-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fxxu+RMoepi8O5z3HKgzLg5+gDJzEFOdPnxBW1TlgqxcsEjYkn/ZRxd8bC14U7cn HLgq8WpgiPwlJxiS3abbtg== 0000950129-09-000795.txt : 20090306 0000950129-09-000795.hdr.sgml : 20090306 20090306165640 ACCESSION NUMBER: 0000950129-09-000795 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20081231 FILED AS OF DATE: 20090306 DATE AS OF CHANGE: 20090306 EFFECTIVENESS DATE: 20090306 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIM GROWTH SERIES CENTRAL INDEX KEY: 0000202032 IRS NUMBER: 942362417 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-02699 FILM NUMBER: 09663624 BUSINESS ADDRESS: STREET 1: 11 GREENWAY PLAZA STREET 2: SUITE 100 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7036261919 MAIL ADDRESS: STREET 1: 11 GREENWAY PLAZA STREET 2: SUITE 100 CITY: HOUSTON STATE: TX ZIP: 77046 FORMER COMPANY: FORMER CONFORMED NAME: G T GLOBAL GROWTH SERIES DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: G T GLOBAL GROWTH FUNDS DATE OF NAME CHANGE: 19870617 FORMER COMPANY: FORMER CONFORMED NAME: GT GLOBAL GROWTH SERIES DATE OF NAME CHANGE: 19870419 0000202032 S000000465 AIM Growth Allocation Fund C000001297 Class A AADAX C000001298 Class B AAEBX C000001299 Class C AADCX C000001300 Class R AADRX C000023020 Institutional Class AADIX C000071350 Class Y 0000202032 S000000471 AIM Basic Value Fund C000001306 Class A GTVLX C000001307 Class B GTVBX C000001308 Class C GTVCX C000001309 Class R GTVRX C000023021 Institutional Class GTVVX C000071351 Class Y 0000202032 S000000472 AIM Conservative Allocation Fund C000001310 Class A ACNAX C000001311 Class B ACNBX C000001312 Class C ACNCX C000001313 Class R ACNRX C000023022 Institutional Class ACNIX C000071352 Class Y 0000202032 S000000473 AIM Global Equity Fund C000001314 Class A GTNDX C000001315 Class B GNDBX C000001316 Class C GNDCX C000023023 Institutional Class GNDIX C000029641 Class R GTNRX C000071353 Class Y 0000202032 S000000474 AIM Mid Cap Core Equity Fund C000001317 Class A GTAGX C000001318 Class B GTABX C000001319 Class C GTACX C000001320 Class R GTARX C000023024 Institutional Class GTAVX C000071354 Class Y 0000202032 S000000475 AIM Moderate Allocation Fund C000001321 Class A AMKAX C000001322 Class B AMKBX C000001323 Class C AMKCX C000001324 Class R AMKRX C000023025 Institutional Class AMLIX C000071355 Class Y 0000202032 S000000476 AIM Small Cap Growth Fund C000001325 Class A GTSAX C000001326 Class B GTSBX C000001327 Class C GTSDX C000001328 Class R GTSRX C000023026 Investor Class C000023027 Institutional Class GTSVX C000071356 Class Y 0000202032 S000010731 AIM Income Allocation Fund C000029631 Class A ALAAX C000029632 Class B BLIAX C000029633 Class C CLIAX C000029634 Class R RLIAX C000029635 Institutional Class ILAAX C000071357 Class Y 0000202032 S000010732 AIM International Allocation Fund C000029636 Class A AINAX C000029637 Class B INABX C000029638 Class C INACX C000029639 Class R RINAX C000029640 Institutional Class INAIX C000071358 Class Y 0000202032 S000011249 AIM Moderate Growth Allocation Fund C000030998 Class A AAMGX C000030999 Class B AMBGX C000031000 Class C ACMGX C000031001 Class R RAMGX C000031002 Institutional Class AIMGX C000071359 Class Y 0000202032 S000011250 AIM Moderately Conservative Allocation Fund C000031003 Institutional Class CMAIX C000031004 Class A CAAMX C000031005 Class B CMBAX C000031006 Class C CACMX C000031007 Class R CMARX C000071360 Class Y 0000202032 S000015564 INDEPENDENCE 2010 C000042429 CLASS A INJAX C000042430 CLASS B INJBX C000042431 CLASS C INJCX C000042432 CLASS R INJRX C000042433 INSTITUTIONAL CLASS INJIX C000071361 Class Y 0000202032 S000015565 INDEPENDENCE 2020 C000042434 CLASS B AFTBX C000042435 CLASS C AFTCX C000042436 CLASS R AFTRX C000042437 INSTITUTIONAL CLASS AFTSX C000042438 CLASS A AFTAX C000071362 Class Y 0000202032 S000015566 INDEPENDENCE 2030 C000042439 CLASS B C000042440 CLASS C C000042441 CLASS R C000042442 INSTITUTIONAL CLASS C000042443 CLASS A C000071363 Class Y 0000202032 S000015567 INDEPENDENCE 2040 C000042444 CLASS B TNDBX C000042445 CLASS C TNDCX C000042446 CLASS R TNDRX C000042447 INSTITUTIONAL CLASS TNDIX C000042448 CLASS A TNDAX C000071364 Class Y 0000202032 S000015568 INDEPENDENCE 2050 C000042449 CLASS B TNEBX C000042450 CLASS C TNECX C000042451 CLASS R TNERX C000042452 INSTITUTIONAL CLASS TNEIX C000042453 CLASS A TNEAX C000071365 Class Y 0000202032 S000015569 INDEPENDENCE NOW C000042454 CLASS A IANAX C000042455 CLASS B IANBX C000042456 CLASS C IANCX C000042457 CLASS R IANRX C000042458 INSTITUTIONAL CLASS IANIX C000071366 Class Y N-CSR 1 h65412nvcsr.txt FORM N-CSR - 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: 12/31/08 Item 1. Reports to Stockholders. [INVESCO AIM LOGO] AIM BASIC VALUE FUND - SERVICE MARK - Annual Report to Shareholders o December 31, 2008 [MOUNTAIN GRAPHIC]
2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 6 Long-Term Fund Performance 8 Supplemental Information 9 Schedule of Investments 11 Financial Statements 14 Notes to Financial Statements 20 Financial Highlights 22 Auditor's Report 23 Fund Expenses 24 Tax Information 25 Trustees and Officers
Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this [TAYLOR opportunity to update you on market developments during calendar year 2008 and provide you with PHOTO] some perspective and encouragement. MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to Philip Taylor stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /S/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim (1) U.S. Federal Reserve; (2) Bureau of Labor Statistics; (3) FactSet Research; (4) Wall Street Journal
2 AIM BASIC VALUE FUND Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have [CROCKETT negatively affected all investors. The new government promises to move quickly with a stimulus PHOTO] package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of Bruce Crockett investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high" has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com. Best regards, /S/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees
3 AIM BASIC VALUE FUND MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE ======================================================================================= MARKET CONDITIONS AND YOUR FUND PERFORMANCE SUMMARY Equity markets declined sharply during the For the fiscal year ended December 31, 2008, all share classes of AIM Basic Value Fund fiscal year as the financial crisis underperformed the Russell 1000 Value Index, the S&P 500 Index and the Lipper Large-Cap intensified and the global economy Value Funds Index.(triangle) weakened.(1) As painful as bear markets like this are to live through, we believe Drivers of performance were stock specific. We attribute the Fund's underperformance they can actually improve long term versus its indexes mainly to below-market returns from several of our investments in results because of the extraordinary the financials sector. Select investments in consumer discretionary and financials were investment opportunities they produce. among the largest positive contributors to Fund performance during the year. Financials was the worst performing Your Fund's long-term performance appears later in this report. sector of the equity market during the fiscal year as the credit crisis FUND VS. INDEXES intensified and a liquidity crisis emerged. FANNIE MAE and AIG were among the Total returns, 12/31/07 to 12/31/08, at net asset value (NAV). Performance shown does Fund's largest detractors during the year. not include applicable contingent deferred sales charges (CDSC) or front-end sales We understood the negative impact of charges, which would have reduced performance. credit losses on both companies and believed they had adequate financial Class A Shares -51.84% wherewithal to absorb the credit losses Class B Shares -52.21 that will persist for years. Ironically, Class C Shares -52.21 the credit losses remained within the Class R Shares -51.98 range of our expectations. However, the Class Y Shares* -51.81 rapid loss of investor confidence and S&P 500 Index(triangle) (Broad Market Index) -36.99 public policy response surprised us. In Russell 1000 Value Index(triangle) (Style-Specific Index) -36.85 the end, the valuation opportunity that Lipper Large-Cap Value Funds Index(triangle) (Peer Group Index) -37.00 was created by the credit cycle was trumped by a liquidity crisis at AIG and (triangle) Lipper Inc. the unintended consequences of government intervention at Fannie Mae -- both events * Share class incepted during the fiscal year. See page 7 for a detailed explanation inherently unpredictable but lethal. We of Fund performance. sold our positions in these investments at ======================================================================================= substantial losses. HOW WE INVEST o Long-term investment results are a CONTEXT FOR RESULTS function of the level and growth of We seek to create wealth by maintaining a business value in the portfolio. It's important to remember that what many long-term investment horizon and investing now consider to be great historic buying in companies that are selling at a Since our application of this strategy opportunities were at the time quite significant discount to their estimated is highly disciplined and relatively frightening events, and in economic terms, intrinsic value -- a value that is based unique, it is important to understand the many of those episodes seemed far more on the estimated future cash flows benefits and limitations of our process. threatening than our current situation. generated by the business. The Fund's First, the investment strategy is intended History and common sense indicate this philosophy is based on key elements that to preserve your capital while growing it crisis will pass, and we believe it will we believe have extensive empirical at above-market rates over the long term. prove to be a historic buying opportunity evidence: Second, our investments have little in for U.S. stocks. The timing and level of common with popular stock market indexes any market bottom is uncertain, but we o Company intrinsic values can be and most of our peers. And third, the believe the absolute reasonably estimated. Importantly, this Fund's short-term relative performance estimated fair business value is will naturally be different than the stock independent of the company's stock market and peers and have little price. information value since we simply don't own the same stocks. o Market prices are more volatile than business values, partly because investors regularly overreact to negative news. ========================================== ========================================== ========================================== PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS* By sector Financials 23.5% 1. Managed Health Care 9.4% 1. UnitedHealth Group Inc. 5.8% Consumer Discretionary 21.2 2. Semiconductor Equipment 7.5 2. ASML Holding N.V. 4.9 Information Technology 20.4 3. Other Diversified Financial 3. Robert Half International, Inc. 4.0 Health Care 14.9 Services 6.2 4. Moody's Corp. 3.8 Industrials 9.6 4. Advertising 5.2 5. Aetna Inc. 3.5 Consumer Staples 4.4 5. Consumer Finance 4.5 6. JP Morgan Chase & Co. 3.4 Energy 3.2 ========================================== 7. Omnicom Group Inc. 3.2 Materials 1.9 8. Illinois Tool Works Inc. 2.9 Money Market Funds Plus ========================================== 9. Home Depot, Inc. (The) 2.9 Other Assets Less Liabilities 0.9 Total Net Assets $1.3 billion 10. Molson Coors Brewing Co.-Class B 2.9 Total Number of Holdings* 46 ========================================== ========================================== ========================================== The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings.
4 AIM BASIC VALUE FUND return opportunity from recent year-end any special insight into the magnitude or BRET STANLEY levels will prove compelling. duration of this bear market, but Chartered Financial historically, valuation opportunities of [STANLEY Analyst, senior portfolio The current bear market represents one this magnitude have not lasted for very PHOTO] manager, is lead manager of of the three greatest declines in the past long. Ironically, part of our 2008 AIM Basic Value Fund. He 60 years.(2) Following the 2000 to 2002 underperformance was due to our efforts to began his investment career Nasdaq decline, investors learned what a capitalize on this opportunity should it in 1988. Mr. Stanley earned a B.B.A. in permanent loss of capital looks and feels have proved short lived. Regardless of finance from The University of Texas at like. While the Nasdaq remains about 69% duration, our process was designed to Austin and an M.S. in finance from the below its 2000 peak,(3) our losses during exploit just such a period, and we believe University of Houston. the 2000-2002 bear market proved temporary patient shareholders may reap the benefits as a new high was achieved in 2004. of recent investments as most of these R. CANON COLEMAN II loses may again prove temporary. Chartered Financial What's the reason for the different [COLEMAN Analyst, portfolio manager, experience? Our strategy emphasizes We thank you for your investment in AIM PHOTO] is manager of AIM Basic fundamental business value and this value Basic Value Fund and for sharing our Value Fund. He began his grew from 2000 to 2002 despite a recession long-term investment horizon. investment career in 1996 and the bear market in stock prices. Once and joined Invesco Aim in 2000. Mr. the market environment improved, prices (1) Lipper Inc. Coleman earned a B.S. and an M.S. in reverted to fundamental value. We see a accounting from the University of Florida. similar situation unfolding in this bear (2) The Leuthold Group He also earned an M.B.A. from the Wharton market. Our estimate of portfolio School at the University of Pennsylvania. intrinsic value is marginally higher today (3) Bloomberg L.P. than in 2007, yet the market price of the MATTHEW SEINSHEIMER portfolio has declined by about 50%. The views and opinions expressed in Chartered Financial management's discussion of Fund [SEINSHEIMER Analyst, senior portfolio PORTFOLIO ASSESSMENT performance are those of Invesco Aim PHOTO] manager, is manager of AIM Advisors, Inc. These views and opinions Basic Value Fund. He began We believe the single most important are subject to change at any time based on his investment career in indicator of the way AIM Basic Value Fund factors such as market and economic 1992 and joined Invesco Aim in 1998. He is positioned for potential future success conditions. These views and opinions may earned a B.B.A. in finance from Southern is not our historical investment results not be relied upon as investment advice or Methodist University and an M.B.A. from or popular statistical measures, but recommendations, or as an offer for a The University of Texas at Austin. rather the difference between current particular security. The information is market prices and the portfolio's not a complete analysis of every aspect of MICHAEL SIMON estimated intrinsic value -- the aggregate any market, country, industry, security or Chartered Financial business value of the portfolio based on the Fund. Statements of fact are from [SIMON Analyst, senior portfolio our estimate of intrinsic value for each sources considered reliable, but Invesco PHOTO] manager, is manager of AIM individual holding. Aim Advisors, Inc. makes no representation Basic Value Fund. He began or warranty as to their completeness or his investment career in At the close of the year, the accuracy. Although historical performance 1989 and joined Invesco Aim in 2001. Mr. difference between the market price and is no guarantee of future results, these Simon earned a B.B.A. in finance from the estimated intrinsic value of the insights may help you understand our Texas Christian University and an M.B.A. portfolio was at record levels and investment management philosophy. from the University of Chicago. produced the most favorable capital appreciation opportunity in the Fund's See important Fund and index disclosures Assisted by the Basic Value Team history, in our opinion. While there is no later in this report. assurance that market value will ever reflect our estimate of the portfolio's intrinsic value, we believe the large gap between price and estimated value may stack the odds in favor of above-average capital appreciation once capital markets normalize. IN CLOSING We are among the largest shareholders of the Fund, and we too are disappointed with our results in 2008. But, we are also excited about the opportunities the current crisis has created. As we have pointed out many times, the distinctive nature of our strategy will naturally produce results that are either above or below the market in the short term. We understand it can be distressing to shareholders when results lag the market as they have this year. We do not have
5 AIM BASIC VALUE FUND YOUR FUND'S LONG-TERM PERFORMANCE Past performance cannot guarantee Performance of an index of funds shown in the chart. The vertical axis, the comparable future results. reflects fund expenses and management one that indicates the dollar value of an fees; performance of a market index does investment, is constructed with each The data shown in the chart include not. Performance shown in the chart and segment representing a percent change in reinvested distributions, applicable sales table(s) does not reflect deduction of the value of the investment. In this charges and Fund expenses including taxes a shareholder would pay on Fund chart, each segment represents a doubling, management fees. Results for Class B distributions or sale of Fund shares. or 100% change, in the value of the shares are calculated as if a hypothetical investment. In other words, the space shareholder had liquidated his entire This chart, which is a logarithmic between $5,000 and $10,000 is the same investment in the Fund at the close of the chart, presents the fluctuations in the size as the space between $10,000 and reporting period and paid the applicable value of the Fund and its indexes. We $20,000, and so on. contingent deferred sales charges. Index believe that a logarithmic chart is more results include reinvested dividends, but effective than other types of charts in they do not reflect sales charges. illustrating changes in value during the early years
6 AIM BASIC VALUE FUND
==================================================================================================================================== [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund data from 10/18/95, index data from 10/31/95 AIM AIM Basic Value Fund- Basic Value Fund- Russell 1000 Lipper Large-Cap Date Class A Shares Class B Shares S&P 500 Index(1) Value Index(1) Value Funds Index(1) 10/18/95 $ 9450 $10000 10/95 9466 10009 $10000 $10000 $10000 11/95 10276 10867 10438 10506 10433 12/95 10550 11156 10640 10771 10603 1/96 10880 11488 11001 11106 10929 2/96 10855 11462 11104 11190 11051 3/96 11095 11707 11211 11380 11171 4/96 11566 12196 11376 11424 11323 5/96 12145 12809 11669 11567 11533 6/96 11888 12528 11713 11576 11539 7/96 11177 11775 11196 11139 11087 8/96 11392 11985 11432 11457 11375 9/96 12021 12640 12075 11913 11932 10/96 12136 12763 12408 12374 12184 11/96 12327 12956 13345 13271 13057 12/96 12144 12754 13081 13101 12836 1/97 12708 13342 13898 13737 13484 2/97 12907 13543 14007 13938 13592 3/97 12336 12938 13432 13437 13073 4/97 12626 13237 14233 14002 13654 5/97 13363 13991 15104 14784 14441 6/97 13860 14509 15775 15418 15044 7/97 15261 15965 17030 16578 16177 8/97 14805 15491 16077 15988 15485 9/97 15625 16334 16957 16954 16278 10/97 14820 15483 16391 16480 15787 11/97 15060 15720 17149 17209 16304 12/97 15451 16127 17443 17711 16491 1/98 15146 15804 17636 17460 16515 2/98 16275 16977 18907 18636 17601 3/98 16857 17573 19875 19776 18383 4/98 17098 17810 20078 19908 18570 5/98 16471 17148 19734 19613 18254 6/98 16453 17120 20535 19864 18596 7/98 16237 16884 20318 19514 18273 8/98 13586 14130 17382 16610 15779 9/98 14374 14934 18497 17563 16538 10/98 15510 16108 19999 18923 17862 11/98 16308 16931 21211 19805 18774 12/98 16531 17150 22432 20479 19499 1/99 16915 17536 23370 20643 19823 2/99 16213 16803 22643 20351 19369 3/99 17116 17728 23549 20772 19957 4/99 19250 19927 24461 22713 21133 5/99 19760 20447 23884 22463 20773 6/99 20726 21420 25206 23115 21688 7/99 20061 20726 24422 22438 21072 8/99 19513 20148 24301 21606 20688 9/99 18729 19328 23636 20851 19923 10/99 19467 20080 25131 22051 20883 11/99 20170 20792 25642 21878 20956 ====================================================================================================================================
(1) Lipper Inc.
==================================================================================================================================== [MOUNTAIN CHART] 12/99 21828 22487 27150 21984 21601 1/00 21068 21693 25786 21267 20688 2/00 20373 20966 25299 19687 19818 3/00 22836 23493 27772 22089 21632 4/00 22763 23397 26937 21832 21392 5/00 23275 23921 26385 22062 21408 6/00 22507 23117 27034 21054 21171 7/00 22635 23233 26612 21317 21076 8/00 24145 24773 28264 22503 22295 9/00 24915 25548 26772 22709 21943 10/00 25685 26322 26659 23267 22119 11/00 24961 25567 24559 22404 21171 12/00 26249 26876 24679 23526 22023 1/01 26792 27413 25554 23617 22206 2/01 26663 27268 23226 22960 21136 3/01 25842 26420 21755 22148 20315 4/01 27468 28058 23444 23235 21466 5/01 28187 28790 23602 23757 21811 6/01 27976 28557 23027 23230 21218 7/01 27828 28383 22801 23180 21074 8/01 26628 27143 21375 22252 20087 9/01 23127 23571 19649 20686 18519 10/01 23580 24009 20024 20508 18640 11/01 25473 25932 21559 21700 19836 12/01 26283 26726 21748 22211 20135 1/02 26063 26491 21431 22040 19763 2/02 25565 25974 21018 22075 19654 3/02 27469 27896 21808 23120 20521 4/02 26500 26892 20486 22327 19647 5/02 26343 26717 20336 22439 19673 6/02 23664 23995 18888 21150 18301 7/02 21049 21319 17416 19184 16720 8/02 21382 21652 17530 19329 16833 9/02 18739 18958 15627 17180 14887 10/02 19914 20139 17001 18453 15980 11/02 21551 21779 18000 19615 16981 12/02 20211 20411 16943 18763 16173 1/03 19758 19942 16500 18309 15788 2/03 19027 19190 16253 17821 15393 3/03 18934 19092 16410 17850 15383 4/03 20662 20820 17761 19422 16682 5/03 22799 22966 18696 20675 17708 6/03 22910 23065 18935 20934 17911 7/03 23586 23739 19269 21246 18160 8/03 24391 24529 19644 21577 18467 9/03 23883 24011 19436 21366 18260 10/03 25068 25183 20535 22674 19267 11/03 25559 25652 20715 22981 19504 12/03 27039 27134 21801 24398 20701 1/04 27455 27533 22201 24827 21014 2/04 28002 28059 22509 25359 21457 3/04 27909 27952 22170 25137 21201 4/04 27513 27542 21822 24523 20810 5/04 27772 27776 22121 24773 20962 6/04 28447 28439 22551 25358 21423 7/04 26885 26867 21805 25001 20908 8/04 26710 26671 21892 25356 21059 9/04 27025 26972 22129 25749 21308 10/04 27506 27441 22467 26178 21535 11/04 28959 28866 23376 27501 22470 12/04 29987 29882 24171 28422 23184 1/05 29450 29326 23582 27917 22734 2/05 30080 29930 24078 28843 23372 3/05 29506 29355 23652 28447 22992 4/05 28839 28671 23204 27937 22537 5/05 29404 29219 23942 28610 23064 6/05 29922 29716 23976 28923 23298 ====================================================================================================================================
==================================================================================================================================== [MOUNTAIN CHART] 7/05 30921 30690 24867 29760 24057 8/05 30429 30184 24640 29631 23953 9/05 30706 30447 24840 30047 24184 10/05 29883 29606 24425 29283 23680 11/05 31049 30737 25348 30246 24494 12/05 31651 31312 25357 30427 24635 1/06 32797 32424 26029 31608 25354 2/06 32630 32239 26099 31801 25400 3/06 33223 32803 26424 32232 25721 4/06 33446 32996 26779 33051 26360 5/06 32272 31825 26009 32216 25716 6/06 31959 31494 26043 32423 25734 7/06 31857 31378 26204 33211 26128 8/06 32392 31886 26826 33766 26610 9/06 33224 32686 27517 34439 27229 10/06 34298 33713 28413 35567 28040 11/06 34843 34238 28953 36379 28524 12/06 35819 35173 29359 37195 29139 1/07 36338 35659 29803 37671 29514 2/07 35651 34953 29222 37084 28987 3/07 35983 35264 29548 37657 29357 4/07 37598 36829 30856 39049 30615 5/07 38967 38144 31932 40457 31742 6/07 38566 37728 31402 39512 31258 7/07 36753 35925 30429 37685 30003 8/07 37084 36234 30885 38107 30359 9/07 37340 36451 32038 39416 31320 10/07 38553 37621 32548 39420 31566 11/07 36618 35706 31187 37493 30208 12/07 36197 35278 30971 37131 29856 1/08 34105 33218 29113 35644 28345 2/08 32839 31972 28169 34150 27391 3/08 31680 30824 28047 33894 27009 4/08 33635 32686 29412 35546 28347 5/08 33877 32908 29793 35489 28587 6/08 29923 29045 27284 32092 26090 7/08 29705 28824 27054 31976 25734 8/08 30246 29317 27446 32520 26028 9/08 25110 24333 25003 30130 23836 10/08 19397 18792 20804 24914 19837 11/08 17110 16571 19311 23128 18392 12/08 17416 17510 19515 23449 18810 ====================================================================================================================================
========================================== The performance data quoted represent AVERAGE ANNUAL TOTAL RETURNS past performance and cannot guarantee comparable future results; current As of 12/31/08, including maximum performance may be lower or higher. Please applicable sales charges visit invescoaim.com for the most recent month-end performance. Performance figures CLASS A SHARES reflect reinvested distributions, changes Inception (10/18/95) 4.29% in net asset value and the effect of the 10 Years -0.05 maximum sales charge unless otherwise 5 Years -9.44 stated. Investment return and principal 1 Year -54.49 value will fluctuate so that you may have a gain or loss when you sell shares. CLASS B SHARES Inception (10/18/95) 4.33% The total annual Fund operating expense 10 Years -0.02 ratio set forth in the most recent Fund 5 Years -9.32 prospectus as of the date of this report 1 Year -54.27 for Class A, Class B, Class C, Class R and Class Y shares was 1.14%, 1.89%, 1.89%, CLASS C SHARES 1.39% and 0.89%, respectively. The expense Inception (5/3/99) -1.90% ratios presented above may vary from the 5 Years -9.07 expense ratios presented in other sections 1 Year -52.62 of this report that are based on expenses incurred during the period covered by this CLASS R SHARES report. 10 Years 0.33% 5 Years -8.62 Class A share performance reflects the 1 Year -51.98 maximum 5.50% sales charge, and Class B and Class C share performance reflects the CLASS Y SHARES applicable contingent deferred sales 10 Years 0.53% charge (CDSC) for the period involved. The 5 Years -8.40 CDSC on Class B shares declines from 5% 1 Year -51.81 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 Class R shares' inception date is June 3, have a front-end sales charge; returns 2002. Returns since that date are shown are at net asset value and do not historical returns. All other returns are reflect a 0.75% CDSC that may be imposed blended returns of historical Class R on a total redemption of retirement plan share performance and restated Class A assets within the first year. Class Y share performance (for periods prior to shares do not have a front-end sales the inception date of Class R shares) at charge or a CDSC; therefore, performance net asset value, adjusted to reflect the is at net asset value. higher Rule 12b-1 fees applicable to Class R shares. Class A shares' inception date The performance of the Fund's share is October 18, 1995. classes will differ primarily due to different sales charge structures and Class Y shares' inception date is class expenses. October 3, 2008; returns since that date are actual returns. All other returns are blended returns of actual Class Y share performance and restated Class A share performance (for periods prior to the inception date of Class Y shares) at net asset value. The restated Class A share performance reflects the Rule 12b-1 fees applicable to Class A shares as well as any fee waivers or expense reimbursements received by Class A shares. Class A shares inception date is October 18, 1995.
7 AIM BASIC VALUE FUND AIM BASIC VALUE FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of December 31, 2008, and is based on total net assets. o Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES o Although the Fund's return during o A direct investment cannot be made in certain periods was positively impacted an index. Unless otherwise indicated, o Effective September 30, 2003, only by its investments in initial public index results include reinvested previously established qualified plans offerings (IPOs), there can be no dividends, and they do not reflect are eligible to purchase Class B shares assurance that the Fund will have sales charges or fund expenses. of any AIM fund. favorable IPO investment opportunities in the future. OTHER INFORMATION o Class R shares are available only to certain retirement plans. Please see ABOUT INDEXES USED IN THIS REPORT o The Chartered Financial Analyst the prospectus for more information. --REGISTERED TRADEMARK-- o The S&P 500--REGISTERED TRADEMARK-- (CFA--REGISTERED TRADEMARK--) o Class Y shares are available to only INDEX is a market designation is a globally recognized certain investors. Please see the capitalization-weighted index covering standard for measuring the competence prospectus for more information. all major areas of the U.S. economy. It and integrity of investment is not the 500 largest companies, but professionals. PRINCIPAL RISKS OF INVESTING IN THE FUND rather the most widely held 500 companies chosen with respect to market o The returns shown in management's o Prices of equity securities change in size, liquidity, and their industry. discussion of Fund performance are response to many factors, including the based on net asset values calculated historical and prospective earnings of o The RUSSELL 1000--REGISTERED for shareholder transactions. Generally the issuer, the value of its assets, TRADEMARK-- VALUE INDEX measures the accepted accounting principles require general economic conditions, interest performance of those Russell 1000 adjustments to be made to the net rates, investor perceptions and market companies with lower price-to-book assets of the Fund at period end for liquidity. ratios and lower forecasted growth financial reporting purposes, and as values. The Russell 1000 Value Index is such, the net asset values for o Foreign securities have additional a trademark/service mark of the Frank shareholder transactions and the risks, including exchange rate changes, Russell Company. Russell--REGISTERED returns based on those net asset values political and economic upheaval, TRADEMARK-- is a trademark of the Frank may differ from the net asset values relative lack of information, Russell Company. and returns reported in the Financial relatively low market liquidity, and Highlights. the potential lack of strict financial o The LIPPER LARGE-CAP VALUE FUNDS INDEX and accounting controls and standards. is an equally weighted representation o Industry classifications used in this of the largest funds in the Lipper report are generally according to the o The Fund may use enhanced investment Large-Cap Value Funds category. These Global Industry Classification techniques such as leveraging and funds typically have a below-average Standard, which was developed by and is derivatives. Leveraging entails risks price-to-earnings ratio, price-to-book the exclusive property and a service such as magnifying changes in the value ratio, and three-year sales-per-share mark of MSCI Inc. and Standard & of the portfolio's securities. growth value, compared to the S&P Poor's. Derivatives are subject to counterparty 500--REGISTERED TRADEMARK-- Index. risk-the risk that the other party will not complete the transaction with the o The NATIONAL ASSOCIATION OF SECURITIES Fund. DEALERS AUTOMATED QUOTATION SYSTEM COMPOSITE INDEX (the Nasdaq) is a o There is no guarantee that the price-only, market-value-weighted index investment techniques and risk analysis comprising all domestic and used by the Fund's portfolio managers non-U.S.-based common stocks listed on will produce the desired results. the Nasdaq system. o The prices of securities held by the o The Fund is not managed to track the fund may decline in response to market performance of any particular index, risks. including the indexes defined here, and consequently, the performance of the o The Fund invests in "value" stocks, Fund may deviate significantly from the which can continue to be inexpensive performance of the indexes. for long periods of time and may never realize their full value. ======================================================================================= ========================================== THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, FUND NASDAQ SYMBOLS WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares GTVLX ======================================================================================= Class B Shares GTVBX Class C Shares GTVCX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares GTVRX Class Y Shares GTVYX ==========================================
8 AIM BASIC VALUE FUND [GO PAPERLESS GRAPHIC] ==================================================================================================================================== GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: o ENVIRONMENTALLY FRIENDLY. Go green by reducing the number o EFFICIENT. Stop waiting for regular mail. Your documents of trees used to produce paper. will be sent via email as soon as they're available. o ECONOMICAL. Help reduce your fund's printing and delivery o EASY. Download, save and print files using your home expenses and put more capital back in your fund's returns. computer with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. ==================================================================================================================================== FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. [INVESCO AIM It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, LOGO] Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset --SERVICE MARK-- Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. invescoaim.com BVA-AR-1 Invesco Aim Distributors, Inc.
------------------------ 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: 12/31/08 SCHEDULE OF INVESTMENTS(a) December 31, 2008
SHARES VALUE - ---------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-99.13% ADVERTISING-5.18% Interpublic Group of Cos., Inc. (The)(b)(c) 6,420,075 $ 25,423,497 - ---------------------------------------------------------------------------------- Omnicom Group Inc. 1,496,350 40,281,742 ================================================================================== 65,705,239 ================================================================================== APPAREL RETAIL-1.22% Gap, Inc. (The) 1,156,065 15,479,710 ================================================================================== ASSET MANAGEMENT & CUSTODY BANKS-1.73% State Street Corp. 558,470 21,964,625 ================================================================================== BREWERS-2.87% Molson Coors Brewing Co.-Class B 743,464 36,370,259 ================================================================================== COMMUNICATIONS EQUIPMENT-1.68% Nokia Oyj-ADR (Finland) 1,368,109 21,342,500 ================================================================================== COMPUTER HARDWARE-2.70% Dell Inc.(c) 3,347,659 34,280,028 ================================================================================== CONSTRUCTION MATERIALS-1.89% Cemex S.A.B. de C.V.-ADR (Mexico)(c) 2,627,022 24,010,981 ================================================================================== CONSUMER FINANCE-4.51% American Express Co. 1,558,906 28,917,706 - ---------------------------------------------------------------------------------- SLM Corp.(c) 3,180,132 28,303,175 ================================================================================== 57,220,881 ================================================================================== DATA PROCESSING & OUTSOURCED SERVICES-1.64% Western Union Co. 1,447,102 20,751,443 ================================================================================== DEPARTMENT STORES-2.50% Kohl's Corp.(c) 874,062 31,641,044 ================================================================================== DIVERSIFIED CAPITAL MARKETS-1.96% UBS AG (Switzerland)(b)(c) 1,736,667 24,834,338 ================================================================================== EDUCATION SERVICES-1.54% Apollo Group Inc.-Class A(c) 255,574 19,582,080 ================================================================================== ELECTRONIC MANUFACTURING SERVICES-0.73% Tyco Electronics Ltd. 573,679 9,299,337 ================================================================================== GENERAL MERCHANDISE STORES-2.83% Target Corp.(b) 1,039,849 35,905,986 ================================================================================== HEALTH CARE DISTRIBUTORS-1.31% Cardinal Health, Inc. 483,198 16,655,835 ================================================================================== HOME IMPROVEMENT RETAIL-2.89% Home Depot, Inc. (The) 1,594,168 36,697,747 ================================================================================== HOUSEHOLD APPLIANCES-1.74% Whirlpool Corp.(b) 535,015 22,122,870 ================================================================================== HUMAN RESOURCE & EMPLOYMENT SERVICES-3.99% Robert Half International, Inc.(b) 2,426,954 50,529,182 ================================================================================== INDUSTRIAL CONGLOMERATES-2.71% General Electric Co. 902,770 14,624,874 - ---------------------------------------------------------------------------------- Tyco International Ltd. 912,941 19,719,526 ================================================================================== 34,344,400 ================================================================================== INDUSTRIAL MACHINERY-2.91% Illinois Tool Works Inc. 1,053,197 36,914,555 ================================================================================== INVESTMENT BANKING & BROKERAGE-3.14% Merrill Lynch & Co., Inc. 1,086,719 12,649,409 - ---------------------------------------------------------------------------------- Morgan Stanley 1,690,432 27,114,530 ================================================================================== 39,763,939 ================================================================================== LIFE SCIENCES TOOLS & SERVICES-1.74% Waters Corp.(c) 601,009 22,026,980 ================================================================================== MANAGED HEALTH CARE-9.39% Aetna Inc. 1,577,407 44,956,099 - ---------------------------------------------------------------------------------- UnitedHealth Group Inc. 2,783,713 74,046,766 ================================================================================== 119,002,865 ================================================================================== MOVIES & ENTERTAINMENT-1.21% Walt Disney Co. (The) 674,506 15,304,541 ================================================================================== OIL & GAS DRILLING-0.50% Transocean Ltd. (Switzerland)(c) 133,713 6,317,939 ================================================================================== OIL & GAS EQUIPMENT & SERVICES-2.69% Halliburton Co. 1,070,535 19,462,327 - ---------------------------------------------------------------------------------- Weatherford International Ltd.(c) 1,351,638 14,624,723 ================================================================================== 34,087,050 ================================================================================== OTHER DIVERSIFIED FINANCIAL SERVICES-6.22% Bank of America Corp. 723,931 10,192,949 - ---------------------------------------------------------------------------------- Citigroup Inc. 3,860,692 25,905,243 - ---------------------------------------------------------------------------------- JPMorgan Chase & Co. 1,356,944 42,784,444 ================================================================================== 78,882,636 ================================================================================== PACKAGED FOODS & MEATS-1.51% Unilever N.V. (Netherlands) 784,869 19,109,826 ================================================================================== PHARMACEUTICALS-2.44% Sanofi-Aventis (France)(b) 484,078 30,894,996 ================================================================================== PROPERTY & CASUALTY INSURANCE-1.11% XL Capital Ltd.-Class A 3,802,119 14,067,840 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM BASIC VALUE FUND
SHARES VALUE - ---------------------------------------------------------------------------------- PUBLISHING-2.16% McGraw-Hill Cos., Inc. (The) 1,181,268 $ 27,393,605 ================================================================================== REGIONAL BANKS-1.07% Fifth Third Bancorp(b) 1,637,100 13,522,446 ================================================================================== SEMICONDUCTOR EQUIPMENT-7.45% ASML Holding N.V. (Netherlands)(b) 3,495,467 62,679,885 - ---------------------------------------------------------------------------------- KLA-Tencor Corp.(b) 1,456,983 31,747,660 ================================================================================== 94,427,545 ================================================================================== SEMICONDUCTORS-2.08% Maxim Integrated Products, Inc. 2,306,772 26,343,336 ================================================================================== SPECIALIZED FINANCE-3.80% Moody's Corp. 2,394,932 48,114,184 ================================================================================== SYSTEMS SOFTWARE-4.09% CA Inc. 1,478,362 27,394,048 - ---------------------------------------------------------------------------------- Microsoft Corp. 1,257,772 24,451,088 ================================================================================== 51,845,136 ================================================================================== Total Common Stocks & Other Equity Interests (Cost $1,729,906,169) 1,256,757,904 ================================================================================== MONEY MARKET FUNDS-0.57% Liquid Assets Portfolio-Institutional Class(d) 3,584,785 3,584,785 - ---------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(d) 3,584,785 3,584,785 ================================================================================== Total Money Market Funds (Cost $7,169,570) 7,169,570 ================================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-99.70% (Cost $1,737,075,739) 1,263,927,474 ================================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-13.51% Liquid Assets Portfolio-Institutional Class (Cost $171,288,215)(d)(e) 171,288,215 171,288,215 ================================================================================== TOTAL INVESTMENTS-113.21% (Cost $1,908,363,954) 1,435,215,689 ================================================================================== OTHER ASSETS LESS LIABILITIES-(13.21)% (167,495,055) ================================================================================== NET ASSETS-100.00% $1,267,720,634 __________________________________________________________________________________ ==================================================================================
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 December 31, 2008. (c) Non-income producing security. (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. 10 AIM BASIC VALUE FUND SCHEDULE OF INVESTMENTS(a) December 31, 2008
SHARES VALUE - ---------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-99.13% ADVERTISING-5.18% Interpublic Group of Cos., Inc. (The)(b)(c) 6,420,075 $ 25,423,497 - ---------------------------------------------------------------------------------- Omnicom Group Inc. 1,496,350 40,281,742 ================================================================================== 65,705,239 ================================================================================== APPAREL RETAIL-1.22% Gap, Inc. (The) 1,156,065 15,479,710 ================================================================================== ASSET MANAGEMENT & CUSTODY BANKS-1.73% State Street Corp. 558,470 21,964,625 ================================================================================== BREWERS-2.87% Molson Coors Brewing Co.-Class B 743,464 36,370,259 ================================================================================== COMMUNICATIONS EQUIPMENT-1.68% Nokia Oyj-ADR (Finland) 1,368,109 21,342,500 ================================================================================== COMPUTER HARDWARE-2.70% Dell Inc.(c) 3,347,659 34,280,028 ================================================================================== CONSTRUCTION MATERIALS-1.89% Cemex S.A.B. de C.V.-ADR (Mexico)(c) 2,627,022 24,010,981 ================================================================================== CONSUMER FINANCE-4.51% American Express Co. 1,558,906 28,917,706 - ---------------------------------------------------------------------------------- SLM Corp.(c) 3,180,132 28,303,175 ================================================================================== 57,220,881 ================================================================================== DATA PROCESSING & OUTSOURCED SERVICES-1.64% Western Union Co. 1,447,102 20,751,443 ================================================================================== DEPARTMENT STORES-2.50% Kohl's Corp.(c) 874,062 31,641,044 ================================================================================== DIVERSIFIED CAPITAL MARKETS-1.96% UBS AG (Switzerland)(b)(c) 1,736,667 24,834,338 ================================================================================== EDUCATION SERVICES-1.54% Apollo Group Inc.-Class A(c) 255,574 19,582,080 ================================================================================== ELECTRONIC MANUFACTURING SERVICES-0.73% Tyco Electronics Ltd. 573,679 9,299,337 ================================================================================== GENERAL MERCHANDISE STORES-2.83% Target Corp.(b) 1,039,849 35,905,986 ================================================================================== HEALTH CARE DISTRIBUTORS-1.31% Cardinal Health, Inc. 483,198 16,655,835 ================================================================================== HOME IMPROVEMENT RETAIL-2.89% Home Depot, Inc. (The) 1,594,168 36,697,747 ================================================================================== HOUSEHOLD APPLIANCES-1.74% Whirlpool Corp.(b) 535,015 22,122,870 ================================================================================== HUMAN RESOURCE & EMPLOYMENT SERVICES-3.99% Robert Half International, Inc.(b) 2,426,954 50,529,182 ================================================================================== INDUSTRIAL CONGLOMERATES-2.71% General Electric Co. 902,770 14,624,874 - ---------------------------------------------------------------------------------- Tyco International Ltd. 912,941 19,719,526 ================================================================================== 34,344,400 ================================================================================== INDUSTRIAL MACHINERY-2.91% Illinois Tool Works Inc. 1,053,197 36,914,555 ================================================================================== INVESTMENT BANKING & BROKERAGE-3.14% Merrill Lynch & Co., Inc. 1,086,719 12,649,409 - ---------------------------------------------------------------------------------- Morgan Stanley 1,690,432 27,114,530 ================================================================================== 39,763,939 ================================================================================== LIFE SCIENCES TOOLS & SERVICES-1.74% Waters Corp.(c) 601,009 22,026,980 ================================================================================== MANAGED HEALTH CARE-9.39% Aetna Inc. 1,577,407 44,956,099 - ---------------------------------------------------------------------------------- UnitedHealth Group Inc. 2,783,713 74,046,766 ================================================================================== 119,002,865 ================================================================================== MOVIES & ENTERTAINMENT-1.21% Walt Disney Co. (The) 674,506 15,304,541 ================================================================================== OIL & GAS DRILLING-0.50% Transocean Ltd. (Switzerland)(c) 133,713 6,317,939 ================================================================================== OIL & GAS EQUIPMENT & SERVICES-2.69% Halliburton Co. 1,070,535 19,462,327 - ---------------------------------------------------------------------------------- Weatherford International Ltd.(c) 1,351,638 14,624,723 ================================================================================== 34,087,050 ================================================================================== OTHER DIVERSIFIED FINANCIAL SERVICES-6.22% Bank of America Corp. 723,931 10,192,949 - ---------------------------------------------------------------------------------- Citigroup Inc. 3,860,692 25,905,243 - ---------------------------------------------------------------------------------- JPMorgan Chase & Co. 1,356,944 42,784,444 ================================================================================== 78,882,636 ================================================================================== PACKAGED FOODS & MEATS-1.51% Unilever N.V. (Netherlands) 784,869 19,109,826 ================================================================================== PHARMACEUTICALS-2.44% Sanofi-Aventis (France)(b) 484,078 30,894,996 ================================================================================== PROPERTY & CASUALTY INSURANCE-1.11% XL Capital Ltd.-Class A 3,802,119 14,067,840 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM BASIC VALUE FUND
SHARES VALUE - ---------------------------------------------------------------------------------- PUBLISHING-2.16% McGraw-Hill Cos., Inc. (The) 1,181,268 $ 27,393,605 ================================================================================== REGIONAL BANKS-1.07% Fifth Third Bancorp(b) 1,637,100 13,522,446 ================================================================================== SEMICONDUCTOR EQUIPMENT-7.45% ASML Holding N.V. (Netherlands)(b) 3,495,467 62,679,885 - ---------------------------------------------------------------------------------- KLA-Tencor Corp.(b) 1,456,983 31,747,660 ================================================================================== 94,427,545 ================================================================================== SEMICONDUCTORS-2.08% Maxim Integrated Products, Inc. 2,306,772 26,343,336 ================================================================================== SPECIALIZED FINANCE-3.80% Moody's Corp. 2,394,932 48,114,184 ================================================================================== SYSTEMS SOFTWARE-4.09% CA Inc. 1,478,362 27,394,048 - ---------------------------------------------------------------------------------- Microsoft Corp. 1,257,772 24,451,088 ================================================================================== 51,845,136 ================================================================================== Total Common Stocks & Other Equity Interests (Cost $1,729,906,169) 1,256,757,904 ================================================================================== MONEY MARKET FUNDS-0.57% Liquid Assets Portfolio-Institutional Class(d) 3,584,785 3,584,785 - ---------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(d) 3,584,785 3,584,785 ================================================================================== Total Money Market Funds (Cost $7,169,570) 7,169,570 ================================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-99.70% (Cost $1,737,075,739) 1,263,927,474 ================================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-13.51% Liquid Assets Portfolio-Institutional Class (Cost $171,288,215)(d)(e) 171,288,215 171,288,215 ================================================================================== TOTAL INVESTMENTS-113.21% (Cost $1,908,363,954) 1,435,215,689 ================================================================================== OTHER ASSETS LESS LIABILITIES-(13.21)% (167,495,055) ================================================================================== NET ASSETS-100.00% $1,267,720,634 __________________________________________________________________________________ ==================================================================================
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 December 31, 2008. (c) Non-income producing security. (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. 10 AIM BASIC VALUE FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments, at value (Cost $1,729,906,169)* $1,256,757,904 - ------------------------------------------------------- Investments in affiliated money market funds, at value and cost 178,457,785 ======================================================= Total investments (Cost $1,908,363,954) 1,435,215,689 ======================================================= Foreign currencies, at value (Cost $2,625,592) 2,574,525 - ------------------------------------------------------- Receivables for: Investments sold 10,107,266 - ------------------------------------------------------- Fund shares sold 1,042,615 - ------------------------------------------------------- Dividends 1,560,425 - ------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 71,246 - ------------------------------------------------------- Other assets 45,144 ======================================================= Total assets 1,450,616,910 _______________________________________________________ ======================================================= LIABILITIES: Payables for: Fund shares reacquired 9,458,052 - ------------------------------------------------------- Collateral upon return of securities loaned 171,288,215 - ------------------------------------------------------- Accrued fees to affiliates 1,531,526 - ------------------------------------------------------- Accrued other operating expenses 122,960 - ------------------------------------------------------- Trustee deferred compensation and retirement plans 495,523 ======================================================= Total liabilities 182,896,276 ======================================================= Net assets applicable to shares outstanding $1,267,720,634 _______________________________________________________ ======================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $2,096,829,389 - ------------------------------------------------------- Undistributed net investment income 15,366,007 - ------------------------------------------------------- Undistributed net realized gain (loss) (371,275,179) - ------------------------------------------------------- Unrealized appreciation (depreciation) (473,199,583) ======================================================= $1,267,720,634 _______________________________________________________ ======================================================= NET ASSETS: Class A $ 786,705,258 _______________________________________________________ ======================================================= Class B $ 284,106,163 _______________________________________________________ ======================================================= Class C $ 118,379,344 _______________________________________________________ ======================================================= Class R $ 22,352,034 _______________________________________________________ ======================================================= Class Y $ 8,518,858 _______________________________________________________ ======================================================= Institutional Class $ 47,658,977 _______________________________________________________ ======================================================= SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 59,618,246 _______________________________________________________ ======================================================= Class B 24,182,926 _______________________________________________________ ======================================================= Class C 10,078,676 _______________________________________________________ ======================================================= Class R 1,715,116 _______________________________________________________ ======================================================= Class Y 645,040 _______________________________________________________ ======================================================= Institutional Class 3,521,362 _______________________________________________________ ======================================================= Class A: Net asset value per share $ 13.20 - ------------------------------------------------------- Maximum offering price per share (Net asset value of $13.20 divided by 94.50%) $ 13.97 _______________________________________________________ ======================================================= Class B: Net asset value and offering price per share $ 11.75 _______________________________________________________ ======================================================= Class C: Net asset value and offering price per share $ 11.75 _______________________________________________________ ======================================================= Class R: Net asset value and offering price per share $ 13.03 _______________________________________________________ ======================================================= Class Y: Net asset value and offering price per share $ 13.21 _______________________________________________________ ======================================================= Institutional Class: Net asset value and offering price per share $ 13.53 _______________________________________________________ =======================================================
* At December 31, 2008, securities with an aggregate value of $169,858,619 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM BASIC VALUE FUND STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $658,123) $ 53,974,067 - -------------------------------------------------------------------------------------------------- Dividends from affiliated money market funds (includes securities lending income of $1,325,705) 2,043,103 ================================================================================================== Total investment income 56,017,170 ================================================================================================== EXPENSES: Advisory fees 17,727,080 - -------------------------------------------------------------------------------------------------- Administrative services fees 556,477 - -------------------------------------------------------------------------------------------------- Custodian fees 104,220 - -------------------------------------------------------------------------------------------------- Distribution fees: Class A 4,060,502 - -------------------------------------------------------------------------------------------------- Class B 6,348,833 - -------------------------------------------------------------------------------------------------- Class C 2,576,325 - -------------------------------------------------------------------------------------------------- Class R 190,779 - -------------------------------------------------------------------------------------------------- Transfer agent fees -- A, B, C, R and Y 7,616,573 - -------------------------------------------------------------------------------------------------- Transfer agent fees -- Institutional 244,099 - -------------------------------------------------------------------------------------------------- Trustees' and officers' fees and benefits 103,240 - -------------------------------------------------------------------------------------------------- Other 1,538,975 ================================================================================================== Total expenses 41,067,103 ================================================================================================== Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (179,522) ================================================================================================== Net expenses 40,887,581 ================================================================================================== Net investment income 15,129,589 ================================================================================================== REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) from: Investment securities (includes net gains (losses) from securities sold to affiliates of $(275,835)) (363,003,667) - -------------------------------------------------------------------------------------------------- Foreign currencies 461,485 ================================================================================================== (362,542,182) ================================================================================================== Change in net unrealized appreciation (depreciation) of: Investment securities (1,467,023,395) - -------------------------------------------------------------------------------------------------- Foreign currencies (51,336) ================================================================================================== (1,467,074,731) ================================================================================================== Net realized and unrealized gain (loss) (1,829,616,913) ================================================================================================== Net increase (decrease) in net assets resulting from operations $(1,814,487,324) __________________________________________________________________________________________________ ==================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM BASIC VALUE FUND STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 - ------------------------------------------------------------------------------------------------------------ OPERATIONS: Net investment income $ 15,129,589 $ 3,884,904 - ------------------------------------------------------------------------------------------------------------ Net realized gain (loss) (362,542,182) 758,820,790 - ------------------------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) (1,467,074,731) (685,275,042) ============================================================================================================ Net increase (decrease) in net assets resulting from operations (1,814,487,324) 77,430,652 ============================================================================================================ Distributions to shareholders from net investment income: Class A (2,879,783) (1,654,275) - ------------------------------------------------------------------------------------------------------------ Class Y (30,672) -- - ------------------------------------------------------------------------------------------------------------ Institutional Class (774,263) (216,875) ============================================================================================================ Total distributions from net investment income (3,684,718) (1,871,150) ============================================================================================================ Distributions to shareholders from net realized gains: Class A (98,632,731) (365,648,122) - ------------------------------------------------------------------------------------------------------------ Class B (39,908,146) (167,237,726) - ------------------------------------------------------------------------------------------------------------ Class C (16,692,806) (65,066,160) - ------------------------------------------------------------------------------------------------------------ Class R (2,751,821) (7,678,455) - ------------------------------------------------------------------------------------------------------------ Class Y (1,050,488) -- - ------------------------------------------------------------------------------------------------------------ Institutional Class (5,621,190) (47,936,462) ============================================================================================================ Total distributions from net realized gains (164,657,182) (653,566,925) ============================================================================================================ Share transactions-net: Class A (480,212,338) (451,904,987) - ------------------------------------------------------------------------------------------------------------ Class B (291,867,070) (269,082,080) - ------------------------------------------------------------------------------------------------------------ Class C (100,257,163) (48,799,986) - ------------------------------------------------------------------------------------------------------------ Class R (1,453,706) 3,042,611 - ------------------------------------------------------------------------------------------------------------ Class Y 12,844,342 -- - ------------------------------------------------------------------------------------------------------------ Institutional Class (87,667,643) 29,523,641 ============================================================================================================ Net increase (decrease) in net assets resulting from share transactions (948,613,578) (737,220,801) ============================================================================================================ Net increase (decrease) in net assets (2,931,442,802) (1,315,228,224) ============================================================================================================ NET ASSETS: Beginning of year 4,199,163,436 5,514,391,660 ============================================================================================================ End of year (includes undistributed net investment income of $15,366,007 and $3,180,196, respectively) $ 1,267,720,634 $ 4,199,163,436 ____________________________________________________________________________________________________________ ============================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM BASIC VALUE FUND NOTES TO FINANCIAL STATEMENTS December 31, 2008 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 assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The Fund's investment objective is to provide long-term growth of capital. The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. 14 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 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. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or 15 AIM BASIC VALUE FUND 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. 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, effective May 1, 2008, between the Advisor and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the "Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Advisor(s). The Advisor has contractually agreed, through at least June 30, 2009, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Advisor receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. For the year ended December 31, 2008, the Advisor waived advisory fees of $38,471. At the request of the Trustees of the Trust, Invesco Ltd. ("Invesco") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $13,058. The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the course of providing such services. IAIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IAIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority ("FINRA") impose a cap on the total sales charges, including asset- 16 AIM BASIC VALUE FUND based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2008, IADI advised the Fund that IADI retained $164,875 in front-end sales commissions from the sale of Class A shares and $4,733, $469,092, $15,913 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN INPUT LEVEL SECURITIES - -------------------------------------- Level 1 $1,322,530,982 - -------------------------------------- Level 2 112,684,707 - -------------------------------------- Level 3 -- ====================================== $1,435,215,689 ______________________________________ ======================================
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 year ended December 31, 2008, the Fund engaged in securities purchases of $4,753,525 and securities sales of $14,318,579, which resulted in net realized gains (losses) of $(275,835). 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 year ended December 31, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $127,993. NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended December 31, 2008, the Fund paid legal fees of $12,029 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. 17 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, 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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 - --------------------------------------------------------------------------------------- Ordinary income $ 35,121,311 $ 38,027,691 - --------------------------------------------------------------------------------------- Long-term capital gain 133,220,589 617,410,384 ======================================================================================= Total distributions $168,341,900 $655,438,075 _______________________________________________________________________________________ =======================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
2008 - ---------------------------------------------------------------------------------- Undistributed ordinary income $ 15,893,961 - ---------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) -- investments (545,984,073) - ---------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) -- other investments (51,318) - ---------------------------------------------------------------------------------- Temporary book/tax differences (527,954) - ---------------------------------------------------------------------------------- Capital loss carryforward (180,807,472) - ---------------------------------------------------------------------------------- Post-October deferrals (117,631,899) - ---------------------------------------------------------------------------------- Shares of beneficial interest 2,096,829,389 ================================================================================== Total net assets $1,267,720,634 __________________________________________________________________________________ ==================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's net unrealized appreciation (depreciation) difference is attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. The Fund has a capital loss carryforward as of December 31, 2008 which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------------------------- December 31, 2016 $180,807,472 _______________________________________________________________________________________________ ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2008 was $1,583,403,488 and $2,682,250,795, 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 $ 132,808,556 - ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (678,792,629) ================================================================================================ Net unrealized (depreciation) appreciation of investment securities $(545,984,073) ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $1,981,199,762.
