reorganization of AIM Small Company Growth Fund, into the Fund are realized on securities held in each Fund at such date, the capital loss carryforward may be further limited for up to five years from the date of reorganization. NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2008 was $204,515,423 and $262,275,391, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end.
UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENT SECURITIES ON A TAX BASIS ------------------------------------------------------------------------------------------------ Aggregate unrealized appreciation of investment securities $ 334,255,396 ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (157,396,437) ================================================================================================ Net unrealized appreciation of investment securities $ 176,858,959 ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $1,438,272,104.
15 AIM SMALL CAP GROWTH FUND NOTE 10--SHARE INFORMATION
CHANGES IN SHARES OUTSTANDING -------------------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED JUNE 30, 2008(a) DECEMBER 31, 2007 ---------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------------- Sold: Class A 5,239,016 $ 140,422,597 7,628,780 $ 243,008,419 -------------------------------------------------------------------------------------------------------------------------- Class B 40,356 944,569 89,915 2,569,076 -------------------------------------------------------------------------------------------------------------------------- Class C 94,043 2,191,251 171,861 4,910,680 -------------------------------------------------------------------------------------------------------------------------- Class R 366,946 9,495,681 639,590 20,286,616 -------------------------------------------------------------------------------------------------------------------------- Investor Class 711,461 19,062,667 920,180 30,104,070 -------------------------------------------------------------------------------------------------------------------------- Institutional Class 778,973 21,289,703 2,986,532 97,694,692 ========================================================================================================================== Issued as reinvestment of dividends: Class A -- -- 3,980,841 114,409,369 -------------------------------------------------------------------------------------------------------------------------- Class B -- -- 279,229 7,120,338 -------------------------------------------------------------------------------------------------------------------------- Class C -- -- 130,748 3,331,458 -------------------------------------------------------------------------------------------------------------------------- Class R -- -- 141,798 4,004,380 -------------------------------------------------------------------------------------------------------------------------- Investor Class -- -- 972,104 28,677,140 -------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 832,135 24,747,697 ========================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 153,964 4,067,332 1,016,530 32,907,168 -------------------------------------------------------------------------------------------------------------------------- Class B (173,935) (4,067,332) (1,127,536) (32,907,168) ========================================================================================================================== Reacquired: Class A (5,671,513) (149,331,014) (12,866,163) (411,221,657) -------------------------------------------------------------------------------------------------------------------------- Class B (309,911) (7,241,347) (729,187) (20,755,779) -------------------------------------------------------------------------------------------------------------------------- Class C (183,179) (4,263,431) (338,328) (9,757,351) -------------------------------------------------------------------------------------------------------------------------- Class R (208,881) (5,422,045) (328,628) (10,332,840) -------------------------------------------------------------------------------------------------------------------------- Investor Class (994,697) (26,945,787) (2,112,401) (68,092,940) -------------------------------------------------------------------------------------------------------------------------- Institutional Class (2,018,805) (53,884,185) (1,733,377) (56,771,466) ========================================================================================================================== (2,176,162) $ (53,681,341) 554,623 $ 3,931,902 __________________________________________________________________________________________________________________________ ==========================================================================================================================
(a) There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund that owns 7% of the outstanding shares of the Fund. IADI has an agreement with this entity to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to this entity, which is 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 this entity is owned beneficially. 16 AIM SMALL CAP GROWTH FUND NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
CLASS A ------------------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ---------------------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 29.00 $ 29.23 $ 27.51 $ 27.46 $ 25.71 $ 18.47 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.08)(a) (0.25)(a) (0.25)(a) (0.31) (0.32) (0.21)(a) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (3.07) 3.54 4.21 2.61 2.07 7.45 ============================================================================================================================ Total from investment operations (3.15) 3.29 3.96 2.30 1.75 7.24 ============================================================================================================================ Less distributions from net realized gains -- (3.52) (2.24) (2.25) -- -- ============================================================================================================================ Net asset value, end of period $ 25.85 $ 29.00 $ 29.23 $ 27.51 $ 27.46 $ 25.71 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (10.86)% 11.38% 14.30% 8.32% 6.81% 39.20% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $934,499 $1,056,349 $1,071,753 $1,099,696 $1,491,940 $1,602,724 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 1.27%(c) 1.23% 1.25% 1.45% 1.40% 1.27% ---------------------------------------------------------------------------------------------------------------------------- Without fee waivers and/or expense reimbursements 1.27%(c) 1.23% 1.25% 1.50% 1.51% 1.37% ============================================================================================================================ Ratio of net investment income (loss) to average net assets (0.64)%(c) (0.78)% (0.84)% (0.95)% (1.12)% (0.98)% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(d) 14% 29% 49% 41% 69% 32% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $935,980,440. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS B -------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ----------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 25.71 $ 26.47 $ 25.29 $ 25.61 $ 24.15 $ 17.49 ------------------------------------------------------------------------------------------------------------------------------ Income from investment operations: Net investment income (loss) (0.16)(a) (0.44)(a) (0.43)(a) (0.47) (0.52) (0.35)(a) ------------------------------------------------------------------------------------------------------------------------------ Net gains (losses) on securities (both realized and unrealized) (2.71) 3.20 3.85 2.40 1.98 7.01 ============================================================================================================================== Total from investment operations (2.87) 2.76 3.42 1.93 1.46 6.66 ============================================================================================================================== Less distributions from net realized gains -- (3.52) (2.24) (2.25) -- -- ============================================================================================================================== Net asset value, end of period $ 22.84 $ 25.71 $ 26.47 $ 25.29 $ 25.61 $ 24.15 ______________________________________________________________________________________________________________________________ ============================================================================================================================== Total return(b) (11.16)% 10.55% 13.42% 7.47% 6.05% 38.08% ______________________________________________________________________________________________________________________________ ============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $43,360 $60,227 $101,394 $117,307 $149,400 $182,700 ______________________________________________________________________________________________________________________________ ============================================================================================================================== Ratio of expenses to average net assets 2.02%(c) 1.98% 2.00% 2.20% 2.15%(d) 2.02% ============================================================================================================================== Ratio of net investment income (loss) to average net assets (1.39)%(c) (1.53)% (1.59)% (1.70)% (1.87)% (1.73)% ______________________________________________________________________________________________________________________________ ============================================================================================================================== Portfolio turnover rate(e) 14% 29% 49% 41% 69% 32% ______________________________________________________________________________________________________________________________ ==============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $49,256,866. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 2.16% for the year ended December 31, 2004. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 17 AIM SMALL CAP GROWTH FUND NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
CLASS C ---------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------- 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 25.69 $ 26.46 $ 25.27 $ 25.60 $ 24.14 $ 17.48 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.16)(a) (0.44)(a) (0.43)(a) (0.47) (0.52) (0.35)(a) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (2.71) 3.19 3.86 2.39 1.98 7.01 ============================================================================================================================ Total from investment operations (2.87) 2.75 3.43 1.92 1.46 6.66 ============================================================================================================================ Less distributions from net realized gains -- (3.52) (2.24) (2.25) -- -- ============================================================================================================================ Net asset value, end of period $ 22.82 $ 25.69 $ 26.46 $ 25.27 $ 25.60 $ 24.14 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (11.17)% 10.52% 13.47% 7.44% 6.05% 38.10% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $23,476 $28,722 $30,521 $31,141 $40,904 $50,031 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratio of expenses to average net assets 2.02%(c) 1.98% 2.00% 2.20% 2.15%(d) 2.02% ============================================================================================================================ Ratio of net investment income (loss) to average net assets (1.39)%(c) (1.53)% (1.59)% (1.70)% (1.87)% (1.73)% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(e) 14% 29% 49% 41% 69% 32% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(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) Ratios are annualized and based on average daily net assets of $25,134,266. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 2.16% for the year ended December 31, 2004. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
CLASS R --------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ---------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 28.48 $ 28.84 $ 27.23 $ 27.28 $ 25.61 $18.44 ---------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.12)(a) (0.33)(a) (0.32)(a) (0.30) (0.27) (0.28)(a) ---------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (3.00) 3.49 4.17 2.50 1.94 7.45 ============================================================================================================================ Total from investment operations (3.12) 3.16 3.85 2.20 1.67 7.17 ============================================================================================================================ Less distributions from net realized gains -- (3.52) (2.24) (2.25) -- -- ============================================================================================================================ Net asset value, end of period $ 25.36 $ 28.48 $ 28.84 $ 27.23 $ 27.28 $25.61 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Total return(b) (10.96)% 11.07% 14.04% 8.01% 6.52% 38.88% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratios/supplemental data: Net assets, end of period (000s omitted) $36,588 $36,591 $23,988 $21,276 $19,506 $9,029 ____________________________________________________________________________________________________________________________ ============================================================================================================================ Ratio of expenses to average net assets 1.52%(c) 1.48% 1.50% 1.70% 1.65%(d) 1.52% ============================================================================================================================ Ratio of net investment income (loss) to average net assets (0.89)%(c) (1.03)% (1.09)% (1.20)% (1.37)% (1.23)% ____________________________________________________________________________________________________________________________ ============================================================================================================================ Portfolio turnover rate(e) 14% 29% 49% 41% 69% 32% ____________________________________________________________________________________________________________________________ ============================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $35,308,390. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 1.66% for the year ended December 31, 2004. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 18 AIM SMALL CAP GROWTH FUND NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED)