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions and proxy costs, on December 31, 2008, undistributed net investment income was increased by $740,940, undistributed net realized gain (loss) was decreased by $444,525 and shares of beneficial interest decreased by $296,415. This reclassification had no effect on the net assets of the Fund. 18 AIM BASIC VALUE FUND NOTE 11--SHARE INFORMATION
SUMMARY OF SHARE ACTIVITY - ---------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 2008(a) 2007 --------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------------------- Sold: Class A 6,512,745 $ 156,489,690 6,775,041 $ 254,644,145 - ---------------------------------------------------------------------------------------------------------------------- Class B 982,636 21,508,349 1,025,803 35,573,860 - ---------------------------------------------------------------------------------------------------------------------- Class C 610,877 13,126,057 701,160 24,291,861 - ---------------------------------------------------------------------------------------------------------------------- Class R 439,285 10,535,934 372,110 13,830,638 - ---------------------------------------------------------------------------------------------------------------------- Class Y(b) 624,972 12,624,179 -- -- - ---------------------------------------------------------------------------------------------------------------------- Institutional Class 3,431,377 93,051,584 3,158,529 121,772,791 ====================================================================================================================== Issued as reinvestment of dividends: Class A 7,653,434 97,276,626 11,163,101 352,931,546 - ---------------------------------------------------------------------------------------------------------------------- Class B 3,332,111 37,730,806 5,457,199 155,800,362 - ---------------------------------------------------------------------------------------------------------------------- Class C 1,394,866 15,790,672 2,137,511 60,812,171 - ---------------------------------------------------------------------------------------------------------------------- Class R 219,268 2,751,821 248,012 7,678,455 - ---------------------------------------------------------------------------------------------------------------------- Class Y(b) 84,554 1,075,526 -- -- - ---------------------------------------------------------------------------------------------------------------------- Institutional Class 478,723 6,237,761 1,319,782 42,628,948 ====================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 4,313,375 106,435,958 3,145,381 117,286,990 - ---------------------------------------------------------------------------------------------------------------------- Class B (5,014,423) (106,435,958) (3,409,196) (117,286,990) ====================================================================================================================== Reacquired: Class A(b) (35,195,197) (840,414,612) (31,455,727) (1,176,767,668) - ---------------------------------------------------------------------------------------------------------------------- Class B (10,642,794) (244,670,267) (9,845,262) (343,169,312) - ---------------------------------------------------------------------------------------------------------------------- Class C (5,893,438) (129,173,892) (3,859,927) (133,904,018) - ---------------------------------------------------------------------------------------------------------------------- Class R (600,578) (14,741,461) (498,251) (18,466,482) - ---------------------------------------------------------------------------------------------------------------------- Class Y(b) (64,486) (855,363) -- -- - ---------------------------------------------------------------------------------------------------------------------- Institutional Class (10,478,398) (186,956,988) (3,470,740) (134,878,098) ====================================================================================================================== Net increase (decrease) in share activity (37,811,091) $(948,613,578) (17,035,474) $ (737,220,801) ______________________________________________________________________________________________________________________ ======================================================================================================================
(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. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A into Class Y shares of the Fund:
CLASS SHARES AMOUNT ---------------------------------------------------------------------------------------------------- Class Y 620,606 $ 12,561,067 ---------------------------------------------------------------------------------------------------- Class A (620,606) (12,561,067) ____________________________________________________________________________________________________ ====================================================================================================
19 AIM BASIC VALUE FUND NOTE 12--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $31.51 $ 0.18(c) $(16.60) $(16.42) $(0.05) $(1.84) $(1.89) $13.20 Year ended 12/31/07 36.61 0.12 0.24 0.36 (0.02) (5.44) (5.46) 31.51 Year ended 12/31/06 34.22 0.14 4.38 4.52 (0.03) (2.10) (2.13) 36.61 Year ended 12/31/05 32.42 0.06 1.74 1.80 -- -- -- 34.22 Year ended 12/31/04 29.24 (0.03) 3.21 3.18 -- -- -- 32.42 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 28.59 0.00(c) (15.00) (15.00) -- (1.84) (1.84) 11.75 Year ended 12/31/07 33.95 (0.15) 0.23 0.08 -- (5.44) (5.44) 28.59 Year ended 12/31/06 32.09 (0.14) 4.10 3.96 -- (2.10) (2.10) 33.95 Year ended 12/31/05 30.62 (0.19) 1.66 1.47 -- -- -- 32.09 Year ended 12/31/04 27.80 (0.23) 3.05 2.82 -- -- -- 30.62 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 28.59 0.00(c) (15.00) (15.00) -- (1.84) (1.84) 11.75 Year ended 12/31/07 33.95 (0.15) 0.23 0.08 -- (5.44) (5.44) 28.59 Year ended 12/31/06 32.08 (0.14) 4.11 3.97 -- (2.10) (2.10) 33.95 Year ended 12/31/05 30.61 (0.19) 1.66 1.47 -- -- -- 32.08 Year ended 12/31/04 27.79 (0.23) 3.05 2.82 -- -- -- 30.61 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 31.12 0.12(c) (16.37) (16.25) -- (1.84) (1.84) 13.03 Year ended 12/31/07 36.29 0.02 0.25 0.27 -- (5.44) (5.44) 31.12 Year ended 12/31/06 34.00 0.03 4.36 4.39 -- (2.10) (2.10) 36.29 Year ended 12/31/05 32.28 (0.02) 1.74 1.72 -- -- -- 34.00 Year ended 12/31/04 29.16 (0.06) 3.18 3.12 -- -- -- 32.28 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(e) 20.24 0.03(c) (5.17) (5.14) (0.05) (1.84) (1.89) 13.21 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 32.47 0.31(c) (17.16) (16.85) (0.25) (1.84) (2.09) 13.53 Year ended 12/31/07 37.43 0.23 0.27 0.50 (0.02) (5.44) (5.46) 32.47 Year ended 12/31/06 34.95 0.24 4.53 4.77 (0.19) (2.10) (2.29) 37.43 Year ended 12/31/05 32.96 0.17 1.82 1.99 -- -- -- 34.95 Year ended 12/31/04 29.56 0.02 3.38 3.40 -- -- -- 32.96 _________________________________________________________________________________________________________________________________ ================================================================================================================================= RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET NET ASSETS ASSETS WITHOUT RATIO OF NET NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INVESTMENT INCOME TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES (LOSS) TO AVERAGE PORTFOLIO RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b) - ------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (51.86)% $ 786,705 1.26%(d) 1.26%(d) 0.73%(d) 57% Year ended 12/31/07 1.07 2,404,900 1.14 1.17 0.31 23 Year ended 12/31/06 13.20 3,173,889 1.15 1.20 0.36 14 Year ended 12/31/05 5.55 3,682,420 1.19 1.25 0.15 12 Year ended 12/31/04 10.88 4,480,701 1.29 1.31 (0.11) 15 - ------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (52.21) 284,106 2.01(d) 2.01(d) (0.02)(d) 57 Year ended 12/31/07 0.31 1,015,776 1.89 1.92 (0.44) 23 Year ended 12/31/06 12.33 1,436,084 1.90 1.95 (0.39) 14 Year ended 12/31/05 4.80 1,682,608 1.89 1.95 (0.55) 12 Year ended 12/31/04 10.14 1,985,690 1.94 1.96 (0.76) 15 - ------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (52.21) 118,379 2.01(d) 2.01(d) (0.02)(d) 57 Year ended 12/31/07 0.31 399,262 1.89 1.92 (0.44) 23 Year ended 12/31/06 12.37 508,775 1.90 1.95 (0.39) 14 Year ended 12/31/05 4.80 566,685 1.89 1.95 (0.55) 12 Year ended 12/31/04 10.15 681,234 1.94 1.96 (0.76) 15 - ------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (51.98) 22,352 1.51(d) 1.51(d) 0.48(d) 57 Year ended 12/31/07 0.82 51,572 1.39 1.42 0.06 23 Year ended 12/31/06 12.91 55,718 1.40 1.45 0.11 14 Year ended 12/31/05 5.33 33,049 1.39 1.45 (0.05) 12 Year ended 12/31/04 10.70 29,245 1.44 1.46 (0.26) 15 - ------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(e) (25.00) 8,519 1.28(d)(f) 1.28(d)(f) 0.71(d)(f) 57 - ------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (51.63) 47,659 0.81(d) 0.81(d) 1.18(d) 57 Year ended 12/31/07 1.42 327,654 0.76 0.79 0.69 23 Year ended 12/31/06 13.64 339,915 0.75 0.80 0.76 14 Year ended 12/31/05 6.04 209,208 0.72 0.78 0.62 12 Year ended 12/31/04 11.50 103,219 0.71 0.73 0.47 15 _________________________________________________________________________________________________________________________ =========================================================================================================================
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (b) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (c) Calculated using average shares outstanding. (d) Ratios are based on average daily net assets (000's omitted) of $1,624,201, $634,883, $257,633, $38,156, $9,089 and $243,737 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (e) Commencement date of October 3, 2008. (f) Annualized. 20 AIM BASIC VALUE FUND NOTE 13--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. PENDING LITIGATION AND REGULATORY INQUIRIES 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 21 AIM BASIC VALUE FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM Basic Value Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Basic Value Fund (one of the funds constituting AIM Growth Series, hereafter referred to as the "Fund") at December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 22 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $582.50 $5.45 $1,018.25 $ 6.95 1.37% - --------------------------------------------------------------------------------------------------- B 1,000.00 580.40 8.42 1,014.48 10.74 2.12 - --------------------------------------------------------------------------------------------------- C 1,000.00 580.40 8.42 1,014.48 10.74 2.12 - --------------------------------------------------------------------------------------------------- R 1,000.00 581.70 6.44 1,016.99 8.21 1.62 - --------------------------------------------------------------------------------------------------- Y 1,000.00 750.00 2.75 1,018.70 6.50 1.28 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 23 AIM BASIC VALUE FUND 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 July 1, 2008, through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
- ----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $583.90 $3.42 $1,020.81 $4.37 0.86% - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM BASIC VALUE FUND Supplement to Annual Report dated 12/31/08 AIM BASIC VALUE FUND INSTITUTIONAL CLASS SHARES The following information has been prepared to provide Institutional Class shareholders with a performance overview specific to their holdings. Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (3/15/02) -5.98% 5 Years -8.00 1 Year -51.63
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.76%. 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. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. NASDAQ SYMBOL GTVVX 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-1 Invesco Aim Distributors, Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008:
FEDERAL AND STATE INCOME TAX ---------------------------- Long-Term Capital Gain Dividends $133,220,589 Qualified Dividend Income* 100.00% Corporate Dividends Received Deduction* 86.23%
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund's fiscal year. ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 were 7.23%, 9.00%, 11.81%, and 15.14%, respectively. 24 AIM BASIC VALUE FUND TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 25 AIM BASIC VALUE FUND TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
26 AIM BASIC VALUE FUND [GO PAPERLESS GRAPHIC] ==================================================================================================================================== GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: o ENVIRONMENTALLY FRIENDLY. Go green by reducing the number o EFFICIENT. Stop waiting for regular mail. Your documents of trees used to produce paper. will be sent via email as soon as they're available. o ECONOMICAL. Help reduce your fund's printing and delivery o EASY. Download, save and print files using your home expenses and put more capital back in your fund's returns. computer with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. ==================================================================================================================================== FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. [INVESCO AIM It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, LOGO] Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset --SERVICE MARK-- Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. invescoaim.com BVA-AR-1 Invesco Aim Distributors, Inc.
AIM ALLOCATION FUNDS Annual Report to Shareholders o December 31, 2008 AIM Conservative Allocation Fund AIM Growth Allocation Fund AIM Moderate Allocation Fund AIM Moderate Growth Allocation Fund AIM Moderately Conservative Allocation Fund 2 Long-Term Fund Performance 12 Letters to Shareholders 14 Performance Summary 14 Management Discussion 24 Supplemental Information 28 Schedule of Investments 33 Financial Statements 38 Notes to Financial Statements 49 Financial Highlights 55 Auditor's Report 56 Fund Expenses 59 Tax Information 60 Trustees and Officers AIM CONSERVATIVE ALLOCATION FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 2 AIM ALLOCATION FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT - OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 04/30/04
Lipper Custom Mixed-Asset AIM Conservative AIM Conservative AIM Conservative AIM Conservative Conservative Target Allocation Date Allocation Fund- Allocation Fund- Allocation Fund- Allocation Fund- Allocation Conservative Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 Index(2) Index(1) Funds Index(2) 4/30/04 $9450 $10000 $10000 $10000 $ 10000 $10000 $ 10000 5/04 9469 10010 10010 10010 10137 10001 10003 6/04 9545 10080 10080 10090 10334 10094 10080 7/04 9479 10000 10000 10020 9992 10071 9992 8/04 9526 10050 10040 10071 10032 10212 10074 9/04 9592 10111 10111 10141 10141 10281 10133 10/04 9649 10160 10160 10201 10296 10391 10206 11/04 9733 10251 10251 10291 10712 10477 10323 12/04 9846 10359 10359 10405 11077 10642 10476 1/05 9808 10319 10309 10364 10807 10615 10394 2/05 9846 10359 10359 10405 11034 10653 10460 3/05 9799 10299 10289 10334 10839 10558 10358 4/05 9780 10269 10268 10324 10633 10585 10296 5/05 9876 10370 10369 10425 10971 10759 10475 6/05 9943 10430 10429 10485 10987 10829 10547 7/05 10001 10480 10479 10546 11395 10890 10683 8/05 10039 10520 10519 10586 11291 10963 10738 9/05 10039 10509 10508 10576 11383 10934 10764 10/05 9972 10439 10427 10515 11193 10826 10644 11/05 10095 10560 10559 10647 11616 10965 10811 12/05 10186 10645 10643 10735 11620 11052 10887 1/06 10314 10768 10767 10859 11928 11166 11079 2/06 10314 10768 10756 10859 11960 11203 11074 3/06 10372 10820 10817 10920 12109 11195 11143 4/06 10421 10861 10858 10972 12271 11231 11205 5/06 10314 10748 10734 10848 11919 11133 11086 6/06 10314 10748 10734 10859 11934 11153 11092 7/06 10373 10799 10786 10911 12008 11258 11162 8/06 10480 10902 10899 11024 12293 11446 11331 9/06 10588 11005 10992 11128 12610 11576 11466 10/06 10715 11138 11126 11273 13021 11741 11641 11/06 10843 11261 11249 11397 13268 11904 11814 12/06 10883 11299 11287 11444 13454 11916 11845 1/07 10965 11373 11361 11520 13657 11977 11916 2/07 11016 11416 11404 11574 13391 12059 11965 3/07 11098 11491 11478 11649 13540 12102 12039 4/07 11241 11630 11628 11801 14140 12276 12237 5/07 11303 11694 11692 11866 14633 12334 12333 6/07 11282 11662 11649 11834 14390 12253 12240 7/07 11221 11598 11585 11779 13944 12200 12167 8/07 11252 11619 11606 11800 14153 12333 12226 9/07 11385 11746 11746 11941 14682 12526 12480 10/07 11518 11875 11863 12081 14915 12669 12640 11/07 11405 11757 11746 11962 14291 12653 12537 12/07 11405 11736 11735 11955 14192 12655 12515 1/08 11275 11602 11601 11819 13341 12576 12413 2/08 11199 11513 11512 11739 12908 12495 12364 3/08 11167 11479 11467 11694 12852 12493 12294 4/08 11318 11625 11613 11853 13478 12660 12493 5/08 11393 11692 11692 11932 13653 12668 12615 6/08 11167 11457 11445 11693 12503 12376 12316
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. [MOUNTAIN CHART] 7/08 11145 11424 11412 11660 12398 12347 12189 8/08 11157 11436 11423 11683 12577 12452 12187 9/08 10530 10775 10773 11012 11458 12022 11603 10/08 9805 10036 10023 10251 9534 11160 10462 11/08 9643 9856 9855 10092 8849 11095 10145 12/08 9753 9797 9954 10201 8943 11475 10488
AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (4/30/04) -0.53% 1 Year -19.16 Class B Shares Inception (4/30/04) -0.44% 1 Year -19.13 CLASS C SHARES Inception (4/30/04) -0.10% 1 Year -15.99 CLASS R SHARES Inception (4/30/04) 0.43% 1 Year -14.67 CLASS Y SHARES Inception 0.69% 1 Year -14.43
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12b-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS APRIL 30, 2004. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.11%, 1.86%, 1.86%, 1.36% AND 0.86%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.27%, 2.02%, 2.02%, 1.52% AND 1.02%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES IN THE PAST, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.62% for AIM Conservative Allocation Fund. 3 AIM ALLOCATION FUNDS AIM GROWTH ALLOCATION FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 4 AIM ALLOCATION FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT - OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 4/30/04
AIM Growth AIM Growth AIM Growth AIM Growth Lipper Allocation Allocation Allocation Allocation Multi-Cap Fund- Fund- Fund- Fund- Custom Growth Core Funds Date Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 Index(2) Allocation Index(1) Index(2) 4/30/04 $9450 $ 10000 $10000 $ 10000 $ 10000 $ 10000 $ 10000 5/04 9582 10130 10130 10140 10137 10133 10120 6/04 9819 10380 10380 10390 10334 10341 10344 7/04 9356 9880 9880 9891 9992 10010 9920 8/04 9337 9860 9860 9881 10032 10097 9912 9/04 9592 10120 10120 10141 10141 10266 10124 10/04 9800 10330 10330 10351 10296 10495 10277 11/04 10329 10879 10879 10911 10712 11010 10793 12/04 10691 11260 11260 11298 11077 11418 11172 1/05 10444 10990 10990 11027 10807 11124 10918 2/05 10738 11301 11301 11348 11034 11418 11139 3/05 10520 11060 11060 11107 10839 11208 10964 4/05 10254 10779 10779 10836 10633 11020 10665 5/05 10586 11120 11120 11177 10971 11318 11102 6/05 10776 11310 11310 11379 10987 11440 11224 7/05 11194 11741 11741 11810 11395 11869 11700 8/05 11204 11741 11741 11820 11291 11856 11647 9/05 11356 11891 11891 11981 11383 12054 11752 10/05 11119 11640 11640 11730 11193 11800 11509 11/05 11537 12071 12071 12172 11616 12199 11952 12/05 11787 12327 12317 12429 11620 12352 12091 1/06 12443 12996 12997 13111 11928 12855 12540 2/06 12376 12925 12926 13049 11960 12877 12490 3/06 12684 13239 13240 13376 12109 13155 12769 4/06 12916 13472 13473 13610 12271 13379 12927 5/06 12385 12905 12906 13049 11919 12951 12479 6/06 12365 12884 12875 13028 11934 13001 12442 7/06 12317 12834 12825 12977 12008 13056 12293 8/06 12539 13047 13048 13202 12293 13388 12584 9/06 12742 13249 13241 13416 12610 13606 12854 10/06 13204 13726 13717 13895 13021 14105 13332 11/06 13571 14101 14092 14282 13268 14451 13648 12/06 13748 14270 14261 14458 13454 14662 13801 1/07 14038 14563 14553 14764 13657 14930 14102 2/07 13858 14363 14366 14574 13391 14796 13916 3/07 14088 14593 14596 14817 13540 14973 14062 4/07 14588 15105 15098 15334 14140 15532 14609 5/07 15099 15617 15620 15873 14633 15964 15156 6/07 14878 15377 15379 15630 14390 15698 15025 7/07 14438 14917 14920 15166 13944 15235 14544 8/07 14568 15042 15035 15302 14153 15377 14638 9/07 15149 15627 15631 15903 14682 15988 15148 10/07 15690 16182 16175 16473 14915 16352 15454 11/07 14899 15355 15349 15639 14291 15677 14759 12/07 14813 15249 15255 15544 14192 15490 14625 1/08 13729 14124 14129 14404 13341 14525 13803 2/08 13458 13843 13848 14119 12908 14258 13440 3/08 13271 13648 13643 13922 12852 14211 13251 4/08 14012 14383 14389 14689 13478 14908 13917 5/08 14314 14697 14703 15006 13653 15144 14258 6/08 13178 13518 13524 13811 12503 13938 13121
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. [MOUNTAIN CHART] 7/08 12927 13248 13253 13538 12398 13777 12929 8/08 12907 13216 13222 13516 12577 13798 13052 9/08 11488 11756 11761 12026 11458 12441 11597 10/08 9278 9495 9499 9713 9534 10160 9406 11/08 8454 8652 8656 8858 8849 9398 8585 12/08 8797 8848 9001 9219 8943 9751 8856
AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (4/30/04) -2.71% 1 Year -43.90 CLASS B SHARES Inception (4/30/04) -2.58% 1 Year -43.71 CLASS C SHARES Inception (4/30/04) -2.23% 1 Year -41.54 CLASS R SHARES Inception (4/30/04) -1.73% 1 Year -40.70 CLASS Y SHARES Inception -1.50% 1 Year -40.54
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12b-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS APRIL 30, 2004. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.27%, 2.02%, 2.02%, 1.52% AND 1.02%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.36%, 2.11%, 2.11%, 1.61% AND 1.11%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES IN THE PAST, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.80% for AIM Growth Allocation Fund. 5 AIM ALLOCATION FUNDS AIM MODERATE ALLOCATION FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 6 AIM ALLOCATION FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT - OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 4/30/04
Lipper Mixed-Asset AIM Moderate AIM Moderate AIM Moderate AIM Moderate Target Allocation Allocation Fund- Allocation Fund- Allocation Fund- Allocation Fund- Custom Moderate Moderate Funds Date Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 Index(2) Allocation Index(1) Index(2) 4/30/04 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 5/04 9488 10030 10040 10040 10137 10045 10016 6/04 9658 10210 10210 10220 10334 10196 10143 7/04 9412 9940 9940 9960 9992 10018 10014 8/04 9450 9980 9980 9990 10032 10122 10131 9/04 9639 10179 10179 10200 10141 10251 10234 10/04 9790 10329 10329 10360 10296 10421 10357 11/04 10121 10669 10669 10710 10712 10725 10609 12/04 10381 10943 10943 10980 11077 11013 10879 1/05 10276 10823 10823 10869 10807 10878 10754 2/05 10457 11003 11004 11051 11034 11044 10889 3/05 10295 10832 10832 10879 10839 10884 10741 4/05 10134 10651 10651 10707 10633 10792 10630 5/05 10343 10872 10873 10929 10971 11017 10857 6/05 10506 11023 11024 11091 10987 11105 10985 7/05 10725 11255 11255 11323 11395 11326 11234 8/05 10782 11306 11306 11383 11291 11386 11242 9/05 10868 11386 11386 11463 11383 11475 11274 10/05 10697 11195 11205 11282 11193 11288 11071 11/05 10964 11477 11477 11564 11616 11545 11290 12/05 11158 11672 11672 11771 11620 11688 11393 1/06 11528 12049 12049 12150 11928 11986 11662 2/06 11499 12008 12008 12120 11960 12010 11669 3/06 11664 12181 12181 12295 12109 12125 11733 4/06 11819 12334 12335 12458 12271 12276 11837 5/06 11490 11978 11978 12099 11919 12018 11648 6/06 11451 11926 11927 12058 11934 12035 11662 7/06 11470 11947 11947 12079 12008 12117 11776 8/06 11683 12160 12161 12305 12293 12377 11976 9/06 11839 12314 12314 12468 12610 12543 12139 10/06 12130 12609 12610 12766 13021 12857 12425 11/06 12344 12824 12824 12992 13268 13105 12646 12/06 12468 12938 12940 13116 13454 13221 12762 1/07 12652 13129 13131 13308 13657 13345 12887 2/07 12631 13098 13100 13287 13391 13353 12875 3/07 12814 13278 13280 13481 13540 13473 12974 4/07 13150 13618 13620 13825 14140 13839 13309 5/07 13436 13906 13897 14115 14633 14059 13553 6/07 13333 13789 13790 14008 14390 13927 13421 7/07 13079 13512 13513 13739 13944 13717 13200 8/07 13130 13554 13555 13793 14153 13828 13296 9/07 13466 13894 13895 14136 14682 14221 13652 10/07 13803 14234 14235 14491 14915 14482 13869 11/07 13375 13799 13800 14050 14291 14205 13594 12/07 13359 13756 13757 14021 14192 14129 13487 1/08 12753 13129 13129 13384 13341 13619 13083 2/08 12537 12904 12905 13157 12908 13473 12898 3/08 12352 12713 12714 12963 12852 13426 12813 4/08 12818 13173 13174 13440 13478 13844 13216 5/08 12969 13330 13320 13599 13653 13948 13337 6/08 12256 12578 12580 12848 12503 13232 12672
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. [MOUNTAIN CHART] 7/08 12137 12455 12457 12724 12398 13122 12487 8/08 12148 12444 12445 12724 12577 13164 12501 9/08 11056 11334 11324 11586 11458 12243 11555 10/08 9412 9641 9631 9857 9534 10660 10026 11/08 8904 9113 9115 9323 8849 10266 9507 12/08 9203 9259 9416 9641 8943 10659 9794
AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (4/30/04) -1.76% 1 year -34.90 CLASS B SHARES Inception (4/30/04) -1.64% 1 year -34.76 CLASS C SHARES Inception (4/30/04) -1.28% 1 year -32.21 CLASS R SHARES Inception (4/30/04) -0.78% 1 year -31.24 CLASS Y SHARES Inception -0.55% 1 year -31.05
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12b-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS APRIL 30, 2004. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.14%, 1.89%, 1.89%, 1.39% AND 0.89%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.26%, 2.01%, 2.01%, 1.51% AND 1.01%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES IN THE PAST, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.76% for AIM Moderate Allocation Fund. 7 AIM ALLOCATION FUNDS AIM MODERATE GROWTH ALLOCATION FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 8 AIM ALLOCATION FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT - OLDEST SHARE CLASSES SINCE INCEPTION Fund data from 4/29/05, index data from 4/30/05
Lipper AIM AIM AIM AIM Mixed-Asset Moderate Growth Moderate Growth Moderate Growth Moderate Growth Custom Target Allocation Allocation Fund- Allocation Fund- Allocation Fund- Allocation Fund- Moderate Growth Growth Funds Date Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 Index(2) Allocation Index(1) Index(2) 4/29/05 $ 9450 $ 10000 $ 10000 $ 10000 4/05 9450 10000 10000 10000 $ 10000 $ 10000 $ 10000 5/05 9769 10338 10328 10338 10318 10243 10211 6/05 9948 10517 10507 10517 10333 10340 10304 7/05 10249 10834 10825 10834 10717 10649 10525 8/05 10276 10844 10835 10854 10619 10668 10547 9/05 10399 10973 10973 10993 10705 10806 10608 10/05 10210 10775 10765 10794 10526 10600 10439 11/05 10548 11123 11113 11141 10924 10908 10678 12/05 10752 11325 11315 11359 10928 11045 10757 1/06 11244 11836 11825 11870 11217 11423 11082 2/06 11206 11786 11776 11830 11248 11443 11014 3/06 11424 12016 12005 12060 11388 11630 11112 4/06 11613 12206 12195 12251 11541 11808 11274 5/06 11225 11786 11785 11840 11209 11486 11073 6/06 11187 11736 11736 11800 11224 11515 11084 7/06 11187 11726 11725 11791 11293 11576 11207 8/06 11395 11946 11935 12011 11561 11850 11415 9/06 11566 12116 12104 12182 11859 12028 11576 10/06 11926 12476 12465 12563 12245 12408 11858 11/06 12200 12765 12756 12853 12478 12684 12081 12/06 12355 12915 12905 13005 12653 12840 12215 1/07 12579 13139 13129 13240 12844 13022 12356 2/07 12472 13028 13018 13128 12593 12959 12322 3/07 12665 13211 13201 13322 12734 13100 12447 4/07 13073 13629 13620 13752 13298 13534 12827 5/07 13451 14027 14007 14151 13761 13842 13136 6/07 13305 13853 13844 13987 13533 13659 13026 7/07 12917 13446 13436 13577 13114 13343 12762 8/07 13014 13537 13527 13669 13310 13457 12860 9/07 13460 13985 13976 14141 13807 13927 13236 10/07 13868 14413 14404 14571 14027 14218 13468 11/07 13305 13812 13802 13976 13440 13769 13102 12/07 13244 13747 13737 13912 13347 13645 13013 1/08 12427 12884 12873 13041 12547 12945 12508 2/08 12225 12672 12662 12829 12140 12751 12297 3/08 12054 12482 12472 12648 12087 12705 12196 4/08 12629 13062 13062 13244 12676 13230 12639 5/08 12841 13282 13272 13478 12840 13393 12794 6/08 11954 12355 12346 12532 11758 12489 12060 7/08 11793 12176 12176 12361 11659 12361 11902 8/08 11782 12155 12156 12350 11828 12387 11929 9/08 10592 10923 10923 11097 10775 11316 10981 10/08 8716 8985 8974 9130 8966 9506 9434 11/08 8061 8311 8301 8450 8322 8950 9008 12/08 8379 8408 8629 8779 8410 9288 9231
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (4/29/05) -4.70% 1 Year -40.17 CLASS B SHARES Inception (4/29/05) -4.61% 1 Year -40.13 CLASS C SHARES Inception (4/29/05) -3.93% 1 Year -37.79 CLASS R SHARES Inception (4/29/05) -3.48% 1 Year -36.90 CLASS Y SHARES Inception -3.18% 1 Year -36.63
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12b-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS APRIL 29, 2005. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.15%, 1.90%, 1.90%, 1.40% AND 0.90%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.32%, 2.07%, 2.07%, 1.57% AND 1.07%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES IN THE PAST, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.78% for AIM Moderate Growth Allocation Fund. 9 AIM ALLOCATION FUNDS AIM MODERATELY CONSERVATIVE ALLOCATION FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 10 AIM ALLOCATION FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT - OLDEST SHARE CLASSES SINCE INCEPTION Fund data from 4/29/05, index data from 4/30/05
Lipper AIM AIM AIM AIM Custom Mixed-Asset Moderately Moderately Moderately Moderately Moderately Target Conservative Conservative Conservative Conservative Conservative Allocation Allocation Fund- Allocation Fund- Allocation Fund- Allocation Fund- Allocation Conservative Date Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 Index (2) Index (1) Funds Index(2) 4/29/05 $ 9450 $ 10000 $ 10000 $ 10000 4/05 9450 10000 10000 10000 $ 10000 $ 10000 $ 10000 5/05 9638 10189 10189 10199 10318 10194 10174 6/05 9733 10279 10289 10299 10333 10269 10244 7/05 9845 10398 10399 10408 10717 10385 10376 8/05 9874 10418 10429 10438 10619 10449 10429 9/05 9911 10448 10459 10478 10705 10455 10454 10/05 9817 10338 10350 10368 10526 10318 10338 11/05 9987 10518 10529 10558 10924 10498 10500 12/05 10112 10648 10649 10683 10928 10598 10574 1/06 10322 10860 10861 10906 11217 10771 10760 2/06 10313 10840 10840 10886 11248 10801 10756 3/06 10380 10900 10910 10957 11388 10831 10823 4/06 10447 10971 10970 11027 11541 10900 10883 5/06 10246 10760 10759 10815 11209 10745 10767 6/06 10226 10729 10728 10795 11224 10762 10773 7/06 10275 10770 10779 10845 11293 10855 10841 8/06 10417 10911 10910 10986 11561 11065 11005 9/06 10532 11023 11032 11107 11859 11208 11137 10/06 10713 11204 11212 11299 12245 11421 11306 11/06 10865 11356 11364 11451 12478 11609 11474 12/06 10934 11426 11424 11522 12653 11652 11505 1/07 11042 11530 11538 11636 12844 11732 11574 2/07 11052 11530 11538 11646 12593 11785 11621 3/07 11160 11644 11642 11750 12734 11849 11693 4/07 11377 11862 11860 11979 13298 12084 11885 5/07 11525 12007 12005 12135 13761 12196 11979 6/07 11455 11924 11932 12062 13533 12092 11888 7/07 11297 11758 11767 11895 13114 11981 11817 8/07 11356 11810 11808 11948 13310 12108 11875 9/07 11573 12027 12036 12177 13807 12366 12121 10/07 11800 12256 12263 12417 14027 12543 12276 11/07 11603 12049 12056 12208 13440 12438 12177 12/07 11613 12044 12051 12202 13347 12414 12156 1/08 11314 11731 11738 11886 12547 12191 12057 2/08 11189 11590 11598 11756 12140 12081 12008 3/08 11086 11482 11490 11646 12087 12063 11941 4/08 11344 11742 11749 11919 12676 12316 12134 5/08 11438 11828 11835 12016 12840 12357 12253 6/08 11045 11418 11414 11592 11758 11920 11962 7/08 10972 11331 11339 11516 11659 11862 11839 8/08 10982 11343 11339 11526 11828 11951 11837 9/08 10187 10511 10519 10688 10775 11349 11269 10/08 9154 9443 9440 9600 8966 10239 10162 11/08 8937 9217 9213 9382 8322 10058 9854 12/08 9156 9181 9452 9603 8410 10433 10187
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (4/29/05) -2.37% 1 Year -25.51 CLASS B SHARES Inception (4/29/05) -2.30% 1 Year -25.41 CLASS C SHARES Inception (4/29/05) -1.52% 1 Year -22.31 CLASS R SHARES Inception (4/29/05) -1.10% 1 Year -21.31 CLASS Y SHARES Inception -0.84% 1 Year -21.13
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12b-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS APRIL 29, 2005. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.09%, 1.84%, 1.84%, 1.34% AND 0.84%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.37%, 2.12%, 2.12%, 1.62% AND 1.12%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.70% for AIM Moderately Conservative Allocation Fund. 11 AIM ALLOCATION FUNDS Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this opportunity to update you on market developments during calendar year 2008 and provide you with some perspective and encouragement. [TAYLOR PHOTO] MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Philip Taylor Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront - driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them - but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /s/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim 1 U.S. Federal Reserve; 2 Bureau of Labor Statistics; 3 FactSet Research; 4 Wall Street Journal 12 AIM ALLOCATION FUNDS Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have negatively affected all investors. The new government promises to move quickly with a stimulus package, yet considerable anxiety remains about how, when and what kind of a [CROCKETT PHOTO] recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund Bruce Crockett investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high" has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com. Best regards, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 13 AIM ALLOCATION FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY -- AIM CONSERVATIVE ALLOCATION FUND Equity markets in 2008 generally provided negative returns rivaling the worst bear markets in history. Against this backdrop, AIM Conservative Allocation Fund at net asset value outperformed the broad-based S&P 500 Index as exposure to bonds cushioned falling stock prices.+ However, the Fund underperformed the Custom Conservative Allocation Index, which approximates the performance of the types of holdings owned by the Fund's underlying funds.# Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -14.49% Class B Shares -15.08 Class C Shares -15.19 Class R Shares -14.67 Class Y Shares* -14.43 S&P 500 Index+ (Broad Market Index) -36.99 Custom Conservative Allocation Index# (Style-Specific Index) -9.33 Lipper Mixed-Asset Target Allocation Conservative Funds Index+ (Peer Group Index) -16.20
+ Lipper Inc.; # Invesco Aim, Lipper, Inc. * Share class incepted during the fiscal year. See page 3 for a detailed explanation of Fund performance. HOW WE INVEST AIM Conservative Allocation Fund is intended for investors with relatively low risk tolerance. The Fund invests in 14 underlying funds diversified among asset classes (stocks, bonds and cash), investment styles (value and blend/core), regions (domestic and international) and market capitalizations (mid and large). These underlying funds include five bond funds, which represent 65% of the portfolio, and nine stock funds, which represent 25%. The portfolio also maintains a 10% allocation to cash equivalents. While no fund can guarantee positive performance, the broad portfolio diversifi-cation provides exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming. We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight, and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Intermediate Term Taxable Investment Grade 26.00% 27.91% International/Global Blend 2.50 1.88 Large Cap Blend 5.00 4.29 Large Cap Growth 5.00 3.79 Large Cap Value 5.00 3.64 Mid Cap Blend 2.50 1.89 Sector 2.50 1.73 Short Term Taxable Investment Grade 32.00 35.78 Real Estate 2.50 1.87 Taxable Non-Investment Grade 7.00 5.64 Cash Equivalents Plus Other Assets Less 10.00 11.58 Liabilities
Total Net Assets $ 117.2 million
14 AIM ALLOCATION FUNDS stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar it negatively affected the relative return of foreign equities. Within the Fund's fixed-income component, AIM Limited Maturity Treasury Fund and AIM International Total Return Fund were the Fund's only absolute contributors. Additionally, these two funds were the only contributors to relative fixed-income performance when compared with the components of the Fund's custom style-specific index, the Custom Conservative Allocation Index. AIM Limited Maturity Treasury Fund was helped by investors' flight to quality. AIM Floating Rate Fund and AIM Core Bond Fund were the largest detractors from both the Fund's absolute performance and relative fixed-income performance when compared with the components of the Custom Conservative Allocation Index. Within the Fund's equity component, there were no positive absolute contributors to performance as the bear market pushed each of the equity funds into negative territory. The largest detractors from absolute performance were AIM Charter Fund and AIM Large Cap Basic Value Fund. The largest contributors to relative equity performance when compared with the components of the Custom Conservative Allocation Index were AIM Charter Fund and AIM Select Real Estate Income Fund. During this historic bear market, AIM Charter Fund weathered the storm better than most due in part to its avoidance of caustic financial stocks and a lower than average weight to the energy sector. AIM Select Real Estate Income Fund outperformed its custom style-specific index counterpart primarily due to its more conservative investment philosophy. The largest single relative detractor when compared with the equity components of the Fund's custom style-specific index was AIM Large Cap Basic Value Fund, which was hindered by the underperformance of its intrinsic value investment philosophy. This investment philosophy led the management team to invest in financial stocks which underperformed severely in the fourth quarter due to the credit crisis. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We remain committed to our asset allocation strategies, and as always, we thank you for your continued investment in AIM Conservative Allocation Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. [WENDLER PHOTO] GARY WENDLER Director of Product Strategy and Investments Services, is manager of AIM Conservative Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares ACNAX Class B Shares ACNBX Class C Shares ACNCX Class R Shares ACNRX Class Y Shares ACNYX
15 AIM ALLOCATION FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY -- AIM GROWTH ALLOCATION FUND Equity markets in 2008 generally provided negative returns rivaling the worst bear markets in history. Against this backdrop, AIM Growth Allocation Fund, at net asset value (NAV), underperformed the broad-based S&P 500 Index and the Custom Growth Allocation Index, which approximates the performance of the types of holdings owned by the Fund's underlying funds.+,# Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -40.62% Class B Shares -41.00 Class C Shares -41.00 Class R Shares -40.70 Class Y Shares* -40.54 S&P 500 Index+ (Broad Market Index) -36.99 Custom Growth Allocation Index# (Style-Specific Index) -37.05 Lipper Multi-Cap Core Funds Index+ (Peer Group Index) -39.45
+ Lipper Inc.; # Invesco Aim, Lipper, Inc. * Share class incepted during the fiscal year. See page 5 for a detailed explanation of Fund performance. HOW WE INVEST AIM Growth Allocation Fund is intended for investors with a relatively high risk tolerance. The Fund invests in 11 underlying funds diversified among asset classes (stocks and bonds), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (small, mid and large). These underlying funds include 10 stock funds, which represent 95% of the portfolio, and one bond fund, which represents the remaining 5% of the portfolio. While no fund can guarantee positive performance, the broad portfolio diversification provides exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming. We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight, and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar it negatively affected the relative return of foreign equities. Within the Fund's 95% equity component, there were no absolute positive contributors to performance as the bear PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 International/Global Blend 12.50% 12.70% International/Global Growth 12.50 12.63 Large Cap Growth 20.00 20.56 Large Cap Value 17.50 17.15 Mid Cap Growth 5.00 4.62 Real Estate 5.00 4.45 Sector 12.50 11.68 Small Cap 10.00 10.43 Taxable Non-Investment Grade 5.00 5.96 Other Assets Less Liabilities 0.00 -0.18
Total Net Assets $ 391.8 million
16 AIM ALLOCATION FUNDS market pushed each of the equity funds into negative territory. The largest absolute detractors from performance were AIM Multi-Sector Fund, AIM International Growth Fund and AIM International Core Equity Fund, mostly due to their larger weights in the portfolio. AIM International Core Equity Fund, AIM Structured Value Fund and AIM International Growth Fund contributed the most to the Fund's equity performance on a relative basis when compared with the components of the Fund's custom style-specific index, the Custom Growth Allocation Index. The largest relative detractors from performance within the equity component were AIM Large Cap Basic Value Fund and AIM Structured Growth Fund. AIM Large Cap Basic Value Fund was hindered by the underperformance of its intrinsic value investment philosophy. This investment philosophy led the management team to invest in financial stocks which underperformed severely in the fourth quarter due to the credit crisis. AIM Structured Growth Fund was hindered in part due to growth generally underperforming value. The Fund's only fixed-income holding, AIM High Yield Fund, was the single largest relative detractor from performance mainly due to the fund's investment strategy of investing in lower quality, higher yielding bonds which underperformed during the year. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We remain committed to our asset allocation strategies, and as always, we thank you for your continued investment in AIM Growth Allocation Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. [WENDLER PHOTO] GARY WENDLER Director of Product Strategy and Investments Services, is manager of AIM Growth Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares AADAX Class B Shares AAEBX Class C Shares AADCX Class R Shares AADRX Class Y Shares AADYX
17 AIM ALLOCATION FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY -- AIM MODERATE ALLOCATION FUND Equity markets in 2008 generally provided negative returns rivaling the worst bear markets in history. Against this backdrop, AIM Moderate Allocation Fund, at net asset value, outperformed the broad-based S&P 500 Index as exposure to bonds cushioned falling stock prices.+ However, the Fund underperformed the Custom Moderate Allocation Index, which approximates the performance of the types of holdings owned by the Fund's underlying funds.# Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -31.11% Class B Shares -31.57 Class C Shares -31.57 Class R Shares -31.24 Class Y Shares* -31.05 S&P 500 Index+ (Broad Market Index) -36.99 Custom Moderate Allocation Index# (Style-Specific Index) -24.56 Lipper Mixed-Asset Target Allocation Moderate Funds Index+ (Peer Group Index) -27.38
+ Lipper Inc.; # Invesco Aim, Lipper, Inc. * Share class incepted during the fiscal year. See page 7 for a detailed explanation of Fund performance. HOW WE INVEST AIM Moderate Allocation Fund is intended for investors with moderate risk tolerance. The Fund invests in 16 underlying funds diversified among asset classes (stocks and bonds), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (small, mid and large). These underlying funds include 11 stock funds, which represent 60% of the portfolio's target allocation, and five bond funds, which represent the remaining 40% of the portfolio. While no fund can guarantee positive performance, the broad portfolio diversification provides exposure to areas of the market that may perform well in any given period. Additionally, the broad diversifica-tion attempts to limit exposure to any one area of the market that may be underperforming. We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight, and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Intermediate Term Investment Grade 25.50% 32.93% International/Global Blend 10.00 8.84 International/Global Growth 7.50 6.59 Large Cap Growth 12.50 11.18 Large Cap Value 10.00 8.52 Mid Cap Growth 4.00 3.22 Mid Cap Value 4.00 3.01 Real Estate 4.00 2.45 Sector 5.00 4.07 Short Term Investment Grade 2.50 3.31 Small Cap 3.00 3.78 Taxable Non-Investment Grade 12.00 12.25 Other Assets Less Liabilities 0.00 -0.15
Total Net Assets $ 483.9 million
18 AIM ALLOCATION FUNDS Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar it negatively impacted the relative return of foreign equities. Within the Fund's equity component, there were no absolute positive contributors to performance as the bear market pushed each of the equity funds into negative territory. AIM International Growth Fund and AIM International Core Equity Fund were the largest detractors from absolute performance mostly due to their larger percentage allocations within the portfolio. AIM International Core Equity Fund, AIM Structured Value Fund and AIM International Growth Fund contributed the most to the Fund's equity performance on a relative basis when compared with the components of the Fund's custom style-specific index, the Custom Moderate Allocation Index. The largest relative detractors from performance within the equity component were AIM Large Cap Basic Value Fund and AIM Mid Cap Basic Value Fund. These two funds were hindered by the underperformance of their intrinsic value investment philosophy. This investment philosophy led the management team to invest in financial stocks which underperformed severely in the fourth quarter due to the credit crisis. Within the Fund's fixed income component, AIM International Total Return Fund was the only positive contributor to both absolute and relative performance. The largest detractors from absolute performance and performance relative to the Fund's style-specific index were AIM High Yield Fund and AIM Core Bond Fund. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We remain committed to our asset allocation strategies, and as always, we thank you for your continued investment in AIM Moderate Allocation Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. [WENDLER PHOTO] GARY WENDLER Director of Product Strategy and Investments Services, is manager of AIM Moderate Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares AMKAX Class B Shares AMKBX Class C Shares AMKCX Class R Shares AMKRX Class Y Shares ABKYX
19 AIM ALLOCATION FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY -- AIM MODERATE GROWTH ALLOCATION FUND Equity markets in 2008 generally provided negative returns rivaling the worst bear markets in history. Against this backdrop, AIM Moderate Growth Allocation Fund, at net asset value, performed in line with the broad-based S&P 500 Index as exposure to bonds cushioned falling stock prices.+ However, the Fund underperformed the Custom Moderate Growth Allocation Index, which approximates the performance of the types of holdings owned by the Fund's underlying funds.# Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -36.71% Class B Shares -37.17 Class C Shares -37.19 Class R Shares -36.90 Class Y Shares* -36.63 S&P 500 Index+ (Broad Market Index) -36.99 Custom Moderate Growth Allocation Index# (Style-Specific Index) -31.94 Lipper Mixed-Asset Target Allocation Growth Funds Index+ (Peer Group Index) -29.06
+ Lipper Inc.; # Invesco Aim, Lipper, Inc. * Share class incepted during the fiscal year. See page 9 for a detailed explanation of Fund performance. HOW WE INVEST AIM Moderate Growth Allocation Fund is intended for investors with a moderate to high risk tolerance. The Fund invests in 13 underlying funds diversified among asset classes (stocks and bonds), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (small, mid and large). These underlying funds include 11 stock funds, which represent 80% of the portfolio, and two bond funds, which represent the remaining 20% of the portfolio. While no fund can guarantee positive performance, the broad portfolio diversifi-cation provides exposure to areas of the market that may perform well in any given period. Additionally, the broad diversifica-tion attempts to limit exposure to any one area of the market that may be underperforming. We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight, and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Intermediate Term Investment Grade 10.00% 13.88% International/Global Blend 11.00 10.56 International/Global Growth 11.00 10.50 Large Cap Growth 16.50 16.02 Large Cap Value 14.00 12.96 Mid Cap Growth 4.50 3.93 Mid Cap Value 5.00 4.09 Real Estate 4.00 3.37 Sector 7.50 6.62 Small Cap 6.50 6.94 Taxable Non-Investment Grade 10.00 11.25 Other Assets Less Liabilities 0.00 -0.12
Total Net Assets $ 289.7 million
20 AIM ALLOCATION FUNDS stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreignequities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar it negatively affected the relative return of foreign equities. Within the Fund's equity component, there were no absolute positive contributors to performance as the bear market pushed each of the equity funds into negative territory. AIM International Growth Fund and AIM International Core Equity Fund were the largest detractors from absolute performance mostly due to their larger percentage allocations within the portfolio. AIM Small Cap Equity Fund and AIM International Core Equity Fund contributed the most to the Fund's equity performance on a relative basis when compared with the components of the Fund's custom style-specific index, the Custom Moderate Growth Allocation Index. The largest relative detractors from performance within the equity component were AIM Large Cap Basic Value Fund and AIM Mid Cap Basic Value Fund. These two funds were hindered by the underperformance of their intrinsic value investment philosophy. This investment philosophy led the management team to invest in financial stocks which underperformed severely in the fourth quarter due to the credit crisis. The Fund's fixed-income component, consisting of AIM High Yield Fund and AIM Core Bond Fund, detracted from both absolute performance and on a relative basis when compared with the components of the Custom Moderate Allocation Index. AIM High Yield Fund was hurt by its investment strategy which entails investing in lower quality, higher yielding bonds. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We remain committed to our asset allocation strategies, and as always, we thank you for your continued investment in AIM Moderate Growth Allocation Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. [WENDLER PHOTO] GARY WENDLER Director of Product Strategy and Investments Services, is manager of AIM Moderate Growth Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares AAMGX Class B Shares AMBGX Class C Shares ACMGX Class R Shares RAMGX Class Y Shares AAMYX
21 AIM ALLOCATION FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY -- AIM MODERATELY CONSERVATIVE ALLOCATION FUND Equity markets in 2008 generally provided negative returns rivaling the worst bear markets in history. Against this backdrop, AIM Moderately Conservative Allocation Fund, at net asset value, outperformed the broad-based S&P 500 Index as exposure to bonds cushioned falling stock prices.+ However, the Fund underperformed the Custom Moderately Conservative Allocation Index, which approximates the performance of the types of holdings owned by the Fund's underlying funds.# Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -21.20% Class B Shares -21.69 Class C Shares -21.57 Class R Shares -21.31 Class Y Shares* -21.13 S&P 500 Index+ (Broad Market Index) -36.99 Custom Moderately Conservative Allocation Index# (Style-Specific Index) -15.96 Lipper Mixed-Asset Target Allocation Conservative Funds Index# (Peer Group Index) -16.20
+ Lipper Inc.; # Invesco Aim, Lipper, Inc. * Share class incepted during the fiscal year. See page 11 for a detailed explanation of Fund performance. HOW WE INVEST AIM Moderately Conservative Allocation Fund is intended for investors with a low to moderate risk tolerance. The Fund invests in 16 underlying funds diversified among asset classes (stocks and bonds), investment styles (value, blend/core and growth), regions (domestic and international) and market capitalizations (mid and large). These underlying funds include six bond funds, which represent 60% of the portfolio, and 10 stock funds, which represent the remaining 40% of the portfolio. While no fund can guarantee positive performance, the broad portfolio diversification provides exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming. We establish target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight, and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Intermediate Term Investment Grade 39.00% 47.21% International/Globa Blend 5.00 3.98 International/Global Growth 2.50 1.98 Large Cap Growth 11.25 9.03 Large Cap Value 11.25 8.64 Mid Cap Growth 2.50 1.81 Mid Cap Value 2.50 1.70 Real Estate 2.50 1.98 Sector 2.50 1.83 Short Term Maturity 12.00 13.99 Taxable Non-Investment Grade 9.00 8.00 Other Assets Less Liabilities 0.00 -0.15
Total Net Assets $ 82.4 million
22 AIM ALLOCATION FUNDS growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar it negatively affected the relative return of foreign equities. Within the Fund's fixed-income component, AIM U.S. Government Fund and AIM International Total Return Fund were the Fund's only absolute contributors to performance. Additionally, these two funds were the only fixed-income funds that contributed to the Fund's relative fixed-income performance when compared with the components of the Fund's custom style-specific index, the Custom Moderately Conservative Allocation Index. Within the Fund's equity component, there were no positive absolute contributors to performance as the bear market pushed each of the equity funds into negative territory. The largest detractors from absolute performance were AIM Large Cap Basic Value Fund, AIM Structured Growth Fund and AIM Large Cap Growth Fund. The largest contributors to relative equity performance when compared with the components of the Fund's custom style-specific index were AIM Structured Value Fund, AIM International Core Equity Fund and AIM Select Real Estate Income Fund. The largest relative detractors within the equity component were AIM Large Cap Basic Value Fund, AIM Structured Growth Fund and AIM Mid Cap Basic Value Fund. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We remain committed to our asset allocation strategies, and as always, we thank you for your investment in AIM Moderately Conservative Allocation Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. [WENDLER PHOTO] GARY WENDLER Director of Product Strategy and Investments Services, is manager of AIM Moderately Conservative Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares CAAMX Class B Shares CMBAX Class C Shares CACMX Class R Shares CMARX Class Y Shares CAAYX
23 AIM ALLOCATION FUNDS AIM CONSERVATIVE ALLOCATION FUND'S AND AIM MODERATELY CONSERVATIVE ALLOCATION FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN CONSISTENT WITH A LOWER LEVEL OF RISK RELATIVE TO THE BROAD STOCK MARKET. AIM GROWTH ALLOCATION FUND'S AND AIM MODERATE GROWTH ALLOCATION FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL CONSISTENT WITH A HIGHER LEVEL OF RISK RELATIVE TO THE BROAD STOCK MARKET. AIM MODERATE ALLOCATION FUND'S INVESTMENT OBJECTIVE IS TOTAL RETURN CONSISTENT WITH A MODERATE LEVEL OF RISK RELATIVE TO THE BROAD STOCK MARKET. O Unless otherwise stated, information presented in this report is as of December 31, 2008, and is based on total net assets. O Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES O Effective September 30, 2003, only previously established qualified plans are eligible to purchase Class B shares of any AIM fund. O Class R shares are available only to certain retirement plans. Please see the prospectus for more information. O Class Y shares are available only to certain investors. Please see the prospectus for more information. PRINCIPAL RISKS OF INVESTING IN AIM ALLOCATION FUNDS
AIM MODERATE AIM MODERATELY AIM CONSERVATIVE AIM GROWTH AIM MODERATE GROWTH CONSERVATIVE ALLOCATION ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND Concentration Risk x x Convertible Securities Risk x x x x x Counterparty Risk x x Credit Risk x x x x x Currency/Exchange Rate Risk x x x x Dollar Roll Transaction Risk x x x x Equity Securities Risk x x x x x Foreign Securities Risk x x x x x Fund of Funds Risk x x x x x "Growth" Investing Risk x x x x x High-Coupon U.S. Government x x x x Agency Mortgage-Backed Securities Risk High Yield Risk x x x x x Independent Management of Sector x Risk Industry Focus Risk x Interest Rate Risk x x x x x Leveraging & Derivatives Risk x x x x x Liquidity Risk x Management Risk x x x x x Market Cap Risk (Small and Mid) x x Market Risk x x x x x Money Market Fund Risk x Mortgage-Backed Securities Risk x x x Municipal Securities Risk x Nondiversification Risk x x x Prepayment Risk x Reinvestment Risk x x x Repurchase Agreement Risk x Reverse Repurchase Agreement x Risk Risks Relating to Banking and x x Financial Services Industries Sector Fund Risk x x Unseasoned Issuer Risk x x U.S. Government Obligations Risk x x x x x "Value" Investing Risk x x x x x
24 AIM ALLOCATION FUNDS PRINCIPAL RISKS DEFINED o CONCENTRATION RISK: Since a large percentage of the Fund's assets may be invested in securities of a limited number of companies, each investment has a greater effect on the Fund's overall performance, and any change in the value of those securities could significantly affect the value of your investment in the Fund. o CONVERTIBLE SECURITIES RISK: The values of convertible securities in which the Fund invests may be affected by market interest rates, the risk that the issuer may default on interest or principal payments, and the value of the underlying common stock into which these securities may be converted. o COUNTERPARTY RISK: Individually negotiated, or over-the-counter, derivates are also subject to counterparty risk -- the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction of an underlying fund. o CREDIT RISK: Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations, including making timely payment of interest and principal. o CURRENCY/EXCHANGE RATE RISK: The Fund is subject to currency/exchange rate risk because it may buy or sell currencies other than the U.S. dollar. o DOLLAR ROLL TRANSACTION RISK: Dollar-roll transactions involve the risk that the market value of securities to be purchased by the Fund may decline below the price at which the Fund is obligated to repurchase them, or that the other party may default on its obligation such that the Fund is delayed or prevented from completing the transaction. o EQUITY SECURITIES RISK: Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. o FOREIGN SECURITIES RISK: Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, relative lack of information, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards. o FUND OF FUNDS RISK: The Fund pursues its investment objectives by investing its assets in other underlying AIM funds rather than investing directly in stocks, bonds, cash or other investments. The Fund's investment performance depends on the investment performance of the underlying funds. There is risk that the advisor's evaluations and assumptions regarding the Fund's broad asset classes or the underlying funds may be incorrect based on actual market conditions, or that the Fund will vary from the target weightings in the underlying funds due to factors such as market fluctuations. There can be no assurance that the underlying funds will achieve their investment objectives, and the performance of the underlying funds may be lower than that of the asset classes they represent. The underlying funds may change their investment objectives or policies without the approval of the Fund. If that were to occur, the Fund might be forced to withdraw its investments from the underlying funds at an unfavorable time. The advisor has the ability to select and substitute the underlying funds in which the Fund invests and may be subject to potential conflicts of interest in selecting underlying funds because it may receive higher fees from certain underlying funds than others. However, as a fiduciary of the Fund, the advisor is required to act in the Fund's best interest when selecting the underlying funds. Because the Fund is a fund of funds, it is subject to the risks associated with the underlying funds in which it invests. There are additional risks of investing in the underlying funds. o "GROWTH" INVESTING RISK: The Fund invests in "growth" stocks, which may be more volatile than other investment styles because growth stocks are more sensitive to investor perceptions of an issuing company's growth potential. o HIGH-COUPON U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES RISK: High-coupon, U.S. government agency mortgage-backed securities provide a higher coupon than current prevailing market interest rates, and the Fund may purchase such securities at a premium. If these securities experience a faster-than-expected principal prepayment rate, both the market value and income from such securities will decrease. o HIGH YIELD RISK: Lower rated securities may be more susceptible to real or perceived adverse economic and competitive industry conditions, and the secondary markets in which lower rated securities are traded may be less liquid than higher grade securities. The loans in which the Fund may invest are typically noninvestment-grade and involve a greater risk of default on interest and principal payments and of price changes due to the changes in the credit quality of the issuer. o INDEPENDENT MANAGEMENT OF SECTOR RISK: The Fund's investments in different independently managed sectors create allocation risk, which is the risk that the allocation of investments among the sectors may have a more significant effect on the Fund's net asset value when one of the sectors is performing more poorly than the other(s). Active rebalancing of the Fund among the sectors may result in increased transaction costs. o INDUSTRY FOCUS RISK: To the extent that an underlying fund invests in securities issued or guaranteed by companies in the banking and financial services industries, the underlying fund's performance will depend to a greater extent on the overall condition of those industries. o INTEREST RATE RISK: Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. o LEVERAGING AND DERIVATIVES RISK: The Fund may use enhanced investment techniques such as leveraging and derivatives. Leveraging entails risks such as magnifying changes in the value of the portfolio's securities. Derivatives are subject to counterparty risk -- the risk that the other party will not complete the transaction with the Fund. o LIQUIDITY RISK: A majority of the Fund's assets are likely to be invested in loans continued on page 26 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 25 AIM ALLOCATION FUNDS and securities that are less liquid than those rated on national exchanges. o MANAGEMENT RISK: There is no guarantee that the investment techniques and risk analysis used by the Fund's portfolio managers will produce the desired results. o MARKET CAP RISK (SMALL AND MID): Small- and mid-cap companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in these sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, limited product lines, less publicly available information, illiquidity, restricted resale or less frequent trading. o MARKET RISK: The prices of securities held by the Fund may decline in response to market risks. o MONEY MARKET FUND RISK: An investment in the Fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the Fund, and the yield will vary. o MORTGAGE-BACKED SECURITIES RISK: The Fund may invest in mortgage- and asset-backed securities. These securities are subject to prepayment or call risk, which is the risk that payments from the borrower may be received earlier or later than expected due to changes in the rate at which the underlying loans are prepaid. o MUNICIPAL SECURITIES RISK: The value of, payment of interest on and repayment of principal for the Fund as well as the Fund's ability to sell a municipal security may be affected by constitutional amendments, legislative enactments, executive orders, administrative regulations, voter initiatives and the economics of the regions where the issuers in which the Fund invests are located. o NONDIVERSIFICATION RISK: Nondiversification increases the risk that the value of the Fund's shares may vary more widely, and the Fund may be subject to greater investment and credit risk than if it invested more broadly. o PREPAYMENT RISK: The ability of an issuer of a floating rate loan or debt security to repay principal prior to maturity can limit the potential for gains by the Fund. o REINVESTMENT RISK: Reinvestment risk is the risk that a bond's cash flows will be reinvested at an interest rate below that of the original bond. o REPURCHASE AGREEMENT RISK: If the seller of a repurchase agreement in which the Fund invests defaults on its obligation or declares bankruptcy, the Fund may experience delays in selling the securities underlying the repurchase agreement. o REVERSE REPURCHASE AGREEMENT RISK: Reverse repurchase agreements and dollar-roll transactions involve the risk that the market value of securities to be purchased by the Fund may decline below the price at which the Fund is obligated to repurchase them, or that the other party may default on its obligation such that the Fund is delayed or prevented from completing the transaction. o RISKS RELATING TO BANKING AND FINANCIAL SERVICES INDUSTRIES: To the extent that the Fund is concentrated in securities of issuers in the banking and financial services industries, the Fund's performance will depend to a greater extent on the overall condition of those industries. The value of these securities can be sensitive to changes in government regulation, interest rates and economic downturns in the U.S. and abroad. o SECTOR FUND RISK: The Fund's investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund's investments may tend to rise and fall more rapidly. o UNSEASONED ISSUER RISK: Start-up or early stage companies, such as venture capital companies, generally have limited operating histories, no present market for their technologies or products, and no history of earnings or financial services. o U.S. GOVERNMENT OBLIGATIONS RISK: The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. government that may vary in the level of support they receive from the U.S. government. The U.S. government may choose not to provide financial support to U.S.-government-sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the underlying fund holding securities of such an issuer might not be able to recover its investment from the U.S. government. o "VALUE" INVESTING RISK: The Fund invests in "value" stocks, which can continue to be inexpensive for long periods of time and may never realize their full value. ABOUT INDEXES USED IN THIS REPORT o 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. o The CUSTOM CONSERVATIVE ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Conservative Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs, Barclays Capital U.S. Universal and three-month U.S. Treasury bill. 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 composition and will likely be altered in the future to better reflect the objective of the fund. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE --REGISTERED TRADEMARK-- Index is an unman-aged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. The three-month U.S. Treasury bill index is compiled by Lipper and is derived from secondary market interest rates published by the Federal Reserve Bank. o The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target 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, and cash equivalents. o The CUSTOM GROWTH ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Growth Allocation Fund, is composed of the following 26 AIM ALLOCATION FUNDS indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE --REGISTERED TRADEMARK-- Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. o The LIPPER MULTI-CAP CORE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Multi-Cap Core Funds category. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P Composite 1500 Index. o The CUSTOM MODERATE ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Moderate Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unman-aged index considered representative of 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 MSCI EAFE --REGISTERED TRADEMARK-- Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. o The LIPPER MIXED-ASSET TARGET ALLOCATION MODERATE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation Moderate Funds category. These funds, by portfolio practice, maintain a mix of between 40%-60% equity securities, with the remainder invested in bonds, cash, and cash equivalents. o The CUSTOM MODERATE GROWTH ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Moderate Growth Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE--REGISTERED TRADEMARK-- Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. o The LIPPER MIXED-ASSET TARGET ALLOCATION GROWTH FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation Growth Funds category. These funds, by portfolio practice, maintain a mix of between 60%-80% equity securities, with the remainder invested in bonds, cash, and cash equivalents. o The CUSTOM MODERATELY CONSERVATIVE ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Moderately Conservative Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE --REGISTERED TRADEMARK-- Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. o 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. o A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges or fund expenses. OTHER INFORMATION o The returns shown in management's discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. 27 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS December 31, 2008 AIM CONSERVATIVE ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.12%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ----------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-15.34% AIM Charter Fund 4.29% $ 5,927,791 $ 2,276,783 $ (1,086,498) $ (2,150,019) $ 64,649 $ 91,991 422,917 $ 5,032,706 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 1.56% 2,787,949 1,442,423 (446,653) (1,703,918) (254,850) 48,346 273,196 1,824,951 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(b) 1.97% 3,204,501 1,010,903 (520,064) (1,363,074) (21,628) -- 273,772 2,310,638 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Multi- Sector Fund 1.73% 2,949,052 1,154,882 (484,732) (1,558,236) 59,363 15,349 130,609 2,029,670 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 1.82% 3,144,633 1,130,711 (488,724) (1,556,286) (96,685) 16,800 319,409 2,133,649 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 2.08% 2,800,602 1,388,352 (512,507) (1,103,335) (137,175) 63,649 342,607 2,435,937 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Endeavor Fund 1.89% 5,184,307 1,414,421 (2,968,480) (1,159,828) (260,057) 35,003 260,043 2,210,363 =================================================================================================================================== Total Domestic Equity Funds 25,998,835 9,818,475 (6,507,658) (10,594,696) (646,383) 271,138 17,977,914 =================================================================================================================================== FIXED-INCOME FUNDS-69.33% AIM Core Bond Fund 23.37% 27,455,265 11,212,293 (6,261,549) (4,164,333) (850,361) 2,481,958 3,173,965 27,391,315 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 5.64% 8,280,864 3,834,633 (1,554,443) (3,449,006) (494,172) 598,433 1,236,986 6,617,876 - ----------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 4.54% 5,267,623 1,691,937 (1,649,309) 28,932 64,955 20,842 486,323 5,320,375 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Limited Maturity Treasury Fund 9.58% 10,046,134 3,465,101 (2,625,743) 266,767 73,793 290,432 1,065,090 11,226,052 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 26.20% 29,519,969 11,790,260 (6,738,658) (3,183,796) (672,957) 2,266,261 3,571,490 30,714,818 =================================================================================================================================== Total Fixed- Income Funds 80,569,855 31,994,224 (18,829,702) (10,501,436) (1,878,742) 5,657,926 81,270,436 =================================================================================================================================== FOREIGN EQUITY FUNDS-1.88% AIM International Core Equity Fund 1.88% 2,985,651 1,224,466 (477,556) (1,459,256) (67,545) 98,853 265,115 2,205,760 =================================================================================================================================== REAL ESTATE FUNDS-1.87% AIM Select Real Estate Income Fund 1.87% -- 4,093,593 (439,210) (1,293,725) (172,018) 123,713 396,493 2,188,640 =================================================================================================================================== MONEY MARKET FUNDS-11.70% Liquid Assets Portfolio 11.70% 12,337,623 4,258,937 (2,879,324) -- -- 395,660 13,717,236 13,717,236 =================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $140,861,528) 100.12% $121,891,964 $51,389,695 $(29,133,450) $(23,849,113)(c) $(2,764,688)(c)$6,547,290 $117,359,986 =================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.12)% (137,736) =================================================================================================================================== NET ASSETS 100.00% $117,222,250 ===================================================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 28 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM GROWTH ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.18%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-64.44% AIM Dynamics Fund(b) 4.62% $ 36,048,799 $ 3,415,213 $ (3,991,616) $ (17,402,011) $ 40,625 $ -- 1,386,754 $ 18,111,010 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 7.27% 59,960,276 9,068,422 (6,483,477) (30,510,707) (3,533,790) 763,073 4,266,575 28,500,724 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(b) 10.70% 79,155,178 3,165,976 (12,154,977) (28,265,035) 33,714 -- 4,968,585 41,934,856 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Multi- Sector Fund 11.68% 90,829,497 6,369,710 (12,555,907) (39,218,039) 2,407,575 349,276 2,945,294 45,769,872 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Small Cap Growth Fund(b) 10.43% 72,711,325 6,609,697 (8,502,258) (27,957,545) (36,415) -- 2,332,896 40,872,332 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 9.86% 77,617,766 3,472,598 (8,907,079) (31,969,460) (1,594,437) 306,622 5,781,346 38,619,388 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 9.88% 60,252,728 7,930,996 (7,494,990) (19,909,811) (2,081,023) 1,018,083 5,442,743 38,697,900 ================================================================================================================================== Total Domestic Equity Funds 476,575,569 40,032,612 (60,090,304) (195,232,608) (4,763,751) 2,437,054 252,506,082 ================================================================================================================================== FIXED-INCOME FUNDS-5.96% AIM High Yield Fund 5.96% 36,384,504 4,756,805 (6,167,686) (10,055,644) (1,577,055) 3,173,817 8,104,487 23,340,924 ================================================================================================================================== FOREIGN EQUITY FUNDS-25.33% AIM International Core Equity Fund 12.70% 92,056,511 6,205,853 (10,399,252) (36,915,704) (1,177,945) 2,248,383 5,981,907 49,769,463 - ---------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 12.63% 93,962,662 5,292,049 (11,088,245) (40,049,468) 1,347,184 1,334,579 2,633,875 49,464,182 ================================================================================================================================== Total Foreign Equity Funds 186,019,173 11,497,902 (21,487,497) (76,965,172) 169,239 3,582,962 99,233,645 ================================================================================================================================== REAL ESTATE FUNDS-4.45% AIM Global Real Estate Fund 4.45% -- 37,044,517 (3,406,478) (14,429,980) (1,743,392) 423,966 2,382,611 17,440,711 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.00% 33,168,286 994,950 (37,355,661) 9,841,202 (6,648,777) 131,133 -- -- ================================================================================================================================== Total Real Estate Funds 33,168,286 38,039,467 (40,762,139) (4,588,778) (8,392,169) 555,099 17,440,711 ================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $636,327,415) 100.18% $732,147,532 $94,326,786 $(128,507,626) $(286,842,202) $(14,563,736)(c)$9,748,932 $392,521,362 ================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.18)% (694,005) ================================================================================================================================== NET ASSETS 100.00% $391,827,357 ==================================================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 29 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM MODERATE ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.15%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ----------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-33.78% AIM Capital Development Fund(b) 3.22%$ 37,430,178 $ 1,192,258 $ (7,566,442) $ (13,680,983) $ (1,798,661) $ -- 1,530,093 $ 15,576,350 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 3.61% 36,182,198 5,738,618 (3,473,064) (19,022,725) (1,945,758) 469,107 2,616,657 17,479,269 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(b) 5.82% 52,313,375 1,613,877 (6,738,884) (19,294,432) 283,666 -- 3,338,578 28,177,602 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 3.01% 36,935,154 3,208,301 (6,538,062) (17,628,668) 577,378 16,709 2,496,530 14,554,769 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Multi- Sector Fund 4.07% 38,392,019 2,394,236 (4,307,660) (16,763,247) 845,644 150,492 1,265,903 19,672,129 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 5.36% 51,278,660 2,094,319 (4,851,867) (21,393,841) (1,189,587) 206,463 3,882,887 25,937,684 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 4.91% 36,352,557 5,054,709 (4,094,017) (12,275,685) (1,258,659) 627,260 3,344,431 23,778,905 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 3.78% 35,865,195 1,577,490 (4,965,586) (13,534,749) (421,481) 138,161 2,110,138 18,273,798 =================================================================================================================================== Total Domestic Equity Funds 324,749,336 22,873,808 (42,535,582) (133,594,330) (4,907,458) 1,608,192 163,450,506 =================================================================================================================================== FIXED-INCOME FUNDS-48.49% AIM Core Bond Fund 29.50% 187,013,322 20,101,810 (36,601,549) (23,385,797) (4,403,291) 14,184,224 16,538,180 142,724,495 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 2.91% 23,044,053 2,663,464 (2,760,898) (7,921,023) (928,166) 1,422,463 2,635,034 14,097,430 - ----------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 9.34% 69,195,698 8,438,414 (9,849,111) (19,614,395) (2,974,822) 6,113,950 15,692,980 45,195,784 - ----------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 3.43% 21,538,918 1,009,159 (6,134,975) 158,709 322,569 65,442 1,517,021 16,596,214 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 3.31% 20,021,197 1,952,041 (3,850,768) (1,776,878) (343,306) 1,308,209 1,860,731 16,002,286 =================================================================================================================================== Total Fixed- Income Funds 320,813,188 34,164,888 (59,197,301) (52,539,384) (8,327,016) 23,094,288 234,616,209 =================================================================================================================================== FOREIGN EQUITY FUNDS-15.43% AIM International Core Equity Fund 8.84% 77,836,457 5,431,109 (7,632,094) (31,822,244) (1,034,746) 1,937,504 5,141,645 42,778,482 - ----------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 6.59% 59,608,366 3,081,822 (5,805,133) (25,505,266) 509,115 862,598 1,698,025 31,888,904 =================================================================================================================================== Total Foreign Equity Funds 137,444,823 8,512,931 (13,437,227) (57,327,510) (525,631) 2,800,102 74,667,386 =================================================================================================================================== REAL ESTATE FUNDS-2.45% AIM Real Estate Fund 2.45% -- 23,774,973 (2,070,519) (8,901,768) (858,176) 375,030 841,737 11,868,490 =================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $699,210,775) 100.15%$783,007,347 $89,326,600 $(117,240,629) $(252,362,992)(c)$(14,618,281)(c)$27,877,612 $484,602,591 =================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.15)% (749,676) =================================================================================================================================== NET ASSETS 100.00% $483,852,915 ===================================================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 30 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM MODERATE GROWTH ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.12%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ---------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-50.57% AIM Dynamics Fund(b) 3.93% $ 24,752,482 $ 1,745,425 $ (3,664,425) $ (10,904,753) $ (547,301) $ -- 871,472 $ 11,381,428 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 5.50% 32,954,012 6,341,438 (3,693,095) (16,341,085) (3,324,423) 425,853 2,385,338 15,936,847 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(b) 8.34% 44,779,891 3,014,309 (6,863,286) (15,704,896) (1,075,789) -- 2,861,756 24,150,229 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 4.09% 24,025,178 5,950,684 (2,740,969) (13,053,673) (725,061) 13,530 2,030,393 11,837,192 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Multi- Sector Fund 6.62% 37,407,786 3,793,980 (5,201,145) (15,571,880) (386,344) 146,094 1,234,203 19,179,508 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Small Cap Equity Fund 6.95% 36,656,856 2,863,820 (8,762,020) (7,950,967) (2,483,971) 81,165 2,477,571 20,117,872 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 7.68% 43,933,750 3,374,159 (5,118,141) (18,336,739) (1,605,700) 176,331 3,330,438 22,247,329 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 7.46% 33,121,041 5,699,902 (4,533,089) (11,028,412) (1,646,666) 567,640 3,039,772 21,612,776 ================================================================================================================================== Total Domestic Equity Funds 277,630,996 32,783,717 (40,576,170) (108,892,405) (11,795,255) 1,410,613 146,463,181 ================================================================================================================================== FIXED-INCOME FUNDS-25.12% AIM Core Bond Fund 13.88% 52,719,527 7,756,607 (12,023,706) (6,683,109) (1,574,326) 4,100,448 4,657,589 40,194,993 - ---------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 11.24% 49,939,002 8,167,715 (8,594,229) (14,090,410) (2,847,638) 4,511,546 11,310,570 32,574,440 ================================================================================================================================== Total Fixed- Income Funds 102,658,529 15,924,322 (20,617,935) (20,773,519) (4,421,964) 8,611,994 72,769,433 ================================================================================================================================== FOREIGN EQUITY FUNDS-21.06% AIM International Core Equity Fund 10.56% 55,588,814 5,649,751 (6,367,043) (21,990,378) (2,286,505) 1,379,690 3,677,240 30,594,639 - ---------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 10.50% 56,719,771 4,855,250 (6,515,783) (23,536,068) (1,116,093) 818,975 1,619,120 30,407,077 ================================================================================================================================== Total Foreign Equity Funds 112,308,585 10,505,001 (12,882,826) (45,526,446) (3,402,598) 2,198,665 61,001,716 ================================================================================================================================== REAL ESTATE FUNDS-3.37% AIM Global Real Estate Fund 3.37% -- 21,248,753 (2,098,959) (8,006,234) (1,377,376) 242,874 1,332,351 9,752,812 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.00% 11,384,984 546,699 (13,057,681) 4,017,250 (2,891,252) 45,943 -- -- ================================================================================================================================== Total Real Estate Funds 11,384,984 21,795,452 (15,156,640) (3,988,984) (4,268,628) 288,817 9,752,812 ================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $462,252,509) 100.12% $503,983,094 $81,008,492 $(89,233,571) $(179,181,354) $(23,888,445)(c)$12,510,089 $289,987,142 ================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.12)% (334,416) ================================================================================================================================== NET ASSETS 100.00% $289,652,726 ==================================================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 31 AIM ALLOCATION FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM MODERATELY CONSERVATIVE ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.15%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - --------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-23.02% AIM Capital Development Fund(b) 1.81% 2,602,249 $ 871,984 $ (507,352) (1,144,861) (327,981) -- 146,762 1,494,039 - --------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Basic Value Fund 3.69% 5,668,195 2,166,957 (1,056,679) (2,832,274) (902,454) 80,291 455,650 3,043,745 - --------------------------------------------------------------------------------------------------------------------------------- AIM Large Cap Growth Fund(b) 4.70% 6,527,069 1,307,802 (1,282,215) (2,452,924) (228,491) -- 458,678 3,871,241 - --------------------------------------------------------------------------------------------------------------------------------- AIM Mid Cap Basic Value Fund 1.70% 5,139,067 1,005,804 (2,718,202) (1,252,889) (579,762) 1,586 240,875 1,404,304 - --------------------------------------------------------------------------------------------------------------------------------- AIM Multi- Sector Fund 1.83% 2,667,466 697,835 (526,483) (1,157,055) (104,395) 11,369 97,183 1,510,217 - --------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 4.34% 6,403,960 1,543,112 (1,185,499) (2,816,439) (372,500) 27,999 534,825 3,572,634 - --------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 4.95% 5,697,645 2,057,525 (1,280,268) (1,936,744) (457,436) 106,110 573,941 4,080,722 ================================================================================================================================= Total Domestic Equity Funds 34,705,651 9,651,019 (8,556,698) (13,593,186) (2,973,019) 227,355 18,976,902 ================================================================================================================================= FIXED-INCOME FUNDS-69.19% AIM Core Bond Fund 25.49% 25,373,162 7,303,554 (7,201,109) (3,331,927) (1,128,264) 2,144,334 2,435,158 21,015,416 - --------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 4.31% 5,344,069 1,774,729 (1,255,315) (1,825,467) (486,638) 361,233 663,809 3,551,378 - --------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 3.69% 4,280,082 1,343,988 (966,241) (1,245,278) (367,125) 415,486 1,057,440 3,045,426 - --------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 4.23% 4,166,486 880,476 (1,526,406) 12,901 22,334 13,606 319,147 3,491,465 - --------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 13.99% 13,335,671 3,712,623 (3,864,453) (1,227,795) (423,840) 961,041 1,340,954 11,532,206 - --------------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 17.48% 14,927,695 3,773,292 (5,150,888) 840,349 20,035 792,409 1,571,481 14,410,483 ================================================================================================================================= Total Fixed- Income Funds 67,427,165 18,788,662 (19,964,412) (6,777,217) (2,363,498) 4,688,109 57,046,374 ================================================================================================================================= FOREIGN EQUITY FUNDS-5.96% AIM International Core Equity Fund 3.98% 5,398,355 1,517,863 (1,026,669) (2,160,597) (445,883) 146,448 394,600 3,283,069 - --------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 1.98% 2,752,161 714,755 (514,261) (1,187,946) (133,711) 43,451 86,848 1,630,998 ================================================================================================================================= Total Foreign Equity Funds 8,150,516 2,232,618 (1,540,930) (3,348,543) (579,594) 189,899 4,914,067 ================================================================================================================================= REAL ESTATE FUNDS-1.98% AIM Select Real Estate Income Fund 1.98% -- 3,366,631 (496,796) (987,930) (252,563) 103,320 295,171 1,629,342 ================================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $107,687,471) 100.15% $110,283,332 $34,038,930 $(30,558,836) $(24,706,876)(c) $(6,168,674)(c)$5,208,683 $82,566,685 ================================================================================================================================= OTHER ASSETS LESS LIABILITIES (0.15)% (125,066) ================================================================================================================================= NET ASSETS 100.00% $82,441,619 =================================================================================================================================
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) Non-income producing security. A security is determined to be non-income producing if the security has not declared a distribution in more than one year from the report date. (c) Includes $83,763, $298,166, and $64,326 of return of capital from AIM International Total Return Fund held by the AIM Conservative Allocation Fund, AIM Moderate Allocation Fund, and AIM Moderately Conservative Allocation Fund, respectively. Includes $90,659, $4,039,391, $3,211,289, $2,701,074, and $256,865 of capital gains from affiliated underlying funds from AIM Conservative Allocation Fund, AIM Growth Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth Allocation Fund, and AIM Moderately Conservative Allocation Fund, respectively. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 32 AIM ALLOCATION FUNDS STATEMENT OF ASSETS AND LIABILITIES December 31, 2008
AIM AIM AIM AIM AIM MODERATE MODERATELY CONSERVATIVE GROWTH MODERATE GROWTH CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- ASSETS: Investments in affiliated underlying funds, at value $117,359,986 $ 392,521,362 $ 484,602,591 $ 289,987,142 $ 82,566,685 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Receivables for: Investments sold -- affiliated underlying funds -- 432,827 1,458,132 -- -- - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Fund shares sold 281,755 619,098 500,332 469,704 258,655 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Dividends from affiliated funds 21,979 -- -- -- -- - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Fund expenses absorbed 4,552 29,613 11,511 -- 9,978 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Investment for trustee deferred compensation and retirement plans 8,058 9,864 10,517 7,125 6,129 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Other assets 20,901 24,425 26,215 21,230 18,852 ======================================== =============== =============== =============== =============== =============== Total assets 117,697,231 393,637,189 486,609,298 290,485,201 82,860,299 ======================================== =============== =============== =============== =============== =============== LIABILITIES: Payables for: Investments purchased -- affiliated underlying funds 99,691 -- -- 162,080 153,816 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Fund shares reacquired 249,352 1,422,014 2,311,936 361,551 164,394 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Accrued fees to affiliates 78,881 303,405 341,517 229,606 52,221 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Accrued operating expenses 33,912 50,170 61,316 58,730 39,414 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Trustee deferred compensation and retirement plans 13,145 34,243 41,614 20,508 8,835 ======================================== =============== =============== =============== =============== =============== Total liabilities 474,981 1,809,832 2,756,383 832,475 418,680 ======================================== =============== =============== =============== =============== =============== Net assets applicable to shares outstanding $117,222,250 $ 391,827,357 $ 483,852,915 $ 289,652,726 $ 82,441,619 ======================================== =============== =============== =============== =============== =============== NET ASSETS CONSIST OF: Shares of beneficial interest $143,525,070 $ 644,682,973 $ 704,429,321 $ 475,941,170 $112,510,071 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Undistributed net investment income 569,399 5,533,849 8,918,198 9,975,694 1,375,313 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Undistributed net realized gain (loss) (3,370,677) (14,583,412) (14,886,420) (23,998,771) (6,322,979) - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Unrealized appreciation (depreciation) (23,501,542) (243,806,053) (214,608,184) (172,265,367) (25,120,786) ======================================== =============== =============== =============== =============== =============== $117,222,250 $ 391,827,357 $ 483,852,915 $ 289,652,726 $ 82,441,619 ======================================== =============== =============== =============== =============== ===============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 33 AIM ALLOCATION FUNDS STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED) December 31, 2008
AIM AIM AIM AIM AIM MODERATE MODERATELY CONSERVATIVE GROWTH MODERATE GROWTH CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- NET ASSETS: Class A $ 71,799,239 $ 258,135,555 $ 294,667,919 $ 199,591,053 $ 58,818,930 ======================================== =============== =============== =============== =============== =============== Class B $ 17,976,757 $ 65,395,138 $ 85,928,317 $ 40,380,125 $ 8,897,106 ======================================== =============== =============== =============== =============== =============== Class C $ 22,624,423 $ 59,189,636 $ 88,392,336 $ 44,256,496 $ 13,117,626 ======================================== =============== =============== =============== =============== =============== Class R $ 4,246,272 $ 8,385,813 $ 14,176,435 $ 4,911,755 $ 1,551,960 ======================================== =============== =============== =============== =============== =============== Class Y $ 556,088 $ 658,287 $ 679,617 $ 502,877 $ 31,187 ======================================== =============== =============== =============== =============== =============== Institutional Class $ 19,471 $ 62,928 $ 8,291 $ 10,420 $ 24,810 ======================================== =============== =============== =============== =============== =============== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 8,429,550 33,250,115 37,441,870 25,458,416 7,041,060 ======================================== =============== =============== =============== =============== =============== Class B 2,123,071 8,560,978 10,947,177 5,227,333 1,070,352 ======================================== =============== =============== =============== =============== =============== Class C 2,673,487 7,748,997 11,264,637 5,733,964 1,574,396 ======================================== =============== =============== =============== =============== =============== Class R 499,843 1,085,390 1,802,318 630,590 186,021 ======================================== =============== =============== =============== =============== =============== Class Y 65,291 84,727 86,396 64,102 3,737 ======================================== =============== =============== =============== =============== =============== Institutional Class 2,304 8,048 1,051 1,323 2,962 ======================================== =============== =============== =============== =============== =============== Class A: Net asset value per share $ 8.52 $ 7.76 $ 7.87 $ 7.84 $ 8.35 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Maximum offering price per share (Net asset value divided by 94.50%) $ 9.02 $ 8.21 $ 8.33 $ 8.30 $ 8.84 ======================================== =============== =============== =============== =============== =============== Class B: Net asset value and offering price per share $ 8.47 $ 7.64 $ 7.85 $ 7.72 $ 8.31 ======================================== =============== =============== =============== =============== =============== Class C: Net asset value and offering price per share $ 8.46 $ 7.64 $ 7.85 $ 7.72 $ 8.33 ======================================== =============== =============== =============== =============== =============== Class R: Net asset value and offering price per share $ 8.50 $ 7.73 $ 7.87 $ 7.79 $ 8.34 ======================================== =============== =============== =============== =============== =============== Class Y: Net asset value and offering price per share $ 8.52 $ 7.77 $ 7.87 $ 7.84 $ 8.35 ======================================== =============== =============== =============== =============== =============== Institutional Class: Net asset value and offering price per share $ 8.45 $ 7.82 $ 7.89 $ 7.88 $ 8.38 ======================================== =============== =============== =============== =============== =============== Cost of Investments in affiliated underlying funds $140,861,528 $ 636,327,415 $ 699,210,775 $ 462,252,509 $107,687,471 ======================================== =============== =============== =============== =============== ===============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 34 AIM ALLOCATION FUNDS STATEMENT OF OPERATIONS For the year ended December 31, 2008
AIM AIM AIM AIM AIM MODERATE MODERATELY CONSERVATIVE GROWTH MODERATE GROWTH CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- INVESTMENT INCOME: Dividends from affiliated underlying funds $ 6,547,290 $ 9,748,932 $ 27,877,612 $ 12,510,089 $ 5,208,683 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Other Income 299 355 382 242 212 ======================================== =============== =============== =============== =============== =============== Total investment income 6,547,589 9,749,287 27,877,994 12,510,331 5,208,895 ======================================== =============== =============== =============== =============== =============== EXPENSES: Administrative services fees 50,000 180,216 197,483 142,373 50,000 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Custodian fees 11,344 13,526 12,883 12,502 12,536 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Distribution fees: Class A 203,050 1,005,912 1,018,350 775,948 200,235 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Class B 200,322 1,006,834 1,263,981 582,068 108,296 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Class C 238,718 847,445 1,209,522 603,260 151,563 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Class R 24,008 56,323 97,569 28,679 7,064 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Transfer agent fees -- A, B, C, R and Y 244,295 1,628,375 1,329,566 963,618 200,318 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Transfer agent fees -- Institutional 32 37 10 10 20 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Trustees' and officers' fees and benefits 19,384 32,944 34,826 28,057 18,586 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Registration and filing fees 65,512 103,489 97,795 92,446 61,035 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Professional services fees 33,548 36,471 39,888 44,606 45,119 - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Other 24,081 104,806 123,322 83,343 26,894 ======================================== =============== =============== =============== =============== =============== Total expenses 1,114,294 5,016,378 5,425,195 3,356,910 881,666 ======================================== =============== =============== =============== =============== =============== Less: Expenses reimbursed and expense offset arrangement(s) (148,965) (834,497) (1,021,036) (842,574) (263,383) ======================================== =============== =============== =============== =============== =============== Net expenses 965,329 4,181,881 4,404,159 2,514,336 618,283 ======================================== =============== =============== =============== =============== =============== Net investment income 5,582,260 5,567,406 23,473,835 9,995,995 4,590,612 ======================================== =============== =============== =============== =============== =============== REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) on sales of affiliated underlying fund shares (2,855,347) (18,603,127) (17,829,570) (26,589,519) (6,425,539) - ---------------------------------------- --------------- --------------- --------------- --------------- --------------- Net realized gain from distributions of affiliated underlying fund shares 90,659 4,039,391 3,211,289 2,701,074 256,865 ======================================== =============== =============== =============== =============== =============== Net realized gain (loss) from affiliated underlying fund shares (2,764,688) (14,563,736) (14,618,281) (23,888,445) (6,168,674) ======================================== =============== =============== =============== =============== =============== Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (23,849,113) (286,842,202) (252,362,992) (179,181,354) (24,706,876) ======================================== =============== =============== =============== =============== =============== Net increase (decrease) in net assets resulting from operations $(21,031,541) $(295,838,532) $(243,507,438) $(193,073,804) $(26,284,938) ======================================== =============== =============== =============== =============== ===============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 35 AIM ALLOCATION FUNDS STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
AIM CONSERVATIVE AIM GROWTH AIM MODERATE ALLOCATION FUND ALLOCATION FUND ALLOCATION FUND -------------------------- --------------------------- --------------------------- 2008 2007 2008 2007 2008 2007 - ------------------------------------------ -------------------------- --------------------------- --------------------------- OPERATIONS: Net investment income $ 5,582,260 $ 4,305,191 $ 5,567,406 $ 8,278,242 $ 23,473,835 $ 20,924,325 - ------------------------------------------ -------------------------- --------------------------- --------------------------- Net realized gain (loss) (2,764,688) 2,475,293 (14,563,736) 40,911,886 (14,618,281) 30,072,705 - ------------------------------------------ -------------------------- --------------------------- --------------------------- Change in net unrealized appreciation (depreciation) (23,849,113) (2,407,642) (286,842,202) (7,628,788) (252,362,992) (7,128,970) ========================================== ========================== =========================== =========================== Net increase (decrease) in net assets resulting from operations (21,031,541) 4,372,842 (295,838,532) 41,561,340 (243,507,438) 43,868,060 ========================================== ========================== =========================== =========================== Distributions to shareholders from net investment income: Class A (3,306,228) (2,712,663) (190,683) (6,440,810) (10,470,164) (13,255,061) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class B (707,571) (590,695) (48,684) (843,218) (2,217,308) (3,392,062) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class C (878,144) (657,014) (44,880) (661,995) (2,240,551) (3,058,087) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class R (188,657) (172,904) (6,274) (135,859) (489,255) (498,244) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class Y (26,033) -- (484) -- (22,386) -- - ------------------------------------------ -------------------------- --------------------------- --------------------------- Institutional Class (958) (86,011) (46) (1,602) (323) (370) ========================================== ========================== =========================== =========================== Total distributions from net investment income (5,107,591) (4,219,287) (291,051) (8,083,484) (15,439,987) (20,203,824) ========================================== ========================== =========================== =========================== Distributions to shareholders from net realized gains: Class A (666,483) (1,314,422) (20,518,639) (12,291,555) (11,409,560) (13,145,250) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class B (172,478) (355,623) (5,342,664) (3,355,676) (3,448,116) (4,478,775) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class C (214,057) (395,549) (4,831,909) (2,634,702) (3,484,016) (4,039,483) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class R (40,365) (89,604) (678,997) (313,880) (591,937) (538,830) - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class Y (5,173) -- (52,399) -- (23,829) -- - ------------------------------------------ -------------------------- --------------------------- --------------------------- Institutional Class (182) (39,182) (4,968) (2,445) (320) (338) ========================================== ========================== =========================== =========================== Total distributions from net realized gains (1,098,738) (2,194,380) (31,429,576) (18,598,258) (18,957,778) (22,202,676) ========================================== ========================== =========================== =========================== Share transactions-net: Class A 14,089,841 31,577,778 (10,070,017) 231,711,523 (3,072,749) 154,849,580 - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class B 2,245,697 (538,937) (9,052,646) 15,605,194 (18,169,433) 6,941,328 - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class C 5,344,849 4,200,015 3,338,948 25,047,092 (3,123,262) 25,819,939 - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class R 397,908 715,287 2,600,734 2,318,456 3,051,783 3,996,397 - ------------------------------------------ -------------------------- --------------------------- --------------------------- Class Y 622,122 -- 879,053 -- 825,922 -- - ------------------------------------------ -------------------------- --------------------------- --------------------------- Institutional Class 11,977 23,801 10,283 (63,487) 643 (153,923) ========================================== ========================== =========================== =========================== Net increase (decrease) in net assets resulting from share transactions 22,712,394 35,977,944 (12,293,645) 274,618,778 (20,487,096) 191,453,321 ========================================== ========================== =========================== =========================== Net increase (decrease) in net assets (4,525,476) 33,937,119 (339,852,804) 289,498,376 (298,392,299) 192,914,881 ========================================== ========================== =========================== =========================== NET ASSETS: Beginning of year 121,747,726 87,810,607 731,680,161 442,181,785 782,245,214 589,330,333 ========================================== ========================== =========================== =========================== End of year* $117,222,250 $121,747,726 $ 391,827,357 $731,680,161 $ 483,852,915 $782,245,214 ========================================== ========================== =========================== =========================== * Includes accumulated undistributed net investment income $ 569,399 $ 96,522 $ 5,533,849 $ 262,168 $ 8,918,198 $ 898,882 ========================================== ========================== =========================== ===========================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 36 AIM ALLOCATION FUNDS STATEMENT OF CHANGES IN NET ASSETS--(CONTINUED) For the years ended December 31, 2008 and 2007
AIM MODERATE GROWTH AIM MODERATELY CONSERVATIVE ALLOCATION FUND ALLOCATION FUND ----------------------------- ---------------------------- 2008 2007 2008 2007 - ---------------------------------------------------------- ----------------------------- ---------------------------- OPERATIONS: Net investment income $ 9,995,995 $ 9,693,154 $ 4,590,612 $ 3,384,756 - ---------------------------------------------------------- ----------------------------- ---------------------------- Net realized gain (loss) (23,888,445) 19,046,465 (6,168,674) 2,168,935 - ---------------------------------------------------------- ----------------------------- ---------------------------- Change in net unrealized appreciation (depreciation) (179,181,354) (5,170,731) (24,706,876) (1,357,132) ========================================================== ============================= ============================ Net increase (decrease) in net assets resulting from operations (193,073,804) 23,568,888 (26,284,938) 4,196,559 ========================================================== ============================= ============================ Distributions to shareholders from net investment income: Class A (206,733) (7,353,632) (2,625,592) (2,458,720) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class B (42,891) (1,018,349) (325,141) (264,969) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class C (46,256) (989,996) (476,570) (342,643) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class R (5,044) (102,750) (63,577) (34,184) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class Y (485) -- (1,425) -- - ---------------------------------------------------------- ----------------------------- ---------------------------- Institutional Class (11) (267) (1,189) (988) ========================================================== ============================= ============================ Total distributions from net investment income (301,420) (9,464,994) (3,493,494) (3,101,504) ========================================================== ============================= ============================ Distributions to shareholders from net realized gains: Class A (10,994,188) (6,151,082) (714,330) (1,299,940) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class B (2,285,543) (1,241,039) (109,734) (177,767) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class C (2,454,402) (1,206,490) (160,839) (229,877) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class R (268,559) (95,968) (18,482) (19,475) - ---------------------------------------------------------- ----------------------------- ---------------------------- Class Y (25,805) -- (381) -- - ---------------------------------------------------------- ----------------------------- ---------------------------- Institutional Class (571) (201) (301) (491) ========================================================== ============================= ============================ Total distributions from net realized gains (16,029,068) (8,694,780) (1,004,067) (1,727,550) ========================================================== ============================= ============================ Share transactions-net: Class A (9,526,613) 225,281,895 (1,354,672) 62,115,787 - ---------------------------------------------------------- ----------------------------- ---------------------------- Class B (2,307,430) 16,875,875 777,786 3,203,250 - ---------------------------------------------------------- ----------------------------- ---------------------------- Class C 4,091,924 26,129,286 3,040,666 5,600,512 - ---------------------------------------------------------- ----------------------------- ---------------------------- Class R 2,300,765 3,114,974 584,472 865,609 - ---------------------------------------------------------- ----------------------------- ---------------------------- Class Y 615,333 -- 35,678 -- - ---------------------------------------------------------- ----------------------------- ---------------------------- Institutional Class 3,582 (58,532) 1,490 (28,540) ========================================================== ============================= ============================ Net increase (decrease) in net assets resulting from share transactions (4,822,439) 271,343,498 3,085,420 71,756,618 ========================================================== ============================= ============================ Net increase (decrease) in net assets (214,226,731) 276,752,612 (27,697,079) 71,124,123 ========================================================== ============================= ============================ NET ASSETS: Beginning of year 503,879,457 227,126,845 110,138,698 39,014,575 ========================================================== ============================= ============================ End of year* $ 289,652,726 $503,879,457 $ 82,441,619 $110,138,698 ========================================================== ============================= ============================ * Includes accumulated undistributed net investment income $ 9,975,694 $ 283,708 $ 1,375,313 $ 279,361 ========================================================== ============================= ============================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 37 AIM ALLOCATION FUNDS NOTES TO FINANCIAL STATEMENTS December 31, 2008 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"). The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The investment objectives: 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 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 target weightings in the underlying funds without shareholder approval. The underlying funds may engage in a number of investment techniques and practices, which involve certain risks. Each underlying fund's accounting policies are outlined in the underlying fund's financial statements and are available upon request. Each Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. The following is a summary of the significant accounting policies followed by the Funds in the preparation of their financial statements. 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. 38 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. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from 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 Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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, 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, Invesco Aim 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, Class R, Class Y and Institutional Class shares for each Fund as shown in the following table under Expense Limit. The Funds operating expenses are limited to the Expense Limit plus the 12b-1 Fee.