INVESTOR CLASS --------------------------------------------------------- APRIL 7, 2006 SIX MONTHS ENDED YEAR ENDED (COMMENCEMENT DATE) JUNE 30, DECEMBER 31, TO DECEMBER 31, 2008 2007 2006 -------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 29.76 $ 29.91 $ 31.20 -------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss)(a) (0.09) (0.26) (0.19) -------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (3.14) 3.63 1.14 ============================================================================================================== Total from investment operations (3.23) 3.37 0.95 ============================================================================================================== Less distributions from net realized gains -- (3.52) (2.24) ============================================================================================================== Net asset value, end of period $ 26.53 $ 29.76 $ 29.91 ______________________________________________________________________________________________________________ ============================================================================================================== Total return(b) (10.85)% 11.39% 2.96% ______________________________________________________________________________________________________________ ============================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $236,302 $273,506 $281,479 ______________________________________________________________________________________________________________ ============================================================================================================== Ratio of expenses to average net assets 1.27%(c) 1.23% 1.26%(d) ============================================================================================================== Ratio of net investment income (loss) to average net assets (0.64)%(c) (0.78)% (0.85)%(d) ______________________________________________________________________________________________________________ ============================================================================================================== Portfolio turnover rate(e) 14% 29% 49% ______________________________________________________________________________________________________________ ==============================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $245,882,314. (d) Annualized. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year.
INSTITUTIONAL CLASS --------------------------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ 2008 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period $ 30.01 $ 30.01 $ 28.08 $ 27.83 $ 25.91 $ 18.53 ------------------------------------------------------------------------------------------------------------------------------- Income from investment operations: Net investment income (loss) (0.03)(a) (0.12)(a) (0.13)(a) (0.11) (0.16) (0.12)(a) ------------------------------------------------------------------------------------------------------------------------------- Net gains (losses) on securities (both realized and unrealized) (3.17) 3.64 4.30 2.61 2.08 7.50 =============================================================================================================================== Total from investment operations (3.20) 3.52 4.17 2.50 1.92 7.38 =============================================================================================================================== Less distributions from net realized gains -- (3.52) (2.24) (2.25) -- -- =============================================================================================================================== Net asset value, end of period $ 26.81 $ 30.01 $ 30.01 $ 28.08 $ 27.83 $ 25.91 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Total return(b) (10.66)% 11.85% 14.76% 8.93% 7.41% 39.83% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratios/supplemental data: Net assets, end of period (000s omitted) $182,918 $241,992 $179,414 $107,023 $112,547 $108,116 _______________________________________________________________________________________________________________________________ =============================================================================================================================== Ratio of expenses to average net assets: With fee waivers and/or expense reimbursements 0.86%(c) 0.81% 0.84% 0.84% 0.85%(d) 0.80% =============================================================================================================================== Ratio of net investment income (loss) to average net assets (0.23)%(c) (0.36)% (0.43)% (0.35)% (0.57)% (0.51)% _______________________________________________________________________________________________________________________________ =============================================================================================================================== Portfolio turnover rate(e) 14% 29% 49% 41% 69% 32% _______________________________________________________________________________________________________________________________ ===============================================================================================================================
(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. Not annualized for periods less than one year. (c) Ratios are annualized and based on average daily net assets of $199,488,871. (d) After fee waivers and/or expense reimbursements. Ratio of expenses to average net assets prior to fee waivers and/or expense reimbursements was 0.86% for the year ended December 31, 2004. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year. 19 AIM SMALL CAP GROWTH FUND NOTE 12--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. SETTLED ENFORCEMENT ACTIONS AND INVESTIGATIONS RELATED TO MARKET TIMING On May 23, 2008, the Securities and Exchange Commission ("SEC") publicly posted its final approval of the Distribution Plans ("Distribution Plans") for the distribution of monies placed into two separate Fair Funds created pursuant to a settlement reached on October 8, 2004 between Invesco Funds Group, Inc. ("IFG"), Invesco Aim Advisors, Inc. ("Invesco Aim") and Invesco Aim Distributors, Inc. ("IADI") and the SEC (the "Order"). One of the Fair Funds consists of $325 million, plus interest and any contributions by other settling parties, for distribution to shareholders of certain mutual funds formerly advised by IFG who may have been harmed by market timing and related activity. The second Fair Fund consists of $50 million, plus interest and any contributions by other settling parties, for distribution to shareholders of mutual funds advised by Invesco Aim who may have been harmed by market timing and related activity. The Distribution Plans provide for the distribution to all eligible investors to compensate such investors for injury they may have suffered as a result of market timing in the affected funds. The Distribution Plans include a provision for any residual amounts in the Fair Funds to be distributed in the future to the affected funds. Because the distribution of the Fair Funds has not yet commenced, management of Invesco Aim and the Fund are unable to estimate the amount of distribution to be made to the Fund, if any. At the request of the trustees of the AIM Funds, Invesco Ltd. ("Invesco"), the parent company of IFG and Invesco Aim, has agreed to reimburse expenses incurred by the AIM Funds related to market timing matters. 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, 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 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 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. 20 AIM SMALL CAP GROWTH FUND CALCULATING YOUR ONGOING FUND EXPENSES EXAMPLE As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and/or service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2008, through June 30, 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.