ESTIMATED 12B-1 FEES ACQUIRED FUND ------------------------------------------- FEES AND EXPENSES EXPENSE LIMIT CLASS A CLASS B CLASS C CLASS R FROM UNDERLYING FUND - -------------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund 0.23% 0.25% 1.00% 1.00% 0.50% 0.60% - -------------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 0.21% 0.25% 1.00% 1.00% 0.50% 0.80% - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 0.12% 0.25% 1.00% 1.00% 0.50% 0.75% - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 0.12% 0.25% 1.00% 1.00% 0.50% 0.77% - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 0.14% 0.25% 1.00% 1.00% 0.50% 0.69% - --------------------------------------------------------------------------------------------------------------------------------
39 AIM ALLOCATION FUNDS 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) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement with Invesco Ltd. ("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. These 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 year ended December 31, 2008, the Advisor reimbursed the following expenses:
FUND LEVEL CLASS A CLASS B CLASS C CLASS R CLASS Y INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ -- $ 90,572 $ 22,339 $ 26,620 $ 5,355 $151 $ 9 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund -- 540,575 135,267 113,854 15,134 410 -- - ---------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund -- 601,846 186,753 178,707 28,832 339 4 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 24,268 573,432 107,538 111,454 10,597 340 6 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 62,868 147,753 19,978 27,959 2,606 15 20 - ----------------------------------------------------------------------------------------------------------------------------------
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 year ended December 31, 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 year ended December 31, 2008, Invesco reimbursed expenses of: AIM Conservative Allocation Fund $ 301 - --------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 2,372 - --------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 1,959 - --------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 1,205 - --------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 177 - ---------------------------------------------------------------------------------------------
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 year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of each Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Class A, Class 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 cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of each Fund. For the year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. 40 AIM ALLOCATION FUNDS Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Funds. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Funds. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 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 CONTINGENT DEFERRED SALES CHARGES CHARGES -------------------------------------------- CLASS A CLASS A CLASS B CLASS C CLASS R - ---------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 45,867 $ 227 $ 77,038 $ 6,337 $-- - ---------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 260,198 623 221,787 17,641 -- - ---------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 220,361 2,227 256,831 17,206 -- - ---------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 187,171 2,076 92,454 10,202 -- - ---------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 34,985 817 26,696 2,953 -- - ----------------------------------------------------------------------------------------------------------------------
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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect 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 valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN SECURITIES INPUT LEVEL ----------------------------------------------------- FUND NAME LEVEL 1 LEVEL 2 LEVEL 3 TOTAL - ------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $117,359,986 $-- $-- $117,359,986 - ------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 392,521,362 -- -- 392,521,362 - ------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 484,602,591 -- -- 484,602,591 - ------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 289,987,142 -- -- 289,987,142 - ------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 82,566,685 -- -- 82,566,685 - -------------------------------------------------------------------------------------------------------------
NOTE 4--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended December 31, 2008, the Funds received credits from these arrangements, which resulted in the reduction of the Funds' total expenses of:
TRANSFER AGENT CREDITS CUSTODIAN CREDITS - ------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 3,420 $198 - ------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 26,588 297 - ------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 22,428 168 - ------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 13,575 159 - ------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 2,007 -- - -------------------------------------------------------------------------------------------------------------
41 AIM ALLOCATION FUNDS NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by each Fund to pay remuneration to certain Trustees and Officers of such Fund. Trustees have the option to defer compensation payable by the Funds, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by each Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 Officers' Fees and Benefits" include amounts accrued by each Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Funds. During the year ended December 31, 2008, the Funds in aggregate paid legal fees of $20,616 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 Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco Aim, not to exceed the contractually agreed upon rate. NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 ---------------------------------------------- ---------------------------------------------- ORDINARY LONG-TERM TOTAL ORDINARY LONG-TERM TOTAL INCOME CAPITAL GAIN DISTRIBUTIONS INCOME CAPITAL GAIN DISTRIBUTIONS - ----------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 5,130,231 $ 1,076,098 $ 6,206,329 $ 4,324,110 $ 2,089,557 $ 6,413,667 - ----------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 352,719 31,367,908 31,720,627 8,582,898 18,098,844 26,681,742 - ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 15,507,463 18,890,302 34,397,765 20,515,342 21,891,158 42,406,500 - ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 305,520 16,024,968 16,330,488 9,509,150 8,650,624 18,159,774 - ----------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 3,499,596 997,965 4,497,561 3,145,370 1,683,684 4,829,054 =============================================================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
NET UNREALIZED UNDISTRIBUTED APPRECIATION TEMPORARY SHARES OF ORDINARY (DEPRECIATION) BOOK/TAX CAPITAL LOSS BENEFICIAL TOTAL INCOME -- INVESTMENTS DIFFERENCES CARRYFORWARD INTEREST NET ASSETS - -------------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 586,212 $ (26,477,129) $(16,811) $ (395,092) $143,525,070 $117,222,250 - -------------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 5,572,583 (248,507,613) (38,733) (9,881,853) 644,682,973 391,827,357 - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 8,964,600 (222,240,650) (46,402) (7,253,954) 704,429,321 483,852,915 - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 9,999,445 (177,684,302) (23,752) (18,579,835) 475,941,170 289,652,726 - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 1,386,938 (27,030,509) (11,625) (4,413,256) 112,510,071 82,441,619 ================================================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Funds net unrealized appreciation (depreciation) differences are attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Funds temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Funds to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. The Funds have a capital loss carryforward as of December 31, 2008 which expires as follows:
2016 - ----------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 395,092 - ----------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 9,881,853 - ----------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 7,253,954 - ----------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 18,579,835 - ----------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 4,413,256 ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. 42 AIM ALLOCATION FUNDS NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities purchased and sold by each Fund and aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes are as follows:
AT DECEMBER 31, 2008 FOR THE YEAR ENDED ------------------------------------------------------------------- DECEMBER 31, 2008* NET UNREALIZED ---------------------------- FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION PURCHASES SALES COST** APPRECIATION (DEPRECIATION) (DEPRECIATION) - -------------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $47,130,758 $ 26,254,126 $143,837,115 $ 646,878 $ (27,124,007) $ (26,477,129) - -------------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 94,326,786 128,507,626 641,028,975 -- (248,507,613) (248,507,613) - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 89,326,600 117,240,629 706,843,241 982,153 (223,222,803) (222,240,650) - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 81,008,492 89,233,571 467,671,444 -- (177,684,302) (177,684,302) - -------------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 34,038,930 30,558,836 109,597,194 1,088,316 (28,118,825) (27,030,509) ================================================================================================================================
* Excludes U.S. Treasury obligations and money market funds, if any. ** Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed Federal income tax reporting period end. NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of distributions, on December 31, 2008. These reclassifications had no effect on the net assets of each Fund.
UNDISTRIBUTED NET UNDISTRIBUTED NET INVESTMENT INCOME REALIZED GAIN (LOSS) - ------------------------------------------------------------------------------------------------------------ AIM Conservative Allocation Fund $ (1,792) $ 1,792 - ------------------------------------------------------------------------------------------------------------ AIM Growth Allocation Fund (4,674) 4,674 - ------------------------------------------------------------------------------------------------------------ AIM Moderate Allocation Fund (14,532) 14,532 - ------------------------------------------------------------------------------------------------------------ AIM Moderate Growth Allocation Fund (2,589) 2,589 - ------------------------------------------------------------------------------------------------------------ AIM Moderately Conservative Allocation Fund (1,166) 1,166 ============================================================================================================
43 AIM ALLOCATION FUNDS NOTE 10--SHARE INFORMATION AIM CONSERVATIVE ALLOCATION FUND
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED YEAR ENDED DECEMBER 31, 2008(a) DECEMBER 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 4,991,592 $ 49,826,652 4,701,629 $ 51,516,142 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,369,578 13,504,108 627,681 6,793,367 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,454,950 14,322,489 954,471 10,394,277 - ------------------------------------------------------------------------------------------------------------------------ Class R 229,783 2,252,277 198,445 2,171,739 - ------------------------------------------------------------------------------------------------------------------------ Class Y(b) 64,158 613,808 -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class 5,992 60,402 228,461 2,562,014 ======================================================================================================================== Issued as reinvestment of dividends: Class A 430,685 3,665,126 363,910 3,817,452 - ------------------------------------------------------------------------------------------------------------------------ Class B 91,972 778,081 81,356 848,548 - ------------------------------------------------------------------------------------------------------------------------ Class C 112,119 948,527 94,324 983,757 - ------------------------------------------------------------------------------------------------------------------------ Class R 26,500 224,986 24,992 261,416 - ------------------------------------------------------------------------------------------------------------------------ Class Y 3,667 31,207 -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class 135 1,141 11,912 125,192 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 331,364 3,323,349 221,709 2,402,405 - ------------------------------------------------------------------------------------------------------------------------ Class B (334,374) (3,323,349) (223,433) (2,402,405) ======================================================================================================================== Reacquired: Class A(b) (4,413,007) (42,725,286) (2,388,778) (26,158,221) - ------------------------------------------------------------------------------------------------------------------------ Class B (892,212) (8,713,143) (532,433) (5,778,447) - ------------------------------------------------------------------------------------------------------------------------ Class C (1,024,144) (9,926,167) (660,678) (7,178,019) - ------------------------------------------------------------------------------------------------------------------------ Class R (215,683) (2,079,355) (158,109) (1,717,868) - ------------------------------------------------------------------------------------------------------------------------ Class Y (2,534) (22,893) -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class (4,864) (49,566) (250,216) (2,663,405) ======================================================================================================================== Net increase in share activity 2,225,677 $ 22,712,394 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 and it 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 these entities are also owned beneficially. In addition, 13% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control of Invesco Aim. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT -------------------------------------------------------------------------------------------------- Class Y 62,817 $ 601,158 -------------------------------------------------------------------------------------------------- Class A (62,817) (601,158) ==================================================================================================
44 AIM ALLOCATION FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM GROWTH ALLOCATION FUND
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, 2008(a) DECEMBER 31, 2007 ----------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------- Sold: Class A 6,747,838 $ 78,853,451 19,142,362 $274,937,740 - ------------------------------------------------------------------------------------------------------------------------- Class B 1,687,238 19,612,742 2,821,441 40,448,466 - ------------------------------------------------------------------------------------------------------------------------- Class C 1,992,477 22,610,442 2,657,398 38,199,447 - ------------------------------------------------------------------------------------------------------------------------- Class R 488,235 5,629,604 456,877 6,636,932 - ------------------------------------------------------------------------------------------------------------------------- Class Y(b) 93,994 959,708 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 615 5,269 8,665 126,671 ========================================================================================================================= Issued as reinvestment of dividends: Class A 2,584,206 20,029,009 1,317,636 18,367,626 - ------------------------------------------------------------------------------------------------------------------------- Class B 680,204 5,181,503 294,407 4,074,532 - ------------------------------------------------------------------------------------------------------------------------- Class C 591,588 4,508,431 233,564 3,229,384 - ------------------------------------------------------------------------------------------------------------------------- Class R 88,753 684,291 32,329 449,688 - ------------------------------------------------------------------------------------------------------------------------- Class Y 6,788 52,607 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 643 5,014 289 4,047 ========================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 1,120,345 13,024,906 714,866 10,425,005 - ------------------------------------------------------------------------------------------------------------------------- Class B (1,133,621) (13,024,906) (722,234) (10,425,005) ========================================================================================================================= Reacquired: Class A(b) (11,468,155) (121,977,383) (4,872,891) (72,018,848) - ------------------------------------------------------------------------------------------------------------------------- Class B (1,860,469) (20,821,985) (1,284,388) (18,492,799) - ------------------------------------------------------------------------------------------------------------------------- Class C (2,136,670) (23,779,925) (1,135,346) (16,381,739) - ------------------------------------------------------------------------------------------------------------------------- Class R (354,257) (3,713,161) (328,318) (4,768,164) - ------------------------------------------------------------------------------------------------------------------------- Class Y (16,055) (133,262) -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (12,816) (194,205) ========================================================================================================================= Net increase (decrease) in share activity (886,303) $ (12,293,645) 19,323,841 $274,618,778 =========================================================================================================================
(a) There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and it owns 6% 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 these entities are also owned beneficially. In addition, 12% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control of Invesco Aim. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT -------------------------------------------------------------------------------------------------- Class Y 90,188 $ 925,333 -------------------------------------------------------------------------------------------------- Class A (90,188) (925,333) ==================================================================================================
45 AIM ALLOCATION FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM MODERATE ALLOCATION FUND
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, 2008(a) DECEMBER 31, 2007 ----------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------- Sold: Class A 7,302,994 $ 78,447,189 14,863,957 $189,608,287 - ------------------------------------------------------------------------------------------------------------------------- Class B 2,533,062 27,708,433 3,040,515 38,727,508 - ------------------------------------------------------------------------------------------------------------------------- Class C 2,736,928 28,768,798 3,231,435 41,101,588 - ------------------------------------------------------------------------------------------------------------------------- Class R 860,067 9,162,686 618,550 7,923,366 - ------------------------------------------------------------------------------------------------------------------------- Class Y(b) 89,771 855,901 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- -- -- ========================================================================================================================= Issued as reinvestment of dividends: Class A 2,664,933 20,814,508 2,105,291 25,663,296 - ------------------------------------------------------------------------------------------------------------------------- Class B 683,883 5,327,407 620,917 7,524,510 - ------------------------------------------------------------------------------------------------------------------------- Class C 667,073 5,197,312 563,570 6,830,042 - ------------------------------------------------------------------------------------------------------------------------- Class R 135,920 1,061,540 83,749 1,019,223 - ------------------------------------------------------------------------------------------------------------------------- Class Y 5,917 46,214 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 83 643 59 708 ========================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 1,976,605 20,986,578 1,309,372 16,780,750 - ------------------------------------------------------------------------------------------------------------------------- Class B (2,000,475) (20,986,578) (1,320,759) (16,780,750) ========================================================================================================================= Reacquired: Class A(b) (12,307,350) (123,321,024) (6,008,823) (77,202,753) - ------------------------------------------------------------------------------------------------------------------------- Class B (2,902,022) (30,218,695) (1,771,007) (22,529,940) - ------------------------------------------------------------------------------------------------------------------------- Class C (3,635,251) (37,089,372) (1,738,060) (22,111,691) - ------------------------------------------------------------------------------------------------------------------------- Class R (761,916) (7,172,443) (386,398) (4,946,192) - ------------------------------------------------------------------------------------------------------------------------- Class Y (9,292) (76,193) -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (11,802) (154,631) ========================================================================================================================= Net increase (decrease) in share activity (1,959,070) $ (20,487,096) 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 and it 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 these entities are also owned beneficially. In addition, 5% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control of Invesco Aim. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT -------------------------------------------------------------------------------------------------- Class Y 76,375 $ 746,184 -------------------------------------------------------------------------------------------------- Class A (76,375) (746,184) ==================================================================================================
46 AIM ALLOCATION FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
Summary of Share Activity - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED Year ended DECEMBER 31, 2008(a) December 31, 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 5,633,994 $ 62,756,596 18,007,457 $238,631,685 - ------------------------------------------------------------------------------------------------------------------------ Class B 1,447,534 16,154,173 2,141,964 28,363,240 - ------------------------------------------------------------------------------------------------------------------------ Class C 1,578,500 17,057,915 2,528,182 33,500,611 - ------------------------------------------------------------------------------------------------------------------------ Class R 283,459 3,129,709 298,566 4,031,967 - ------------------------------------------------------------------------------------------------------------------------ Class Y(b) 60,747 589,233 -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class 359 3,000 -- -- ======================================================================================================================== Issued as reinvestment of dividends: Class A 1,403,538 10,919,646 1,025,387 13,268,548 - ------------------------------------------------------------------------------------------------------------------------ Class B 294,996 2,262,570 171,081 2,200,088 - ------------------------------------------------------------------------------------------------------------------------ Class C 306,296 2,346,354 165,961 2,132,534 - ------------------------------------------------------------------------------------------------------------------------ Class R 35,316 272,995 15,416 198,717 - ------------------------------------------------------------------------------------------------------------------------ Class Y 3,379 26,290 -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class 75 582 36 468 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 766,640 8,321,288 405,378 5,438,094 - ------------------------------------------------------------------------------------------------------------------------ Class B (774,755) (8,321,288) (408,989) (5,438,094) ======================================================================================================================== Reacquired: Class A(b) (9,627,486) (91,524,143) (2,369,948) (32,056,432) - ------------------------------------------------------------------------------------------------------------------------ Class B (1,155,245) (12,402,885) (620,146) (8,249,359) - ------------------------------------------------------------------------------------------------------------------------ Class C (1,473,498) (15,312,345) (710,582) (9,503,859) - ------------------------------------------------------------------------------------------------------------------------ Class R (106,489) (1,101,939) (82,956) (1,115,710) - ------------------------------------------------------------------------------------------------------------------------ Class Y (24) (190) -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class -- -- (4,291) (59,000) ======================================================================================================================== Net increase (decrease) in share activity (1,322,664) $ (4,822,439) 20,562,516 $271,343,498 ========================================================================================================================
(a) 20% of the outstanding shares of the Fund are by Invesco Aim or an investment advisor under common control of Invesco Aim. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT -------------------------------------------------------------------------------------------------- Class Y 53,048 $ 524,644 -------------------------------------------------------------------------------------------------- Class A (53,048) (524,644) ==================================================================================================
47 AIM ALLOCATION FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
SUMMARY OF SHARE ACTIVITY - ----------------------------------------------------------------------------------------------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, 2008(a) DECEMBER 31, 2007 --------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------------------------- Sold: Class A 2,519,918 $ 25,687,581 5,729,536 $65,618,780 - ----------------------------------------------------------------------------------------------------------------------- Class B 537,933 5,517,064 510,423 5,820,590 - ----------------------------------------------------------------------------------------------------------------------- Class C 629,537 6,462,753 685,102 7,800,557 - ----------------------------------------------------------------------------------------------------------------------- Class R 94,607 948,614 266,416 3,087,568 - ----------------------------------------------------------------------------------------------------------------------- Class Y(b) 7,895 75,826 -- -- - ----------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- 1,719 19,981 ======================================================================================================================= Issued as reinvestment of dividends: Class A 387,795 3,230,335 332,695 3,702,895 - ----------------------------------------------------------------------------------------------------------------------- Class B 48,766 404,267 37,142 410,787 - ----------------------------------------------------------------------------------------------------------------------- Class C 68,624 568,892 50,177 555,456 - ----------------------------------------------------------------------------------------------------------------------- Class R 9,666 80,421 4,572 50,800 - ----------------------------------------------------------------------------------------------------------------------- Class Y 217 1,805 -- -- - ----------------------------------------------------------------------------------------------------------------------- Institutional Class 179 1,490 132 1,479 ======================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 170,878 1,722,318 76,282 875,190 - ----------------------------------------------------------------------------------------------------------------------- Class B (172,557) (1,722,318) (76,968) (875,190) ======================================================================================================================= Reacquired: Class A(b) (3,433,211) (31,994,906) (701,012) (8,081,078) - ----------------------------------------------------------------------------------------------------------------------- Class B (343,377) (3,421,227) (188,927) (2,152,937) - ----------------------------------------------------------------------------------------------------------------------- Class C (418,073) (3,990,979) (241,628) (2,755,501) - ----------------------------------------------------------------------------------------------------------------------- Class R (42,737) (444,563) (191,176) (2,272,759) - ----------------------------------------------------------------------------------------------------------------------- Class Y (4,375) (41,953) -- -- - ----------------------------------------------------------------------------------------------------------------------- Institutional Class -- -- (4,299) (50,000) ======================================================================================================================= Net increase in share activity 61,685 $ 3,085,420 6,290,186 $71,756,618 =======================================================================================================================
(a) 31% of the outstanding shares of the Fund are by Invesco Aim or an investment advisor under common control of Invesco Aim. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ------------------------------------------------------------------------------------------------- Class Y 6,852 $ 65,712 ------------------------------------------------------------------------------------------------- Class A (6,852) (65,712) =================================================================================================
48 AIM ALLOCATION FUNDS NOTE 10--SHARE INFORMATION--(CONTINUED) NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of each Fund outstanding throughout the periods indicated. AIM CONSERVATIVE ALLOCATION FUND
NET GAINS (LOSSES) NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD INCOME UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $10.55 $0.45(d) $(1.98) $(1.53) $(0.42) $(0.08) $(0.50) $ 8.52 Year ended 12/31/07 $10.64 0.46(d) 0.05 0.51 (0.40) (0.20) (0.60) 10.55 Year ended 12/31/06 $10.41 0.35(d) 0.36 0.71 (0.33) (0.15) (0.48) 10.64 Year ended 12/31/05 $10.32 0.25(d) 0.11 0.36 (0.21) (0.06) (0.27) 10.41 Year ended 12/31/04(f) $10.00 0.06 0.36 0.42 (0.10) (0.00) (0.10) 10.32 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 $10.48 0.38(d) (1.97) (1.59) (0.34) (0.08) (0.42) 8.47 Year ended 12/31/07 $10.59 0.37(d) 0.04 0.41 (0.32) (0.20) (0.52) 10.48 Year ended 12/31/06 $10.36 0.27(d) 0.37 0.64 (0.26) (0.15) (0.41) 10.59 Year ended 12/31/05 $10.28 0.17(d) 0.11 0.28 (0.14) (0.06) (0.20) 10.36 Year ended 12/31/04(f) $10.00 0.04 0.32 0.36 (0.08) (0.00) (0.08) 10.28 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 $10.48 0.38(d) (1.98) (1.60) (0.34) (0.08) (0.42) 8.46 Year ended 12/31/07 $10.58 0.37(d) 0.05 0.42 (0.32) (0.20) (0.52) 10.48 Year ended 12/31/06 $10.36 0.27(d) 0.36 0.63 (0.26) (0.15) (0.41) 10.58 Year ended 12/31/05 $10.28 0.17(d) 0.11 0.28 (0.14) (0.06) (0.20) 10.36 Year ended 12/31/04(f) $10.00 0.04 0.32 0.36 (0.08) (0.00) (0.08) 10.28 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 $10.52 0.43(d) (1.98) (1.55) (0.39) (0.08) (0.47) 8.50 Year ended 12/31/07 $10.62 0.43(d) 0.04 0.47 (0.37) (0.20) (0.57) 10.52 Year ended 12/31/06 $10.39 0.33(d) 0.36 0.69 (0.31) (0.15) (0.46) 10.62 Year ended 12/31/05 $10.31 0.22(d) 0.11 0.33 (0.19) (0.06) (0.25) 10.39 Year ended 12/31/04(f) $10.00 0.06 0.34 0.40 (0.09) (0.00) (0.09) 10.31 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) $ 9.57 0.10(d) (0.65) (0.55) (0.42) (0.08) (0.50) 8.52 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 $10.48 0.49(d) (2.00) (1.51) (0.44) (0.08) (0.52) 8.45 Year ended 12/31/07 $10.66 0.50(d) (0.05) 0.45 (0.43) (0.20) (0.63) 10.48 Year ended 12/31/06 $10.42 0.38(d) 0.37 0.75 (0.36) (0.15) (0.51) 10.66 Year ended 12/31/05 $10.32 0.28(d) 0.11 0.39 (0.23) (0.06) (0.29) 10.42 Year ended 12/31/04(f) $10.00 0.14 0.29 0.43 (0.11) (0.00) (0.11) 10.32 ================================================================================================================================= RATIO OF EXPENSES RATIO OF TO AVERAGE NET EXPENSES TO RATIO OF NET ASSETS WITH FEE AVERAGE NET ASSETS INVESTMENT NET ASSETS, WAIVERS AND/OR WITHOUT FEE WAIVERS INCOME TOTAL END OF PERIOD EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(a) (000S OMITTED) REIMBURSEMENTS(b) REIMBURSEMENTS NET ASSETS TURNOVER(c) - ----------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (14.49)% $71,799 0.48%(e) 0.59%(e) 4.55%(e) 23% Year ended 12/31/07 4.79 74,783 0.49 0.65 4.18 22 Year ended 12/31/06 6.84 44,595 0.49 0.72 3.32 34 Year ended 12/31/05 3.44 35,981 0.50 0.91 2.36 24 Year ended 12/31/04(f) 4.19 20,124 0.55(g) 1.41(g) 1.74(g) 9 - ----------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (15.08) 17,977 1.23(e) 1.34(e) 3.80(e) 23 Year ended 12/31/07 3.88 19,796 1.24 1.40 3.43 22 Year ended 12/31/06 6.14 20,482 1.24 1.47 2.57 34 Year ended 12/31/05 2.76 18,281 1.20 1.61 1.66 24 Year ended 12/31/04(f) 3.59 10,436 1.20(g) 2.06(g) 1.09(g) 9 - ----------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (15.19) 22,624 1.23(e) 1.34(e) 3.80(e) 23 Year ended 12/31/07 3.98 22,327 1.24 1.40 3.43 22 Year ended 12/31/06 6.04 18,436 1.24 1.47 2.57 34 Year ended 12/31/05 2.76 13,726 1.20 1.61 1.66 24 Year ended 12/31/04(f) 3.59 11,751 1.20(g) 2.06(g) 1.09(g) 9 - ----------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (14.67) 4,246 0.73(e) 0.84(e) 4.30(e) 23 Year ended 12/31/07 4.46 4,831 0.74 0.90 3.93 22 Year ended 12/31/06 6.60 4,182 0.74 0.97 3.07 34 Year ended 12/31/05 3.18 3,584 0.70 1.11 2.16 24 Year ended 12/31/04(f) 4.05 1,584 0.70(g) 1.56(g) 1.59(g) 9 - ----------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (5.67) 556 0.23(e)(g) 0.34(e)(g) 4.80(e)(g) 23 - ----------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (14.35) 19 0.23(e) 0.26(e) 4.80(e) 23 Year ended 12/31/07 4.13 11 0.21 0.21 4.45 22 Year ended 12/31/06 7.16 116 0.23 0.31 3.57 34 Year ended 12/31/05 3.79 108 0.20 0.45 2.66 24 Year ended 12/31/04(f) 4.31 104 0.20(g) 0.96(g) 2.09(g) 9 =======================================================================================================================
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges, if applicable and is not annualized for periods less than one year. (b) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.60%, 0.62%, 0.61%, 0.60% and 0.63% for the years ended December 31, 2008, 2007, 2006, 2005 and the period April 30, 2004 (commencement date) to December 31, 2004, respectively. (c) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (d) Calculated using average shares outstanding. (e) Ratios are based on average daily net assets (000's omitted) of $81,220, $20,032, $23,872, $4,802, $558 and $32 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of April 30, 2004 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 49 AIM ALLOCATION FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM GROWTH ALLOCATION FUND
NET GAINS (LOSSES) NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $14.21 $ 0.14(d) $(5.91) $(5.77) $(0.01) $(0.67) $(0.68) $ 7.76 Year ended 12/31/07 $13.73 0.22(d) 0.83 1.05 (0.19) (0.38) (0.57) 14.21 Year ended 12/31/06 $12.22 0.10 1.93 2.03 (0.10) (0.42) (0.52) 13.73 Year ended 12/31/05 $11.26 0.10(d) 1.05 1.15 (0.07) (0.12) (0.19) 12.22 Year ended 12/31/04(f) $10.00 0.03(d) 1.28 1.31 (0.05) (0.00) (0.05) 11.26 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 $14.10 0.05(d) (5.83) (5.78) (0.01) (0.67) (0.68) 7.64 Year ended 12/31/07 $13.64 0.11(d) 0.82 0.93 (0.09) (0.38) (0.47) 14.10 Year ended 12/31/06 $12.16 0.02 1.90 1.92 (0.02) (0.42) (0.44) 13.64 Year ended 12/31/05 $11.23 0.02(d) 1.05 1.07 (0.02) (0.12) (0.14) 12.16 Year ended 12/31/04(f) $10.00 (0.02)(d) 1.28 1.26 (0.03) (0.00) (0.03) 11.23 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 $14.10 0.05(d) (5.83) (5.78) (0.01) (0.67) (0.68) 7.64 Year ended 12/31/07 $13.63 0.11(d) 0.83 0.94 (0.09) (0.38) (0.47) 14.10 Year ended 12/31/06 $12.15 0.02 1.90 1.92 (0.02) (0.42) (0.44) 13.63 Year ended 12/31/05 $11.23 0.02(d) 1.04 1.06 (0.02) (0.12) (0.14) 12.15 Year ended 12/31/04(f) $10.00 (0.02)(d) 1.28 1.26 (0.03) (0.00) (0.03) 11.23 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 $14.18 0.11(d) (5.88) (5.77) (0.01) (0.67) (0.68) 7.73 Year ended 12/31/07 $13.70 0.19(d) 0.83 1.02 (0.16) (0.38) (0.54) 14.18 Year ended 12/31/06 $12.20 0.07 1.92 1.99 (0.07) (0.42) (0.49) 13.70 Year ended 12/31/05 $11.25 0.08(d) 1.05 1.13 (0.06) (0.12) (0.18) 12.20 Year ended 12/31/04(f) $10.00 0.02(d) 1.28 1.30 (0.05) (0.00) (0.05) 11.25 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) $10.26 0.03(d) (1.84) (1.81) (0.01) (0.67) (0.68) 7.77 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 $14.25 0.18(d) (5.93) (5.75) (0.01) (0.67) (0.68) 7.82 Year ended 12/31/07 $13.77 0.28(d) 0.82 1.10 (0.24) (0.38) (0.62) 14.25 Year ended 12/31/06 $12.25 0.16 1.92 2.08 (0.14) (0.42) (0.56) 13.77 Year ended 12/31/05 $11.28 0.14(d) 1.05 1.19 (0.10) (0.12) (0.22) 12.25 Year ended 12/31/04(f) $10.00 0.05(d) 1.29 1.34 (0.06) (0.00) (0.06) 11.28 ================================================================================================================================= RATIO OF EXPENSES RATIO OF TO AVERAGE NET EXPENSES TO ASSETS WITH FEE AVERAGE NET ASSETS RATIO OF NET NET ASSETS, WAIVERS AND/OR WITHOUT FEE WAIVERS INVESTMENT INCOME TOTAL END OF PERIOD EXPENSE AND/OR EXPENSE (LOSS) TO AVERAGE PORTFOLIO RETURN(a) (000S OMITTED) REIMBURSEMENTS(b) REIMBURSEMENTS NET ASSETS TURNOVER(c) - ---------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (40.62)% $258,136 0.46%(e) 0.59%(e) 1.16%(e) 16% Year ended 12/31/07 7.75 486,834 0.47 0.56 1.53 5 Year ended 12/31/06 16.63 246,635 0.47 0.63 0.90 24 Year ended 12/31/05 10.24 132,159 0.46 0.75 0.89 14 Year ended 12/31/04(f) 13.12 39,368 0.52(g) 1.31(g) 0.40(g) 2 - ---------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (41.00) 65,395 1.21(e) 1.34(e) 0.41(e) 16 Year ended 12/31/07 6.89 129,577 1.22 1.31 0.78 5 Year ended 12/31/06 15.77 110,172 1.22 1.38 0.15 24 Year ended 12/31/05 9.49 68,411 1.17 1.46 0.18 14 Year ended 12/31/04(f) 12.61 22,384 1.17(g) 1.96(g) (0.25)(g) 2 - ---------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (41.00) 59,190 1.21(e) 1.34(e) 0.41(e) 16 Year ended 12/31/07 6.97 102,941 1.22 1.31 0.78 5 Year ended 12/31/06 15.78 75,611 1.22 1.38 0.15 24 Year ended 12/31/05 9.40 39,271 1.17 1.46 0.18 14 Year ended 12/31/04(f) 12.61 11,543 1.17(g) 1.96(g) (0.25)(g) 2 - ---------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (40.70) 8,386 0.71(e) 0.84(e) 0.91(e) 16 Year ended 12/31/07 7.52 12,231 0.72 0.81 1.28 5 Year ended 12/31/06 16.34 9,617 0.72 0.88 0.65 24 Year ended 12/31/05 10.01 6,285 0.67 0.96 0.68 14 Year ended 12/31/04(f) 12.98 1,342 0.67(g) 1.46(g) 0.25(g) 2 - ---------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (17.65) 658 0.21(e)(g) 0.46(e)(g) 1.42(e)(g) 16 - ---------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (40.36) 63 0.12(e) 0.12(e) 1.50(e) 16 Year ended 12/31/07 8.09 97 0.08 0.08 1.91 5 Year ended 12/31/06 16.98 147 0.12 0.12 1.24 24 Year ended 12/31/05 10.52 125 0.17 0.19 1.18 14 Year ended 12/31/04(f) 13.44 113 0.17(g) 0.75(g) 0.75(g) 2 ============================================================================================================================
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges, if applicable and is not annualized for periods less than one year. (b) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.80%, 0.80%, 0.83%, 0.87% and 0.96% for the years ended December 31, 2008, 2007, 2006, 2005 and the period April 30, 2004 (commencement date) to December 31, 2004, respectively. (c) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (d) Calculated using average shares outstanding. (e) Ratios are based on average daily net assets (000's omitted) of $402,365, $100,683, $84,745, $11,265, $686 and $81 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of April 30, 2004 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 50 AIM ALLOCATION FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE ALLOCATION FUND
NET GAINS (LOSSES) NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS - -------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $12.35 $0.40 $(4.25) $(3.85) $(0.30) $(0.33) $(0.63) Year ended 12/31/07 $12.23 0.41 0.45 0.86 (0.37) (0.37) (0.74) Year ended 12/31/06 $11.49 0.31 1.04 1.35 (0.28) (0.33) (0.61) Year ended 12/31/05 $10.89 0.24 0.57 0.81 (0.18) (0.03) (0.21) Year ended 12/31/04(f) $10.00 0.11 0.87 0.98 (0.09) (0.00) (0.09) - -------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 $12.27 0.32 (4.20) (3.88) (0.21) (0.33) (0.54) Year ended 12/31/07 $12.17 0.31 0.44 0.75 (0.28) (0.37) (0.65) Year ended 12/31/06 $11.45 0.21 1.03 1.24 (0.19) (0.33) (0.52) Year ended 12/31/05 $10.87 0.16 0.57 0.73 (0.12) (0.03) (0.15) Year ended 12/31/04(f) $10.00 0.06 0.88 0.94 (0.07) (0.00) (0.07) - -------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 $12.27 0.32 (4.20) (3.88) (0.21) (0.33) (0.54) Year ended 12/31/07 $12.17 0.31 0.44 0.75 (0.28) (0.37) (0.65) Year ended 12/31/06 $11.45 0.21 1.03 1.24 (0.19) (0.33) (0.52) Year ended 12/31/05 $10.87 0.16 0.57 0.73 (0.12) (0.03) (0.15) Year ended 12/31/04(f) $10.00 0.06 0.88 0.94 (0.07) (0.00) (0.07) - -------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 $12.33 0.37 (4.23) (3.86) (0.27) (0.33) (0.60) Year ended 12/31/07 $12.21 0.38 0.45 0.83 (0.34) (0.37) (0.71) Year ended 12/31/06 $11.48 0.28 1.03 1.31 (0.25) (0.33) (0.58) Year ended 12/31/05 $10.89 0.22 0.57 0.79 (0.17) (0.03) (0.20) Year ended 12/31/04(f) $10.00 0.10 0.88 0.98 (0.09) (0.00) (0.09) - -------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) $ 9.77 0.08 (1.34) (1.26) (0.31) (0.33) (0.64) - -------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 $12.39 0.43 (4.27) (3.84) (0.33) (0.33) (0.66) Year ended 12/31/07 $12.26 0.45 0.46 0.91 (0.41) (0.37) (0.78) Year ended 12/31/06 $11.52 0.34 1.04 1.38 (0.31) (0.33) (0.64) Year ended 12/31/05 $10.91 0.28 0.57 0.85 (0.21) (0.03) (0.24) Year ended 12/31/04(f) $10.00 0.13 0.88 1.01 (0.10) (0.00) (0.10) ========================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSET NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME VALUE, END TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO OF PERIOD RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 7.87 (31.11)% $294,668 0.37%(e) 0.52%(e) 3.76%(e) 13% Year ended 12/31/07 12.35 7.14 466,753 0.38 0.50 3.20 6 Year ended 12/31/06 12.23 11.73 312,300 0.38 0.53 2.56 21 Year ended 12/31/05 11.49 7.47 208,841 0.34 0.62 2.19 2 Year ended 12/31/04(f) 10.89 9.85 71,431 0.40(g) 0.87(g) 1.56(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 7.85 (31.57) 85,928 1.12(e) 1.27(e) 3.01(e) 13 Year ended 12/31/07 12.27 6.24 155,059 1.13 1.25 2.45 6 Year ended 12/31/06 12.17 10.86 146,751 1.13 1.28 1.81 21 Year ended 12/31/05 11.45 6.75 117,373 1.05 1.33 1.48 2 Year ended 12/31/04(f) 10.87 9.44 45,846 1.05(g) 1.52(g) 0.91(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 7.85 (31.57) 88,392 1.12(e) 1.27(e) 3.01(e) 13 Year ended 12/31/07 12.27 6.24 141,090 1.13 1.25 2.45 6 Year ended 12/31/06 12.17 10.86 114,828 1.13 1.28 1.81 21 Year ended 12/31/05 11.45 6.75 77,801 1.05 1.33 1.48 2 Year ended 12/31/04(f) 10.87 9.44 27,339 1.05(g) 1.52(g) 0.91(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 7.87 (31.24) 14,176 0.62(e) 0.77(e) 3.51(e) 13 Year ended 12/31/07 12.33 6.90 19,332 0.63 0.75 2.95 6 Year ended 12/31/06 12.21 11.41 15,294 0.63 0.78 2.31 21 Year ended 12/31/05 11.48 7.21 10,332 0.55 0.83 1.98 2 Year ended 12/31/04(f) 10.89 9.80 2,161 0.55(g) 1.02(g) 1.41(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 7.87 (12.84) 680 0.12(e)(g) 0.33(e)(g) 4.01(e)(g) 13 - ----------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 7.89 (30.92) 8 0.13(e) 0.17(e) 4.00(e) 13 Year ended 12/31/07 12.39 7.49 12 0.09 0.09 3.49 6 Year ended 12/31/06 12.26 11.96 156 0.10 0.10 2.83 21 Year ended 12/31/05 11.52 7.76 141 0.05 0.15 2.48 2 Year ended 12/31/04(f) 10.91 10.16 110 0.05(g) 0.40(g) 1.91(g) 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, if applicable and is not annualized for periods less than one year. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.75%, 0.76%, 0.80%, 0.82% and 0.92% for the years ended December 31, 2008, 2007, 2006, 2005 and the period April 30, 2004 (commencement date) to December 31, 2004, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $407,340, $126,398, $120,952, $19,514, $668, and $10 for Class A, Class B, Class C, Class R, Class Y, and Institutional Class shares, respectively. (f) Commencement date of April 30, 2004 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 51 AIM ALLOCATION FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATE GROWTH ALLOCATION FUND
NET GAINS (LOSSES) NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS - -------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $13.13 $0.28 $(5.10) $(4.82) $(0.01) $(0.46) $(0.47) Year ended 12/31/07 $12.74 0.34 0.57 0.91 (0.28) (0.24) (0.52) Year ended 12/31/06 $11.35 0.24 1.45 1.69 (0.16) (0.14) (0.30) Year ended 12/31/05(f) $10.06 0.20 1.19 1.39 (0.10) (0.00) (0.10) - -------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 $13.05 0.19 (5.05) (4.86) (0.01) (0.46) (0.47) Year ended 12/31/07 $12.67 0.24 0.57 0.81 (0.19) (0.24) (0.43) Year ended 12/31/06 $11.32 0.15 1.44 1.59 (0.10) (0.14) (0.24) Year ended 12/31/05(f) $10.06 0.14 1.19 1.33 (0.07) (0.00) (0.07) - -------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 $13.04 0.19 (5.04) (4.85) (0.01) (0.46) (0.47) Year ended 12/31/07 $12.66 0.24 0.57 0.81 (0.19) (0.24) (0.43) Year ended 12/31/06 $11.31 0.15 1.44 1.59 (0.10) (0.14) (0.24) Year ended 12/31/05(f) $10.06 0.14 1.18 1.32 (0.07) (0.00) (0.07) - -------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 $13.09 0.25 (5.08) (4.83) (0.01) (0.46) (0.47) Year ended 12/31/07 $12.70 0.31 0.57 0.88 (0.25) (0.24) (0.49) Year ended 12/31/06 $11.34 0.21 1.43 1.64 (0.14) (0.14) (0.28) Year ended 12/31/05(f) $10.06 0.18 1.19 1.37 (0.09) (0.00) (0.09) - -------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) $ 9.89 0.05 (1.63) (1.58) (0.01) (0.46) (0.47) - -------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 $13.16 0.29 (5.10) (4.81) (0.01) (0.46) (0.47) Year ended 12/31/07 $12.76 0.38 0.57 0.95 (0.31) (0.24) (0.55) Year ended 12/31/06 $11.36 0.27 1.45 1.72 (0.18) (0.14) (0.32) Year ended 12/31/05(f) $10.06 0.21 1.19 1.40 (0.10) (0.00) (0.10) ========================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSET NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME VALUE, END TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO OF PERIOD RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 7.84 (36.71)% $199,591 0.37%(e) 0.56%(e) 2.50%(e) 19 Year ended 12/31/07 13.13 7.19 358,335 0.37 0.54 2.54 2 Year ended 12/31/06 12.74 14.92 130,088 0.38 0.71 1.97 21 Year ended 12/31/05(f) 11.35 13.78 33,667 0.37(g) 1.16(g) 2.65(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 7.72 (37.25) 40,380 1.12(e) 1.31(e) 1.75(e) 19 Year ended 12/31/07 13.05 6.44 70,657 1.12 1.29 1.79 2 Year ended 12/31/06 12.67 14.04 52,329 1.13 1.46 1.22 21 Year ended 12/31/05(f) 11.32 13.26 17,221 1.12(g) 1.91(g) 1.90(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 7.72 (37.19) 44,256 1.12(e) 1.31(e) 1.75(e) 19 Year ended 12/31/07 13.04 6.45 69,400 1.12 1.29 1.79 2 Year ended 12/31/06 12.66 14.05 42,266 1.13 1.46 1.22 21 Year ended 12/31/05(f) 11.31 13.16 11,656 1.12(g) 1.91(g) 1.90(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 7.79 (36.90) 4,912 0.62(e) 0.81(e) 2.25(e) 19 Year ended 12/31/07 13.09 6.98 5,475 0.62 0.79 2.29 2 Year ended 12/31/06 12.70 14.47 2,378 0.63 0.96 1.72 21 Year ended 12/31/05(f) 11.34 13.61 380 0.62(g) 1.41(g) 2.40(g) 1 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 7.84 (15.98) 503 0.12(e)(g) 0.47(e)(g) 2.75(e)(g) 19 - ----------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 7.88 (36.55) 10 0.13(e) 0.19(e) 2.75(e) 19 Year ended 12/31/07 13.16 7.42 12 0.10 0.12 2.82 2 Year ended 12/31/06 12.76 15.17 66 0.12 0.26 2.22 21 Year ended 12/31/05(f) 11.36 13.95 57 0.12(g) 0.69(g) 2.90(g) 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, if applicable and is not annualized for periods less than one year. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.77%, 0.78%, 0.82% and 0.78% for the years ended December 31, 2008, 2007, 2006 and the period April 29, 2005 (commencement date) to December 31, 2005, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $310,379, $58,207, $60,326, $5,736, $456 and $10 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of April 29, 2005 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 52 AIM ALLOCATION FUNDS NOTE 11--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM MODERATELY CONSERVATIVE ALLOCATION FUND
NET GAINS NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL OF PERIOD INCOME(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS - -------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $11.24 $0.46 $(2.84) $(2.38) $(0.40) $(0.11) $(0.51) Year ended 12/31/07 $11.09 0.48 0.21 0.69 (0.35) (0.19) (0.54) Year ended 12/31/06 $10.60 0.36 0.50 0.86 (0.27) (0.10) (0.37) Year ended 12/31/05(f) $10.03 0.22 0.49 0.71 (0.13) (0.01) (0.14) - -------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 $11.16 0.38 (2.80) (2.42) (0.32) (0.11) (0.43) Year ended 12/31/07 $11.03 0.39 0.21 0.60 (0.28) (0.19) (0.47) Year ended 12/31/06 $10.57 0.27 0.50 0.77 (0.21) (0.10) (0.31) Year ended 12/31/05(f) $10.03 0.16 0.49 0.65 (0.10) (0.01) (0.11) - -------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 $11.17 0.37 (2.78) (2.41) (0.32) (0.11) (0.43) Year ended 12/31/07 $11.03 0.39 0.22 0.61 (0.28) (0.19) (0.47) Year ended 12/31/06 $10.57 0.27 0.50 0.77 (0.21) (0.10) (0.31) Year ended 12/31/05(f) $10.03 0.16 0.49 0.65 (0.10) (0.01) (0.11) - -------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 $11.21 0.42 (2.81) (2.39) (0.37) (0.11) (0.48) Year ended 12/31/07 $11.07 0.45 0.20 0.65 (0.32) (0.19) (0.51) Year ended 12/31/06 $10.59 0.33 0.50 0.83 (0.25) (0.10) (0.35) Year ended 12/31/05(f) $10.03 0.20 0.49 0.69 (0.12) (0.01) (0.13) - -------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08 $ 9.59 0.10 (0.83) (0.73) (0.40) (0.11) (0.51) - -------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 $11.27 0.48 (2.83) (2.35) (0.43) (0.11) (0.54) Year ended 12/31/07 $11.11 0.50 0.22 0.72 (0.37) (0.19) (0.56) Year ended 12/31/06 $10.61 0.38 0.51 0.89 (0.29) (0.10) (0.39) Year ended 12/31/05(f) $10.03 0.23 0.49 0.72 (0.13) (0.01) (0.14) ========================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSET NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME VALUE, END TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO OF PERIOD RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 8.35 (21.20)% $58,819 0.39%(e) 0.63%(e) 4.45%(e) 28% Year ended 12/31/07 11.24 6.23 83,101 0.39 0.67 4.12 8 Year ended 12/31/06 11.09 8.13 21,713 0.40 1.37 3.26 29 Year ended 12/31/05(f) 10.60 7.01 8,489 0.40(g) 2.81(g) 3.04(g) 5 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 8.31 (21.69) 8,897 1.14(e) 1.38(e) 3.70(e) 28 Year ended 12/31/07 11.16 5.40 11,156 1.14 1.42 3.37 8 Year ended 12/31/06 11.03 7.29 7,916 1.15 2.12 2.51 29 Year ended 12/31/05(f) 10.57 6.49 3,904 1.14(g) 3.55(g) 2.30(g) 5 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 8.33 (21.57) 13,118 1.14(e) 1.38(e) 3.70(e) 28 Year ended 12/31/07 11.17 5.49 14,454 1.14 1.42 3.37 8 Year ended 12/31/06 11.03 7.29 8,833 1.15 2.12 2.51 29 Year ended 12/31/05(f) 10.57 6.49 2,893 1.14(g) 3.55(g) 2.30(g) 5 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 8.34 (21.31) 1,552 0.64(e) 0.88(e) 4.20(e) 28 Year ended 12/31/07 11.21 5.91 1,396 0.64 0.92 3.87 8 Year ended 12/31/06 11.07 7.84 495 0.65 1.62 3.01 29 Year ended 12/31/05(f) 10.59 6.84 144 0.64(g) 3.05(g) 2.80(g) 5 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08 8.35 (7.56) 31 0.14(e)(g) 0.42(e)(g) 4.70(e)(g) 28 - ----------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 8.38 (20.88) 25 0.14(e) 0.27(e) 4.70(e) 28 Year ended 12/31/07 11.27 6.51 31 0.14 0.27 4.37 8 Year ended 12/31/06 11.11 8.41 58 0.14 0.99 3.51 29 Year ended 12/31/05(f) 10.61 7.19 54 0.14(g) 2.40(g) 3.30(g) 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, if applicable and is not annualized for periods less than one year. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.69%, 0.70%, 0.74% and 0.69% for the ended December 31, 2008, 2007, 2006 and the period April 29, 2005 (commencement date) to December 31, 2005, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $80,094, $10,830, $15,156, $1,413, $31 and $29 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of April 29, 2005 for Class A, Class B, Class C and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 53 AIM ALLOCATION FUNDS 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 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 54 AIM ALLOCATION FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM Conservative Allocation Fund AIM Growth Allocation Fund AIM Moderate Allocation Fund AIM Moderate Growth Allocation Fund AIM Moderately Conservative Allocation Fund: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Conservative Allocation Fund, AIM Growth Allocation Fund, AIM Moderate Allocation Fund, AIM Moderate Growth Allocation Fund and AIM Moderately Conservative Allocation Fund (five of the funds constituting AIM Growth Series, hereafter referred to as the "Funds") at December 31, 2008, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodians, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 55 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 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 (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $873.30 $2.26 $1,022.72 $2.44 0.48% - --------------------------------------------------------------------------------------------------- B 1,000.00 869.90 5.78 1,018.95 6.24 1.23 - --------------------------------------------------------------------------------------------------- C 1,000.00 869.70 5.78 1,018.95 6.24 1.23 - --------------------------------------------------------------------------------------------------- R 1,000.00 872.40 3.44 1,021.47 3.71 0.73 - --------------------------------------------------------------------------------------------------- Y 1,000.00 943.30 0.55 1,023.98 1.17 0.23 - ---------------------------------------------------------------------------------------------------
56 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $667.60 $1.93 $1,022.82 $2.34 0.46% - --------------------------------------------------------------------------------------------------- B 1,000.00 665.50 5.07 1,019.05 6.14 1.21 - --------------------------------------------------------------------------------------------------- C 1,000.00 665.50 5.07 1,019.05 6.14 1.21 - --------------------------------------------------------------------------------------------------- R 1,000.00 667.40 2.98 1,021.57 3.61 0.71 - --------------------------------------------------------------------------------------------------- Y 1,000.00 823.50 0.47 1,024.08 1.07 0.21 - ---------------------------------------------------------------------------------------------------
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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $750.90 $1.63 $1,023.28 $1.88 0.37% - --------------------------------------------------------------------------------------------------- B 1,000.00 748.40 4.92 1,019.51 5.69 1.12 - --------------------------------------------------------------------------------------------------- C 1,000.00 748.40 4.92 1,019.51 5.69 1.12 - --------------------------------------------------------------------------------------------------- R 1,000.00 750.30 2.73 1,022.02 3.15 0.62 - --------------------------------------------------------------------------------------------------- Y 1,000.00 871.60 0.28 1,024.53 0.61 0.12 - ---------------------------------------------------------------------------------------------------
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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $701.30 $1.58 $1,023.28 $1.88 0.37% - --------------------------------------------------------------------------------------------------- B 1,000.00 699.10 4.78 1,019.51 5.69 1.12 - --------------------------------------------------------------------------------------------------- C 1,000.00 698.80 4.78 1,019.51 5.69 1.12 - --------------------------------------------------------------------------------------------------- R 1,000.00 700.60 2.65 1,022.02 3.15 0.62 - --------------------------------------------------------------------------------------------------- Y 1,000.00 841.30 0.27 1,024.53 0.61 0.12 - ---------------------------------------------------------------------------------------------------
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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $828.50 $1.79 $1,023.18 $1.98 0.39% - --------------------------------------------------------------------------------------------------- B 1,000.00 826.10 5.23 1,019.41 5.79 1.14 - --------------------------------------------------------------------------------------------------- C 1,000.00 828.10 5.24 1,019.41 5.79 1.14 - --------------------------------------------------------------------------------------------------- R 1,000.00 828.30 2.94 1,021.92 3.25 0.64 - --------------------------------------------------------------------------------------------------- Y 1,000.00 829.30 0.31 1,024.43 0.71 0.14 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. 57 AIM ALLOCATION FUNDS (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 58 AIM ALLOCATION FUNDS 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 July 1, 2008, through December 31, 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 INSTITUTIONAL CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ------------------------------------------------------------------------------------------------------------------ AIM Conservative Allocation Fund $1,000.00 $873.20 $1.08 $1,023.98 $1.17 0.23% - ------------------------------------------------------------------------------------------------------------------ AIM Growth Allocation Fund 1,000.00 669.20 0.59 1,024.43 0.71 0.14 - ------------------------------------------------------------------------------------------------------------------ AIM Moderate Allocation Fund 1,000.00 751.40 0.57 1,024.48 0.66 0.13 - ------------------------------------------------------------------------------------------------------------------ AIM Moderate Growth Allocation Fund 1,000.00 702.30 0.56 1,024.48 0.66 0.13 - ------------------------------------------------------------------------------------------------------------------ AIM Moderately Conservative Allocation Fund 1,000.00 831.10 0.64 1,024.43 0.71 0.14 - ------------------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM ALLOCATION FUNDS [INVESCO AIM LOGO] - SERVICE MARK - Supplement to Annual Report dated 12/31/08 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 FUND NASDAQ SYMBOLS AIM Conservative Allocation Fund ACNIX AIM Growth Allocation Fund AADIX AIM Moderate Allocation Fund AMLIX AIM Moderate Growth Allocation Fund AIMGX AIM Moderately Conservative Allocation Fund CMAIX INSTITUTIONAL CLASS SHARES The following information has been prepared to provide Institutional Class shareholders with a performance overview specifi c to their holdings. Institutional Class shares are offered exclusively to institutional investors, including defi ned 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-1 Invesco Aim Distributors, Inc. Supplement to Annual Report dated 12/31/08 AIM CONSERVATIVE ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (4/30/04) 0.73% 1 Year -14.35 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.83%.(1,2) 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 0.83%. The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses in the past, performance would have been lower. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.62%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 4/30/04
AIM Lipper Conservative Mixed-Asset Allocation Fund- Custom Target Allocation Institutional Class Conservative Conservative Date Shares S&P 500 Index(2) Allocation Index(1) Funds Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 4/30/04 $ 10000 $ 10000 $10000 $ 10000 5/04 10020 10137 10001 10003 6/04 10100 10334 10094 10080 7/04 10030 9992 10071 9992 8/04 10081 10032 10212 10074 9/04 10160 10141 10281 10133 10/04 10220 10296 10391 10206 11/04 10310 10712 10477 10323 12/04 10431 11077 10642 10476 1/05 10401 10807 10615 10394 2/05 10451 11034 10653 10460 3/05 10391 10839 10558 10358 4/05 10380 10633 10585 10296 5/05 10481 10971 10759 10475 6/05 10562 10987 10829 10547 7/05 10613 11395 10890 10683 8/05 10664 11291 10963 10738 9/05 10664 11383 10934 10764 10/05 10603 11193 10826 10644 11/05 10734 11616 10965 10811 12/05 10827 11620 11052 10887 1/06 10962 11928 11166 11079 2/06 10973 11960 11203 11074 3/06 11035 12109 11195 11143 4/06 11087 12271 11231 11205 5/06 10973 11919 11133 11086 6/06 10983 11934 11153 11092 7/06 11045 12008 11258 11162 8/06 11170 12293 11446 11331 9/06 11274 12610 11576 11466 10/06 11420 13021 11741 11641 11/06 11554 13268 11904 11814 12/06 11603 13454 11916 11845 1/07 11690 13657 11977 11916 2/07 11745 13391 12059 11965 3/07 11832 13540 12102 12039 4/07 11995 14140 12276 12237 5/07 12060 14633 12334 12333 6/07 12038 14390 12253 12240 7/07 11973 13944 12200 12167 8/07 12005 14153 12333 12226 9/07 12158 14682 12526 12480 10/07 12299 14915 12669 12640 11/07 12191 14291 12653 12537 12/07 12082 14192 12655 12515 1/08 11955 13341 12576 12413 2/08 11863 12908 12495 12364 3/08 11841 12852 12493 12294 4/08 12002 13478 12660 12493 5/08 12082 13653 12668 12615 6/08 11851 12503 12376 12316
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. [MOUNTAIN CHART] 7/08 11817 12398 12347 12189 8/08 11841 12577 12452 12187 9/08 11172 11458 12022 11603 10/08 10400 9534 11160 10462 11/08 10239 8849 11095 10145 12/08 10347 8943 11475 10488
Supplement to Annual Report dated 12/31/08 AIM GROWTH ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (4/30/04) -1.19% 1 Year -40.36 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.88%.(1,2) 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 0.88%. 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. 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.80%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 4/30/04
AIM Growth Allocation Fund- Institutional Class Custom Growth Lipper Multi-Cap Date Shares S&P 500 Index(2) Allocation Index(1) Core Funds Index(2) - ------- ------------------- --------------- ------------------ ------------------ 4/30/04 $ 10000 $ 10000 $10000 $ 10000 5/04 10140 10137 10133 10120 6/04 10390 10334 10341 10344 7/04 9900 9992 10010 9920 8/04 9890 10032 10097 9912 9/04 10160 10141 10266 10124 10/04 10381 10296 10495 10277 11/04 10950 10712 11010 10793 12/04 11344 11077 11418 11172 1/05 11082 10807 11124 10918 2/05 11393 11034 11418 11139 3/05 11162 10839 11208 10964 4/05 10890 10633 11020 10665 5/05 11242 10971 11318 11102 6/05 11443 10987 11440 11224 7/05 11886 11395 11869 11700 8/05 11907 11291 11856 11647 9/05 12067 11383 12054 11752 10/05 11816 11193 11800 11509 11/05 12269 11616 12199 11952 12/05 12538 11620 12352 12091 1/06 13233 11928 12855 12540 2/06 13172 11960 12877 12490 3/06 13510 12109 13155 12769 4/06 13756 12271 13379 12927 5/06 13193 11919 12951 12479 6/06 13173 11934 13001 12442 7/06 13132 12008 13056 12293 8/06 13367 12293 13388 12584 9/06 13583 12610 13606 12854 10/06 14084 13021 14105 13332 11/06 14482 13268 14451 13648 12/06 14666 13454 14662 13801 1/07 14986 13657 14930 14102 2/07 14794 13391 14796 13916 3/07 15050 13540 14973 14062 4/07 15593 14140 15532 14609 5/07 16136 14633 15964 15156 6/07 15902 14390 15698 15025 7/07 15433 13944 15235 14544 8/07 15572 14153 15377 14638 9/07 16200 14682 15988 15148 10/07 16786 14915 16352 15454 11/07 15945 14291 15677 14759 12/07 15854 14192 15490 14625 1/08 14697 13341 14525 13803 2/08 14419 12908 14258 13440 3/08 14230 12852 14211 13251 4/08 15020 13478 14908 13917 5/08 15353 13653 15144 14258 6/08 14130 12503 13938 13121
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. [MOUNTAIN CHART] 7/08 13863 12398 13777 12929 8/08 13851 12577 13798 13052 9/08 12328 11458 12441 11597 10/08 9958 9534 10160 9406 11/08 9079 8849 9398 8585 12/08 9455 8943 9751 8856
Supplement to Annual Report dated 12/31/08 AIM MODERATE ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (4/30/04) -0.28% 1 Year -30.92 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.85%.(1,2) 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. 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.76%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 4/30/04
AIM Lipper Moderate Mixed-Asset Allocation Fund- Target Allocation Institutional Class Custom Moderate Moderate Funds Date Shares S&P 500 Index(2) Allocation Index(1) Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 4/30/04 $ 10000 $ 10000 $ 10000 $ 10000 5/04 10040 10137 10045 10016 6/04 10220 10334 10196 10143 7/04 9969 9992 10018 10014 8/04 10009 10032 10122 10131 9/04 10219 10141 10251 10234 10/04 10380 10296 10421 10357 11/04 10730 10712 10725 10609 12/04 11016 11077 11013 10879 1/05 10905 10807 10878 10754 2/05 11097 11034 11044 10889 3/05 10935 10839 10884 10741 4/05 10763 10633 10792 10630 5/05 10985 10971 11017 10857 6/05 11156 10987 11105 10985 7/05 11398 11395 11326 11234 8/05 11459 11291 11386 11242 9/05 11549 11383 11475 11274 10/05 11368 11193 11288 11071 11/05 11651 11616 11545 11290 12/05 11870 11620 11688 11393 1/06 12262 11928 11986 11662 2/06 12231 11960 12010 11669 3/06 12417 12109 12125 11733 4/06 12582 12271 12276 11837 5/06 12232 11919 12018 11648 6/06 12191 11934 12035 11662 7/06 12221 12008 12117 11776 8/06 12447 12293 12377 11976 9/06 12612 12610 12543 12139 10/06 12921 13021 12857 12425 11/06 13157 13268 13105 12646 12/06 13289 13454 13221 12762 1/07 13495 13657 13345 12887 2/07 13473 13391 13353 12875 3/07 13679 13540 13473 12974 4/07 14036 14140 13839 13309 5/07 14339 14633 14059 13553 6/07 14230 14390 13927 13421 7/07 13960 13944 13717 13200 8/07 14026 14153 13828 13296 9/07 14383 14682 14221 13652 10/07 14751 14915 14482 13869 11/07 14296 14291 14205 13594 12/07 14283 14192 14129 13487 1/08 13649 13341 13619 13083 2/08 13418 12908 13473 12898 3/08 13222 12852 13426 12813 4/08 13718 13478 13844 13216 5/08 13891 13653 13948 13337 6/08 13130 12503 13232 12672
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. [MOUNTAIN CHART] 7/08 13002 12398 13122 12487 8/08 13014 12577 13164 12501 9/08 11849 11458 12243 11555 10/08 10086 9534 10660 10026 11/08 9544 8849 10266 9507 12/08 9868 8943 10659 9794
Supplement to Annual Report dated 12/31/08 AIM MODERATE GROWTH ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (4/29/05) -2.97% 1 Year -36.55 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.90%.(1,2) 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 0.90%. 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. 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.78%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund data from 4/29/05, index data from 4/30/05
AIM Lipper Moderate Growth Mixed-Asset Allocation Fund- Custom Moderate Target Allocation Institutional Class Growth Allocation Growth Funds Date Shares S&P 500 Index(2) Index(1) Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 4/29/05 $ 10000 4/05 10000 $ 10000 $ 10000 $ 10000 5/05 10338 10318 10243 10211 6/05 10527 10333 10340 10304 7/05 10856 10717 10649 10525 8/05 10875 10619 10668 10547 9/05 11024 10705 10806 10608 10/05 10826 10526 10600 10439 11/05 11184 10924 10908 10678 12/05 11397 10928 11045 10757 1/06 11919 11217 11423 11082 2/06 11878 11248 11443 11014 3/06 12119 11388 11630 11112 4/06 12320 11541 11808 11274 5/06 11919 11209 11486 11073 6/06 11878 11224 11515 11084 7/06 11867 11293 11576 11207 8/06 12098 11561 11850 11415 9/06 12278 11859 12028 11576 10/06 12659 12245 12408 11858 11/06 12960 12478 12684 12081 12/06 13123 12653 12840 12215 1/07 13359 12844 13022 12356 2/07 13256 12593 12959 12322 3/07 13462 12734 13100 12447 4/07 13894 13298 13534 12827 5/07 14305 13761 13842 13136 6/07 14151 13533 13659 13026 7/07 13739 13114 13343 12762 8/07 13842 13310 13457 12860 9/07 14325 13807 13927 13236 10/07 14768 14027 14218 13468 11/07 14161 13440 13769 13102 12/07 14107 13347 13645 13013 1/08 13239 12547 12945 12508 2/08 13025 12140 12751 12297 3/08 12843 12087 12705 12196 4/08 13454 12676 13230 12639 5/08 13689 12840 13393 12794 6/08 12746 11758 12489 12060 7/08 12574 11659 12361 11902 8/08 12563 11828 12387 11929 9/08 11298 10775 11316 10981 10/08 9294 8966 9506 9434 11/08 8608 8322 8950 9008 12/08 8952 8410 9288 9231
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. Supplement to Annual Report dated 12/31/08 AIM MODERATELY CONSERVATIVE ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (4/29/05) -0.57% 1 Year -20.87 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.84%.(1,2) 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 0.97%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.70%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund data from 4/29/05, index data from 4/30/05
AIM Moderately Lipper Conservative Custom Mixed-Asset Allocation Fund- Moderately Target Allocation Institutional Class Conservative Conservative Date Shares S&P 500 Index(2) Allocation Index(1) Funds Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 4/29/05 $ 10000 4/05 10000 $ 10000 $ 10000 $ 10000 5/05 10199 10318 10194 10174 6/05 10299 10333 10269 10244 7/05 10429 10717 10385 10376 8/05 10459 10619 10449 10429 9/05 10499 10705 10455 10454 10/05 10399 10526 10318 10338 11/05 10588 10924 10498 10500 12/05 10718 10928 10598 10574 1/06 10940 11217 10771 10760 2/06 10930 11248 10801 10756 3/06 11011 11388 10831 10823 4/06 11082 11541 10900 10883 5/06 10880 11209 10745 10767 6/06 10859 11224 10762 10773 7/06 10909 11293 10855 10841 8/06 11061 11561 11065 11005 9/06 11183 11859 11208 11137 10/06 11385 12245 11421 11306 11/06 11547 12478 11609 11474 12/06 11620 12653 11652 11505 1/07 11735 12844 11732 11574 2/07 11745 12593 11785 11621 3/07 11871 12734 11849 11693 4/07 12101 13298 12084 11885 5/07 12258 13761 12196 11979 6/07 12196 13533 12092 11888 7/07 12039 13114 11981 11817 8/07 12090 13310 12108 11875 9/07 12320 13807 12366 12121 10/07 12571 14027 12543 12276 11/07 12373 13440 12438 12177 12/07 12377 13347 12414 12156 1/08 12058 12547 12191 12057 2/08 11938 12140 12081 12008 3/08 11828 12087 12063 11941 4/08 12102 12676 12316 12134 5/08 12202 12840 12357 12253 6/08 11784 11758 11920 11962 7/08 11708 11659 11862 11839 8/08 11730 11828 11951 11837 9/08 10884 10775 11349 11269 10/08 9775 8966 10239 10162 11/08 9555 8322 10058 9854 12/08 9793 8410 10433 10187
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Funds designate the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008: FEDERAL AND STATE INCOME TAX
LONG TERM CAPITAL QUALIFIED DIVIDEND CORPORATE DIVIDENDS U.S. TREASURY GAIN DISTRIBUTIONS INCOME* RECEIVED DEDUCTION* OBLIGATIONS* - --------------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund $ 1,076,098 6.00% 4.85% 4.51% - --------------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 31,367,908 65.00% 33.95% 0.01% - --------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 18,890,302 18.90% 7.12% 0.07% - --------------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 16,024,968 39.00% 22.86% 0.04% - --------------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 997,965 9.00% 5.25% 0.24% - ---------------------------------------------------------------------------------------------------------------------------------
* The above percentage is based on ordinary income dividends paid to shareholders during the Fund's fiscal year. ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the Funds are as follows:
MARCH 31, 2008 JUNE 30, 2008 SEPTEMBER 30, 2008 DECEMBER 31, 2008 - ----------------------------------------------------------------------------------------------------------------------------- AIM Conservative Allocation Fund 63.62% 63.52% 73.56% 80.32% - ----------------------------------------------------------------------------------------------------------------------------- AIM Growth Allocation Fund 37.38% 22.48% 37.87% 38.96% - ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Allocation Fund 60.27% 58.31% 57.56% 60.99% - ----------------------------------------------------------------------------------------------------------------------------- AIM Moderate Growth Allocation Fund 47.89% 49.15% 48.32% 49.10% - ----------------------------------------------------------------------------------------------------------------------------- AIM Moderately Conservative Allocation Fund 66.30% 64.08% 64.94% 71.26% - -----------------------------------------------------------------------------------------------------------------------------
59 AIM ALLOCATION FUNDS TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 60 AIM ALLOCATION FUNDS TRUSTEES AND OFFICERS--(CONTINUED) NOTE 12--LEGAL PROCEEDINGS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
61 AIM ALLOCATION FUNDS [GO PAPERLESS GRAPHIC] GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: - - ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of trees used to produce paper. - - ECONOMICAL. Help reduce your fund's printing and delivery expenses and put more capital back in your fund's returns. - - EFFICIENT. Stop waiting for regular mail. Your documents will be sent via email as soon as they're available. - - easy. Download, save and print files using your home computer with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim. com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. [INVESCO AIM LOGO] - - SERVICE MARK - invescoaim.com AAS-AR-1 Invesco Aim Distributors, Inc. AIM Global Equity Fund [Invesco Aim Logo] Annual Report to Shareholders - December 31, 2008 - service mark -
[MOUNTAIN GRAPHIC] 2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 6 Long-Term Fund Performance 8 Supplemental Information 9 Schedule of Investments 11 Financial Statements 14 Notes to Financial Statements 20 Financial Highlights 22 Auditor's Report 23 Fund Expenses 24 Tax Information 25 Trustees and Officers
[TAYLOR PHOTO] Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this opportunity to update you on market developments during calendar year 2008 and provide you with some perspective and encouragement. PHILIP TAYLOR MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3)
For example, the S&P 500 Index,considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the country-region place U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: - INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. - DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. - STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /S/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim 1 U.S. Federal Reserve; 2 Bureau of Labor Statistics; 3 FactSet Research; 4 Wall Street Journal 2 AIM GLOBAL EQUITY FUND [CROCKETT PHOTO] Dear Fellow Shareholders: Bruce Crockett Since my last letter, continuing troubles in the global economy and financial markets have negatively affected all investors. The new government promises to move quickly with a stimulus package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets.
In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high" has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com. Best regards, /S/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 3 AIM GLOBAL EQUITY FUND MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE ================================================================================ PERFORMANCE SUMMARY For the fiscal year ended December 31, 2008, all share classes of AIM Global Equity Fund, at net asset value (NAV), lagged the Fund's style-specific benchmark, the MSCI World Index.# This was one of the most challenging years in history for financial markets. All sectors were down for the period. However, consumer staples and utilities held up comparatively well while financials and materials were the worst performing sectors.# Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -43.90% Class B Shares -44.32 Class C Shares -44.30 Class R Shares -44.03 Class Y Shares* -43.82 MSCI World Index# (Broad Market/Style-Specific Index) -40.71 Lipper Global Multi-Cap Core Funds Index# (Peer Group Index) -36.70
#Lipper Inc. *Share class incepted during the fiscal year. See page 7 for a detailed explanation of Fund performance. ================================================================================ HOW WE INVEST We manage your Fund to provide exposure to global large capitalization stocks. The portfolio is designed to outperform the MSCI World Index while minimizing the amount of additional risk relative to the benchmark. The Fund can be used as a long-term allocation to large cap stocks that complements other style-specific strategies within a diversified asset allocation strategy. The investment process integrates the following key steps: - - Universe Development - - Stock Rankings - - Risk Assessment - - Portfolio Construction - - Trading While the companies included within the MSCI World Index are used as a general guide for developing the Fund's investable universe, non-benchmark stocks may also be considered. Each stock in the universe is evaluated on four factors: company earnings momentum, price trend, management action and relative valuation. The sum of the scores from these four factors makes up our alpha (excess return) forecast, relative to the average stock in the universe. Stocks are also evaluated on a multitude of other factors to develop a stock-specific risk forecast and transaction cost forecast. We then incorporate the alpha forecast, risk forecast and transaction cost forecast -- using an optimizer (a proprietary software system) -- to build a portfolio that we believe is an optimal balance of the stocks' potential return and risk. This portfolio is constructed according to certain constraints to increase the probability that the Fund's relative performance and volatility remain within the Fund strategy's guidelines. The portfolio is continually monitored by the Fund management team. The overall investment process is repeated on a monthly basis to determine which companies should be bought or sold within the portfolio. MARKET CONDITIONS AND YOUR FUND The fiscal year ended December 31, 2008, was very challenging for investors. It can be difficult to maintain perspective during periods of crisis but we should remember that equity markets have gone through similarly difficult environments in the past and have always recovered.At the end of the reporting period, the challenges were serious, but central banks around the world were taking aggressive action to ease the crisis. We believe the issues were not insurmountable and investors should not abandon their long-term investment strategy. We were often asked "how did our economy get into this mess?" It is not a simple question to answer, but essentially there was an excessive amount of leverage in the system -- too much debt and not enough assets to back it up. For many years, financial institutions have been taking on additional risk in an effort to remain competitive with their rivals, and banks had to reach beyond their traditional revenue sources to keep up with their peers. Consumers have also taken more and more risk onto their personal balance sheets, most notably in the country-region place United States. While financial, institutional and individual consumers were not exclusively behind the current crisis, they played a role, and our economy began the painful process of "deleveraging." Regarding the results of AIM Global Equity Fund, the Fund underperformed ================================================================================ PORTFOLIO COMPOSITION By sector Financials 17.6% Consumer Discretionary 14.4 Energy 13.5 Information Technology 13.4 Health Care 11.5 Industrials 11.3 Consumer Staples 10.1 Materials 3.2 Utilities 2.9 Telecommunication Services 2.3 Other Assets Less Liabilities (0.2)
================================================================================ ================================================================================ TOP FIVE COUNTRIES 1. United States 49.0% 2. Japan 13.1 3. United Kingdom 8.7 4. France 6.7 5. Australia 5.4
================================================================================ ================================================================================ Total Net Assets $182.1 million Total Number of Holdings* 87
================================================================================ TOP 10 EQUITY HOLDINGS ================================================================================ 1. Exxon Mobil Corp. 5.2% 2. Pfizer Inc. 3.7 3. Chevron Corp. 3.6 4. International Business Machines Corp. 3.5 5. McDonald's Corp. 3.3 6. Microsoft Corp. 3.3 7. Gap, Inc. (The) 3.0 8. British American Tobacco PLC 2.8 9. Nissan Motor Co. 2.7 10. Westpac Banking Corp. 2.7
================================================================================ The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. 4 AIM GLOBAL EQUITY FUND its style-specific benchmark, the MSCI World Index.(1) All sectors were down for the year, but traditionally defensive areas held up comparatively well, such as the consumer staples and utilities sectors. In contrast, embattled financials was one of the worst performing sectors along with materials -- which declined sharply in the second half of 2008 as stalling economic growth reduced the demand for raw materials. Our stock selection model is based on four factors: earnings momentum, price trend, management action and relative value that make up our alpha (excess return) forecast for stocks in our investment universe. The investment universe consists of roughly 3,000 stocks globally. We use our optimization software to assist in making investment decisions based on risk and transaction cost forecasts as well as our alpha forecast. From May 2008 (inception of Invesco Quantitative Strategies' management of the Fund) to December 2008, stock selection was a negative contributor to the Fund's performance. Within materials, NORDDEUTSCHE AFFINERIE went against the trend of its peers and delivered positive returns for the year, making it a top contributor to Fund results. We sold this holding. On the other hand, the primary detractor from Fund returns was ANGLO IRISH BANK. The company was under pressure for most of the year, and eventually, the Irish government stepped in with a significant capital injection into the bank, giving it 75% of the company's voting rights. The Fund benefited from not owning some of the troubled companies like insurance giant American International Group or banking giant Citigroup, which needed billions in government aid to stay afloat. In terms of risk management, we seek to minimize any biases in the portfolio. Active managers seek to add value in one of or a combination of five areas: beta bias (relative volatility), style bias, sector/industry over/under weight, country/currency over/underweight and stock selection. We attempt to add value through our stock selection decisions. Consequently, our risk management process seeks to neutralize the Fund's exposure relative to the benchmark with regard to beta, style, sector/industry and country/currency exposures. The style factors, success and value, which are positively correlated with our price trend and relative value concepts and therefore directly related to our stock selection model, were the only intended style factors. Both factors negatively affected the Fund's performance. We thank you for your continued investment in AIM Global Equity Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. UWE DRAEGER Portfolio manager, is manager of AIM Global Equity Fund. Mr. Draeger joined Invesco Deutschland in 2005 as head of the portfolio construction and trading team. He began his investment career in 1995. Mr. Draeger earned a Diplom-okonom degree from HochschYle fur okonomie State Berlin, an M.A. from City of City London Polytechnic and an Place Name M.B.A. Place Name Anglia Place Name Business Place Type School (City place Cambridge). MICHAEL FRAIKIN Portfolio manager, is manager of AIM Global Equity Fund. He began his investment career in 1991. Mr. Fraikin earned an M.S. in accounting and finance from the London School of Economics and a B.A. with honors from the Place Type University of Place Name Reutlingen and Place Name Middle sex Place Type University (City place London) within the combined European study program. NILS HUTER Portfolio manager, is manager of AIM Global Equity Fund. Mr. Huter joined Invesco Deutschland in 2007. He earned a Diplom Kaufman (FH) degree from the Place Type University of Place Name Applied Sciences and Arts in City place Hildesheim. THORSTEN PAARMANN Chartered Financial Analyst, portfolio manager, is manager of AIM Global Equity Fund. He joined Invesco Deutschland in 2004. Mr. Paarmann earned a Diplom Kaufmann (FH) degree from Berlin School of Economics and Place Name Anglia Place Name Business Place Type School (City place Cambridge) within the combined European study program. ALEXANDER UHLMANN Chartered Financial Analyst, portfolio manager, is manager of AIM Global Equity Fund. Mr. Uhlmann began his investment career with Invesco Deutschland in 1997. He earned a Diplom Betriebswirt (FH) degree from the Place Name Business Place Type School for Banking and Finance (HfB) in place Frankfurt. Assisted by the Invesco Deutschland's Quantitative Strategies Team 5 AIM GLOBAL EQUITY FUND YOUR FUND'S LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. This chart, which is a logarithmic chart, presents the fluctuations in the value of the Fund and its indexes. We believe that a logarithmic chart is more effective than other types of charts in illustrating changes in value during the early years shown in the chart. The vertical axis, the one that indicates the dollar value of an investment, is constructed with each segment representing a percent change in the value of the investment. In this chart, each segment represents a doubling, or 100% change, in the value of the investment. In other words, the space between $5,000 and $10,000 is the same size as the space between $10,000 and $20,000, and so on. 6 AIM Global Equity Fund ================================================================================ [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Index data from 8/31/97, Fund data from 9/15/97
AIM Global AIM Global Equity Fund- Equity Fund- Date Class A Shares Class B Shares MSCI World Index(1) 8/31/97 $10000 9/97 $9648 $10201 10542 10/97 9243 9773 9985 11/97 9103 9624 10160 12/97 9196 9716 10282 1/98 8963 9470 10567 2/98 9698 10239 11280 3/98 10217 10778 11755 4/98 10321 10888 11868 5/98 10070 10622 11717 6/98 10251 10797 11994 7/98 10027 10568 11973 8/98 8314 8756 10374 9/98 8418 8866 10556 10/98 8790 9241 11508 11/98 9344 9827 12191 12/98 10059 10575 12785 1/99 10401 10927 13063 2/99 10049 10556 12713 3/99 10576 11103 13241 4/99 11190 11743 13761 5/99 10769 11298 13256 6/99 11453 12012 13873 7/99 11339 11891 13829 8/99 11259 11808 13803 9/99 11382 11929 13667 10/99 12128 12708 14376 11/99 13234 13856 14778 12/99 15280 15988 15973 1/00 14505 15179 15056 2/00 15522 16223 15095 3/00 15551 16263 16136 4/00 14642 15291 15452 5/00 14012 14636 15059 6/00 14574 15210 15564 7/00 14313 14933 15124 8/00 15504 16171 15614 9/00 14865 15495 14782 10/00 13694 14267 14533 11/00 13064 13602 13649 12/00 14075 14660 13868 1/01 13557 14113 14135 2/01 12712 13220 12939 3/01 11709 12181 12087 4/01 12627 13131 12977 5/01 12553 13052 12808 6/01 12225 12694 12405 7/01 11993 12448 12239 8/01 11655 12102 11650 9/01 10630 11041 10622 10/01 10936 11353 10825
================================================================================ 1 Lipper Inc. ================================================================================ [MOUNTAIN CHART] 11/01 11285 11711 11464 12/01 11676 12104 11535 1/02 11390 11813 11184 2/02 11454 11869 11086 3/02 11995 12431 11596 4/02 12112 12543 11180 5/02 12165 12588 11199 6/02 11826 12240 10518 7/02 10881 11252 9630 8/02 10912 11286 9647 9/02 10106 10434 8585 10/02 10584 10928 9217 11/02 10892 11241 9713 12/02 10563 10894 9241 1/03 10457 10782 8959 2/03 10266 10580 8802 3/03 10266 10580 8773 4/03 10988 11321 9551 5/03 11773 12118 10095 6/03 11953 12308 10268 7/03 12452 12813 10475 8/03 12759 13126 10700 9/03 12759 13115 10765 10/03 13566 13933 11402 11/03 14001 14393 11575 12/03 14523 14911 12300 1/04 14932 15319 12497 2/04 15232 15626 12707 3/04 15264 15660 12622 4/04 14995 15366 12364 5/04 15305 15695 12467 6/04 15734 16126 12733 7/04 15251 15615 12317 8/04 15272 15638 12371 9/04 15798 16161 12605 10/04 16077 16444 12914 11/04 16989 17374 13592 12/04 17665 18055 14111 1/05 17428 17792 13793 2/05 18218 18592 14230 3/05 17970 18330 13955 4/05 17350 17685 13650 5/05 17723 18067 13892 6/05 17881 18210 14012 7/05 18467 18796 14502 8/05 18366 18689 14611 9/05 18660 18964 14991 10/05 18141 18425 14627 11/05 18750 19046 15114 12/05 19332 19616 15449 1/06 20414 20694 16139 2/06 20475 20761 16115 3/06 20948 21222 16469 4/06 21445 21708 16969 5/06 20712 20959 16390 6/06 20799 21038 16385 7/06 20599 20815 16487 8/06 21110 21315 16915 9/06 21148 21340 17117 10/06 21932 22115 17745 11/06 22478 22668 18180 12/06 22982 23153 18549 1/07 23485 23639 18768 2/07 23248 23389 18671 3/07 23583 23714 19012 4/07 24686 24802 19851 5/07 25301 25405 20407
================================================================================ ================================================================================ [MOUNTAIN CHART] 6/07 24939 25021 20250 7/07 24465 24536 19801 8/07 24409 24448 19786 9/07 25261 25301 20727 10/07 26322 26346 21363 11/07 24590 24594 20490 12/07 24179 24153 20225 1/08 22547 22518 18680 2/08 22105 22070 18572 3/08 22024 21984 18394 4/08 23118 23050 19360 5/08 23167 23085 19655 6/08 21436 21347 18088 7/08 20686 20589 17646 8/08 20392 20280 17398 9/08 17894 17769 15329 10/08 14466 14363 12422 11/08 13356 13261 11618 12/08 13561 13782 11991
================================================================================ ================================================================================ AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (9/15/97) 2.73% 10 Years 2.45 5 Years -2.47 1 Year -46.98 CLASS B SHARES Inception (9/15/97) 2.88% 10 Years 2.59 5 Years -2.28 1 Year -46.88 CLASS C SHARES Inception (1/2/98) 3.01% 10 Years 2.44 5 Years -2.04 1 Year -44.81 CLASS R SHARES 10 Years 2.85% 5 Years -1.56 1 Year -44.03 CLASS Y SHARES 10 Years 3.05% 5 Years -1.33 1 Year -43.82
================================================================================ CLASS R SHARES' INCEPTION DATE IS OCTOBER 31, 2005. RETURNS SINCE THAT DATE ARE HISTORICAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF HISTORICAL CLASS R SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS R SHARES) AT NET ASSET VALUE, ADJUSTED TO REFLECT THE HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS R SHARES. CLASS A SHARES' INCEPTION DATE IS SEPTEMBER 15, 1997. CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES' INCEPTION DATE IS SEPTEMBER 15, 1997. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.40%, 2.15%, 2.15%, 1.65% AND 1.15%, RESPECTIVELY. THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. A REDEMPTION FEE OF 2% WILL BE IMPOSED ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF THE FUND WITHIN 31 DAYS OF PURCHASE. EXCEPTIONS TO THE REDEMPTION FEE ARE LISTED IN THE FUND'S PROSPECTUS. 7 AIM GLOBAL EQUITY FUND AIM GLOBAL EQUITY FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. - - Unless otherwise stated, information presented in this report is as of December 31, 2008, and is based on total net assets. - - Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES - - Effective September 30, 2003, only previously established qualified plans are eligible to purchase Class B shares of any AIM fund. - - Class R shares are available only to certain retirement plans. Please see the prospectus for more information. - - Class Y shares are available to only certain investors. Please see the prospectus for more information. PRINCIPAL RISKS OF INVESTING IN THE FUND - - Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations, including making timely payment of interest and principal. - - The Fund is subject to currency/exchange rate risk because it may buy or sell currencies other than the U.S. dollar. - - Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. - - Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, relative lack of information, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards. - - The Fund may use enhanced investment techniques such as leveraging and derivatives. Leveraging entails risks such as magnifying changes in the value of the portfolio's securities. Derivatives are subject to counterparty risk -- the risk that the other party will not complete the transaction with the Fund. - - Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. - - There is no guarantee that the investment techniques and risk analysis used by the Fund's portfolio managers will produce the desired results. - - The prices of securities held by the Fund may decline in response to market risks. - - Although the Fund's return during certain periods was positively impacted by its investments in initial public offerings (IPOs), there can be no assurance that the Fund will have favorable IPO investment opportunities in the future. - - The Fund may engage in active and frequent trading of portfolio securities to achieve its investment objective. If a fund does trade in this way, it may incur increased costs, which can lower the actual return of the fund. Active trading may also increase short term gains and losses, which may affect taxes that must be paid. ABOUT INDEXES USED IN THIS REPORT - - 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. OTHER INFORMATION - - The Chartered Financial Analyst --REGISTERED TRADEMARK-- (CFA--REGISTERED TRADEMARK--) designation is a globally recognized standard for measuring the competence and integrity of investment professionals. - - The returns shown in management's discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. - - Industry classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor's. ================================================================================ THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. ================================================================================ NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE ================================================================================
FUND NASDAQ SYMBOLS Class A Shares GTNDX Class B Shares GNDBX Class C Shares GNDCX Class R Shares GTNRX Class Y Shares GTNYX
================================================================================ 8 AIM GLOBAL EQUITY FUND SCHEDULE OF INVESTMENTS(a) December 31, 2008
SHARES VALUE - ------------------------------------------------------------------------------ COMMON STOCKS & OTHER EQUITY INTERESTS-100.15% AUSTRALIA-5.38% BHP Billiton Ltd. 44,030 $ 945,652 - ------------------------------------------------------------------------------ Commonwealth Bank of Australia 141,138 2,918,112 - ------------------------------------------------------------------------------ Westfield Group 106,892 1,004,332 - ------------------------------------------------------------------------------ Westpac Banking Corp. 405,645 4,926,117 ============================================================================== 9,794,213 ============================================================================== BELGIUM-0.23% Dexia S.A. 92,932 420,323 ============================================================================== BERMUDA-1.25% Arch Capital Group Ltd.(b) 32,390 2,270,539 ============================================================================== CANADA-2.71% Brookfield Asset Management Inc.-Class A 45,400 695,189 - ------------------------------------------------------------------------------ Fairfax Financial Holdings Ltd. 10,275 3,232,025 - ------------------------------------------------------------------------------ Royal Bank of Canada 21,500 636,173 - ------------------------------------------------------------------------------ Teck Cominco Ltd.-Class B 73,900 364,443 ============================================================================== 4,927,830 ============================================================================== DENMARK-3.43% A P Moller-Maersk A.S. 711 3,827,899 - ------------------------------------------------------------------------------ Novo Nordisk A.S.-Class B 47,402 2,423,892 ============================================================================== 6,251,791 ============================================================================== FINLAND-1.74% Nokia Oyj 202,845 3,159,964 ============================================================================== FRANCE-6.73% Axa S.A. 44,842 1,004,594 - ------------------------------------------------------------------------------ BNP Paribas 21,669 915,585 - ------------------------------------------------------------------------------ Bouygues S.A. 97,492 4,146,641 - ------------------------------------------------------------------------------ Legrand S.A. 138,231 2,669,000 - ------------------------------------------------------------------------------ PSA Peugeot Citroen S.A. 173,694 2,976,004 - ------------------------------------------------------------------------------ UbiSoft Entertainment S.A.(b) 27,156 533,518 ============================================================================== 12,245,342 ============================================================================== GERMANY-2.03% Bilfinger Berger AG 38,876 2,066,704 - ------------------------------------------------------------------------------ Deutsche Lufthansa AG 101,973 1,622,316 ============================================================================== 3,689,020 ============================================================================== HONG KONG-0.80% Cheung Kong (Holdings) Ltd. 153,000 1,458,686 ============================================================================== IRELAND-1.24% Anglo Irish Bank Corp. PLC 830,581 200,442 - ------------------------------------------------------------------------------ Kerry Group PLC-Class A 112,491 2,058,369 ============================================================================== 2,258,811 ============================================================================== ITALY-0.77% Enel S.p.A. 121,731 782,263 - ------------------------------------------------------------------------------ Eni S.p.A. 26,219 624,300 ============================================================================== 1,406,563 ============================================================================== JAPAN-13.09% Asahi Breweries, Ltd. 137,700 2,367,784 - ------------------------------------------------------------------------------ Astellas Pharma Inc. 85,700 3,484,370 - ------------------------------------------------------------------------------ Chubu Electric Power Co., Inc. 6,500 197,389 - ------------------------------------------------------------------------------ Electric Power Development Co., Ltd. 5,900 231,557 - ------------------------------------------------------------------------------ Hisamitsu Pharmaceutical Co., Inc. 58,800 2,398,637 - ------------------------------------------------------------------------------ Hitachi, Ltd. 245,000 949,349 - ------------------------------------------------------------------------------ Matsushita Electric Industrial Co., Ltd. 97,000 1,214,441 - ------------------------------------------------------------------------------ Nippon Electric Glass Co., Ltd. 400,000 2,099,281 - ------------------------------------------------------------------------------ Nissan Motor Co., Ltd. 1,383,300 5,006,182 - ------------------------------------------------------------------------------ Nissha Printing Co., Ltd. 11,100 441,237 - ------------------------------------------------------------------------------ NTT Data Corp. 213 854,313 - ------------------------------------------------------------------------------ Toyo Suisan Kaisha, Ltd. 160,000 4,595,050 ============================================================================== 23,839,590 ============================================================================== NORWAY-1.32% Frontline Ltd. 24,420 716,947 - ------------------------------------------------------------------------------ StatoilHydro A.S.A. 101,749 1,687,085 ============================================================================== 2,404,032 ============================================================================== SINGAPORE-0.22% Jardine Matheson Holdings Ltd. 22,000 407,000 ============================================================================== SWEDEN-0.58% Loomis AB-Class B(b) 10,836 67,827 - ------------------------------------------------------------------------------ Securitas A.B.-Class B 54,182 449,268 - ------------------------------------------------------------------------------ Swedbank A.B. 91,900 532,446 ============================================================================== 1,049,541 ============================================================================== SWITZERLAND-0.93% Nestle S.A. 13,480 530,224 - ------------------------------------------------------------------------------ Novartis AG 23,230 1,161,609 ============================================================================== 1,691,833 ============================================================================== UNITED KINGDOM-8.65% AstraZeneca PLC 30,119 1,194,485 - ------------------------------------------------------------------------------ BHP Billiton PLC 28,955 553,445 - ------------------------------------------------------------------------------ British American Tobacco PLC 192,581 5,077,507 - ------------------------------------------------------------------------------
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM GLOBAL EQUITY FUND
SHARES VALUE - ------------------------------------------------------------------------------ UNITED KINGDOM-(CONTINUED) Eurasian Natural Resources Corp. 170,520 $ 828,714 - ------------------------------------------------------------------------------ Ladbrokes PLC 678,076 1,840,140 - ------------------------------------------------------------------------------ Royal Dutch Shell PLC-Class B 39,876 1,018,343 - ------------------------------------------------------------------------------ Standard Chartered PLC 180,893 2,346,426 - ------------------------------------------------------------------------------ Tesco PLC 495,337 2,618,622 - ------------------------------------------------------------------------------ Vodafone Group PLC 136,506 278,844 ============================================================================== 15,756,526 ============================================================================== UNITED STATES-49.05% Aeropostale, Inc.(b) 98,081 1,579,104 - ------------------------------------------------------------------------------ Bank of New York Mellon Corp. 113,789 3,223,642 - ------------------------------------------------------------------------------ Big Lots, Inc.(b) 74,400 1,078,056 - ------------------------------------------------------------------------------ CF Industries Holdings, Inc. 53,900 2,649,724 - ------------------------------------------------------------------------------ Chevron Corp. 87,734 6,489,684 - ------------------------------------------------------------------------------ ConocoPhillips 71,880 3,723,384 - ------------------------------------------------------------------------------ D.R. Horton, Inc. 72,500 512,575 - ------------------------------------------------------------------------------ Energen Corp. 92,151 2,702,789 - ------------------------------------------------------------------------------ Express Scripts, Inc.(b) 47,356 2,603,633 - ------------------------------------------------------------------------------ Exxon Mobil Corp. 117,965 9,417,146 - ------------------------------------------------------------------------------ Gap, Inc. (The) 411,928 5,515,716 - ------------------------------------------------------------------------------ Goldman Sachs Group, Inc. (The) 16,508 1,393,110 - ------------------------------------------------------------------------------ InterDigital, Inc.(b) 19,800 544,500 - ------------------------------------------------------------------------------ International Business Machines Corp. 75,741 6,374,363 - ------------------------------------------------------------------------------ Johnson & Johnson 13,364 799,568 - ------------------------------------------------------------------------------ Lockheed Martin Corp. 45,736 3,845,483 - ------------------------------------------------------------------------------ Marsh & McLennan Cos., Inc. 59,000 1,431,930 - ------------------------------------------------------------------------------ MasterCard, Inc.-Class A 9,493 1,356,835 - ------------------------------------------------------------------------------ McDonald's Corp. 97,111 6,039,333 - ------------------------------------------------------------------------------ Microsoft Corp. 306,197 5,952,470 - ------------------------------------------------------------------------------ Mirant Corp.(b) 68,617 1,294,803 - ------------------------------------------------------------------------------ Northrop Grumman Corp. 23,628 1,064,205 - ------------------------------------------------------------------------------ Perrigo Co. 5,927 191,501 - ------------------------------------------------------------------------------ Pfizer Inc. 376,627 6,670,064 - ------------------------------------------------------------------------------ Procter & Gamble Co. (The) 19,337 1,195,413 - ------------------------------------------------------------------------------ QLogic Corp.(b) 136,400 1,833,216 - ------------------------------------------------------------------------------ RadioShack Corp. 42,583 508,441 - ------------------------------------------------------------------------------ State Street Corp. 86,665 3,408,534 - ------------------------------------------------------------------------------ Terra Industries Inc. 27,861 464,443 - ------------------------------------------------------------------------------ Texas Instruments Inc. 43,164 669,905 - ------------------------------------------------------------------------------ Walter Industries, Inc. 46,174 808,507 - ------------------------------------------------------------------------------ Windstream Corp. 430,742 3,962,826 ============================================================================== 89,304,903 ============================================================================== TOTAL INVESTMENTS-100.15% (Cost $268,089,393) 182,336,507 ============================================================================== OTHER ASSETS LESS LIABILITIES-(0.15)% (279,856) ============================================================================== NET ASSETS-100.00% $182,056,651 ______________________________________________________________________________ ==============================================================================
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. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM GLOBAL EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments, at value (Cost $268,089,393) $182,336,507 - ------------------------------------------------------ Foreign currencies, at value (Cost $527,340) 533,677 - ------------------------------------------------------ Receivables for: Fund shares sold 216,703 - ------------------------------------------------------ Dividends 266,738 - ------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 15,694 - ------------------------------------------------------ Other assets 64,813 ====================================================== Total assets 183,434,132 ====================================================== LIABILITIES: Payables for: Fund shares reacquired 712,765 - ------------------------------------------------------ Amount due custodian 306,186 - ------------------------------------------------------ Accrued fees to affiliates 187,929 - ------------------------------------------------------ Accrued other operating expenses 123,636 - ------------------------------------------------------ Trustee deferred compensation and retirement plans 46,965 ====================================================== Total liabilities 1,377,481 ====================================================== Net assets applicable to shares outstanding $182,056,651 ====================================================== NET ASSETS CONSIST OF: Shares of beneficial interest $342,850,982 - ------------------------------------------------------ Undistributed net investment income 2,899,607 - ------------------------------------------------------ Undistributed net realized gain (loss) (77,947,215) - ------------------------------------------------------ Unrealized appreciation (depreciation) (85,746,723) ====================================================== $182,056,651 ====================================================== NET ASSETS: Class A $132,058,234 ====================================================== Class B $ 22,769,901 ====================================================== Class C $ 13,575,179 ====================================================== Class R $ 606,516 ====================================================== Class Y $ 182,831 ====================================================== Institutional Class $ 12,863,990 ====================================================== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 17,156,777 ====================================================== Class B 3,157,354 ====================================================== Class C 1,886,476 ====================================================== Class R 78,981 ====================================================== Class Y 23,725 ====================================================== Institutional Class 1,647,546 ====================================================== Class A: Net asset value per share $ 7.70 - ------------------------------------------------------ Maximum offering price per share (Net asset value of $7.70 divided by 94.50%) $ 8.15 ====================================================== Class B: Net asset value and offering price per share $ 7.21 ====================================================== Class C: Net asset value and offering price per share $ 7.20 ====================================================== Class R: Net asset value and offering price per share $ 7.68 ====================================================== Class Y: Net asset value and offering price per share $ 7.71 ====================================================== Institutional Class: Net asset value and offering price per share $ 7.81 ======================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM GLOBAL EQUITY FUND STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $537,639) $ 8,934,562 - ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $435,750) 655,335 ================================================================================================ Total investment income 9,589,897 ================================================================================================ EXPENSES: Advisory fees 2,758,530 - ------------------------------------------------------------------------------------------------ Administrative services fees 122,244 - ------------------------------------------------------------------------------------------------ Custodian fees 127,520 - ------------------------------------------------------------------------------------------------ Distribution fees: Class A 566,123 - ------------------------------------------------------------------------------------------------ Class B 477,073 - ------------------------------------------------------------------------------------------------ Class C 274,027 - ------------------------------------------------------------------------------------------------ Class R 3,526 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C, R and Y 941,318 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 44,874 - ------------------------------------------------------------------------------------------------ Trustees' and officers' fees and benefits 26,638 - ------------------------------------------------------------------------------------------------ Other 360,849 ================================================================================================ Total expenses 5,702,722 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (37,528) ================================================================================================ Net expenses 5,665,194 ================================================================================================ Net investment income 3,924,703 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) from: Investment securities (75,738,847) - ------------------------------------------------------------------------------------------------ Foreign currencies 485,570 - ------------------------------------------------------------------------------------------------ Futures contracts (2,166,947) ================================================================================================ (77,420,224) ================================================================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (100,364,786) - ------------------------------------------------------------------------------------------------ Foreign currencies 2,022 - ------------------------------------------------------------------------------------------------ Futures contracts 343,764 ================================================================================================ (100,019,000) ================================================================================================ Net realized and unrealized gain (loss) (177,439,224) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(173,514,521) ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM GLOBAL EQUITY FUND STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 - --------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 3,924,703 $ 6,418,007 - --------------------------------------------------------------------------------------------------------- Net realized gain (loss) (77,420,224) 74,097,880 - --------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (100,019,000) (51,690,367) ========================================================================================================= Net increase (decrease) in net assets resulting from operations (173,514,521) 28,825,520 ========================================================================================================= Distributions to shareholders from net investment income: Class A (516,563) (5,939,578) - --------------------------------------------------------------------------------------------------------- Class B (95,853) (858,998) - --------------------------------------------------------------------------------------------------------- Class C (57,868) (435,707) - --------------------------------------------------------------------------------------------------------- Class R (2,466) (8,313) - --------------------------------------------------------------------------------------------------------- Class Y (699) -- - --------------------------------------------------------------------------------------------------------- Institutional Class (49,547) (1,600,517) ========================================================================================================= Total distributions from net investment income (722,996) (8,843,113) ========================================================================================================= Distributions to shareholders from net realized gains: Class A (9,140,117) (41,556,306) - --------------------------------------------------------------------------------------------------------- Class B (1,697,161) (10,873,397) - --------------------------------------------------------------------------------------------------------- Class C (1,024,617) (5,515,532) - --------------------------------------------------------------------------------------------------------- Class R (43,642) (68,352) - --------------------------------------------------------------------------------------------------------- Class Y (12,382) -- - --------------------------------------------------------------------------------------------------------- Institutional Class (877,037) (9,127,643) ========================================================================================================= Total distributions from net realized gains (12,794,956) (67,141,230) ========================================================================================================= Share transactions-net: Class A (56,170,421) 23,552,976 - --------------------------------------------------------------------------------------------------------- Class B (29,382,265) (14,781,365) - --------------------------------------------------------------------------------------------------------- Class C (11,627,531) 3,282,172 - --------------------------------------------------------------------------------------------------------- Class R 588,389 395,091 - --------------------------------------------------------------------------------------------------------- Class Y 249,597 -- - --------------------------------------------------------------------------------------------------------- Institutional Class (50,804,670) 19,245,458 ========================================================================================================= Net increase (decrease) in net assets resulting from share transactions (147,146,901) 31,694,332 ========================================================================================================= Net increase (decrease) in net assets (334,179,374) (15,464,491) ========================================================================================================= NET ASSETS: Beginning of year 516,236,025 531,700,516 ========================================================================================================= End of year (includes undistributed net investment income of $2,899,607 and $(955,278), respectively) $ 182,056,651 $516,236,025 =========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM GLOBAL EQUITY FUND NOTES TO FINANCIAL STATEMENTS December 31, 2008 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 assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The Fund's investment objective is long-term growth of capital. The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. 14 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 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. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. J. REDEMPTION FEES -- The Fund has a 2% redemption fee that is to be retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, is imposed on certain redemptions or exchanges of shares within 31 days of purchase. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. K. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated 15 AIM GLOBAL EQUITY FUND 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. 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, effective May 1, 2008, between the Advisor and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the "Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Advisor(s). The Advisor has contractually agreed, through at least June 30, 2009, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Advisor receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. For the year ended December 31, 2008, the Advisor waived advisory fees of $10,508. At the request of the Trustees of the Trust, Invesco Ltd. ("Invesco") agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $2,256. The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. 16 AIM GLOBAL EQUITY 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 year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority ("FINRA") impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2008, IADI advised the Fund that IADI retained $27,278 in front-end sales commissions from the sale of Class A shares and $12,017, $60,229, $2,748 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN INPUT LEVEL SECURITIES - -------------------------------------- Level 1 $ 99,952,053 - -------------------------------------- Level 2 82,384,454 - -------------------------------------- Level 3 -- ====================================== $182,336,507 ======================================
NOTE 4--EXPENSE OFFSET ARRANGEMENTS The expense offset arrangements are comprised of (i) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (ii) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended December 31, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $24,764. NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to 17 AIM GLOBAL EQUITY FUND Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended December 31, 2008, the Fund paid legal fees of $4,180 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 6--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco Aim, not to exceed the contractually agreed upon rate. NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 - -------------------------------------------------------------------------------------------------------- Ordinary income $ 1,286,525 $41,137,308 - -------------------------------------------------------------------------------------------------------- Long-term capital gain 12,231,427 34,847,035 ======================================================================================================== Total distributions $13,517,952 $75,984,343 ========================================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
2008 - ------------------------------------------------------------------------------------------------ Undistributed ordinary income $ 3,265,843 - ------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) -- investments (86,803,359) - ------------------------------------------------------------------------------------------------ Net unrealized appreciation -- other investments 6,163 - ------------------------------------------------------------------------------------------------ Temporary book/tax differences (54,108) - ------------------------------------------------------------------------------------------------ Post-October loss deferrals (17,271,953) - ------------------------------------------------------------------------------------------------ Capital loss carryforward (59,936,917) - ------------------------------------------------------------------------------------------------ Shares of beneficial interest 342,850,982 ================================================================================================ Total net assets $182,056,651 ================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's net unrealized appreciation (depreciation) difference is attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. The Fund has a capital loss carryforward as of December 31, 2008 which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------------------------- December 31, 2016 $59,936,917 ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2008 was $388,319,190 and $535,554,291, 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 $ 3,987,293 - ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (90,790,652) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(86,803,359) ================================================================================================ Cost of investments for tax purposes is $269,139,866.