--------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------- A $1,000.00 $891.40 $5.97 $1,018.55 $ 6.37 1.27% --------------------------------------------------------------------------------------------------- B 1,000.00 888.00 9.48 1,014.82 10.12 2.02 --------------------------------------------------------------------------------------------------- C 1,000.00 888.30 9.48 1,014.82 10.12 2.02 --------------------------------------------------------------------------------------------------- R 1,000.00 890.40 7.14 1,017.30 7.62 1.52 --------------------------------------------------------------------------------------------------- Investor 1,000.00 891.50 5.97 1,018.55 6.37 1.27 ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. 21 AIM SMALL CAP 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 Growth Series is required under the renewal process, the Trustees receive from one another and attributed different Investment Company Act of 1940 to approve comparative performance and fee data weight to the various factors. The annually the renewal of the AIM Small Cap regarding the AIM Funds prepared by an Trustees recognized that the advisory Growth Fund (the Fund) investment advisory independent company, Lipper, Inc. arrangements and resulting advisory fees agreement with Invesco Advisors, Inc. (Lipper), under the direction and for the Fund and the other AIM Funds are (Invesco Aim). During contract renewal supervision of the independent Senior the result of years of review and meetings held on June 18-19, 2008, the Officer who also prepares a separate negotiation between the Trustees and Board as a whole and the disinterested or analysis of this information for the Invesco Aim, that the Trustees may focus "independent" Trustees, voting separately, Trustees. Each Sub-Committee then makes to a greater extent on certain aspects of approved the continuance of the Fund's recommendations to the Investments these arrangements in some years than in investment advisory agreement for another Committee regarding the performance, fees others, and that the Trustees' year, effective July 1, 2008. In doing so, and expenses of their assigned funds. The deliberations and conclusions in a the Board determined that the Fund's Investments Committee considers each particular year may be based in part on investment advisory agreement is in the Sub-Committee's recommendations and makes their deliberations and conclusions of best interests of the Fund and its its own recommendations regarding the these same arrangements throughout the shareholders and that the compensation to performance, fees and expenses of the AIM year and in prior years. Invesco Aim under the Fund's investment Funds to the full Board. The Investments advisory agreement is fair and reasonable. Committee also considers each FACTORS AND CONCLUSIONS AND SUMMARY OF Sub-Committee's recommendations in making INDEPENDENT WRITTEN FEE EVALUATION The independent Trustees met separately its annual recommendation to the Board during their evaluation of the Fund's whether to approve the continuance of each The discussion below serves as a summary investment advisory agreement with AIM Fund's investment advisory agreement of the Senior Officer's independent independent legal counsel from whom they and sub-advisory agreements for another written evaluation with respect to the received independent legal advice, and the year. Fund's investment advisory agreement as independent Trustees also received well as a discussion of the material assistance during their deliberations from The independent Trustees are assisted factors and related conclusions that the independent Senior Officer, a in their annual evaluation of the Fund's formed the basis for the Board's approval full-time officer of the AIM Funds who investment advisory agreement by the of the Fund's investment advisory reports directly to the independent independent Senior Officer. One agreement and sub-advisory agreements. Trustees. responsibility of the Senior Officer is to Unless otherwise stated, information set manage the process by which the AIM Funds' forth below is as of June 19, 2008 and THE BOARD'S FUND EVALUATION PROCESS 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 Investments Committee has to ensure that they are negotiated in a not limited to changes to the Fund's established three Sub-Committees that are manner that is at arms' length and performance, advisory fees, expense responsible for overseeing the management reasonable. Accordingly, the Senior limitations and/or fee waivers. of a number of the series portfolios of Officer must either supervise a the AIM Funds. This Sub-Committee competitive bidding process or prepare an I. Investment Advisory Agreement structure permits the Trustees to focus on independent written evaluation. The Senior the performance of the AIM Funds that have Officer has recommended that an A. Nature, Extent and Quality of been assigned to them. The Sub-Committees independent written evaluation be provided Services Provided by Invesco Aim meet throughout the year to review the and, at the direction of the Board, has performance of their assigned funds, and prepared an independent written The Board reviewed the advisory services the Sub-Committees review monthly and evaluation. provided to the Fund by Invesco Aim under quarterly comparative performance the Fund's investment advisory agreement, information and periodic asset flow data During the annual contract renewal the performance of Invesco Aim in for their assigned funds. These materials process, the Board considered the factors providing these