18 AIM GLOBAL EQUITY FUND NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of foreign currency transactions, partnership investments, passive foreign investment companies and proxy costs, on December 31, 2008, undistributed net investment income was increased by $653,178, undistributed net realized gain (loss) was decreased by $619,443 and shares of beneficial interest decreased by $33,735. This reclassification had no effect on the net assets of the Fund. NOTE 10--SHARE INFORMATION
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ------------------------------------------------------------- 2008(a) 2007 ----------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------- Sold: Class A 1,285,562 $ 15,404,060 2,695,620 $ 46,498,238 - ------------------------------------------------------------------------------------------------------------------------- Class B 261,570 3,091,092 595,531 9,814,196 - ------------------------------------------------------------------------------------------------------------------------- Class C 178,604 1,972,968 473,706 7,801,642 - ------------------------------------------------------------------------------------------------------------------------- Class R 60,238 762,903 27,712 486,177 - ------------------------------------------------------------------------------------------------------------------------- Class Y(b) 25,237 263,960 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 997,913 13,628,364 2,897,972 50,074,391 ========================================================================================================================= Issued as reinvestment of dividends: Class A 1,211,384 9,110,956 3,033,601 44,836,660 - ------------------------------------------------------------------------------------------------------------------------- Class B 245,083 1,727,247 785,736 11,023,881 - ------------------------------------------------------------------------------------------------------------------------- Class C 145,402 1,021,807 400,405 5,605,731 - ------------------------------------------------------------------------------------------------------------------------- Class R 6,148 46,108 5,187 76,665 - ------------------------------------------------------------------------------------------------------------------------- Class Y(b) 1,740 13,081 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 119,099 907,531 711,186 10,603,784 ========================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 1,172,084 14,475,248 838,355 14,456,246 - ------------------------------------------------------------------------------------------------------------------------- Class B (1,241,539) (14,475,248) (881,595) (14,456,246) ========================================================================================================================= Reacquired:(c) Class A(b) (7,935,085) (95,160,685) (4,820,592) (82,238,168) - ------------------------------------------------------------------------------------------------------------------------- Class B (1,684,856) (19,725,356) (1,288,797) (21,163,196) - ------------------------------------------------------------------------------------------------------------------------- Class C (1,324,976) (14,622,306) (613,782) (10,125,201) - ------------------------------------------------------------------------------------------------------------------------- Class R (20,343) (220,622) (10,296) (167,751) - ------------------------------------------------------------------------------------------------------------------------- Class Y(b) (3,252) (27,444) -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class (4,809,340) (65,340,565) (2,246,043) (41,432,717) ========================================================================================================================= Net increase (decrease) in share activity (11,309,327) $(147,146,901) 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 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, 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) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ---------------------------------------------------------------------------------------------------- Class Y 24,272 $ 253,880 ---------------------------------------------------------------------------------------------------- Class A (24,272) ($253,880) ====================================================================================================
(c) Net of redemption fees of $61,115 and $14,787 which were allocated among the classes based on relative net assets of each class for the years ended December 31, 2008 and 2007, respectively 19 AIM GLOBAL EQUITY FUND NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
NET GAINS NET ASSET (LOSSES) ON DIVIDENDS DISTRIBUTIONS VALUE NET SECURITIES (BOTH TOTAL FROM FROM NET FROM NET BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL OF PERIOD INCOME (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS - --------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $14.81 $ 0.15(d) $(6.67) $(6.52) $(0.03) $(0.56) $(0.59) Year ended 12/31/07 16.47 0.22(d) 0.63 0.85 (0.31) (2.20) (2.51) Year ended 12/31/06 15.54 0.19 2.73 2.92 (0.20) (1.79) (1.99) Year ended 12/31/05 15.65 0.15(d) 1.34 1.49 (0.13) (1.47) (1.60) Year ended 12/31/04 13.54 (0.02)(d) 2.93 2.91 -- (0.80) (0.80) - --------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 14.04 0.06(d) (6.30) (6.24) (0.03) (0.56) (0.59) Year ended 12/31/07 15.73 0.09(d) 0.59 0.68 (0.17) (2.20) (2.37) Year ended 12/31/06 14.92 0.06 2.62 2.68 (0.08) (1.79) (1.87) Year ended 12/31/05 15.10 0.03(d) 1.28 1.31 (0.03) (1.46) (1.49) Year ended 12/31/04 13.15 (0.09)(d) 2.84 2.75 -- (0.80) (0.80) - --------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 14.02 0.06(d) (6.29) (6.23) (0.03) (0.56) (0.59) Year ended 12/31/07 15.71 0.09(d) 0.59 0.68 (0.17) (2.20) (2.37) Year ended 12/31/06 14.89 0.06 2.63 2.69 (0.08) (1.79) (1.87) Year ended 12/31/05 15.08 0.03(d) 1.27 1.30 (0.03) (1.46) (1.49) Year ended 12/31/04 13.14 (0.09)(d) 2.83 2.74 -- (0.80) (0.80) - --------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 14.81 0.11(d) (6.65) (6.54) (0.03) (0.56) (0.59) Year ended 12/31/07 16.46 0.18(d) 0.63 0.81 (0.26) (2.20) (2.46) Year ended 12/31/06 15.53 0.12 2.76 2.88 (0.16) (1.79) (1.95) Year ended 12/31/05(f) 16.07 0.02(d) 1.03 1.05 (0.13) (1.46) (1.59) - --------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 10.46 0.03(d) (2.19) (2.16) (0.03) (0.56) (0.59) - --------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 14.94 0.22(d) (6.76) (6.54) (0.03) (0.56) (0.59) Year ended 12/31/07 16.60 0.29(d) 0.63 0.92 (0.38) (2.20) (2.58) Year ended 12/31/06 15.64 0.23 2.79 3.02 (0.27) (1.79) (2.06) Year ended 12/31/05 15.73 0.23(d) 1.34 1.57 (0.21) (1.45) (1.66) Year ended 12/31/04(f) 13.98 0.07(d) 2.48 2.55 -- (0.80) (0.80) ___________________________________________________________________________________________________________________________ =========================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSET NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) VALUE, END TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO OF PERIOD(A) RETURN(B) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(C) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 7.70 (43.90)% $132,058 1.54%(e) 1.54%(e) 1.22%(e) 114% Year ended 12/31/07 14.81 5.19 317,181 1.39 1.49 1.27 160 Year ended 12/31/06 16.47 18.88 324,111 1.45 1.64 1.09 166 Year ended 12/31/05 15.54 9.43 264,868 1.50 1.68 0.91 120 Year ended 12/31/04 15.65 21.64 182,416 1.94 1.96 (0.11) 115 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 7.21 (44.32) 22,770 2.29(e) 2.29(e) 0.47(e) 114 Year ended 12/31/07 14.04 4.33 78,326 2.14 2.24 0.52 160 Year ended 12/31/06 15.73 18.02 100,141 2.20 2.39 0.34 166 Year ended 12/31/05 14.92 8.65 95,379 2.21 2.39 0.20 120 Year ended 12/31/04 15.10 21.06 74,120 2.44 2.46 (0.61) 115 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 7.20 (44.30) 13,575 2.29(e) 2.29(e) 0.47(e) 114 Year ended 12/31/07 14.02 4.35 40,480 2.14 2.24 0.52 160 Year ended 12/31/06 15.71 18.12 41,261 2.20 2.39 0.34 166 Year ended 12/31/05 14.89 8.58 35,313 2.21 2.39 0.20 120 Year ended 12/31/04 15.08 21.00 20,375 2.44 2.46 (0.61) 115 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 7.68 (44.03) 607 1.79(e) 1.79(e) 0.97(e) 114 Year ended 12/31/07 14.81 4.97 488 1.64 1.74 1.02 160 Year ended 12/31/06 16.46 18.62 170 1.70 1.89 0.84 166 Year ended 12/31/05(f) 15.53 6.46 15 1.73(g) 1.91(g) 0.68(g) 120 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 7.71 (20.46) 183 1.53(e)(g) 1.53(e)(g) 1.23(e)(g) 114 - ----------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 7.81 (43.64) 12,864 1.07(e) 1.07(e) 1.69(e) 114 Year ended 12/31/07 14.94 5.58 79,762 0.99 1.67 1.67 160 Year ended 12/31/06 16.60 19.40 66,018 1.03 1.22 1.50 166 Year ended 12/31/05 15.64 9.97 39,803 0.99 1.17 1.42 120 Year ended 12/31/04(f) 15.73 18.39 13,158 1.18(g) 1.20(g) 0.65(g) 115 ___________________________________________________________________________________________________________________________________ ===================================================================================================================================
(a) Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (d) Calculated using average shares outstanding. (e) Ratios are based on average daily net assets (000's omitted) of $226,449, $47,707, $27,403, $705, $186 and $44,939 for Class A, Class B, Class C, Class R, Class Y, and Institutional Class shares, respectively. (f) Commencement dates of October 31, 2005, October 3, 2008 and April 30, 2004 for Class R, Class Y and Institutional Class shares, respectively. (g) Annualized. 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. 20 AIM GLOBAL EQUITY FUND NOTE 12--LEGAL PROCEEDINGS--(CONTINUED) PENDING LITIGATION AND REGULATORY INQUIRIES 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 21 AIM GLOBAL EQUITY FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM Global Equity Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Global Equity Fund (one of the funds constituting AIM Growth Series, hereafter referred to as the "Fund") at December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian and broker, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 22 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period (as of close of business October 3, 2008 through October 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $632.80 $6.69 $1,016.94 $ 8.26 1.63% - --------------------------------------------------------------------------------------------------- B 1,000.00 630.00 9.75 1,013.17 12.04 2.38 - --------------------------------------------------------------------------------------------------- C 1,000.00 630.80 9.76 1,013.17 12.04 2.38 - --------------------------------------------------------------------------------------------------- R 1,000.00 632.30 7.71 1,015.69 9.53 1.88 - --------------------------------------------------------------------------------------------------- Y 1,000.00 795.40 3.38 1,017.44 7.76 1.53 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 23 AIM GLOBAL EQUITY FUND 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 July 1, 2008, through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
- ----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $634.50 $5.01 $1,019.00 $6.19 1.22% - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM GLOBAL EQUITY FUND Supplement to Annual Report dated 12/31/08 AIM GLOBAL EQUITY 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. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 10 Years 3.27% 5 Years -0.92 1 Year -43.64
Institutional Class shares' inception date is April 30, 2004. Returns since that date are historical returns. All other returns 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 31 days of purchase. Exceptions to the redemption fee are listed in the Fund's prospectus. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. NASDAQ SYMBOL GNDIX 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-1 Invesco Aim Distributors, Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008:
FEDERAL AND STATE INCOME TAX ---------------------------- Long-Term Capital Gain Dividends $12,231,427 Qualified Dividend Income* 25.00% Corporate Dividends Received Deduction* 8.65%
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund's fiscal year. ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 were 52.81%, 52.78%, 50.27% and 51.23%, respectively. 24 AIM GLOBAL EQUITY FUND TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 25 AIM GLOBAL EQUITY FUND TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
26 AIM GLOBAL EQUITY FUND [GO PAPERLESS GRAPHIC] ================================================================================ GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: - - ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of trees used to produce paper. - - ECONOMICAL. Help reduce your fund's printing and delivery expenses and put more capital back in your fund's returns. This service is provided by Invesco Aim Investment Services, Inc. - - EFFICIENT. Stop waiting for regular mail. Your documents will be sent via email as soon as they're available. - - EASY. Download, save and print files using your home computer with a few clicks of your mouse. ================================================================================ FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in City place Washington, State D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02669 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 website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the country-region place U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com GEQ-AR-1 Invesco Aim Distributors, Inc. [INVESCO AIM LOGO] AIM INCOME ALLOCATION FUND - SERVICE MARK - Annual Report to Shareholders - December 31,2008 [MOUNTAIN GRAPHIC] 2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 6 Long-Term Fund Performance 8 Supplemental Information 10 Schedule of Investments 11 Financial Statements 14 Notes to Financial Statements 19 Financial Highlights 21 Auditor's Report 22 Fund Expenses 23 Tax Information 24 Trustees and Officers Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this opportunity to [PHOTO OF TAYLOR] update you on market developments during calendar year 2008 and provide you with some perspective and encouragement. MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate Philip Taylor targets throughout 2008 in an effort to stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets - -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: # INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. # DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. # STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /s/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim 1 U.S. Federal Reserve; 2 Bureau of Labor Statistics; 3 FactSet Research; 4 Wall Street Journal 2 AIM INCOME ALLOCATION FUND Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have negatively affected all investors. The new government promises to move quickly with a [CROCKETT PHOTO] stimulus package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some Bruce Crockett consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high"has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the lnvesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com. Best regards, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 3 AIM INCOME ALLOCATION FUND MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY Equity markets in 2008 generally provided negative returns rivaling the worst bear markets in history/Against this backdrop, the Fund at net asset value (NAV) outperformed the broad-based S&P 500 Index as exposure to bonds cushioned falling stock prices/ However, the Fund at NAV underperformed the Custom Income Allocation Index, which approximates the performance of the types of holdings owned by the Fund's underlying funds. "Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -18.88% Class B Shares -19.47 Class C Shares -19.46 Class R Shares -19.06 Class Y Shares* -18.73 S&P 500 Index+ (Broad Market Index) -36.99 Custom Income Allocation Index#(Style-Specific Index) -13.21 Lipper Mixed-Asset Target Allocation Conservative Funds Index+(Peer Group Index) -16.20
+Lipper Inc.; #Invesco Aim, Lipper Inc. *Share class incepted during the fiscal year. See page 7 for a detailed explanation of Fund performance. HOW WE INVEST The Fund invests in 11 underlying funds diversified among asset classes (bonds, stocks and cash), investment styles (value and blend/core), regions (domestic and international) and market capitalizations (large and mid). These underlying funds include seven bond funds, which represent 65% of the portfolio, and four stock funds, which represent the remaining 35% of the portfolio. The underlying funds invest in a wide range of income-producing securities, which may generate an attractive yield with less price volatility than individual asset classes. While no fund can guarantee positive performance, the broad portfolio diversification provides exposure to areas of the market that may perform well in any given period. Additionally, the broad diversification attempts to limit exposure to any one area of the market that may be underperforming. We determine target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain its target asset class allocations. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The fiscal year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight, rather, they grew over many years from a systematic increase in risk-taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve, in concert with other world central banks, dramatically decreased interest rates, Congress enacted a $700 billion rescue plan -- the Troubled Assets Relief Program -- and the Bush Administration underwrote a bridge loan to the Big Three U.S. auto makers. Despite these efforts lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer-dated issues. While investors shunned Treasuries in prior years as they offered lower yields versus credit sensitive issues, investors once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory, while high yield markets generally posted negative returns.(1) Across equity market segments there were relatively small differences in performance. Small-cap stocks edged out large-cap stocks and value stocks generally outperformed growth stocks.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S.dollar.(1) As investors increased the relative value of the dollar, it negatively affected the relative return of foreign equities. Within the Fund's 65% fixed-income component, AIM U.S. Government Fund and AIM International Total Return Fund were the Fund's only positive absolute contributors to performance. AIM International Total Return Fund, which was helped by the declining dollar, and AIM U.S. Government Fund, which was helped by the outperformance of high quality bonds, were the only funds that positively contributed to the Fund's INCOME ALLOCATION FUND
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 ---------- --------------------- Intermediate Term Taxable Investment Grade 38.00% 44.35% International/Global Blend 5.00 3.93 Large Cap Blend 15.00 13.73 Real Estate 7.00 5.45 Sector 8.00 6.96 Short Term Taxable Investment Grade 6.00 6.99 Taxable Non-Investment Grade 21.00 18.83 Other Assets Less Liabilities 0.00 -0.24
Total Net Assets $71.1 million
4 AIM INCOME ALLOCATION FUND relative fixed-income performance when compared with the components of the Fund's custom style-specific index. AIM High Yield Fund was the largest detractor from the Fund's fixed-income component's relative performance as its investment philosophy of holding lower quality, higher yielding bonds underperformed during the year. AIM Floating Rate Fund and AIM Core Bond Fund also detracted from relative performance. Within the Fund's 35% equity component, there were no positive absolute contributors to performance as the historic bear market pushed each of the equity funds into negative territory. AIM Diversified Dividend Fund and AIM Utilities Fund were the largest detractors from absolute performance primarily due to their larger percentage allocation within the portfolio's equity component. AIM Diversified Dividend Fund, AIM Select Real Estate Income Fund and AIM Utilities Fund were the largest positive contributors to relative equity performance when compared with the components of the Fund's custom style-specific index. There were no relative detractors within the equity component. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We remain committed to our asset allocation strategies, and as always, we thank you for your continued investment in AIM Income Allocation Fund. 1 Lipper lnc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [PHOTO OF WENDLER] Director of Product Strategy and Investment Services is manager of AIM Income Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University. 5 AIM INCOME ALLOCATION FUND YOUR FUND'S LONG-TERM PERFORMANCE Past performance can not guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 6 AIM Income Allocation Fund [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT - OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 10/31/05
Lipper AIM AIM AIM AIM Mixed-Asset Income Income Income Income Target Allocation Allocation Fund- Allocation Fund- Allocation Fund- Allocation Fund- Custom Income Conservative Date Class A Shares Class B Shares Class C Shares Class R Shares S&P 500 lndex(2) Allocation Index(1) Funds Index(2) 10/31/05 $ 9450 $10000 $ 10000 $ 10000 $ 10000 $10000 $ 10000 11/05 9573 10120 10120 10120 10378 10163 10157 12/05 9672 10218 10217 10220 10382 10251 10229 1/06 9825 10380 10379 10392 10656 10423 10409 2/06 9882 10430 10429 10443 10685 10466 10404 3/06 9917 10457 10456 10482 10818 10502 10469 4/06 9955 10487 10496 10513 10963 10517 10528 5/06 9888 10426 10425 10452 10648 10389 10415 6/06 9947 10469 10477 10507 10662 10441 10421 7/06 10092 10622 10621 10661 10728 10562 10487 8/06 10267 10796 10804 10845 10983 10771 10645 9/06 10353 10876 10884 10929 11266 10905 10773 10/06 10549 11081 11080 11135 11633 11117 10937 11/06 10725 11256 11265 11321 11854 11311 11100 12/06 10782 11315 11314 11385 12020 11316 11129 1/07 10902 11429 11428 11510 12202 11438 11196 2/07 10991 11523 11522 11594 11964 11496 11241 3/07 11048 11571 11570 11658 12097 11522 11311 4/07 11238 11749 11759 11848 12633 11697 11497 5/07 11299 11822 11822 11921 13073 11756 11587 6/07 11130 11624 11634 11726 12856 11599 11500 7/07 10907 11390 11400 11500 12458 11474 11431 8/07 11019 11496 11506 11618 12644 11645 11487 9/07 11254 11741 11740 11858 13117 11877 11725 10/07 11408 11891 11901 12021 13325 12030 11875 11/07 11203 11666 11676 11793 12768 11923 11779 12/07 11149 11610 11609 11740 12680 11873 11759 1/08 10980 11425 11434 11563 11919 11756 11663 2/08 10812 11238 11248 11375 11532 11651 11616 3/08 10857 11286 11284 11426 11483 11696 11551 4/08 11143 11572 11570 11716 12042 11917 11738 5/08 11228 11650 11658 11805 12198 11938 11853 6/08 10904 11314 11312 11469 11170 11549 11571 7/08 10827 11224 11221 11377 11076 11526 11452 8/08 10872 11257 11267 11424 11237 11628 11450 9/08 10182 10546 10545 10704 10237 11149 10901 10/08 9045 9357 9357 9498 8518 10074 9830 11/08 8788 9092 9091 9240 7906 9874 9532 12/08 9047 9113 9351 9505 7990 10305 9854
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (10/31/05) -3.11% 1 Year -23.36 CLASS B SHARES Inception (10/31/05) -2.89% 1 Year -23.22 CLASS C SHARES Inception (10/31/05) -2.10% 1 Year -20.21 CLASS R SHARES Inception (10/31/05) -1.59% 1 Year -19.06 CLASS Y SHARES Inception -1.32% 1 Year -18.73
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3,2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS OCTOBER 31,2005. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 0.97%, 1.72%, 1.72%, 1.22% AND 0.72%, RESPECTIVELY. (1)(2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.39%, 2.14%, 2.14%, 1.64% AND 1.14%, RESPECTIVELY. (2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/ OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30,2009. See current prospectus for more information. 2 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.69% for AIM Income Allocation Fund. 7 AIM INCOME ALLOCATION FUND AIM INCOME ALLOCATION FUND'S INVESTMENT OBJECTIVE IS A HIGH LEVEL OF CURRENT INCOME WITH GROWTH OF CAPITAL AS A SECONDARY OBJECTIVE. # Unless otherwise stated, information presented in this report is as of December 31,2008, and is based on total net assets. # Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES # Effective September 30,2003, only previously established qualified plans are eligible to purchase Class B shares of any AIM fund. # Class R shares are available only to certain retirement plans. Please see the prospectus for more information. # Class Y shares are available to only certain investors. Please see the prospectus for more information. PRINCIPAL RISKS OF INVESTING IN THE FUND # The Fund pursues its investment objectives by investing its assets in other underlying AIM funds rather than investing directly in stocks, bonds, cash or other investments. The Fund's investment performance depends on the investment performance of the underlying funds. There is risk that the advisor's evaluations and assumptions regarding the Fund's broad asset classes or the underlying funds may be incorrect based on actual market conditions, or that the Fund will vary from the target weightings in the underlying funds due to factors such as market fluctuations. There can be no assurance that the underlying funds will achieve their investment objectives, and the performance of the underlying funds may be lower than that of the asset classes they represent. The underlying funds may change their investment objectives or policies without the approval of the Fund. If that were to occur, the Fund might be forced to withdraw its investments from the underlying funds at an unfavorable time. The advisor has the ability to select and substitute the underlying funds in which the Fund invests and may be subject to potential conflicts of interest in selecting underlying funds because it may receive higher fees from certain underlying funds than others. However, as a fiduciary of the Fund, the advisor is required to act in the Fund's best interest when selecting the underlying funds. Because the Fund is a fund of funds, it is subject to the risks associated with the underlying funds in which it invests. There are additional risks of investing in the underlying funds. # Since a large percentage of the Fund's assets may be invested in securities of a limited number of companies, each investment has a greater effect on the Fund's overall performance, and any change in the value of those securities could significantly affect the value of your investment in the Fund. # The values of convertible securities in which the Fund invests may be affected by market interest rates, the risk that the issuer may default on interest or principal payments, and the value of the underlying common stock into which these securities may be converted. # Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations, including making timely payment of interest and principal. # The Fund is subject to currency/ exchange rate risk because it may buy or sell currencies other than the U.S. dollar. # Investing in developing countries can add additional risk, such as high rates of inflation or sharply devalued currencies against the U.S. dollar. Transaction costs are often higher, and there may be delays in settlement procedures. # The Fund could hold real estate directly if a company defaults on debt securities. In that event, an investment in the Fund may have additional risks relating to direct ownership of real estate. # Dollar-roll transactions involve the risk that the market value of securities to be purchased by the Fund may decline below the price at which the Fund is obligated to repurchase them, or that the other party may default on its obligation such that the Fund is delayed or prevented from completing the transaction. # Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. # Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, relative lack of information, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards. # High-coupon, U.S. government agency mortgage-backed securities provide a higher coupon than current prevailing market interest rates, and the Fund may purchase such securities at a premium. If these securities experience a faster-than-expected principal prepayment rate, both the market value and income from such securities will decrease. # Lower rated securities may be more susceptible to real or perceived adverse economic and competitive industry conditions, and the secondary markets in which lower rated securities are traded may be less liquid than higher grade securities. The loans in which the Fund may invest are typically noninvestment-grade and involve a greater risk of default on interest and principal payments and of price changes due to the changes in the credit quality of the issuer. # Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. # The Fund may use enhanced investment techniques such as leveraging and derivatives. Leveraging entails risks such as magnifying changes in the | THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE FUND NASDAQ SYMBOLS Class A Shares ALAAX Class B Shares BLIAX Class C Shares CLIAX Class R Shares RLIAX Class Y Shares ALAYX
8 AIM INCOME ALLOCATION FUND value of the portfolio's securities. Derivatives are subject to counterparty risk -- the risk that the other party will not complete the transaction with the Fund. # A majority of the Fund's assets are likely to be invested in loans and securities that are less liquid than those rated on national exchanges. # There is no guarantee that the investment techniques and risk analysis used by the Fund's portfolio managers will produce the desired results. # The prices of securities held by the Fund may decline in response to market risks. # The Fund may invest in mortgage-and asset-backed securities. These securities are subject to prepayment or call risk, which is the risk that payments from the borrower may be received earlier or later than expected due to changes in the rate at which the underlying loans are prepaid. # Nondiversification increases the risk that the value of the Fund's shares may vary more widely, and the Fund may be subject to greater investment and credit risk than if it invested more broadly. # The ability of an issuer of a floating rate loan or debt security to repay principal prior to maturity can limit the potential for gains by the Fund. # Because the Fund concentrates its assets in the real estate industry, an investment in the Fund will be closely linked to the performance of the real estate markets. # Reinvestment risk is the risk that a bond's cash flows will be reinvested at an interest rate below that of the original bond. # Because the fund focuses its investments in real estate investment trusts (REITs), real estate operating companies and other companies related to the real estate industry, the value of shares may rise and fall more than the value of shares of a fund that invests in a broader range of companies. # If the seller of a repurchase agreement in which the Fund invests defaults on its obligation or declares bankruptcy, the Fund may experience delays in selling the securities underlying the repurchase agreement. # The Fund may use enhanced investment techniques such as short sales. Short sales carry the risk of buying a security back at a higher price at which the Fund's exposure is unlimited. # The Fund's investments are concentrated in a comparatively narrow segment of the economy. Consequently, the Fund may tend to be more volatile than other mutual funds, and the value of the Fund's investments may tend to rise and fall more rapidly. # The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. government that may vary in the level of support they receive from the U.S. government. The U.S. government may choose not to provide financial support to U.S.-government-sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the underlying fund holding securities of such an issuer might not be able to recover its investment from the U.S. government. ABOUT INDEXES USED IN THIS REPORT # 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 CUSTOM INCOME ALLOCATION INDEX, created by Invesco Aim to serve as a benchmark for AIM Income Allocation Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000-REGISTERED TRADEMARK-Index is an unmanaged index considered representative of 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 MSCI EAFE-REGISTERED TRADEMARK-Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. # The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally weighted representation of the largest funds in the Upper Mixed-Asset Target 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, and cash equivalents. # 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. OTHER INFORMATION # The returns shown in management's discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for share holder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. 9 AIM INCOME ALLOCATION FUND SCHEDULE OF INVESTMENTS December 31, 2008 AIM INCOME ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.24%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME - ----------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-20.69% AIM Diversified Dividend Fund 13.73% $13,820,701 $ 2,825,107 $ (2,657,099) $ (3,553,003) $ (671,652) $ 322,693 - ----------------------------------------------------------------------------------------------------------------------------- AIM Utilities Fund 6.96% 8,290,752 1,015,757 (1,567,058) (2,905,728) 114,252 175,281 ============================================================================================================================= Total Domestic Equity Funds 22,111,453 3,840,864 (4,224,157) (6,458,731) (557,400) 497,974 ============================================================================================================================= FIXED-INCOME FUNDS-70.17% AIM Core Bond Fund 19.79% 17,670,860 3,203,898 (4,121,494) (2,343,547) (343,651) 1,365,355 - ----------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 6.00% 6,710,731 1,502,556 (1,302,278) (2,307,235) (341,532) 419,357 - ----------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 12.83% 13,438,008 2,764,951 (2,572,276) (3,936,641) (571,355) 1,202,489 - ----------------------------------------------------------------------------------------------------------------------------- AIM Income Fund 9.08% 8,365,675 1,688,645 (1,649,394) (1,634,226) (317,542) 708,971 - ----------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 6.05% 5,330,845 617,130 (1,697,933) 31,909 96,059 17,121 - ----------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 6.99% 5,973,936 1,026,283 (1,379,622) (555,969) (93,471) 395,924 - ----------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 9.43% 7,197,462 1,089,017 (2,012,294) 388,879 44,145 353,599 ============================================================================================================================= Total Fixed-Income Funds 64,687,517 11,892,480 (14,735,291) (10,356,830) (1,527,347) 4,462,816 ============================================================================================================================= FOREIGN EQUITY FUNDS-3.93% AIM International Core Equity Fund 3.93% 4,848,999 867,915 (816,659) (1,884,425) (223,191) 127,724 ============================================================================================================================= REAL ESTATE FUNDS-5.45% AIM Real Estate Fund 0.00% 6,130,868 369,392 (7,078,748) 2,328,147 (1,749,659) 23,946 - ----------------------------------------------------------------------------------------------------------------------------- AIM Select Real Estate Income Fund 5.45% -- 7,441,828 (778,893) (2,476,591) (310,951) 235,808 - ----------------------------------------------------------------------------------------------------------------------------- Total Real Estate Funds 6,130,868 7,811,220 (7,857,641) (148,444) (2,060,610) 259,754 ============================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $94,111,495) 100.24% $97,778,837 $24,412,479 $(27,633,748) $(18,848,430)(b)$(4,368,548) $5,348,268 ============================================================================================================================= OTHER ASSETS LESS LIABILITIES (0.24)% ============================================================================================================================= NET ASSETS 100.00% ============================================================================================================================= SHARES VALUE 12/31/08 12/31/08 - ------------------------------------------------------- DOMESTIC EQUITY FUNDS-20.69% AIM Diversified Dividend Fund 1,089,738 $ 9,764,054 - ------------------------------------------------------- AIM Utilities Fund 378,865 4,947,975 ======================================================= Total Domestic Equity Funds 14,712,029 ======================================================= FIXED-INCOME FUNDS-70.17% AIM Core Bond Fund 1,629,903 14,066,066 - ------------------------------------------------------- AIM Floating Rate Fund 796,680 4,262,242 - ------------------------------------------------------- AIM High Yield Fund 3,167,600 9,122,687 - ------------------------------------------------------- AIM Income Fund 1,390,767 6,453,158 - ------------------------------------------------------- AIM International Total Return Fund 393,354 4,303,298 - ------------------------------------------------------- AIM Short Term Bond Fund 578,041 4,971,157 - ------------------------------------------------------- AIM U.S. Government Fund 731,430 6,707,209 ======================================================= Total Fixed-Income Funds 49,885,817 ======================================================= FOREIGN EQUITY FUNDS-3.93% AIM International Core Equity Fund 335,654 2,792,639 ======================================================= REAL ESTATE FUNDS-5.45% AIM Real Estate Fund -- -- - ------------------------------------------------------- AIM Select Real Estate Income Fund 702,064 3,875,393 - ------------------------------------------------------- Total Real Estate Funds 3,875,393 ======================================================= TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $94,111,495) $71,265,878 ======================================================= OTHER ASSETS LESS LIABILITIES (173,265) ======================================================= NET ASSETS $71,092,613 =======================================================
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) Includes $74,712 from return of capital from AIM International Total Return Fund. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM INCOME ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments in affiliated underlying funds, at value (Cost $94,111,495) $ 71,265,878 - ------------------------------------------------------ Receivables for: Fund shares sold 170,714 - ------------------------------------------------------ Fund expenses absorbed 7,221 - ------------------------------------------------------ Investment for trustee deferred compensation and retirement plans 5,321 - ------------------------------------------------------ Other assets 31,975 ====================================================== Total assets 71,481,109 ====================================================== LIABILITIES: Payables for: Investments purchased -- affiliated underlying funds 65,292 - ------------------------------------------------------ Fund shares reacquired 223,462 - ------------------------------------------------------ Accrued fees to affiliates 48,991 - ------------------------------------------------------ Accrued other operating expenses 43,221 - ------------------------------------------------------ Trustee deferred compensation and retirement plans 7,530 ====================================================== Total liabilities 388,496 ====================================================== Net assets applicable to shares outstanding $ 71,092,613 ====================================================== NET ASSETS CONSIST OF: Shares of beneficial interest $ 98,327,498 - ------------------------------------------------------ Undistributed net investment income 134,998 - ------------------------------------------------------ Undistributed net realized gain (loss) (4,524,266) - ------------------------------------------------------ Unrealized appreciation (depreciation) (22,845,617) ====================================================== $ 71,092,613 ====================================================== NET ASSETS: Class A $ 43,926,420 ====================================================== Class B $ 7,176,586 ====================================================== Class C $ 19,323,957 ====================================================== Class R $ 419,372 ====================================================== Class Y $ 234,346 ====================================================== Institutional Class $ 11,932 ====================================================== SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 5,529,677 ====================================================== Class B 902,726 ====================================================== Class C 2,430,296 ====================================================== Class R 52,758 ====================================================== Class Y 29,499 ====================================================== Institutional Class 1,502 ====================================================== Class A: Net asset value per share $ 7.94 - ------------------------------------------------------ Maximum offering price per share (Net asset value of $7.94 divided by 94.50%) $ 8.40 ====================================================== Class B: Net asset value and offering price per share $ 7.95 ====================================================== Class C: Net asset value and offering price per share $ 7.95 ====================================================== Class R: Net asset value and offering price per share $ 7.95 ====================================================== Class Y: Net asset value and offering price per share $ 7.94 ====================================================== Institutional Class: Net asset value and offering price per share $ 7.94 ======================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM INCOME ALLOCATION FUND STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Dividends from affiliated underlying funds $ 5,348,268 - ------------------------------------------------------------------------------------------------ Other Income 179 ================================================================================================ Total investment income 5,348,447 ================================================================================================ EXPENSES: Administrative services fees 50,000 - ------------------------------------------------------------------------------------------------ Custodian fees 11,476 - ------------------------------------------------------------------------------------------------ Distribution fees: Class A 139,090 - ------------------------------------------------------------------------------------------------ Class B 99,326 - ------------------------------------------------------------------------------------------------ Class C 232,902 - ------------------------------------------------------------------------------------------------ Class R 2,211 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C, R and Y 145,621 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 11 - ------------------------------------------------------------------------------------------------ Trustees' and officers' fees and benefits 18,112 - ------------------------------------------------------------------------------------------------ Registration and filing fees 67,416 - ------------------------------------------------------------------------------------------------ Professional services fees 45,340 - ------------------------------------------------------------------------------------------------ Other 40,897 ================================================================================================ Total expenses 852,402 ================================================================================================ Less: Expenses reimbursed and expense offset arrangement(s) (351,619) ================================================================================================ Net expenses 500,783 ================================================================================================ Net investment income 4,847,664 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS IN AFFILIATED UNDERLYING FUND SHARES: Net realized gain (loss) on sales of affiliated underlying fund shares (4,368,548) - ------------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (18,848,430) - ------------------------------------------------------------------------------------------------ Net gain (loss) from affiliated underlying funds (23,216,978) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(18,369,314) ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM INCOME ALLOCATION FUND STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 - -------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 4,847,664 $ 3,605,908 - -------------------------------------------------------------------------------------------------------- Net realized gain (loss) (4,368,548) 2,463,474 - -------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (18,848,430) (4,790,323) ======================================================================================================== Net increase (decrease) in net assets resulting from operations (18,369,314) 1,279,059 ======================================================================================================== Distributions to shareholders from net investment income: Class A (3,143,927) (2,309,555) - -------------------------------------------------------------------------------------------------------- Class B (477,083) (381,445) - -------------------------------------------------------------------------------------------------------- Class C (1,163,258) (815,332) - -------------------------------------------------------------------------------------------------------- Class R (24,319) (10,702) - -------------------------------------------------------------------------------------------------------- Class Y (4,944) -- - -------------------------------------------------------------------------------------------------------- Institutional Class (652) (879) ======================================================================================================== Total distributions from net investment income (4,814,183) (3,517,913) ======================================================================================================== Distributions to shareholders from net realized gains: Class A (1,150,854) (768,827) - -------------------------------------------------------------------------------------------------------- Class B (203,257) (151,841) - -------------------------------------------------------------------------------------------------------- Class C (472,679) (323,589) - -------------------------------------------------------------------------------------------------------- Class R (9,077) (4,173) - -------------------------------------------------------------------------------------------------------- Institutional Class (195) (137) ======================================================================================================== Total distributions from net realized gains (1,836,062) (1,248,567) ======================================================================================================== Share transactions-net: Class A (717,053) 41,386,756 - -------------------------------------------------------------------------------------------------------- Class B (1,535,563) 5,781,101 - -------------------------------------------------------------------------------------------------------- Class C 649,784 16,255,572 - -------------------------------------------------------------------------------------------------------- Class R 157,929 297,851 - -------------------------------------------------------------------------------------------------------- Class Y 257,264 -- - -------------------------------------------------------------------------------------------------------- Institutional Class 4,772 (48,001) ======================================================================================================== Net increase (decrease) in net assets resulting from share transactions (1,182,867) 63,673,279 ======================================================================================================== Net increase (decrease) in net assets (26,202,426) 60,185,858 ======================================================================================================== NET ASSETS: Beginning of year 97,295,039 37,109,181 ======================================================================================================== End of year (includes undistributed net investment income of $134,998 and $102,608, respectively) $ 71,092,613 $97,295,039 ========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM INCOME ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS December 31, 2008 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 assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The Fund's investment objective is to 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. The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- 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. 14 AIM INCOME ALLOCATION FUND Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from 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 received are included in the Statement of Operations as realized gain/loss for investments no longer held and as unrealized gain/loss for investments still held. The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class. C. DISTRIBUTIONS -- Distributions from income are declared and paid quarterly and are recorded on ex-dividend date. Distributions from net realized capital gain, if any, are generally paid annually and recorded on ex- dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. D. FEDERAL INCOME TAXES -- The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code necessary to qualify as a regulated investment company and to distribute substantially all of the Fund's taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. E. EXPENSES -- Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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, 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, Class Y 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) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; and (vi) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Currently, in addition to the expense reimbursement 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. 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 15 AIM INCOME ALLOCATION FUND through the valuation of each Fund's investment in those investment companies. The impact of the Acquired Fund Fees and Expenses are included in the total return of the Funds. For the year ended December 31, 2008, the Advisor reimbursed Fund level expenses of $205,796 and reimbursed class level expenses of $89,323, $15,947, $37,392, $710, $107 and $10 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 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 year ended December 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $191. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the course of providing such services. IAIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IAIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority ("FINRA") impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2008, IADI advised the Fund that IADI retained $26,493 in front-end sales commissions from the sale of Class A shares and $2,989, $27,200 and $11,237 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders. The underlying funds pay no distribution fees and the Fund pays no sales loads or other similar compensation to 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN INPUT LEVEL SECURITIES - -------------------------------------- Level 1 $71,265,878 - -------------------------------------- Level 2 -- - -------------------------------------- Level 3 -- ====================================== $71,265,878 ======================================
16 AIM INCOME ALLOCATION FUND NOTE 4--EXPENSE OFFSET ARRANGEMENT The expense offset arrangements are comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended December 31, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $2,143. NOTE 5--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended December 31, 2008, the Fund paid legal fees of $3,316 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 6--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco Aim, not to exceed the contractually agreed upon rate. NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 - ------------------------------------------------------------------------------------------------------- Ordinary income $4,815,274 $3,523,368 - ------------------------------------------------------------------------------------------------------- Long-term capital gain 1,834,971 1,243,112 ======================================================================================================= Total distributions $6,650,245 $4,766,480 =======================================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
2008 - ------------------------------------------------------------------------------------------------ Undistributed ordinary income $ 144,951 - ------------------------------------------------------------------------------------------------ Net unrealized appreciation (depreciation) -- investments (24,717,451) - ------------------------------------------------------------------------------------------------ Temporary book/tax differences (9,953) - ------------------------------------------------------------------------------------------------ Capital loss carryforward (1,851,625) - ------------------------------------------------------------------------------------------------ Post-October deferrals (800,807) - ------------------------------------------------------------------------------------------------ Shares of beneficial interest 98,327,498 ================================================================================================ Total net assets $ 71,092,613 ================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's net unrealized appreciation (depreciation) difference is attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. The Fund has a capital loss carryforward as of December 31, 2008 which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------------------------- December 31, 2016 $1,851,625 ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. 17 AIM INCOME ALLOCATION FUND NOTE 8--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2008 was $24,412,479 and $27,633,748, 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 $ 657,774 - ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (25,375,225) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(24,717,451) ================================================================================================ Cost of investments for tax purposes is $95,983,329.
NOTE 9--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of distributions on December 31, 2008, undistributed net investment income was decreased by $1,091, undistributed net realized gain (loss) was increased by $1,090 and shares of beneficial interest increased by $1. This reclassification had no effect on the net assets of the Fund. NOTE 10--SHARE INFORMATION
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 2008(a) 2007 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------ Sold: Class A 1,902,491 $ 18,812,848 5,130,980 $ 56,581,689 - ------------------------------------------------------------------------------------------------------------------------ Class B 328,976 3,228,801 799,736 8,821,716 - ------------------------------------------------------------------------------------------------------------------------ Class C 948,129 9,044,674 1,845,603 20,353,103 - ------------------------------------------------------------------------------------------------------------------------ Class R 39,496 392,772 32,811 358,816 - ------------------------------------------------------------------------------------------------------------------------ Class Y(b) 32,396 279,880 -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class 1,097 9,000 -- -- ======================================================================================================================== Issued as reinvestment of dividends: Class A 386,392 3,608,675 244,883 2,632,745 - ------------------------------------------------------------------------------------------------------------------------ Class B 61,999 581,282 43,684 469,636 - ------------------------------------------------------------------------------------------------------------------------ Class C 145,162 1,356,553 88,454 950,169 - ------------------------------------------------------------------------------------------------------------------------ Class R 3,614 33,397 1,390 14,875 - ------------------------------------------------------------------------------------------------------------------------ Class Y 633 4,944 -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class 93 847 92 1,017 ======================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 205,573 1,977,769 113,934 1,243,065 - ------------------------------------------------------------------------------------------------------------------------ Class B (205,580) (1,977,769) (113,945) (1,243,065) ======================================================================================================================== Reacquired: Class A(b) (2,642,845) (25,116,345) (1,748,799) (19,070,743) - ------------------------------------------------------------------------------------------------------------------------ Class B (358,574) (3,367,877) (207,894) (2,267,186) - ------------------------------------------------------------------------------------------------------------------------ Class C (1,045,915) (9,751,443) (463,254) (5,047,700) - ------------------------------------------------------------------------------------------------------------------------ Class R (27,512) (268,240) (6,882) (75,840) - ------------------------------------------------------------------------------------------------------------------------ Class Y (3,530) (27,560) -- -- - ------------------------------------------------------------------------------------------------------------------------ Institutional Class (657) (5,075) (4,413) (49,018) ======================================================================================================================== Net increase (decrease) in share activity (228,562) $ (1,182,867) 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 30% 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. 18 AIM INCOME ALLOCATION FUND (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT -------------------------------------------------------------------------------------------------- Class Y 17,643 $ 157,548 -------------------------------------------------------------------------------------------------- Class A (17,643) (157,548) ==================================================================================================
NOTE 11--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
NET GAINS (LOSSES) NET ASSET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, NET (BOTH TOTAL FROM FROM NET FROM NET BEGINNING INVESTMENT REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL OF PERIOD INCOME UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS - -------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $10.60 $0.55(a) $(2.46) $(1.91) $(0.55) $(0.20) $(0.75) Year ended 12/31/07 10.85 0.54(a) (0.17) 0.37 (0.47) (0.15) (0.62) Year ended 12/31/06 10.12 0.39 0.75 1.14 (0.39) (0.02) (0.41) Year ended 12/31/05(f) 10.03 0.11(a) 0.13 0.24 (0.15) -- (0.15) - -------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 10.61 0.48(a) (2.46) (1.98) (0.48) (0.20) (0.68) Year ended 12/31/07 10.86 0.46(a) (0.17) 0.29 (0.39) (0.15) (0.54) Year ended 12/31/06 10.12 0.31 0.76 1.07 (0.31) (0.02) (0.33) Year ended 12/31/05(f) 10.03 0.10(a) 0.12 0.22 (0.13) -- (0.13) - -------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 10.61 0.48(a) (2.46) (1.98) (0.48) (0.20) (0.68) Year ended 12/31/07 10.86 0.46(a) (0.17) 0.29 (0.39) (0.15) (0.54) Year ended 12/31/06 10.12 0.31 0.76 1.07 (0.31) (0.02) (0.33) Year ended 12/31/05(f) 10.03 0.10(a) 0.12 0.22 (0.13) -- (0.13) - -------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 10.61 0.52(a) (2.45) (1.93) (0.53) (0.20) (0.73) Year ended 12/31/07 10.86 0.51(a) (0.17) 0.34 (0.44) (0.15) (0.59) Year ended 12/31/06 10.11 0.43 0.70 1.13 (0.36) (0.02) (0.38) Year ended 12/31/05(f) 10.03 0.11(a) 0.11 0.22 (0.14) -- (0.14) - -------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 8.93 0.12(a) (0.94) (0.82) (0.17) -- (0.17) - -------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 10.60 0.56(a) (2.44) (1.88) (0.58) (0.20) (0.78) Year ended 12/31/07 10.85 0.57(a) (0.17) 0.40 (0.50) (0.15) (0.65) Year ended 12/31/06 10.11 0.53 0.65 1.18 (0.42) (0.02) (0.44) Year ended 12/31/05(f) 10.03 0.12(a) 0.11 0.23 (0.15) -- (0.15) ========================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSET NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME VALUE, END TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO OF PERIOD RETURN(b) (000S OMITTED) ABSORBED(c) ABSORBED NET ASSETS TURNOVER(d) - ----------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 7.94 (18.88)% $43,926 0.28%(e) 0.67%(e) 5.69%(e) 27% Year ended 12/31/07 10.60 3.40 60,193 0.28 0.70 4.92 10 Year ended 12/31/06 10.85 11.48 21,022 0.29 1.96 4.86 21 Year ended 12/31/05(f) 10.12 2.35 1,634 0.29(g) 20.85(g) 6.45(g) 0.99 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 7.95 (19.46) 7,177 1.03(e) 1.42(e) 4.94(e) 27 Year ended 12/31/07 10.61 2.62 11,412 1.03 1.45 4.17 10 Year ended 12/31/06 10.86 10.74 6,018 1.04 2.71 4.11 21 Year ended 12/31/05(f) 10.12 2.17 210 1.04(g) 21.60(g) 5.70(g) 0.99 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 7.95 (19.47) 19,324 1.03(e) 1.42(e) 4.94(e) 27 Year ended 12/31/07 10.61 2.62 25,286 1.03 1.45 4.17 10 Year ended 12/31/06 10.86 10.74 9,905 1.04 2.71 4.11 21 Year ended 12/31/05(f) 10.12 2.17 521 1.04(g) 21.60(g) 5.70(g) 0.99 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 7.95 (19.06) 419 0.53(e) 0.92(e) 5.44(e) 27 Year ended 12/31/07 10.61 3.14 394 0.53 0.95 4.67 10 Year ended 12/31/06 10.86 11.41 107 0.54 2.21 4.61 21 Year ended 12/31/05(f) 10.11 2.20 51 0.54(g) 21.10(g) 6.20(g) 0.99 - ----------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 7.94 (9.14) 234 0.03(e)(g) 0.57(e)(g) 5.94(e)(g) 27 - ----------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 7.94 (18.67) 12 0.04(e) 0.36(e) 5.93(e) 27 Year ended 12/31/07 10.60 3.66 10 0.03 0.33 5.17 10 Year ended 12/31/06 10.85 11.87 57 0.03 1.58 5.11 21 Year ended 12/31/05(f) 10.11 2.29 51 0.04(g) 20.58(g) 6.70(g) 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, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.71% for the year ended December 31, 2008; 0.69% for the year ended December 31, 2007 and for the period October 31, 2005 (commencement date) to December 31, 2005; 0.64% for the year ended December 31, 2006. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $55,636, $9,933, $23,290, $442, $228 and $11 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of Class A, Class B, Class C, Class R and Institutional Class was October 31, 2005 and October 3, 2008 for Class Y shares. (g) Annualized. 19 AIM INCOME ALLOCATION FUND NOTE 12--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. PENDING LITIGATION AND REGULATORY INQUIRIES 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 20 AIM INCOME ALLOCATION FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM Income Allocation Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Income Allocation Fund (one of the funds constituting AIM Growth Series, hereafter referred to as the "Fund") at December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 21 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 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 (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares). HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
- --------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $829.40 $1.29 $1,023.73 $1.42 0.28% - --------------------------------------------------------------------------------------------------- B 1,000.00 826.40 4.73 1,019.96 5.23 1.03 - --------------------------------------------------------------------------------------------------- C 1,000.00 826.50 4.73 1,019.96 5.23 1.03 - --------------------------------------------------------------------------------------------------- R 1,000.00 828.50 2.44 1,022.47 2.69 0.53 - --------------------------------------------------------------------------------------------------- Y 1,000.00 909.80 0.14 1,024.99 0.15 0.03 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 22 AIM INCOME ALLOCATION 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 July 1, 2008, through December 31, 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $830.70 $0.18 $1,024.94 $0.20 0.04% - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM INCOME ALLOCATION FUND Supplement to Annual Report dated 12/31/08 AIM INCOME 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. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (10/31/05) -1.09% 1 Year -18.57
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.72%.(1,2) 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 1.02%.(2) 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. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. - ---------- 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.69%. NASDAQ SYMBOL ILAAX 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 use. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com INCAL-INS-1 Invesco Aim Distributors, Inc. Supplement to Annual Report dated 12/31/08 AIM INCOME ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. 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-1 Invesco Aim Distributors, Inc. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 10/31/05
AIM Lipper Income Mixed-Asset Allocation Fund- Target Allocation Institutional Class Custom Income Conservative Date Shares S&P 500 Index(2) Allocation Index(1) Funds Index(2) - ------- ------------------- ---------------- ------------------- ----------------- 10/31/05 $ 10000 $ 10000 $ 10000 $ 10000 11/05 10130 10378 10163 10157 12/05 10229 10382 10251 10229 1/06 10401 10656 10423 10409 2/06 10461 10685 10466 10404 3/06 10504 10818 10502 10469 4/06 10545 10963 10517 10528 5/06 10484 10648 10389 10415 6/06 10543 10662 10441 10421 7/06 10707 10728 10562 10487 8/06 10893 10983 10771 10645 9/06 10981 11266 10905 10773 10/06 11199 11633 11117 10937 11/06 11386 11854 11311 11100 12/06 11443 12020 11316 11129 1/07 11581 12202 11438 11196 2/07 11676 11964 11496 11241 3/07 11733 12097 11522 11311 4/07 11935 12633 11697 11497 5/07 12009 13073 11756 11587 6/07 11826 12856 11599 11500 7/07 11599 12458 11474 11431 8/07 11717 12644 11645 11487 9/07 11963 13117 11877 11725 10/07 12138 13325 12030 11875 11/07 11920 12768 11923 11779 12/07 11859 12680 11873 11759 1/08 11692 11919 11756 11663 2/08 11513 11532 11651 11616 3/08 11567 11483 11696 11551 4/08 11861 12042 11917 11738 5/08 11963 12198 11938 11853 6/08 11625 11170 11549 11571 7/08 11532 11076 11526 11452 8/08 11591 11237 11628 11450 9/08 10853 10237 11149 10901 10/08 9640 8518 10074 9830 11/08 9379 7906 9874 9532 12/08 9659 7990 10305 9854
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008:
FEDERAL AND STATE INCOME TAX ---------------------------- Long-Term Capital Gain Dividends $1,834,972 Qualified Dividend Income* 13.00% Corporate Dividends Received Deduction* 10.70% U.S. Treasury Obligations* 0.23%
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund's fiscal year. ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 were 65.13%, 63.50%, 63.41%, and 70.54%, respectively. 23 AIM INCOME ALLOCATION FUND TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 24 AIM INCOME ALLOCATION FUND TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
25 AIM INCOME ALLOCATION FUND [GO PAPERLESS GRAPHIC] GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: - - ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of trees used to produce paper. - - ECONOMICAL. Help reduce your fund's printing and delivery expenses and put more capital back in your fund's returns. - - EFFICIENT. Stop waiting for regular mail. Your documents will be sent via email as soon as they're available. - - EASY. Download, save and print files using your home computer with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811 -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 website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30,2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. It is used after April 20,2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim-SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Manage ment, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1,2009. Additional information will be posted at invescoaim.com on or about Aug. 1,2009. [INVESCO AIM LOGO] -SERVICE MARK- invescoaim.com INCAL-AR-1 Invesco Aim Distributors, Inc. [INVESCO AIM LOGO] AIM INDEPENDENCE FUNDS - SERVICE MARK - Annual Report to Shareholders # December 31, 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] 2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 16 Long-Term Fund Performance 28 Supplemental Information 32 Schedule of Investments 38 Financial Statements 43 Notes to Financial Statements 56 Financial Highlights 63 Auditor's Report 64 Fund Expenses 67 Tax Information 68 Trustees and Officers [TAYLOR PHOTO] Philip Taylor Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this opportunity to update you on market developments during calendar year 2008 and provide you with some perspective and encouragement. MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: # INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. # DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. # STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /S/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim 1 U.S. Federal Reserve; 2 Bureau of Labor Statistics; 3 FactSet Research; 4 Wall Street Journal 2 AIM INDEPENDENCE FUNDS [CROCKETT PHOTO] Bruce Crockett Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have negatively affected all investors. The new government promises to move quickly with a stimulus package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high" has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com. Best regards, /S/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 3 AIM INDEPENDENCE FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE Performance summary - AIM Independence Now Fund Class A shares of AIM Independence Now Fund at net asset value returned -17.45% and outperformed the broad market, represented by the S&P 500 Index, but underperformed its style-specific index, the Custom Independence Now Index.+,# The Custom Independence Now Index approximates the performance of the types of holdings owned by the Fund's underlying investments. Performance of select underlying funds within the large cap domestic equity and fixed-income allocations were the primary contributors to underperformance versus the style-specific index. Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 - 17.45% Class B Shares - 18.05 Class C Shares - 18.15 Class R Shares - 17.66 Class Y Shares* - 17.39 S&P 500 Index+ (Broad Market Index) - 36.99 Custom Independence Now Index# (Style-Specific Index) - 13.84 Lipper Mixed-Asset Target Allocation Conservative Funds Index+ Peer Group Index) - 16.20
+ Lipper Inc.; # Invesco Aim, Lipper Inc. * Share class incepted during the fiscal year. See page 17 for a detailed explanation of Fund performance. HOW WE INVEST AIM Independence Now Fund is structured for investors who are currently in, or very near retirement. The Fund operates under a target maturity structure, which automatically redistributes holdings among the underlying products to become more conservative as the Fund approaches the target date. The Fund's investment strategy follows a three-step process. The first step is to determine AIM Independence Now Fund's asset allocation strategy from among broad asset classes based on the Fund's target retirement date. The second step is to select the underlying funds to be held by the Fund and to determine the target weightings of those underlying funds. The third step is the ongoing monitoring of the Fund's asset class allocations, underlying funds and target weightings. The portfolio management team monitors the selection of underlying funds to ensure that they continue to conform to the Fund's asset class allocations and will periodically rebalance the Fund's investments in underlying funds to keep them within their target weightings. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar in the second half of the fiscal year, it negatively affected the relative return of foreign equities. Against this extremely difficult market environment, only four of the Fund's underlying holdings provided positive returns during the fiscal year. Two key contributors were AIM Limited Maturity Fund and AIM U.S. Government Fund. These two holdings benefited from aggressive interest rate cuts and an increased demand for the safety of U.S. Treasuries and U.S. government bonds. The largest detractors from absolute returns naturally came from some of our largest positions. These included the PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Domestic Equity 25.73% 22.03% Foreign Equity 6.24 4.84 High Yield Fixed Income 8.33 7.08 Investment Grade Fixed Income 53.35 61.54 Money Market Funds 3.35 4.92 Real Estate 3.00 2.27 Other Assets Less Liabilities 0.00 -2.68
Total Net Assets $ 1.6 million
4 AIM INDEPENDENCE FUNDS PowerShares FTSE RAFI US 1000 Portfolio, representing large cap domestic equities, and AIM Core Bond Fund, as credit based bond issues suffered most. Relative to the Custom Independence Now Index, primary contributors included AIM Diversified Dividend Fund and PowerShares Dynamic Large Cap Value Portfolio. Relative custom index detractors included AIM High Yield Fund, AIM Core Bond Fund and AIM Floating Rate Fund. Detractors were concentrated in fixed-income holdings as the bond component of our custom index had a higher allocation to Treasuries, which as mentioned previously, were one of the few market bright spots. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We thank you for your continued investment in AIM Independence Now Fund despite the challenging market environment. We continue to advocate that investors work with a financial advisor and follow a well diversified asset allocation strategy. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [WENDLER PHOTO] Director of Product Strategy and Investments Services, is manager of AIM Independence Now Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares IANAX Class B Shares IANBX Class C Shares IANCX Class R Shares IANRX Class Y Shares IANYX
5 AIM INDEPENDENCE FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY - AIM INDEPENDENCE 2010 FUND Class A shares of AIM Independence 2010 Fund at net asset value returned -19.11% and outperformed the broad market, represented by the S&P 500 Index, but underperformed its style-specific index, the Custom Independence 2010 Index.+,# The Custom Independence 2010 Index approximates the performance of the types of holdings owned by the Fund's underlying investments. Performance of select underlying funds within the large-cap domestic equity and fixed-income allocations were the primary contributors to underperformance versus the style-specific index. Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 - 19.11% Class B Shares - 19.66 Class C Shares - 19.64 Class R Shares - 19.20 Class Y Shares* - 18.96 S&P 500 Index+ (Broad Market Index) - 36.99 Custom Independence 2010 Index# (Style-Specific Index) - 15.68 Lipper Mixed-Asset Target 2010 Funds Index+ (Peer Group Index) - 22.20
+ Lipper Inc.; # Invesco Aim, Lipper Inc. * Share class incepted during the fiscal year. See page 19 for a detailed explanation of Fund performance. HOW WE INVEST AIM Independence 2010 Fund is structured for investors whose target retirement date is around the year 2010. The Fund operates under a target maturity structure, which automatically redistributes holdings among the underlying products to become more conservative as the Fund approaches the target date. The Fund's investment strategy follows a three-step process. The first step is to determine AIM Independence 2010 Fund's asset allocation strategy from among broad asset classes based on the Fund's target retirement date. The second step is to select the underlying funds to be held by the Fund and to determine the target weightings of those underlying funds. The third step is the ongoing monitoring of the Fund's asset class allocations, underlying funds and target weightings. The portfolio management team monitors the selection of underlying funds to ensure that they continue to conform to the Fund's asset class allocations and will periodically rebalance the Fund's investments in underlying funds to keep them within their target weightings. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar in the second half of the fiscal year, it negatively affected the relative return of foreign equities. Against this extremely difficult market environment, only two of the Fund's underlying holdings provided positive returns during the fiscal year, AIM International Total Return Fund and AIM U.S. Government Fund. These two holdings benefited from aggressive interest rate cuts and an increased demand for the relative safety of sovereign issues. The largest detractors from absolute returns naturally came from some of our largest positions. These included the PowerShares FTSE RAFI US 1000 Portfolio, representing large cap domestic equities, and AIM Core Bond Fund, as PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Domestic Equity 29.00% 23.84% Foreign Equity 8.00 5.96 High Yield Fixed Income 9.00 7.77 Investment Grade Fixed Income 51.00 59.52 Money Market Funds 0.00 0.93 Real Estate 3.00 2.38 Other Assets Less Liabilities 0.00 -0.40
Total Net Assets $ 4.5 million
6 AIM INDEPENDENCE FUNDS credit based bond issues suffered most. Relative to the Custom Independence 2010 Index, primary contributors included AIM Diversified Dividend Fund, PowerShares Dynamic Large Cap Value Portfolio and AIM U.S. Government Fund. Relative custom index detractors included AIM High Yield Fund, AIM Core Bond Fund and AIM Floating Rate Fund. Detractors were concentrated in fixed-income holdings as the bond component of our custom index has a higher allocation to Treasuries, which as mentioned previously, were one of the few market bright spots during the fiscal year. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We thank you for your continued investment in AIM Independence 2010 Fund despite the challenging market environment. We continue to advocate that investors work with a financial advisor and follow a well-diversified asset allocation strategy. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [WENDLER PHOTO] Director of Product Strategy and Investments Services, is manager of AIM Independence 2010 Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University. FUND NASDAQ SYMBOLS Class A Shares INJAX Class B Shares INJBX Class C Shares INJCX Class R Shares INJRX Class Y Shares INJYX
7 AIM INDEPENDENCE FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY - AIM INDEPENDENCE 2020 FUND Class A shares of AIM Independence 2020 Fund at net asset value returned -27.53% and outperformed the broad market, represented by the S&P 500 Index, but underperformed its style-specific index, the Custom Independence 2020 Index.+,# The Custom Independence 2020 Index approximates the performance of the types of holdings owned by the Fund's underlying investments. Performance of select underlying funds within the large-cap domestic equity and fixed-income allocations were the primary contributors to underperformance versus the style-specific index. Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 - 27.53% Class B Shares - 28.01 Class C Shares - 28.21 Class R Shares - 27.72 Class Y Shares* - 27.49 S&P 500 Index+ (Broad Market Index) - 36.99 Custom Independence 2020 Index# (Style-Specific Index) - 23.59 Lipper Mixed-Asset Target 2020 Funds Index+ (Peer Group Index) - 29.05
+ Lipper Inc.; # Invesco Aim, Lipper Inc. * Share class incepted during the fiscal year. See page 21 for a detailed explanation of Fund performance. HOW WE INVEST AIM Independence 2020 Fund is structured for investors whose target retirement date is around the year 2020. The Fund operates under a target maturity structure, which automatically redistributes holdings among the underlying products to become more conservative as the Fund approaches the target date. The Fund's investment strategy follows a three-step process. The first step is to determine AIM Independence 2020 Fund's asset allocation strategy from among broad asset classes based on the Fund's target retirement date. The second step is to select the underlying funds to be held by the Fund and to determine the target weightings of those underlying funds. The third step is the ongoing monitoring of the Fund's asset class allocations, underlying funds and target weightings. The portfolio management team monitors the selection of underlying funds to ensure that they continue to conform to the Fund's asset class allocations and will periodically rebalance the Fund's investments in underlying funds to keep them within their target weightings. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar in the second half of the fiscal year, it negatively affected the relative return of foreign equities. Against this extremely difficult market environment, only one of the Fund's underlying holdings provided a positive return during the fiscal year, AIM International Total Return Fund. This fund benefited from aggressive interest rate cuts and an increased demand for relative safety of sovereign issues. The largest detractors from absolute returns naturally came from some of our largest positions. These included the PowerShares FTSE RAFI US 1000 Portfolio, representing large cap domestic equities, and PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Domestic Equity 41.48% 37.13% Foreign Equity 15.52 12.80 High Yield Fixed Income 12.00 11.33 Investment Grade Fixed Income 28.00 35.52 Money Market Funds 0.00 0.20 Real Estate 3.00 2.58 Other Assets Less Liabilities 0.00 0.44
Total Net Assets $ 9.2 million
8 AIM INDEPENDENCE FUNDS AIM Core Bond Fund, as credit based bond issues suffered most. Relative to the Custom Independence 2020 Index, primary contributors included AIM Diversified Dividend Fund, Power-Shares Dynamic Large Cap Value Portfolio and PowerShares Dynamic Small Cap Value. Relative custom index detractors included AIM High Yield Fund, AIM Core Bond Fund and AIM Floating Rate Fund. Detractors were concentrated in fixed-income holdings as the bond component of our custom index has a higher allocation to Treasuries, which as mentioned previously, were one of the few market bright spots. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We thank you for your continued investment in AIM Independence 2020 Fund despite the challenging market environment. We continue to advocate that investors work with a financial advisor and follow a well diversified asset allocation strategy. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [WENDLER PHOTO] Director of Product Strategy and Investments Services, is manager of AIM Independence 2020 Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares AFTAX Class B Shares AFTBX Class C Shares AFTCX Class R Shares AFTRX Class Y Shares AFTYX
9 AIM INDEPENDENCE FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY - AIM INDEPENDENCE 2030 FUND Class A shares of AIM Independence 2030 Fund at net asset value returned -33.64% and outperformed the broad market, represented by the S&P 500 Index, but underperformed its style-specific index, the Custom Independence 2030 Index.+,# The Custom Independence 2030 Index approximates the performance of the types of holdings owned by the Fund's underlying investments. Performance of select underlying funds within the large-cap domestic equity and fixed-income allocations were the primary contributors to underperformance versus the style-specific index. Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 - 33.64% Class B Shares - 34.18 Class C Shares - 34.18 Class R Shares - 33.92 Class Y Shares* - 33.60 S&P 500 Index+ (Broad Market Index) - 36.99 Custom Independence 2030 Index# (Style-Specific Index) - 31.29 Lipper Mixed-Asset Target 2030 Funds Index+ (Peer Group Index) - 35.76
+ Lipper Inc.; # Invesco Aim, Lipper Inc. * Share class incepted during the fiscal year. See page 23 for a detailed explanation of Fund performance. HOW WE INVEST AIM Independence 2030 Fund is structured for investors whose target retirement date is around the year 2030. The Fund operates under a target maturity structure, which automatically redistributes holdings among the underlying products to become more conservative as the Fund approaches the target date. The Fund's investment strategy follows a three-step process. The first step is to determine AIM Independence 2030 Fund's asset allocation strategy from among broad asset classes based on the Fund's target retirement date. The second step is to select the underlying funds to be held by the Fund and to determine the target weightings of those underlying funds. The third step is the ongoing monitoring of the Fund's asset class allocations, underlying funds and target weightings. The portfolio management team monitors the selection of underlying funds to ensure that they continue to conform to the Fund's asset class allocations and will periodically rebalance the Fund's investments in underlying funds to keep them within their target weightings. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar in the second half of the fiscal year, it negatively affected the relative return of foreign equities. Against this extremely difficult market environment, none of the Fund's underlying holdings provided a positive return during the fiscal year. However, the Fund's allocation to fixed-income provided some help against the drastic drop in equities. The largest detractors from absolute returns naturally came from some of our largest positions. These included the PowerShares FTSE RAFI US 1000 Portfolio, representing large cap domestic equities and AIM High Yield Fund, as credit based bond issues suffered most. PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Domestic Equity 55.00% 52.52% Foreign Equity 21.00 18.61 High Yield Fixed Income 10.00 10.77 Investment Grade Fixed Income 10.00 14.90 Money Market Funds 0.00 1.07 Real Estate 4.00 3.38 Other Assets Less Liabilities 0.00 -1.25
Total Net Assets $ 7.0 million
10 AIM INDEPENDENCE FUNDS Relative to the Custom Independence 2030 Index, primary contributors included AIM Diversified Dividend Fund, Power-Shares Dynamic Large Cap Value Portfolio and PowerShares Dynamic Small Cap Value. Relative custom index detractors included AIM High Yield Fund, AIM Core Bond Fund, AIM Structured Growth Fund and PowerShares FTSE RAFI US 1000 Portfolio. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We thank you for your continued investment in AIM Independence 2030 Fund despite the challenging market environment. We continue to advocate that investors work with a financial advisor and follow a well diversified asset allocation strategy. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [WENDLER PHOTO] Director of Product Strategy and Investments Services, is manager of AIM Independence 2030 Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares TNAAX Class B Shares TNABX Class C Shares TNACX Class R Shares TNARX Class Y Shares TNAYX
11 AIM INDEPENDENCE FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY - AIM INDEPENDENCE 2040 FUND Class A shares of AIM Independence 2040 Fund at net asset value returned -36.00% and outperformed the broad market, represented by the S&P 500 Index, but underperformed its style-specific index, the Custom Independence 2040 Index.+,# The Custom Independence 2040 Index approximates the performance of the types of holdings owned by the Fund's underlying investments. Performance of select underlying funds within the large-cap domestic equity and fixed-income allocations were the primary contributors to underperformance versus the style-specific index. Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 - 36.00% Class B Shares - 36.53 Class C Shares - 36.53 Class R Shares - 36.27 Class Y Shares* - 35.96 S&P 500 Index+ (Broad Market Index) - 36.99 Custom Independence 2040 Index# (Style-Specific Index) - 34.79 Lipper Mixed-Asset Target 2040 Funds Index+ (Peer Group Index) - 37.36
+ Lipper Inc.; # Invesco Aim, Lipper Inc. * Share class incepted during the fiscal year. See page 25 for a detailed explanation of Fund performance. HOW WE INVEST AIM Independence 2040 Fund is structured for investors whose target retirement date is around the year 2040. The Fund operates under a target maturity structure, which automatically redistributes holdings among the underlying products to become more conservative as the Fund approaches the target date. The Fund's investment strategy follows a three-step process. The first step is to determine AIM Independence 2040 Fund's asset allocation strategy from among broad asset classes based on the Fund's target retirement date. The second step is to select the underlying funds to be held by the Fund and to determine the target weightings of those underlying funds. The third step is the ongoing monitoring of the Fund's asset class allocations, underlying funds and target weightings. The portfolio management team monitors the selection of underlying funds to ensure that they continue to conform to the Fund's asset class allocations and will periodically rebalance the Fund's investments in underlying funds to keep them within their target weightings. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity market segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar in the second half of the fiscal year, it negatively affected the relative return of foreign equities. Against this extremely difficult market environment, none of the Fund's underlying holdings provided a positive return during the fiscal year. However, the Fund's allocation to fixed-income provided some help against the drastic drop in equities. The largest detractors from absolute returns naturally came from some of our largest positions. These included the PowerShares FTSE RAFI US 1000 Portfolio, representing large cap domestic equities, and PowerShares FTSE RAFI PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Domestic Equity 60.79% 59.69% Foreign Equity 23.33 21.70 High Yield Fixed Income 7.10 7.85 Investment Grade Fixed Income 4.20 5.91 Money Market Funds 0.00 1.47 Real Estate 4.58 4.05 Other Assets Less Liabilities 0.00 -0.67
Total Net Assets $ 3.5 million
12 AIM INDEPENDENCE FUNDS US 1500 Small-Mid Portfolio, representing small- and mid-cap domestic equities. Relative to the Custom Independence 2040 Index, primary contributors included AIM Diversified Dividend Fund, Power-Shares Dynamic Large Cap Value Portfolio and PowerShares Dynamic Small Cap Value. Relative custom index detractors included AIM High Yield Fund, AIM Core Bond Fund, AIM Structured Growth Fund and PowerShares FTSE RAFI US 1000 Portfolio. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We thank you for your continued investment in AIM Independence 2040 Fund despite the challenging market environment. We continue to advocate that investors work with a financial advisor and follow a well diversified asset allocation strategy. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [WENDLER PHOTO] Director of Product Strategy and Investments Services, ismanager of AIM Independence 2040 Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares TNDAX Class B Shares TNDBX Class C Shares TNDCX Class R Shares TNDRX Class Y Shares TNDYX
13 AIM INDEPENDENCE FUNDS MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY - AIM INDEPENDENCE 2050 FUND Class A shares of AIM Independence 2050 Fund at net asset value returned -37.51% and performed in line with both the broad market, represented by the S&P 500 Index, and its style-specific index, the Custom Independence 2050 Index.+,# The Custom Independence 2050 Index approximates the performance of the types of holdings owned by the Fund's underlying investments. Performance of select underlying funds within the large-cap domestic equity allocation were the primary detractors from performance versus the style-specific index. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 - 37.51% Class B Shares - 38.03 Class C Shares - 37.99 Class R Shares - 37.78 Class Y Shares* - 37.46 S&P 500 Index+ (Broad Market Index) - 36.99 Custom Independence 2050 Index# (Style-Specific Index) - 37.27 Lipper Mixed-Asset Target 2050+ Funds Category Average+ (Peer Group) - 38.93
+ Lipper Inc.; # Invesco Aim, Lipper Inc. * Share class incepted during the fiscal year. See page 27 for a detailed explanation of Fund performance. HOW WE INVEST AIM Independence 2050 Fund is structured for investors whose target retirement date is around the year 2050. The Fund operates under a target maturity structure, which automatically redistributes holdings among the underlying products to become more conservative as the Fund approaches the target date. The Fund's investment strategy follows a three-step process. The first step is to determine AIM Independence 2050 Fund's asset allocation strategy from among broad asset classes based on the Fund's target retirement date. The second step is to select the underlying funds to be held by the Fund and to determine the target weightings of those underlying funds. The third step is the ongoing monitoring of the Fund's asset class allocations, underlying funds and target weightings. The portfolio management team monitors the selection of underlying funds to ensure that they continue to conform to the Fund's asset class allocations and will periodically rebalance the Fund's investments in underlying funds to keep them within their target weightings. MARKET CONDITIONS AND YOUR FUND The 2008 fiscal year opened with a continuation of the credit crisis which began in 2007. The credit crisis originated from troubles in U.S. subprime mortgage loans but quickly spread beyond mortgage-related debt instruments. The year ended with a global economic and market crisis of historic proportions. Events of this magnitude did not develop overnight; rather, they grew over many years from a systematic increase in risk taking encouraged by easy credit and low market volatility. In response, the U.S. Federal Reserve Board, in concert with other world central banks, dramatically decreased interest rates. Additionally, Congress enacted a $700 billion rescue plan, the Troubled Assets Relief Program, and the Bush Administration underwrote a bridge loan to the Big Three U.S. automakers. Despite these efforts, lending remained tight and the economy continued its decline. Across asset classes there were few places for investors to hide. One exception was Treasuries, especially longer dated issues. While investors shunned Treasuries in prior years because they offered lower yields versus credit sensitive issues, they once again sought the safe harbor of Treasuries as the credit storm intensified. As a result, investment grade bond markets generally finished in positive territory while high yield markets generally posted negative returns.(1) Across domestic equity segments there were relatively small differences in performance. Small-cap stocks generally edged out large-cap stocks and value generally outperformed growth.(1) Foreign equities did not fair as well as domestic equities primarily due to investors seeking the safe haven of the U.S. dollar. As investors increased the relative value of the dollar in the second half of the fiscal year, it negatively affected the relative return of foreign equities. Against this extremely difficult market environment, none of the Fund's underlying holdings provided a positive return during the fiscal year. However, the Fund did perform in line with its style benchmark, the Custom Independence 2050 Index. The largest detractors from absolute returns naturally came from some of our largest positions. These included the PowerShares FTSE RAFI US 1000 Portfolio, representing large cap domestic equities, and PowerShares FTSE RAFI PORTFOLIO COMPOSITION
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Domestic Equity 65.00% 65.49% Foreign Equity 25.00 23.56 High Yield Fixed Income 5.00 5.43 Investment Grade Fixed Income 0.00 0.00 Money Market Funds 0.00 1.85 Real Estate 5.00 4.43 Other Assets Less Liabilities 0.00 -0.76
Total Net Assets $ 2.1 million
14 AIM INDEPENDENCE FUNDS US 1500 Small-Mid Portfolio, representing small- and mid-cap domestic equities. Relative to the Custom Independence 2050 Index, primary contributors included AIM Diversified Dividend Fund, Power-Shares Dynamic Large Cap Value Portfolio and PowerShares Dynamic Small Cap Value. Relative custom index detractors included AIM High Yield Fund, AIM Structured Growth Fund and PowerShares FTSE RAFI US 1000 Portfolio. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We thank you for your continued investment in AIM Independence 2050 Fund despite the challenging market environment. We continue to advocate that investors work with a financial advisor and follow a well diversified asset allocation strategy. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. GARY WENDLER [WENDLER PHOTO] Director of Product Strategy and Investments Services, is manager of AIM Independence 2050 Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University.
FUND NASDAQ SYMBOLS Class A Shares TNEAX Class B Shares TNEBX Class C Shares TNECX Class R Shares TNERX Class Y Shares TNEYX
15 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE NOW FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 16 AIM INDEPENDENCE FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 1/31/07
LIPPER AIM AIM AIM AIM MIXED-ASSET INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE CUSTOM TARGET NOW FUND- NOW FUND- NOW FUND- NOW FUND- INDEPENDENCE CONSERVATIVE DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES S&P 500 INDEX(2) NOW INDEX(1) FUNDS INDEX(2) 1/31/07 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9469 10010 10010 10020 9805 10054 10041 3/07 9547 10095 10095 10097 9914 10103 10103 4/07 9690 10246 10246 10258 10353 10285 10269 5/07 9775 10325 10325 10338 10714 10364 10350 6/07 9719 10257 10257 10273 10536 10284 10271 7/07 9595 10126 10126 10151 10210 10207 10210 8/07 9662 10187 10187 10212 10363 10315 10260 9/07 9819 10343 10332 10372 10750 10515 10473 10/07 9943 10464 10464 10503 10921 10657 10607 11/07 9789 10301 10292 10341 10464 10593 10521 12/07 9777 10280 10281 10322 10392 10580 10503 1/08 9577 10070 10071 10122 9769 10430 10417 2/08 9467 9944 9945 9995 9452 10347 10375 3/08 9451 9919 9920 9971 9411 10336 10317 4/08 9633 10100 10101 10164 9869 10526 10484 5/08 9694 10163 10154 10228 9997 10551 10587 6/08 9401 9849 9840 9913 9155 10220 10335 7/08 9391 9828 9829 9902 9078 10180 10229 8/08 9422 9860 9861 9934 9209 10258 10227 9/08 8859 9265 9255 9335 8390 9798 9737 10/08 8076 8435 8437 8510 6981 8917 8780 11/08 7919 8272 8262 8345 6480 8789 8514 12/08 8075 8121 8414 8499 6548 9116 8801
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (1/31/07) - 10.57% 1 Year - 21.99 CLASS B SHARES Inception (1/31/07) - 10.30% 1 Year - 21.93 CLASS C SHARES Inception (1/31/07) - 8.63% 1 Year - 18.93 CLASS R SHARES Inception (1/31/07) - 8.14% 1 Year - 17.66 CLASS Y SHARES Inception - 7.87% 1 Year - 17.39
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JANUARY 31, 2007. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 0.95%, 1.70%, 1.70%, 1.20% AND 0.70%, RESPECTIVELY.(1,2)THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 29.43%, 30.18%, 30.18%, 29.68% AND 29.18%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.68% for AIM Independence Now Fund. 17 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE 2010 FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 18 AIM INDEPENDENCE FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 1/31/07
AIM AIM AIM AIM LIPPER INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE CUSTOM MIXED-ASSET 2010 FUND- 2010 FUND- 2010 FUND- 2010 FUND- INDEPENDENCE TARGET 2010 FUNDS DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES S&P 500 INDEX(2) 2010 INDEX(1) INDEX(2) 1/31/07 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9459 10010 10010 10010 9805 10046 10001 3/07 9564 10110 10110 10110 9914 10102 10067 4/07 9715 10270 10270 10280 10353 10303 10297 5/07 9819 10369 10369 10380 10714 10397 10440 6/07 9753 10290 10290 10310 10536 10309 10354 7/07 9611 10130 10139 10161 10210 10216 10251 8/07 9668 10190 10189 10221 10363 10323 10302 9/07 9838 10359 10358 10400 10750 10543 10564 10/07 9980 10508 10507 10550 10921 10695 10741 11/07 9810 10319 10318 10360 10464 10606 10550 12/07 9796 10292 10301 10342 10392 10585 10512 1/08 9571 10056 10053 10104 9769 10394 10265 2/08 9444 9922 9920 9969 9452 10302 10183 3/08 9424 9891 9889 9948 9411 10287 10152 4/08 9619 10097 10095 10155 9869 10502 10414 5/08 9687 10158 10156 10217 9997 10534 10504 6/08 9355 9798 9806 9866 9155 10168 10081 7/08 9346 9787 9785 9856 9078 10121 9968 8/08 9385 9818 9817 9897 9209 10195 9979 9/08 8789 9190 9188 9267 8390 9694 9325 10/08 7919 8273 8271 8348 6981 8752 8275 11/08 7733 8077 8075 8152 6480 8598 7960 12/08 7926 7961 8279 8355 6548 8925 8178
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (1/31/07) - 11.43% 1 Year - 23.54 CLASS B SHARES Inception (1/31/07) - 11.23% 1 Year - 23.52 CLASS C SHARES Inception (1/31/07) - 9.39% 1 Year - 20.41 CLASS R SHARES Inception (1/31/07) - 8.96% 1 Year - 19.20 CLASS Y SHARES Inception - 8.70% 1 Year - 18.96
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JANUARY 31, 2007. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 0.99%, 1.74%, 1.74%, 1.24% AND 0.74%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 17.12%, 17.87%, 17.87%, 17.37% AND 16.87% RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.70% for AIM Independence 2010 Fund. 19 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE 2020 FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 20 AIM INDEPENDENCE FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 1/31/07
AIM AIM AIM AIM LIPPER INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE CUSTOM MIXED-ASSET 2020 FUND- 2020 FUND- 2020 FUND- 2020 FUND- INDEPENDENCE TARGET 2020 DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES S&P 500 INDEX(2) 2020 INDEX(1) FUNDS INDEX(2) 1/31/07 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9431 9980 9980 9980 9805 10008 9974 3/07 9554 10090 10100 10110 9914 10094 10046 4/07 9761 10310 10309 10319 10353 10357 10293 5/07 9921 10470 10469 10488 10714 10517 10481 6/07 9808 10340 10339 10369 10536 10397 10363 7/07 9573 10091 10090 10119 10210 10231 10219 8/07 9648 10160 10159 10199 10363 10325 10310 9/07 9875 10390 10399 10428 10750 10622 10591 10/07 10064 10589 10588 10627 10921 10815 10803 11/07 9743 10240 10239 10288 10464 10595 10569 12/07 9675 10168 10167 10218 10392 10527 10502 1/08 9296 9758 9757 9808 9769 10159 10152 2/08 9121 9574 9573 9633 9452 10045 10044 3/08 9082 9522 9521 9582 9411 10014 10055 4/08 9384 9840 9839 9900 9869 10329 10399 5/08 9471 9922 9921 9992 9997 10404 10518 6/08 8966 9389 9377 9459 9155 9886 9910 7/08 8946 9358 9346 9438 9078 9812 9769 8/08 8985 9399 9388 9479 9209 9857 9768 9/08 8286 8661 8660 8740 8390 9196 8974 10/08 7149 7462 7461 7538 6981 8040 7678 11/08 6789 7083 7071 7158 6480 7753 7273 12/08 7014 7044 7299 7386 6548 8044 7451
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (1/31/07) - 16.91% 1 Year - 31.51 CLASS B SHARES Inception (1/31/07) - 16.72% 1 Year - 31.49 CLASS C SHARES Inception (1/31/07) - 15.16% 1 Year - 28.91 CLASS R SHARES Inception (1/31/07) - 14.63% 1 Year - 27.72 CLASS Y SHARES Inception - 14.40% 1 Year - 27.49
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JANUARY 31, 2007. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.11%, 1.86%, 1.86%, 1.36% AND 0.86%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 10.82%, 11.57%, 11.57%, 11.07% AND 10.57%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.78% for AIM Independence 2020 Fund. 21 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE 2030 FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. 22 AIM INDEPENDENCE FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 1/31/07
AIM AIM AIM AIM INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE CUSTOM LIPPER MIXED- 2030 FUND- 2030 FUND- 2030 FUND- 2030 FUND- INDEPENDENCE ASSET TARGET 2030 DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES S&P 500 INDEX(2) 2030 INDEX(1) FUNDS INDEX(2) 1/31/07 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9384 9930 9930 9930 9805 9960 9943 3/07 9554 10100 10090 10100 9914 10074 10048 4/07 9809 10369 10359 10380 10353 10404 10405 5/07 10054 10609 10609 10629 10714 10641 10691 6/07 9912 10459 10459 10479 10536 10494 10567 7/07 9610 10130 10130 10150 10210 10254 10380 8/07 9694 10210 10210 10239 10363 10338 10408 9/07 9949 10490 10490 10519 10750 10704 10792 10/07 10176 10719 10719 10748 10921 10931 11067 11/07 9733 10240 10240 10269 10464 10583 10654 12/07 9638 10143 10143 10177 10392 10482 10562 1/08 9122 9588 9598 9632 9769 9942 9958 2/08 8917 9362 9372 9405 9452 9795 9783 3/08 8858 9300 9300 9343 9411 9747 9708 4/08 9229 9691 9690 9745 9869 10152 10150 5/08 9346 9793 9804 9858 9997 10273 10310 6/08 8683 9094 9095 9147 9155 9596 9592 7/08 8654 9063 9074 9116 9078 9502 9431 8/08 8713 9115 9126 9178 9209 9529 9419 9/08 7962 8324 8334 8375 8390 8727 8531 10/08 6608 6905 6916 6954 6981 7359 7071 11/08 6140 6412 6423 6459 6480 6943 6593 12/08 6398 6424 6676 6725 6548 7202 6785
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (1/31/07) - 20.80% 1 Year - 37.32 CLASS B SHARES Inception (1/31/07) - 20.63% 1 Year - 37.37 CLASS C SHARES Inception (1/31/07) - 19.02% 1 Year - 34.81 CLASS R SHARES Inception (1/31/07) - 18.71% 1 Year - 33.92 CLASS Y SHARES Inception - 18.41% 1 Year - 33.60
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JANUARY 31, 2007. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.16%, 1.91%, 1.91%, 1.41% AND 0.91%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 14.33%, 15.08%, 15.08%, 14.58% AND 14.08%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.80% for AIM Independence 2030 Fund. 23 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE 2040 FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. In prior periods the Fund compared itself to the Lipper Mixed-Asset Target 2030+ Funds Index for comparison to a peer group benchmark. That index is no longer available. The new peer group benchmark is the Lipper Mixed-Asset Target 2040 Funds Index. 24 AIM INDEPENDENCE FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 1/31/07
AIM AIM AIM AIM LIPPER INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE CUSTOM MIXED-ASSET 2040 FUND- 2040 FUND- 2040 FUND- 2040 FUND- INDEPENDENCE TARGET 2040 DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES S&P 500 INDEX(2) 2040 INDEX(1) FUNDS INDEX(2) 1/31/07 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9365 9900 9900 9910 9805 9940 9918 3/07 9525 10069 10069 10070 9914 10065 10043 4/07 9808 10368 10358 10379 10353 10424 10403 5/07 10072 10638 10638 10658 10714 10694 10733 6/07 9931 10478 10478 10498 10536 10534 10602 7/07 9591 10119 10119 10139 10210 10261 10292 8/07 9685 10209 10199 10229 10363 10341 10329 9/07 9958 10489 10489 10519 10750 10738 10723 10/07 10203 10748 10738 10779 10921 10980 11031 11/07 9723 10229 10229 10270 10464 10574 10510 12/07 9621 10114 10115 10160 10392 10458 10400 1/08 9053 9515 9516 9559 9769 9844 9739 2/08 8828 9268 9268 9321 9452 9683 9563 3/08 8769 9196 9196 9249 9411 9629 9471 4/08 9151 9598 9599 9662 9869 10072 9943 5/08 9278 9722 9723 9786 9997 10215 10155 6/08 8534 8948 8949 9000 9155 9460 9404 7/08 8514 8917 8918 8969 9078 9358 9237 8/08 8573 8969 8969 9031 9209 9377 9222 9/08 7819 8174 8175 8235 8390 8511 8319 10/08 6410 6698 6698 6756 6981 7047 6800 11/08 5901 6161 6162 6207 6480 6574 6301 12/08 6160 6178 6419 6474 6548 6820 6514
1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (1/31/07) - 22.36% 1 Year - 39.50 CLASS B SHARES Inception (1/31/07) - 22.24% 1 Year - 39.62 CLASS C SHARES Inception (1/31/07) - 20.66% 1 Year - 37.15 CLASS R SHARES Inception (1/31/07) - 20.31% 1 Year - 36.27 CLASS Y SHARES Inception - 20.02% 1 Year - 35.96
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JANUARY 31, 2007. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.16%, 1.91%, 1.91%, 1.41% AND 0.91%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 23.24%, 23.99%, 23.99%, 23.49% AND 22.99%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.81% for AIM Independence 2040 Fund. 25 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE 2050 FUND LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. In prior periods the Fund compared itself to the Lipper Mixed-Asset Target 2030+ Funds Index for comparison to a peer group benchmark. That index is no longer available. The new peer group benchmark is the Lipper Mixed-Asset Target 2050+ Funds Category Average. 26 AIM INDEPENDENCE FUNDS [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 1/31/07
LIPPER AIM AIM AIM AIM MIXED-ASSET INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE CUSTOM TARGET 2050+ 2050 FUND- 2050 FUND- 2050 FUND- 2050 FUND- INDEPENDENCE CATEGORY DATE CLASS A SHARES CLASS B SHARES CLASS C SHARES CLASS R SHARES S&P 500 INDEX(2) 2050 INDEX(1) AVERAGE(2) 1/31/07 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9346 9880 9880 9890 9805 9925 9893 3/07 9516 10050 10060 10060 9914 10058 10034 4/07 9808 10359 10370 10370 10353 10438 10404 5/07 10101 10659 10659 10670 10714 10732 10746 6/07 9940 10489 10489 10510 10536 10563 10641 7/07 9591 10110 10120 10141 10210 10267 10348 8/07 9695 10210 10220 10240 10363 10343 10416 9/07 9987 10509 10520 10549 10750 10762 10904 10/07 10242 10778 10780 10818 10921 11015 11230 11/07 9714 10220 10231 10259 10464 10568 10690 12/07 9596 10080 10092 10129 10392 10441 10587 1/08 8988 9439 9451 9486 9769 9774 9881 2/08 8762 9190 9203 9237 9452 9602 9692 3/08 8703 9118 9130 9175 9411 9543 9611 4/08 9106 9542 9553 9600 9869 10013 10101 5/08 9233 9676 9688 9734 9997 10172 10291 6/08 8448 8849 8851 8905 9155 9361 9505 7/08 8429 8818 8831 8885 9078 9253 9335 8/08 8497 8880 8893 8947 9209 9267 9290 9/08 7722 8063 8075 8128 8390 8356 8319 10/08 6270 6543 6556 6604 6981 6824 6783 11/08 5730 5985 5987 6034 6480 6312 6225 12/08 5999 6013 6257 6302 6548 6549 6488
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (1/31/07) - 23.42% 1 Year - 40.95 CLASS B SHARES Inception (1/31/07) - 23.32% 1 Year - 41.03 CLASS C SHARES Inception (1/31/07) - 21.72% 1 Year - 38.59 CLASS R SHARES Inception (1/31/07) - 21.42% 1 Year - 37.78 CLASS Y SHARES Inception - 21.10% 1 Year - 37.46
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED RETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JANUARY 31, 2007. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.16%, 1.91%, 1.91%, 1.41% AND 0.91%, RESPECTIVELY.(1,2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 25.45%, 26.20%, 26.20%, 25.70% AND 25.20%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. 1 Total annual operating expenses less any contractual fee waivers and/or expense reimbursements by the advisor in effect through at least June 30, 2009. See current prospectus for more information. 2 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.82% for AIM Independence 2050 Fund. 27 AIM INDEPENDENCE FUNDS AIM INDEPENDENCE NOW FUND'S INVESTMENT OBJECTIVE IS CURRENT INCOME AND, AS A SECONDARY OBJECTIVE, CAPITAL APPRECIATION. AIM INDEPENDENCE 2010 FUND'S, AIM INDEPENDENCE 2020 FUND'S, AIM INDEPENDENCE 2030 FUND'S, AIM INDEPENDENCE 2040 FUND'S AND AIM INDEPENDENCE 2050 FUND'S INVESTMENT OBJECTIVES ARE CAPITAL APPRECIATION AND CURRENT INCOME, CONSISTENT WITH THEIR CURRENT ASSET ALLOCATION STRATEGIES. # Unless otherwise stated, information presented in this report is as of December 31, 2008, and is based on total net assets. # Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES # Effective September 30, 2003, only previously established qualified plans are eligible to purchase Class B shares of any AIM fund. # Class R shares are available only to certain retirement plans. Please see the prospectus for more information. # Class Y shares are available only to certain investors. Please see the prospectus for more information. PRINCIPAL RISKS OF INVESTING IN AIM INDEPENDENCE FUNDS
AIM AIM AIM AIM AIM AIM INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE INDEPENDENCE NOW FUND 2010 FUND 2020 FUND 2030 FUND 2040 FUND 2050 FUND Convertible Securities Risk x x x Credit Risk x x x x x Developing Markets Risk x x x x Dollar Roll Transaction Risk x x x x Equity Securities Risk x x x x x x Exchange-Traded Funds Risk x x x x x x Foreign Securities Risk x x x x x x Fund of Funds Risk x x x x x x High-Coupon U.S. Government x x x x Agency Mortgage-Backed Securities Risk High Yield Risk x x x Interest Rate Risk x x x x x Leveraging & Derivatives Risk x x x x x Management Risk x x x x x Market Cap Risk (Small & Mid) x x x x x x Market Risk x x x x x x Reinvestment Risk x x x x x Reverse Repurchase x x Agreement Risk U.S. Government Obligations Risk x x x x