services, and the are prepared under the direction and discussed below under the heading "Factors credentials and experience of the officers supervision of the independent Senior and Conclusions and Summary of Independent and employees of Invesco Aim who provide Officer. Over the course of each year, the Written Fee Evaluation" in evaluating the these services. The Board's review of the Sub-Committees meet with portfolio fairness and reasonableness of the Fund's qualifications of Invesco Aim to provide managers for their assigned funds and investment advisory agreement and these services included the Board's other members of management and review sub-advisory agreements at the contract consideration of Invesco Aim's portfolio with these individuals the performance, renewal meetings and at their meetings and product review process, various back investment objective(s), policies, throughout the year as part of their office support functions provided by strategies and limitations of these funds. ongoing oversight of the Fund. The Fund's Invesco Aim, and Invesco Aim's equity and investment advisory agreement and fixed income trading operations. The Board In addition to their meetings sub-advisory agreements were considered concluded that the nature, extent and throughout the year, the Sub-Committees separately, although the Board also quality of the advisory services provided meet at designated contract renewal considered the common interests of all of to the Fund by Invesco Aim were meetings each year to conduct an in-depth the AIM Funds in their deliberations. The appropriate and that Invesco Aim currently review of the performance, fees and Board considered all of the information is providing satisfactory advisory expenses of provided to them and did not identify any services in accordance with the terms of particular factor that was controlling. the Fund's investment advisory agreement. Each Trustee may have evalu- In addition, based on their ongoing meetings throughout the year with the continued
22 AIM SMALL CAP GROWTH FUND Fund's portfolio manager or managers, the calendar year, the Board also reviewed schedule includes three breakpoints and Board concluded that these individuals are more recent Fund performance and this that the level of the Fund's advisory competent and able to continue to carry review did not change their conclusions. fees, as a percentage of the Fund's net out their responsibilities under the assets, has decreased as net assets Fund's investment advisory agreement. C. Advisory Fees and Fee Waivers increased because of the breakpoints. Based on this information, the Board In determining whether to continue the The Board compared the Fund's contractual concluded that the Fund's advisory fees Fund's investment advisory agreement, the advisory fee rate to the contractual appropriately reflect economies of scale Board considered the prior relationship advisory fee rates of funds in the Fund's at current asset levels. The Board also between Invesco Aim and the Fund, as well expense group that are not managed by noted that the Fund shares directly in as the Board's knowledge of Invesco Aim's Invesco Aim, at a common asset level and economies of scale through lower fees operations, and concluded that it was as of the end of the past calendar year. charged by third party service providers beneficial to maintain the current The Board noted that the Fund's based on the combined size of all of the relationship, in part, because of such contractual advisory fee rate was below AIM Funds and affiliates. knowledge. The Board also considered the the median contractual advisory fee rate steps that Invesco Aim and its affiliates of funds in its expense group. The Board E. Profitability and Financial have taken over the last several years to also reviewed the methodology used by Resources of Invesco Aim improve the quality and efficiency of the Lipper in determining contractual fee services they provide to the AIM Funds in rates. The Board reviewed information from the areas of investment performance, Invesco Aim concerning the costs of the product line diversification, The Board also compared the Fund's advisory and other services that Invesco distribution, fund operations, shareholder effective fee rate (the advisory fee after Aim and its affiliates provide to the Fund services and compliance. The Board any advisory fee waivers and before any and the profitability of Invesco Aim and concluded that the quality and efficiency expense limitations/waivers) to the its affiliates in providing these of the services Invesco Aim and its advisory fee rates of other clients of services. The Board also reviewed affiliates provide to the AIM Funds in Invesco Aim and its affiliates with information concerning the financial each of these areas have generally investment strategies comparable to those condition of Invesco Aim and its improved, and support the Board's approval of the Fund, including four mutual funds affiliates. The Board also reviewed with of the continuance of the Fund's sub-advised by an Invesco Aim affiliate. Invesco Aim the methodology used to investment advisory agreement. The Board noted that the Fund's rate was prepare the profitability information. The above the sub-advisory fee rates for the Board considered the overall profitability B. Fund Performance sub-advised mutual funds. of Invesco Aim, as well as the profitability of Invesco Aim in connection The Board compared the Fund's performance The Board also noted that Invesco Aim with managing the Fund. The Board noted during the past one, three and five proposed that the contractual expense that Invesco Aim continues to operate at a calendar years to the performance of funds limitation of the Fund expire on June 30, net profit, although increased expenses in in the Fund's performance group that are 2008. Invesco Aim advised the Board that recent years have reduced the not managed by Invesco Aim, and against the expense limitation had not resulted in profitability of Invesco Aim and its the performance of all funds in the Lipper any waivers for at least the past two affiliates. The Board concluded that the Small-Cap Growth Funds Index. The Board fiscal years of the Fund. Fund's fees were fair and reasonable, and also reviewed the criteria used by Invesco that the level of profits realized by Aim to identify the funds in the Fund's The Board concluded that it was not Invesco Aim and its affiliates from performance group for inclusion in the necessary at this time to discuss with providing services to the Fund was not Lipper reports. The Board noted that the Invesco Aim whether to continue any fee excessive in light of the nature, quality Fund's performance was in the third waivers or expense limitations because the and extent of the services provided. The quintile for the one year period, the Fund's total expenses were below the Board considered whether Invesco Aim is first quintile for the three year period median total expenses of the funds in the financially sound and has the resources and the third quintile for the five year Fund's Lipper expense group that are not necessary to perform its obligations under period (the first quintile being the best managed by Invesco Aim. the Fund's investment advisory agreement, performing funds and the fifth quintile and concluded that Invesco Aim has the being the worst performing funds). The After taking account of the Fund's financial resources necessary to fulfill Board noted that the Fund's performance contractual advisory fee rate, as well as these obligations. was above the performance of the Index for the comparative advisory fee information the one and three year periods and below and the expiration of the expense F. Independent Written Evaluation of the performance for the five year period. limitation discussed above, the Board the Fund's Senior Officer The Board also considered the steps concluded that the Fund's advisory fees Invesco Aim has taken over the last were fair and reasonable. The Board noted that, at their direction, several years to improve the quality and the Senior Officer of the Fund, who is efficiency of the services that Invesco D. Economies of Scale and Breakpoints independent of Invesco Aim and Invesco Aim provides to the AIM Funds. The Board The Board considered the extent to which Aim's affiliates, had prepared an concluded that Invesco Aim continues to be there are economies of scale in Invesco independent written evaluation to assist responsive to the Board's focus on fund Aim's provision of advisory services to the Board in determining the performance. Although the independent the Fund. The Board also considered reasonableness of the proposed management written evaluation of the Fund's Senior whether the Fund benefits from such fees of the AIM Funds, including the Fund. Officer only considered Fund performance economies of scale through contractual The Board noted that they had relied upon through the most recent breakpoints in the Fund's advisory fee the Senior Officer's written evaluation schedule or through advisory fee waivers instead of a competitive bidding process. or expense limitations. The Board noted that the Fund's contractual advisory fee continued
23 AIM SMALL CAP GROWTH FUND In determining whether to continue the investments, although Invesco Aim has whether to approve the sub-advisory Fund's investment advisory agreement, the contractually agreed to waive through at agreements for the Fund, as no Affiliated Board considered the Senior Officer's least June 30, 2009, the advisory fees Sub-Adviser currently manages any portion written evaluation. payable by the Fund in an amount equal to of the Fund's assets. 100% of the net advisory fees Invesco Aim G. Collateral Benefits to Invesco Aim receives from the affiliated money market C. Sub-Advisory Fees and its Affiliates funds with respect to the Fund's investment of uninvested cash, but not The Board considered the services to be The Board considered various other cash collateral. The Board considered the provided by the Affiliated Sub-Advisers benefits received by Invesco Aim and its contractual nature of this fee waiver and pursuant to the sub-advisory agreements affiliates resulting from Invesco Aim's noted that it remains in effect until at and the services to be provided by Invesco relationship with the Fund, including the least June 30, 2009. The Board concluded Aim pursuant to the Fund's investment fees received by Invesco Aim and its that the Fund's investment of uninvested advisory agreement, as well as the affiliates for their provision of cash and cash collateral from any allocation of fees between Invesco Aim and administrative, transfer agency and securities lending arrangements in the the Affiliated Sub-Advisers pursuant to distribution services to the Fund. The affiliated money market funds is in the the sub-advisory agreements. The Board Board considered the performance of best interests of the Fund and its noted that the sub-advisory fees have no Invesco Aim and its affiliates in shareholders. direct effect on the Fund or its providing these services and the shareholders, as they are paid by Invesco organizational structure employed by II. Sub-Advisory Agreements Aim to the Affiliated Sub-Advisers, and Invesco Aim and its affiliates to provide that Invesco Aim and the Affiliated these services. The Board also considered A. Nature, Extent and Quality of Sub-Advisers are affiliates. After taking that these services are provided to the Services Provided by Affiliated account of the Fund's contractual Fund pursuant to written contracts which Sub-Advisers sub-advisory fee rate, as well as other are reviewed and approved on an annual relevant factors, the Board concluded that basis by the Board. The Board concluded The Board reviewed the services to be the Fund's sub-advisory fees were fair and that Invesco Aim and its affiliates were provided by Invesco Trimark Ltd., Invesco reasonable. providing these services in a satisfactory Asset Management Deutschland, GmbH, manner and in accordance with the terms of Invesco Asset Management Limited, Invesco D. Financial Resources of the their contracts, and were qualified to Asset Management (Japan) Limited, Invesco Affiliated Sub-Advisers continue to provide these services to the Australia Limited, Invesco Global Asset Fund. Management (N.A.), Inc., Invesco Hong Kong The Board considered whether each Limited, Invesco Institutional (N.A.), Affiliated Sub-Adviser is financially The Board considered the benefits Inc. and Invesco Senior Secured sound and has the resources necessary to realized by Invesco Aim as a result of Management, Inc. (collectively, the perform its obligations under its portfolio brokerage transactions executed "Affiliated Sub-Advisers") under the respective sub-advisory agreement, and through "soft dollar" arrangements. Under sub-advisory agreements and the concluded that each Affiliated Sub-Adviser these arrangements, portfolio brokerage credentials and experience of the officers has the financial resources necessary to commissions paid by the Fund and/or other and employees of the Affiliated fulfill these obligations. funds advised by Invesco Aim are used to Sub-Advisers who will provide these 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 arrangements shift the payment obligation to be provided by the Affiliated for the research and execution services Sub-Advisers were appropriate. The Board from Invesco Aim to the funds and noted that the Affiliated Sub-Advisers, therefore may reduce Invesco Aim's which have offices and personnel that are expenses. The Board also noted that geographically dispersed in financial research obtained through soft dollar centers around the world, have been formed arrangements may be used by Invesco Aim in in part for the purpose of researching and making investment decisions for the Fund compiling information and making and may therefore benefit Fund recommendations on the markets and shareholders. The Board concluded that economies of various countries and Invesco Aim's soft dollar arrangements securities of companies located in such were appropriate. The Board also concluded countries or on various types of that, based on their review and investments and investment techniques, and representations made by Invesco Aim, these providing investment advisory services. arrangements were consistent with The Board concluded that the sub-advisory regulatory requirements. agreements will benefit the Fund and its shareholders by permitting Invesco Aim to The Board considered the fact that the utilize the additional resources and Fund's uninvested cash and cash collateral talent of the Affiliated Sub-Advisers in from any securities lending arrangements managing the Fund. may be invested in money market funds advised by Invesco Aim pursuant to B. Fund Performance procedures approved by the Board. The Board noted that Invesco Aim will receive The Board did not view Fund performance as advisory fees from these affiliated money a relevant factor in considering market funds attributable to such
24 AIM SMALL CAP GROWTH FUND Supplement to Semiannual Report dated 6/30/08 AIM SMALL CAP GROWTH FUND ========================================== INSTITUTIONAL CLASS SHARES AVERAGE ANNUAL TOTAL RETURNS Please note that past performance is not indicative of future results. More The following information has been For periods ended 6/30/08 recent returns may be more or less than prepared to provide Institutional Class Inception (3/15/02) 5.64% those shown. All returns assume shareholders with a performance overview 5 Years 10.04 reinvestment of distributions at NAV. specific to their holdings. Institutional 1 Year -11.50 Investment return and principal value will Class shares are offered exclusively to 6 Months* -10.70 fluctuate so your shares, when redeemed, institutional investors, including defined may be worth more or less than their contribution plans that meet certain * Cumulative total return that has not original cost. See full report for criteria. been annualized information on comparative benchmarks. ========================================== Please consult your Fund prospectus for more information. For the most current Institutional Class shares have no sales month-end performance, please call 800 451 charge; therefore, performance is at net 4246 or visit invescoaim.com. 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 0.81%. 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. 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 or shown to the public, nor used in written form as sales literature for public use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com SCG-INS-2 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 January 1, 2008, through June 30, 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.
--------------------------------------------------------------------------------------------------------- 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 (01/01/08) (06/30/08)(1) PERIOD(2) (06/30/08) PERIOD(2) RATIO --------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $893.00 $4.05 $1,020.59 $4.32 0.86% ---------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period January 1, 2008, through June 30, 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 182/366 to reflect the most recent fiscal half year. AIM SMALL CAP GROWTH FUND PROXY RESULTS A Special Meeting ("Meeting") of Shareholders of AIM Small Cap Growth Fund, an investment portfolio of AIM Growth Series, a Delaware statutory trust ("Trust"), was held on February 29, 2008 and adjourned until March 28, 2008. The Meeting 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:
WITHHELD/ MATTERS VOTES FOR ABSTENTIONS** ----------------------------------------------------------------------------------------------------------- (1)* Bob R. Baker...................................................... 259,205,198 10,486,394 Frank S. Bayley................................................... 259,256,384 10,435,208 James T. Bunch.................................................... 258,142,293 11,549,299 Bruce L. Crockett................................................. 258,143,390 11,548,202 Albert R. Dowden.................................................. 259,201,224 10,490,368 Jack M. Fields.................................................... 259,317,796 10,373,796 Martin L. Flanagan................................................ 259,304,758 10,386,834 Carl Frischling................................................... 259,178,445 10,513,147 Prema Mathai-Davis................................................ 259,255,582 10,436,010 Lewis F. Pennock.................................................. 258,139,258 11,552,334 Larry Soll, Ph.D. ................................................ 258,048,313 11,643,279 Raymond Stickel, Jr. ............................................. 258,206,591 11,485,001 Philip A. Taylor.................................................. 259,264,092 10,427,500
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................................ 182,780,828 23,098,525 6,564,572 57,247,667 (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. ........................................... 21,707,120 2,582,743 686,188 3,517,697
* Proposals 1 and 2 required approval by a combined vote of all of the portfolios of AIM Growth Series. ** Includes Broker Non-Votes. 25 AIM SMALL CAP GROWTH FUND ================================================================================ EDELIVERY INVESCOAIM.COM/EDELIVERY REGISTER FOR EDELIVERY - eDelivery is the process of receiving your fund and account information via e-mail. Once your quarterly statements, tax forms, fund reports, and prospectuses are available, we will send you an e-mail 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 1. Log in to your account. and postage. - reduce the amount of paper you 2. Click on the "Service Center" tab. receive. - gain access to your documents 3. Select "Register for eDelivery" and faster by not waiting for the mail. complete the consent 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 Web site 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 e-mail address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 and 002-57526. A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or on the Invesco Aim Web site, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC Web site, 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 Web site. 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 Web site, sec.gov. If used after October 20, 2008, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Invesco [INVESCO AIM LOGO] Institutional (N.A.), Inc., Invesco Senior Secured - SERVICE MARK - Management, Inc., Invesco Global Asset Management (N.A.), Inc., Invesco Trimark Ltd., Invesco Asset Management (Japan) Ltd. and Invesco Hong Kong Ltd. are affiliated investment advisors that serve as the subadvisor for some 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 SCG-SAR-1 Invesco Aim Distributors, Inc. ITEM 2. CODE OF ETHICS. There were no amendments to the Code of Ethics (the "Code") that applies to the Registrant's Principal Executive Officer ("PEO") and Principal Financial Officer ("PFO") during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 11. CONTROLS AND PROCEDURES. (a) As of June 16, 2008, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer ("PEO") and Principal Financial Officer ("PFO"), to assess the effectiveness of the Registrant's disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act"), as amended. Based on that evaluation, the Registrant's officers, including the PEO and PFO, concluded that, as of June 16, 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 the report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. 12(a)(1) Not applicable. 12(a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. 12(a)(3) Not applicable. 12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AIM Growth Series By: /s/ Philip A. Taylor --------------------------------- Philip A. Taylor Principal Executive Officer Date: September 5, 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: September 5, 2008 By: /s/ Sidney M. Dilgren --------------------------------- Sidney M. Dilgren Principal Financial Officer Date: September 5, 2008 EXHIBIT INDEX 12(a)(1) Not applicable. 12(a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. 12(a)(3) Not applicable. 12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940.