PRINCIPAL RISKS DEFINED # CONVERTIBLE RISK: The values of convertible securities in which the Fund invests may be affected by market interest rates, the risk that the issuer may default on interest or principal payments, and the value of the underlying common stock into which these securities may be converted. # CREDIT RISK: Credit Risk is the risk of loss on an investment due to the deterioration of an issuer's financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities and may lead to the issuer's inability to honor its contractual obligations, including making timely payment of interest and principal. # DEVELOPING MARKETS RISK: Investing in developing countries can add additional risk, such as high rates of inflation or sharply devalued currencies against the U.S. dollar. Transaction costs are often higher, and there may be delays in settlement procedures. # DOLLAR ROLL TRANSACTION RISK: Dollar-roll transactions involve the risk that the market value of securities to be purchased by the Fund may decline below the price at which the Fund is obligated to repurchase them, or that the other party may default on its obligation such that the Fund is delayed or prevented from completing the transaction. # EQUITY SECURITIES RISK: Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. # EXCHANGE-TRADED FUNDS RISK: ETF shares may trade above or below their net asset value. An active trading market for PowerShares' ETFs may not develop or be maintained. Trading of a PowerShares ETF may be halted if the listing exchange's officials deem such action appropriate. PowerShares' ETFs are not actively managed and may not fulfill their objective of tracking the performance of a specified index. PowerShares' ETFs would not necessarily sell a security because the issuer of the security was in financial trouble 28 AIM INDEPENDENCE FUNDS unless the security is removed from the index that the ETF seeks to track. The value of an investment in a PowerShares ETF will decline, more or less, in correlation with any decline in the value of the index it seeks to track. In addition, certain PowerShares ETFs may be composed of a significant percentage of issuers in a single industry or sector of the economy and may present more risk than if they were broadly diversified. # FOREIGN SECURITIES RISK: Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, relative lack of information, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards. # FUND OF FUNDS RISK: The Fund pursues its investment objectives by investing its assets in other underlying funds rather than investing directly in stocks, bonds, cash or other investments. The Fund's investment performance depends on the investment performance of the underlying funds. The Fund will indirectly pay a proportional share of the asset-based fees of the underlying funds in which it invests. There is risk that the advisor's evaluations and assumptions regarding the Fund's broad asset classes or the underlying funds may be incorrect based on actual market conditions, or that the Fund will vary from the target weightings in the underlying funds due to factors such as market fluctuations. There can be no assurance that the underlying funds will achieve their investment objectives, and the performance of the underlying funds may be lower than that of the asset classes they represent. The underlying funds may change their investment objectives or policies without the approval of the Fund. If that were to occur, the Fund might be forced to withdraw its investments from the underlying funds at an unfavorable time. The advisor has the ability to select and substitute the underlying funds in which the Fund invests and may be subject to potential conflicts of interest in selecting underlying funds because the advisor for PowerShares ETFs and an affiliate of the advisor may receive higher fees from certain underlying funds than others. However, as a fiduciary of the Fund, the advisor is required to act in the Fund's best interest when selecting the underlying funds. Because the Fund is a fund of funds, it is subject to the risks associated with the underlying funds in which it invests. There are additional risks of investing in the underlying funds. # HIGH-COUPON U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES RISK: High-coupon, U.S. government agency mortgage-backed securities provide a higher coupon than current prevailing market interest rates, and the Fund may purchase such securities at a premium. If these securities experience a faster-than-expected principal prepayment rate, both the market value and income from such securities will decrease. # HIGH YIELD RISK: Lower rated securities may be more susceptible to real or perceived adverse economic and competitive industry conditions, and the secondary markets in which lower rated securities are traded may be less liquid than higher grade securities. The loans in which the Fund may invest are typically noninvestment-grade and involve a greater risk of default on interest and principal payments and of price changes due to the changes in the credit quality of the issuer. # INTEREST RATE RISK: Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. # LEVERAGING & DERIVATIVES RISK: The Fund may use enhanced investment techniques such as leveraging and derivatives. Leveraging entails risks such as magnifying changes in the value of the portfolio's securities. Derivatives are subject to counterparty risk -- the risk that the other party will not complete the transaction with the Fund. # MANAGEMENT RISK: The prices of securities held by the Fund may decline in response to market risks. # MARKET CAP RISK (SMALL AND MID): Small- and mid-cap companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in these sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, limited product lines, less publicly available information, illiquidity, restricted resale or less frequent trading. # MARKET RISK: The prices of securities held by the Fund may decline in response to market risks. # REINVESTMENT RISK: Reinvestment risk is the risk that a bond's cash flows will be reinvested at an interest rate below that of the original bond. # REVERSE REPURCHASE AGREEMENT RISK: Reverse repurchase agreements and dollar-roll transactions involve the risk that the market value of securities to be purchased by the Fund may decline below the price at which the Fund is obligated to repurchase them, or that the other party may default on its obligation such that the Fund is delayed or prevented from completing the transaction. # U.S. GOVERNMENT OBLIGATIONS RISK: The Fund may invest in obligations issued by agencies and instrumentalities of the U.S. government that may vary in the level of support they receive from the U.S. government. The U.S. government may choose not to provide financial support to U.S.-government-sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the underlying fund holding securities of such an issuer might not be able to recover its investment from the U.S. government. ABOUT INDEXES USED IN THIS REPORT # 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 CUSTOM INDEPENDENCE NOW INDEX, created by Invesco Aim to serve as a benchmark for AIM Independence Now Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, CONTINUED ON PAGE 30 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 29 AIM INDEPENDENCE FUNDS continued on page 30 FTSE NAREIT Equity REITs, Barclays Capital U.S. Universal and the three-month U.S. Treasury bill. 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 composition and will likely be altered in the future to better reflect the objective of the Fund. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE --REGISTERED TRADEMARK-- Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. The three-month U.S. Treasury bill index is compiled by Lipper and is derived from secondary market interest rates published by the Federal Reserve Bank. # The LIPPER MIXED-ASSET TARGET ALLOCATION CONSERVATIVE FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target 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, and cash equivalents. # The CUSTOM INDEPENDENCE 2010 INDEX, created by Invesco Aim to serve as a benchmark for AIM Independence 2010 Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs, Barclays Capital U.S. Universal and the three-month U.S. Treasury bill. 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 composition and likely will be altered in the future to reflect the increasingly conservative allocations of the Fund over time. The Russell 3000-- registered trademark-- Index is an unman- aged index considered representative of 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 MSCI EAFE --REGISTERED TRADEMARK-- Index is an unmanaged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. The three-month U.S. Treasury bill index is compiled by Lipper and is derived from secondary market interest rates published by the Federal Reserve Bank. # The LIPPER MIXED-ASSET TARGET 2010 FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation 2010 Funds category. These funds seek to maximize assets for retirement or other purposes with an extended time horizon not to exceed the year 2010. # The CUSTOM INDEPENDENCE 2020 INDEX, created by Invesco Aim to serve as a benchmark for AIM Independence 2020 Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to reflect the increasingly conservative allocations of the Fund over time. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE -- REGISTERED TRADEMARK-- Index is an unman- aged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. # The LIPPER MIXED-ASSET TARGET 2020 FUNDS INDEX is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation 2020 Funds category. These funds seek to maximize assets for retirement or other purposes with an expected time horizon from January 1, 2016, to December 31, 2020. # The CUSTOM INDEPENDENCE 2030 INDEX, created by Invesco Aim to serve as a benchmark for AIM Independence 2030 Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to reflect the increasingly conservative allocations of the Fund over time. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE-- registered trademark-- Index is an unman- aged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. # The LIPPER MIXED-ASSET TARGET 2030 FUNDS Index is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target Allocation 2030 Funds category. These funds seek to maximize assets for retirement or other purposes with an expected time horizon from January 1, 2026, to December 31, 2030. # The CUSTOM INDEPENDENCE 2040 INDEX, created by Invesco Aim to serve as a benchmark for AIM Independence 2040 Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to reflect the increasingly conservative allocations of the Fund 30 AIM INDEPENDENCE FUNDS over time. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE -- REGISTERED TRADEMARK-- Index is an unman- aged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. # The LIPPER MIXED-ASSET TARGET 2040 FUNDS Index is an equally weighted representation of the largest funds in the Lipper Mixed-Asset Target 2040 Funds category. The funds seek to maximize assets for retirement or other purposes with an expected time horizon from January 1, 2036 to December 31, 2040. The Lipper Peer Group Benchmark changed effective 05/23/08 in response to Lipper's refinement of their existing classifications to ensure meaningful peer groups. # The CUSTOM INDEPENDENCE 2050 INDEX, created by Invesco Aim to serve as a benchmark for AIM Independence 2050 Fund, is composed of the following indexes: Russell 3000, MSCI EAFE, FTSE NAREIT Equity REITs and Barclays Capital U.S. Universal. The composition of the index may change from time to time based upon the target asset allocation of the Fund. Therefore, the current composition of the index does not reflect its historical composition and will likely be altered in the future to reflect the increasingly conservative allocations of the Fund over time. The Russell 3000 --REGISTERED TRADEMARK-- Index is an unmanaged index considered representative of 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 MSCI EAFE -- REGISTERED TRADEMARK-- Index is an unman- aged 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. REITs. The Barclays Capital U.S. Universal Index is composed of the following Barclays Capital indexes: U.S. Aggregate Index, U.S. High-Yield Corporate, 144A, Eurodollar, Emerging Markets and the non-ERISA portion of CMBS. # The LIPPER MIXED-ASSET TARGET 2050+ FUNDS CATEGORY AVERAGE represents an average of all of the funds in the Lipper Mixed-Asset Target 2050+ Funds category. These funds seek to maximize assets for retirement or other purposes with an expected time horizon exceeding the year 2045. The Lipper Peer Group Benchmark changed effective 05/23/08 in response to Lipper's refinement of their existing classifications to ensure meaningful peer groups. For those funds where the new Lipper index has less than a 5-year history, the category average will be used until the Lipper index has sufficient history. # 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. OTHER INFORMATION # The returns shown in management's discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. 31 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS December 31, 2008 AIM INDEPENDENCE NOW FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-102.68%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ----------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-22.03% AIM Diversified Dividend Fund 3.85% $ 55,462 $ 53,401 $ (23,535) $ (13,219) $ (9,655) $ 1,822 6,970 $ 62,454 - ----------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 2.01% 35,842 33,915 (14,698) (15,950) (6,608) 259 4,865 32,501 - ----------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 2.29% 35,402 33,878 (14,698) (10,415) (6,967) 979 5,232 37,200 - ----------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 0.61% 17,258 12,233 (12,625) (2,041) (4,748) 75 1,148 9,943 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 2.24% 34,649 30,745 (7,187) (18,520) (3,328) 236 3,376 36,359 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 2.69% 34,255 31,042 (7,292) (11,787) (2,607) 1,051 3,016 43,611 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 0.91% 22,312 14,418 (14,115) (5,638) (2,237) -- 1,356 14,740 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 0.90% 20,703 14,366 (14,979) (3,697) (1,827) 146 1,350 14,566 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 5.53% 82,151 76,099 (17,044) (42,536) (9,063) 2,248 2,627 89,607 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small Mid Portfolio-ETF 1.00% 27,089 17,827 (19,161) (6,656) (2,843) 239 505 16,256 ============================================================================================================================= Total Domestic Equity Funds 365,123 317,924 (145,334) (130,459) (49,883) 7,055 357,237 ============================================================================================================================= FIXED-INCOME FUNDS-68.62% AIM Core Bond Fund 24.49% 291,778 298,865 (126,220) (50,806) (16,543) 33,062 46,011 397,074 - ----------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 4.71% 73,813 75,639 (30,806) (30,457) (11,904) 6,542 14,259 76,285 - ----------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 2.37% 34,976 36,019 (16,012) (10,988) (5,616) 4,291 13,326 38,379 - ----------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 4.31% 46,782 44,929 (21,815) 490 542 275 6,394 69,947 - ----------------------------------------------------------------------------------------------------------------------------- AIM Limited Maturity Treasury Fund 3.33% 34,865 33,162 (15,393) 867 547 1,248 5,127 54,048 - ----------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 18.12% 209,628 210,471 (92,236) (25,752) (8,265) 19,865 34,168 293,846 - ----------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 11.29% 113,015 110,859 (51,189) 9,006 1,348 7,982 19,961 183,039 ============================================================================================================================= Total Fixed-Income Funds 804,857 809,944 (353,671) (107,640) (39,891) 73,265 1,112,618 ============================================================================================================================= FOREIGN EQUITY FUNDS-4.84% AIM International Core Equity Fund 0.58% 39,332 21,583 (45,439) (1,012) (5,147) 422 1,120 9,317 - ----------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 1.46% 20,112 28,484 (10,238) (9,651) (5,029) 640 1,261 23,678 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Portfolio-ETF 1.62% -- 46,708 (4,729) (12,686) (2,976) 670 926 26,317 - ----------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 1.18% 19,527 18,391 (4,018) (12,134) (2,648) 1,040 1,819 19,118 ============================================================================================================================= Total Foreign Equity Funds 78,971 115,166 (64,424) (35,483) (15,800) 2,772 78,430 ============================================================================================================================= REAL ESTATE FUNDS-2.27% AIM Select Real Estate Income Fund 2.27% -- 75,192 (14,855) (16,126) (7,365) 2,005 6,675 36,846 ============================================================================================================================= MONEY MARKET FUNDS-4.92% Liquid Assets Portfolio 4.41% 52,068 145,373 (126,036) -- -- 1,680 71,405 71,405 - ----------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.51% 11,463 105,393 (108,540) -- -- 97 8,316 8,316 ============================================================================================================================= Total Money Market Funds 63,531 250,766 (234,576) -- -- 1,777 79,721 ============================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $1,972,028) 102.68% $1,312,482 $1,568,992 $(812,860) $(289,708)(c) $(112,939)(c) $86,874 $1,664,852 OTHER ASSETS LESS LIABILITIES (2.68)% (43,446) ============================================================================================================================= NET ASSETS 100.00% $1,621,406 =============================================================================================================================
Investment Abbreviations: ETF - Exchange-Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment 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. (c) Includes $981 from return of capital and $134 of capital gains, respectively from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 32 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM INDEPENDENCE 2010 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.40%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-23.84% AIM Diversified Dividend Fund 4.23% $ 121,795 $ 182,599 $ (54,854) $ (39,661) $ (21,050) $ 4,579 21,075 $ 188,829 - ------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 2.30% 79,709 114,497 (33,070) (44,168) (14,209) 810 15,383 102,759 - ------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 2.57% 78,624 115,307 (33,197) (30,026) (15,844) 3,001 16,155 114,864 - ------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 0.80% 38,956 44,763 (28,338) (8,170) (10,854) 269 4,143 35,877 - ------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 2.32% 76,824 111,781 (29,670) (44,923) (10,189) 684 9,640 103,823 - ------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 2.75% 75,871 112,989 (29,909) (26,494) (9,619) 2,648 8,495 122,838 - ------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfo- lio-ETF(b) 1.03% 51,059 53,244 (37,263) (14,141) (6,767) -- 4,244 46,132 - ------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 1.02% 47,293 53,267 (38,577) (10,233) (6,335) 410 4,209 45,415 - ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 5.65% 180,641 274,578 (71,045) (99,266) (32,255) 5,854 7,407 252,653 - ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small Mid Portfolio-ETF 1.17% 62,620 65,485 (49,791) (18,795) (7,242) 664 1,624 52,277 ========================================================================================================================= Total Domestic Equity Funds 813,392 1,128,510 (405,714) (335,877) (134,364) 18,919 1,065,467 ========================================================================================================================= FIXED-INCOME FUNDS-67.29% AIM Core Bond Fund 24.75% 588,568 928,145 (257,997) (123,049) (29,399) 77,165 128,189 1,106,268 - ------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 4.34% 130,372 213,314 (57,266) (76,075) (16,412) 13,277 36,249 193,933 - ------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 3.43% 105,345 160,076 (55,983) (42,269) (13,641) 14,313 53,308 153,528 - ------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 4.15% 89,342 136,593 (40,957) 2,137 488 725 16,963 185,570 - ------------------------------------------------------------------------------------------------------------------------- AIM Limited Maturity Treasury Fund 0.58% -- 30,666 (4,960) 493 30 305 2,488 26,229 - ------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 14.35% 314,529 530,263 (141,902) (50,139) (11,422) 35,410 74,573 641,329 - ------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 15.69% 340,333 499,650 (177,317) 34,651 3,893 25,920 76,468 701,210 ========================================================================================================================= Total Fixed- Income Funds 1,568,489 2,498,707 (736,382) (254,251) (66,463) 167,115 3,008,067 ========================================================================================================================= FOREIGN EQUITY FUNDS-5.96% AIM International Core Equity Fund 0.77% 102,261 81,494 (131,675) (4,569) (13,143) 1,542 4,131 34,368 - ------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 1.93% 50,901 105,636 (26,492) (31,185) (12,858) 2,304 4,579 86,002 - ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Portfolio-ETF 1.89% -- 151,094 (22,356) (32,848) (11,227) 2,071 2,979 84,663 - ------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 1.37% 49,365 74,258 (19,786) (32,445) (9,993) 2,877 5,842 61,399 ========================================================================================================================= Total Foreign Equity Funds 202,527 412,482 (200,309) (101,047) (47,221) 8,794 266,432 ========================================================================================================================= REAL ESTATE FUNDS-2.38% AIM Select Real Estate Income Fund 2.38% -- 194,568 (30,999) (43,008) (14,143) 4,859 19,279 106,418 ========================================================================================================================= MONEY MARKET FUNDS-0.93% Liquid Assets Portfolio 0.62% 7,403 462,449 (442,132) -- -- 470 27,720 27,720 - ------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.31% 7,403 442,447 (436,099) -- -- 330 13,751 13,751 ========================================================================================================================= Total Money Market Funds 14,806 904,896 (878,231) -- -- 800 41,471 ========================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $5,269,792) 100.40% $2,599,214 $5,139,163 $(2,251,635) $(734,183)(c) $(262,191)(c) $200,487 $4,487,855 OTHER ASSETS LESS LIABILITIES (0.40)% (17,860) ========================================================================================================================= NET ASSETS 100.00% $4,469,995 =========================================================================================================================
Investment Abbreviations: ETF - Exchange-Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment 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. (c) Includes $2,033 from return of capital and $480 of capital gains, respectively from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 33 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM INDEPENDENCE 2020 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-99.56%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - --------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-37.13% AIM Diversified Dividend Fund 5.39% $ 270,265 $ 434,860 $ (80,584) $ (104,730) $ (22,723) $ 10,493 55,479 $ 497,088 - --------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 2.97% 174,581 273,034 (48,429) (111,933) (13,081) 2,086 41,044 274,172 - --------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 3.29% 172,414 278,627 (52,025) (78,299) (17,076) 7,680 42,706 303,641 - --------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 2.42% 136,718 214,664 (38,931) (71,609) (15,107) 1,610 25,734 222,855 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 2.92% 165,739 261,476 (37,222) (111,787) (9,548) 1,740 24,945 268,658 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 3.44% 163,956 263,576 (37,721) (64,927) (8,036) 6,132 21,912 316,848 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 3.04% 168,278 265,645 (52,631) (87,340) (13,647) -- 25,787 280,305 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 3.03% 156,294 259,992 (51,986) (72,972) (12,342) 2,177 25,856 278,986 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 7.12% 387,794 636,896 (89,297) (251,673) (27,273) 13,791 19,245 656,447 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small Mid Portfolio-ETF 3.51% 200,683 313,520 (60,604) (115,938) (14,248) 3,485 10,047 323,413 ================================================================================================================================= Total Domestic Equity Funds 1,996,722 3,202,290 (549,430) (1,071,208) (153,081) 49,194 3,422,413 ================================================================================================================================= FIXED-INCOME FUNDS-46.85% AIM Core Bond Fund 26.52% 1,152,339 1,934,099 (339,598) (280,274) (22,736) 151,426 283,178 2,443,830 - --------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 2.92% 149,781 277,992 (44,457) (104,947) (9,509) 15,877 50,254 268,860 - --------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 8.41% 453,638 731,188 (170,204) (211,411) (28,248) 62,170 269,084 774,963 - --------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 3.21% 122,418 208,385 (38,350) 5,074 1,314 1,128 27,061 296,042 - --------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 4.06% 125,442 326,129 (44,339) (30,703) (2,138) 17,376 43,534 374,391 - --------------------------------------------------------------------------------------------------------------------------------- AIM U.S. Government Fund 1.73% -- 163,331 (12,102) 8,096 85 3,550 17,384 159,410 ================================================================================================================================= Total Fixed-Income Funds 2,003,618 3,641,124 (649,050) (614,165) (61,232) 251,527 4,317,496 ================================================================================================================================= FOREIGN EQUITY FUNDS-12.80% AIM International Core Equity Fund 1.42% 306,444 237,372 (354,441) (16,570) (41,512) 5,691 15,780 131,293 - --------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 3.07% 225,826 299,112 (124,188) (94,829) (23,427) 7,313 15,042 282,494 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Portfolio-ETF 3.55% -- 497,887 (35,502) (124,344) (11,296) 7,424 11,497 326,745 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Small- Mid Portfolio-ETF 2.35% -- 322,635 (16,406) (82,235) (7,274) 3,016 15,403 216,720 - --------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 2.41% 215,540 257,123 (124,190) (109,637) (16,581) 9,625 21,147 222,255 ================================================================================================================================= Total Foreign Equity Funds 747,810 1,614,129 (654,727) (427,615) (100,090) 33,069 1,179,507 ================================================================================================================================= REAL ESTATE FUNDS-2.58% AIM Global Real Estate Fund 0.0% 142,647 71,636 (216,535) 21,911 (19,659) 835 -- -- - --------------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 2.31% -- 337,464 (25,136) (91,900) (6,036) 4,292 15,113 213,093 - --------------------------------------------------------------------------------------------------------------------------------- AIM Select Real Estate Income Fund 0.27% -- 37,869 (2,793) (9,312) (761) 997 4,530 25,003 ================================================================================================================================= Total Real Estate Funds 142,647 446,969 (244,464) (79,301) (26,456) 6,124 238,096 ================================================================================================================================= MONEY MARKET FUNDS-0.20% Liquid Assets Portfolio 0.10% 64,560 1,292,869 (1,348,091) -- -- 730 9,338 9,338 - --------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.10% 64,560 1,292,869 (1,348,091) -- -- 758 9,338 9,338 ================================================================================================================================= Total Money Market Funds 129,120 2,585,738 (2,696,182) -- -- 1,488 18,676 ================================================================================================================================= TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $11,548,933) 99.56% $5,019,917 $11,490,250 $(4,793,853) $(2,192,289)(c) $(340,859)(c) $341,402 $9,176,188 OTHER ASSETS LESS LIABILITIES 0.44% 39,838 ================================================================================================================================= NET ASSETS 100.00% $9,216,026 =================================================================================================================================
Investment Abbreviations: ETF - Exchange-Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment 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. (c) Includes $2,799 from return of capital and $4,179 of capital gains, respectively from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 34 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM INDEPENDENCE 2030 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-101.25%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ------------------------------------------------------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS-52.52% AIM Diversified Dividend Fund 7.06% $ 233,868 $ 444,138 $ (41,017) $ (127,637) $ (15,093) $ 11,453 55,163 $ 494,259 - ------------------------------------------------------------------------------------------------------------------------------- AIM Structured Growth Fund 3.83% 151,921 280,942 (25,412) (128,732) (10,578) 2,066 40,141 268,141 - ------------------------------------------------------------------------------------------------------------------------------- AIM Structured Value Fund 4.29% 150,158 283,154 (25,127) (95,843) (11,622) 7,693 42,295 300,720 - ------------------------------------------------------------------------------------------------------------------------------- AIM Trimark Small Companies Fund 4.06% 148,806 288,857 (24,741) (113,006) (12,040) 2,080 32,813 284,156 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Growth Portfolio-ETF 3.78% 146,782 266,118 (13,686) (131,806) (2,692) 1,702 24,579 264,716 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Large Cap Value Portfolio-ETF 4.51% 145,259 268,520 (14,141) (80,775) (2,796) 6,638 21,858 316,067 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 5.01% 180,505 334,935 (24,549) (134,254) (5,558) -- 32,298 351,079 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares Dynamic Small Cap Value Portfolio-ETF 5.01% 168,384 327,263 (23,760) (115,840) (5,264) 2,917 32,510 350,783 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio-ETF 9.31% 345,352 650,002 (32,214) (301,686) (9,168) 14,864 19,123 652,286 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small Mid Portfolio-ETF 5.66% 211,315 388,968 (24,468) (173,960) (5,403) 4,564 12,316 396,452 =============================================================================================================================== Total Domestic Equity Funds 1,882,350 3,532,897 (249,115) (1,403,539) (80,214) 53,977 3,678,659 =============================================================================================================================== FIXED-INCOME FUNDS-25.67% AIM Core Bond Fund 14.24% 353,592 849,406 (67,522) (129,309) (9,053) 64,723 115,541 997,114 - ------------------------------------------------------------------------------------------------------------------------------- AIM Floating Rate Fund 0.29% -- 31,180 (1,689) (8,604) (325) 945 3,843 20,562 - ------------------------------------------------------------------------------------------------------------------------------- AIM High Yield Fund 10.48% 355,589 703,650 (69,150) (235,098) (21,129) 61,791 254,813 733,862 - ------------------------------------------------------------------------------------------------------------------------------- AIM International Total Return Fund 0.34% -- 25,471 (1,408) (68) (76) 91 2,169 23,732 - ------------------------------------------------------------------------------------------------------------------------------- AIM Short Term Bond Fund 0.32% -- 26,115 (1,408) (2,058) (98) 917 2,622 22,551 =============================================================================================================================== Total Fixed-Income Funds 709,181 1,635,822 (141,177) (375,137) (30,681) 128,467 1,797,821 =============================================================================================================================== FOREIGN EQUITY FUNDS-18.61% AIM International Core Equity Fund 1.83% 294,023 263,415 (368,133) (27,011) (33,922) 5,632 15,429 128,372 - ------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 4.85% 215,315 354,248 (68,840) (143,668) (17,076) 8,908 18,103 339,979 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Portfolio-ETF 4.91% -- 528,720 (17,386) (163,632) (3,877) 8,095 12,098 343,825 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Small- Mid Portfolio-ETF 3.55% -- 377,269 (6,275) (119,768) (2,961) 3,828 17,645 248,265 - ------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfolio-ETF 3.47% 208,963 287,911 (98,464) (146,988) (8,452) 11,733 23,118 242,970 =============================================================================================================================== Total Foreign Equity Funds 718,301 1,811,563 (559,098) (601,067) (66,288) 38,196 1,303,411 =============================================================================================================================== REAL ESTATE FUNDS-3.38% AIM Global Real Estate Fund 3.11% 134,118 239,502 (32,086) (103,300) (19,691) 4,621 29,816 218,253 - ------------------------------------------------------------------------------------------------------------------------------- AIM Real Estate Fund 0.27% -- 30,793 (1,689) (9,587) (585) 429 1,335 18,816 =============================================================================================================================== Total Real Estate Funds 134,118 270,295 (33,775) (112,887) (20,276) 5,050 237,069 =============================================================================================================================== MONEY MARKET FUNDS-1.07% Liquid Assets Portfolio 0.53% 79,249 1,527,656 (1,569,424) -- -- 922 37,481 37,481 - ------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.54% 79,249 1,527,656 (1,569,424) -- -- 909 37,481 37,481 =============================================================================================================================== Total Money Market Funds 158,498 3,055,312 (3,138,848) -- -- 1,831 74,962 =============================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $9,724,749) 101.25% $3,602,448 $10,305,889 $(4,122,013) $(2,492,630)(c) $(197,459)(c) $227,521 $7,091,922 OTHER ASSETS LESS LIABILITIES (1.25)% (87,621) =============================================================================================================================== NET ASSETS 100.00% $7,004,301 ===============================================================================================================================
Investment Abbreviations: ETF - Exchange-Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment 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. (c) Includes $187 from return of capital and $4,126 of capital gains, respectively from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 35 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM INDEPENDENCE 2040 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.67%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ------------------------------------------------------------------------------------------------------------------------------ DOMESTIC EQUITY FUNDS-59.69% AIM Diversified Dividend Fund 7.85% $ 140,916 $ 246,054 $ (43,902) $ (58,481) $ (10,619) $ 5,549 30,577 $ 273,968 - ------------------------------------------------------------------------------------------------------------------------------ AIM Structured Growth Fund 4.37% 91,414 152,314 (23,854) (62,408) (4,816) 1,144 22,852 152,650 - ------------------------------------------------------------------------------------------------------------------------------ AIM Structured Value Fund 4.81% 90,210 154,976 (25,647) (44,001) (7,648) 4,188 23,613 167,890 - ------------------------------------------------------------------------------------------------------------------------------ AIM Trimark Small Companies Fund 4.67% 89,359 159,208 (23,854) (52,387) (7,474) 1,160 18,796 162,777 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 4.31% 86,904 148,103 (19,343) (61,811) (3,299) 938 13,979 150,554 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 5.03% 85,963 148,038 (19,568) (35,187) (3,832) 3,249 12,131 175,414 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 5.79% 107,889 188,129 (25,877) (62,270) (5,809) -- 18,589 202,062 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 5.76% 99,911 185,523 (25,555) (52,648) (6,408) 1,490 18,612 200,823 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 10.52% 203,548 359,373 (46,511) (136,757) (12,459) 7,391 10,765 367,194 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI US 1500 Small Mid Portfolio-ETF 6.58% 126,790 220,246 (29,144) (81,499) (6,717) 2,346 7,135 229,676 ============================================================================================================================== Total Domestic Equity Funds 1,122,904 1,961,964 (283,255) (647,449) (69,081) 27,455 2,083,008 ============================================================================================================================== FIXED-INCOME FUNDS-13.76% AIM Core Bond Fund 5.91% 80,666 173,740 (23,762) (22,903) (1,532) 11,819 23,894 206,209 - ------------------------------------------------------------------------------------------------------------------------------ AIM High Yield Fund 7.85% 137,290 257,553 (39,958) (73,772) (7,252) 19,944 95,090 273,861 ============================================================================================================================== Total Fixed-Income Funds 217,956 431,293 (63,720) (96,675) (8,784) 31,763 480,070 ============================================================================================================================== FOREIGN EQUITY FUNDS-21.70% AIM International Core Equity Fund 2.19% 176,170 131,525 (198,865) (9,493) (22,904) 3,266 9,187 76,433 - ------------------------------------------------------------------------------------------------------------------------------ AIM International Growth Fund 5.76% 130,601 205,407 (54,953) (71,013) (9,146) 5,127 10,697 200,896 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-US Portfolio-ETF 5.44% -- 278,015 (14,353) (69,270) (4,376) 4,113 6,686 190,016 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-US Small- Mid Portfolio-ETF 4.27% -- 218,555 (12,393) (53,516) (3,560) 1,959 10,596 149,086 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 4.04% 124,978 166,098 (74,805) (67,355) (7,924) 5,656 13,415 140,992 ============================================================================================================================== Total Foreign Equity Funds 431,749 999,600 (355,369) (270,647) (47,910) 20,121 757,423 ============================================================================================================================== REAL ESTATE FUNDS-4.05% AIM Global Real Estate Fund 4.05% 83,422 149,666 (25,879) (52,859) (12,690) 2,469 19,328 141,477 ============================================================================================================================== MONEY MARKET FUNDS-1.47% Liquid Assets Portfolio 0.73% 9,463 784,568 (768,342) -- -- 456 25,689 25,689 - ------------------------------------------------------------------------------------------------------------------------------ Premier Portfolio 0.74% 9,463 784,568 (768,342) -- -- 450 25,689 25,689 ============================================================================================================================== Total Money Market Funds 18,926 1,569,136 (1,536,684) -- -- 906 51,378 ============================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $4,668,084) 100.67% $1,874,957 $5,111,659 $(2,264,907) $(1,067,630) $(138,465)(c) $82,714 $3,513,356 OTHER ASSETS LESS LIABILITIES (0.67)% (23,308) ============================================================================================================================== NET ASSETS 100.00% $3,490,048 ==============================================================================================================================
Investment Abbreviations: ETF - Exchange-Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment 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. (c) Includes $2,258 of capital gains from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 36 AIM INDEPENDENCE FUNDS SCHEDULE OF INVESTMENTS--(CONTINUED) December 31, 2008 AIM INDEPENDENCE 2050 FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.76%(a)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ------------------------------------------------------------------------------------------------------------------------------ DOMESTIC EQUITY FUNDS-65.49% AIM Diversified Dividend Fund 8.72% $ 139,321 $ 124,545 $ (29,543) $ (48,199) $ (6,100) $ 4,105 20,092 $ 180,024 - ------------------------------------------------------------------------------------------------------------------------------ AIM Structured Growth Fund 4.75% 90,115 78,163 (17,025) (51,087) (2,115) 725 14,678 98,051 - ------------------------------------------------------------------------------------------------------------------------------ AIM Structured Value Fund 5.30% 88,980 78,439 (17,469) (36,674) (3,898) 2,698 15,383 109,378 - ------------------------------------------------------------------------------------------------------------------------------ AIM Trimark Small Companies Fund 5.09% 88,085 84,221 (17,025) (44,296) (4,452) 741 12,149 105,208 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Large Cap Growth Portfolio-ETF 4.70% 86,699 74,108 (12,802) (48,860) (2,043) 611 9,016 97,102 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Large Cap Value Portfolio-ETF 5.57% 85,719 74,100 (12,981) (29,771) (2,052) 2,364 7,954 115,015 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Small Cap Growth Portfolio-ETF(b) 6.36% 107,976 96,441 (17,327) (51,738) (4,108) -- 12,074 131,244 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares Dynamic Small Cap Value Portfolio-ETF 6.31% 100,134 94,321 (17,025) (42,772) (4,455) 1,054 12,067 130,203 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI US 1000 Portfolio-ETF 11.47% 202,734 180,075 (30,367) (109,263) (6,421) 5,183 6,941 236,758 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI US 1500 Small Mid Portfolio-ETF 7.22% 127,163 111,499 (19,122) (66,226) (4,274) 1,671 4,630 149,040 ============================================================================================================================== Total Domestic Equity Funds 1,116,926 995,912 (190,686) (528,886) (39,918) 19,152 1,352,023 ============================================================================================================================== FIXED-INCOME FUNDS-5.43% AIM High Yield Fund 5.43% 89,288 85,089 (22,779) (36,194) (3,220) 9,809 38,953 112,184 ============================================================================================================================== FOREIGN EQUITY FUNDS-23.56% AIM International Core Equity Fund 2.46% 173,816 69,748 (164,437) (10,689) (17,694) 2,140 6,099 50,744 - ------------------------------------------------------------------------------------------------------------------------------ AIM International Growth Fund 6.36% 129,801 105,188 (39,396) (60,950) (3,325) 3,308 6,992 131,318 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-US Portfolio-ETF 5.68% -- 176,030 (3,994) (53,556) (1,162) 2,695 4,128 117,318 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares FTSE RAFI Developed Markets ex-US Small- Mid Portfolio-ETF 4.74% -- 147,517 (4,370) (44,258) (962) 1,466 6,960 97,927 - ------------------------------------------------------------------------------------------------------------------------------ PowerShares International Dividend Achievers Portfolio-ETF 4.32% 125,679 80,194 (57,245) (56,052) (3,462) 4,298 8,479 89,114 ============================================================================================================================== Total Foreign Equity Funds 429,296 578,677 (269,442) (225,505) (26,605) 13,907 486,421 ============================================================================================================================== REAL ESTATE FUNDS-4.43% AIM Global Real Estate Fund 4.43% 84,276 77,722 (17,283) (45,758) (7,419) 1,864 12,489 91,422 ============================================================================================================================== MONEY MARKET FUNDS-1.85% Liquid Assets Portfolio 0.92% 8,688 442,668 (432,304) -- -- 295 19,052 19,052 - ------------------------------------------------------------------------------------------------------------------------------ Premier Portfolio 0.93% 8,688 442,668 (432,304) -- -- 287 19,052 19,052 ============================================================================================================================== Total Money Market Funds 17,376 885,336 (864,608) -- -- 582 38,104 ============================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $2,967,088) 100.76% $1,737,162 $2,622,736 $(1,364,798) $(836,343) $(77,162)(c) $45,314 $2,080,154 - ------------------------------------------------------------------------------------------------------------------------------ OTHER ASSETS LESS LIABILITIES 0.76% (15,670) ============================================================================================================================== NET ASSETS 100.00% $2,064,484 ==============================================================================================================================
Investment Abbreviations: ETF - Exchange-Traded Fund Notes to Schedule of Investments: (a) Each underlying fund and the Fund are affiliated by either having the same investment 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. (c) Includes $1,441 of capital gains from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 37 AIM INDEPENDENCE FUNDS STATEMENT OF ASSETS AND LIABILITIES December 31, 2008
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 $1,664,852 $4,487,855 $ 9,176,188 $ 7,091,922 $ 3,513,356 $2,080,154 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Receivables for: Investments sold 70,245 8,965 1,595 17,692 -- -- - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Investments sold to affiliates -- 15,043 18,374 -- -- -- - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Fund shares sold 24 618 49,436 23,877 33,022 23,387 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Dividends from affiliated underlying funds 100 69 112 130 97 34 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Fund expenses absorbed 3,604 3,714 7,321 6,346 6,650 6,269 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Investment for trustee deferred compensation and retirement plans 3,070 3,130 3,077 3,075 3,071 3,071 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Other assets 33,180 34,157 33,858 34,405 33,236 33,189 ================================ ============ ============ ============ ============ ============ ============ Total assets 1,775,075 4,553,551 9,289,961 7,177,447 3,589,432 2,146,104 ================================ ============ ============ ============ ============ ============ ============ LIABILITIES: Payables for: Investments purchased 6,020 12,633 5,202 50,033 33,250 30,962 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Investments purchased from affiliates 15,043 9,923 -- -- 9,778 -- - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Fund shares reacquired 90,372 12,155 -- 54,580 20 -- - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Amount due custodian -- 6,241 20,798 21,312 12,008 7,564 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Accrued fees to affiliates 1,073 2,846 6,286 6,204 3,508 2,204 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Accrued operating expenses 38,091 36,628 38,572 37,942 37,749 37,819 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Trustee deferred compensation and retirement plans 3,070 3,130 3,077 3,075 3,071 3,071 ================================ ============ ============ ============ ============ ============ ============ Total liabilities 153,669 83,556 73,935 173,146 99,384 81,620 ================================ ============ ============ ============ ============ ============ ============ Net assets applicable to shares outstanding $1,621,406 $4,469,995 $ 9,216,026 $ 7,004,301 $ 3,490,048 $2,064,484 ================================ ============ ============ ============ ============ ============ ============ NET ASSETS CONSIST OF: Shares of beneficial interest $2,043,320 $5,508,058 $11,923,316 $ 9,822,525 $ 4,776,674 $3,025,477 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Undistributed net investment income (loss) (282) 9,969 25,448 27,587 12,122 7,093 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Undistributed net realized gain (loss) (114,456) (266,095) (359,993) (212,984) (144,020) (81,152) - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Unrealized appreciation (depreciation) (307,176) (781,937) (2,372,745) (2,632,827) (1,154,728) (886,934) ================================ ============ ============ ============ ============ ============ ============ $1,621,406 $4,469,995 $ 9,216,026 $ 7,004,301 $ 3,490,048 $2,064,484 ================================ ============ ============ ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 38 AIM INDEPENDENCE FUNDS STATEMENT OF ASSETS AND LIABILITIES--(CONTINUED) December 31, 2008
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 $ 941,915 $2,620,209 $ 5,899,343 $3,088,388 $1,907,300 $1,247,942 ================================ ============ ============ ============ ============ ============ ============ Class B $ 345,596 $ 410,926 $ 1,430,866 $1,386,304 $ 521,823 $ 214,348 ================================ ============ ============ ============ ============ ============ ============ Class C $ 174,406 $ 753,194 $ 852,411 $ 937,679 $ 597,045 $ 252,830 ================================ ============ ============ ============ ============ ============ ============ Class R $ 107,169 $ 601,962 $ 974,148 $1,533,728 $ 431,572 $ 275,090 ================================ ============ ============ ============ ============ ============ ============ Class Y $ 9,310 $ 73,782 $ 50,484 $ 49,989 $ 23,543 $ 42,370 ================================ ============ ============ ============ ============ ============ ============ Institutional Class $ 43,010 $ 9,922 $ 8,774 $ 8,213 $ 8,765 $ 31,904 ================================ ============ ============ ============ ============ ============ ============ SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 124,110 339,267 851,505 488,235 313,346 212,717 ================================ ============ ============ ============ ============ ============ ============ Class B 45,480 53,345 207,524 219,849 86,058 36,701 ================================ ============ ============ ============ ============ ============ ============ Class C 22,974 97,750 123,847 148,628 98,484 43,250 ================================ ============ ============ ============ ============ ============ ============ Class R 14,115 78,004 140,742 243,118 71,071 46,999 ================================ ============ ============ ============ ============ ============ ============ Class Y 1,227 9,550 7,287 7,898 3,866 7,221 ================================ ============ ============ ============ ============ ============ ============ Institutional Class 5,668 1,282 1,262 1,296 1,438 5,438 ================================ ============ ============ ============ ============ ============ ============ Class A: Net asset value per share $ 7.59 $ 7.72 $ 6.93 $ 6.33 $ 6.09 $ 5.87 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Maximum offering price per share (Net asset value of divided by 94.50%) $ 8.03 $ 8.17 $ 7.33 $ 6.69 $ 6.44 $ 6.21 ================================ ============ ============ ============ ============ ============ ============ Class B: Net asset value and offering price per share $ 7.60 $ 7.70 $ 6.90 $ 6.31 $ 6.06 $ 5.84 ================================ ============ ============ ============ ============ ============ ============ Class C: Net asset value and offering price per share $ 7.59 $ 7.71 $ 6.88 $ 6.31 $ 6.06 $ 5.85 ================================ ============ ============ ============ ============ ============ ============ Class R: Net asset value and offering price per share $ 7.59 $ 7.72 $ 6.92 $ 6.31 $ 6.07 $ 5.85 ================================ ============ ============ ============ ============ ============ ============ Class Y: Net asset value and offering price per share $ 7.59 $ 7.73 $ 6.93 $ 6.33 $ 6.09 $ 5.87 ================================ ============ ============ ============ ============ ============ ============ Institutional Class: Net asset value and offering price per share $ 7.59 $ 7.74 $ 6.95 $ 6.34 $ 6.09 $ 5.87 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Cost of Investments in affiliated underlying funds $1,972,028 $5,269,792 $11,548,933 $9,724,749 $4,668,084 $2,967,088 ================================ ============ ============ ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 39 AIM INDEPENDENCE FUNDS STATEMENT OF OPERATIONS For the year ended December 31, 2008
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 $ 86,874 $ 200,487 $ 341,402 $ 227,521 $ 82,714 $ 45,314 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Other Income 89 109 91 90 89 89 ================================ ============ ============ ============ ============ ============ ============ Total investment income 86,963 200,596 341,493 227,611 82,803 45,403 ================================ ============ ============ ============ ============ ============ ============ EXPENSES: Administrative services fees 50,000 50,000 50,000 50,000 50,000 50,000 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Custodian fees 8,502 8,975 10,519 10,907 11,499 10,530 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Distribution fees: Class A 2,729 5,190 9,738 6,036 3,032 2,910 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Class B 3,545 4,705 12,285 11,759 4,995 2,095 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Class C 1,016 8,062 6,840 10,073 4,625 1,788 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Class R 368 1,803 5,604 6,055 1,503 998 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Transfer agent fees -- A, B, C, R and Y 4,009 8,750 22,085 23,578 17,337 11,479 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Transfer agent fees -- Institutional 13 14 8 10 15 11 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Trustees' and officers' fees and benefits 15,908 15,781 15,707 16,067 16,050 15,755 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Registration and filing fees 62,816 62,139 62,608 62,951 62,021 61,779 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Professional services fees 44,749 39,245 45,292 44,503 44,420 38,888 - -------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ Other 8,525 11,964 17,905 14,572 9,269 7,700 ================================ ============ ============ ============ ============ ============ ============ Total expenses 202,180 216,628 258,591 256,511 224,766 203,933 ================================ ============ ============ ============ ============ ============ ============ Less: Expenses reimbursed and expense offset arrangement(s) (193,445) (193,979) (215,989) (214,612) (207,050) (193,590) ================================ ============ ============ ============ ============ ============ ============ Net expenses 8,735 22,649 42,602 41,899 17,716 10,343 ================================ ============ ============ ============ ============ ============ ============ Net investment income 78,228 177,947 298,891 185,712 65,087 35,060 ================================ ============ ============ ============ ============ ============ ============ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) on sales of affiliated underlying fund shares (includes gains (losses) from securities sold to affiliates of $(180,525)) (113,073) (262,671) (345,038) (201,585) (140,723) (78,603) ================================ ============ ============ ============ ============ ============ ============ Net realized gain from distributions of affiliated underlying fund shares 134 480 4,179 4,126 2,258 1,441 ================================ ============ ============ ============ ============ ============ ============ Net realized gain (loss) from affiliated underlying fund shares (112,939) (262,191) (340,859) (197,459) (138,465) (77,162) ================================ ============ ============ ============ ============ ============ ============ Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (289,708) (734,183) (2,192,289) (2,492,630) (1,067,630) (836,343) ================================ ============ ============ ============ ============ ============ ============ Net increase (decrease) in net assets resulting from operations $(324,419) $(818,427) $(2,234,257) $(2,504,377) $(1,141,008) $(878,445) ================================ ============ ============ ============ ============ ============ ============
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 40 AIM INDEPENDENCE FUNDS STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and the period January 31, 2007 through December 31, 2007
AIM INDEPENDENCE NOW FUND AIM INDEPENDENCE 2010 FUND AIM INDEPENDENCE 2020 FUND ---------------------------- ---------------------------- ---------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2008 2007 2008 2007 2008 2007 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- OPERATIONS: Net investment income $ 78,228 $ 30,836 $ 177,947 $ 56,138 $ 298,891 $ 89,044 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Net realized gain (loss) (112,939) 8,584 (262,191) 18,300 (340,859) 49,702 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Change in net unrealized appreciation (depreciation) (289,708) (17,468) (734,183) (47,754) (2,192,289) (180,456) ================================ ============================ ============================ ============================ Net increase (decrease) in net assets resulting from operations (324,419) 21,952 (818,427) 26,684 (2,234,257) (41,710) ================================ ============================ ============================ ============================ DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A (64,685) (33,781) (110,668) (52,594) (200,997) (61,402) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B (18,001) (11,689) (15,463) (9,793) (39,699) (20,030) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C (5,255) (2,632) (29,895) (12,420) (23,250) (10,670) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class R (4,739) (2,633) (24,510) (3,660) (30,604) (13,844) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y (168) -- (3,248) -- (1,749) -- - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Institutional Class (2,883) (3,130) (450) (1,762) (314) (307) ================================ ============================ ============================ ============================ Total distributions from net investment income (95,731) (53,865) (184,234) (80,229) (296,613) (106,253) ================================ ============================ ============================ ============================ DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS: Class A (3,557) (3,061) (9,605) (3,496) (31,626) (11,117) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B (1,048) (1,184) (1,613) (744) (7,697) (4,130) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C (319) (241) (3,119) (943) (4,508) (2,200) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class R (211) (213) (2,240) (254) (5,161) (2,597) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y -- -- (278) -- (271) -- - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Institutional Class (154) (212) (37) (113) (47) (53) ================================ ============================ ============================ ============================ Total distributions from net realized gains (5,289) (4,911) (16,892) (5,550) (49,310) (20,097) ================================ ============================ ============================ ============================ Decrease in net assets resulting from distributions (101,020) (58,776) (201,126) (85,779) (345,923) (126,350) ================================ ============================ ============================ ============================ SHARE TRANSACTIONS-NET: Class A 401,388 831,360 1,534,893 1,685,472 4,687,608 2,804,919 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B 132,590 319,205 186,372 349,541 955,292 971,424 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C 126,903 76,014 564,436 438,505 531,368 615,357 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class R 76,954 53,633 570,478 121,157 632,371 701,808 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y 10,168 -- 83,432 -- 53,458 -- - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Institutional Class 3,037 52,417 (37,528) 51,885 361 10,300 ================================ ============================ ============================ ============================ Net increase in net assets resulting from share transactions 751,040 1,332,629 2,902,083 2,646,560 6,860,458 5,103,808 ================================ ============================ ============================ ============================ Net increase in net assets 325,601 1,295,805 1,882,530 2,587,465 4,280,278 4,935,748 ================================ ============================ ============================ ============================ NET ASSETS: Beginning of year 1,295,805 -- 2,587,465 -- 4,935,748 -- ================================ ============================ ============================ ============================ End of year* $1,621,406 $1,295,805 $4,469,995 $2,587,465 $ 9,216,026 $4,935,748 ================================ ============================ ============================ ============================ * Includes accumulated undistributed net investment income (loss) $ (282) $ 17,296 $ 9,969 $ 16,465 $ 25,448 $ 23,718 ================================ ============================ ============================ ============================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 41 AIM INDEPENDENCE FUNDS STATEMENT OF CHANGES IN NET ASSETS--(CONTINUED) For the years ended December 31, 2008 and the period January 31, 2007 through December 31, 2007
AIM INDEPENDENCE 2030 FUND AIM INDEPENDENCE 2040 FUND AIM INDEPENDENCE 2050 FUND ---------------------------- ---------------------------- ---------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2008 2007 2008 2007 2008 2007 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- OPERATIONS: Net investment income $ 185,712 $ 52,616 $ 65,087 $ 28,148 $ 35,060 $ 25,123 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Net realized gain (loss) (197,459) 47,660 (138,465) 32,943 (77,162) 34,003 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Change in net unrealized appreciation (depreciation) of affiliated underlying funds shares (2,492,630) (140,197) (1,067,630) (87,098) (836,343) (50,591) ================================ ============================ ============================ ============================ Net increase (decrease) in net assets resulting from operations (2,504,377) (39,921) (1,141,008) (26,007) (878,445) 8,535 ================================ ============================ ============================ ============================ DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A (85,183) (42,432) (45,544) (23,717) (31,537) (33,184) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B (29,823) (16,422) (9,324) (11,405) (4,393) (4,512) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C (19,269) (10,435) (10,401) (5,758) (4,777) (3,528) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class R (37,730) (7,604) (8,904) (3,843) (5,989) (1,407) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y (1,424) -- (609) -- (1,174) -- - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Institutional Class (246) (347) (231) (1,458) (937) (1,526) ================================ ============================ ============================ ============================ Total distributions from net investment income (173,675) (77,240) (75,013) (46,181) (48,807) (44,157) ================================ ============================ ============================ ============================ DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS: Class A (21,377) (7,830) (12,971) (7,337) (13,976) (11,035) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B (9,941) (3,515) (3,608) (4,047) (2,557) (1,769) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C (6,423) (2,234) (4,025) (2,044) (2,781) (1,383) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class R (10,288) (1,466) (2,773) (1,241) (2,881) (494) - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y (350) -- (169) -- (507) -- - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Institutional Class (57) (61) (61) (432) (382) (486) ================================ ============================ ============================ ============================ Total distributions from net realized gains (48,436) (15,106) (23,607) (15,101) (23,084) (15,167) ================================ ============================ ============================ ============================ Decrease in net assets resulting from distributions (222,111) (92,346) (98,620) (61,282) (71,891) (59,324) ================================ ============================ ============================ ============================ SHARE TRANSACTIONS-NET: Class A 2,608,491 1,648,097 1,608,773 946,845 670,920 1,212,088 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class B 1,153,845 782,082 251,102 525,655 137,335 193,543 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class C 690,882 752,285 568,670 286,342 205,187 154,721 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class R 1,745,454 409,679 422,653 158,599 234,950 150,881 - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Class Y 61,519 -- 29,134 -- 52,643 -- - -------------------------------- ---------------------------- ---------------------------- ---------------------------- Institutional Class 305 10,417 (32,708) 51,900 1,319 52,022 ================================ ============================ ============================ ============================ Net increase in net assets resulting from share transactions 6,260,496 3,602,560 2,847,624 1,969,341 1,302,354 1,763,255 ================================ ============================ ============================ ============================ Net increase in net assets 3,534,008 3,470,293 1,607,996 1,882,052 352,018 1,712,466 ================================ ============================ ============================ ============================ NET ASSETS: Beginning of year 3,470,293 -- 1,882,052 -- 1,712,466 -- ================================ ============================ ============================ ============================ End of year* $ 7,004,301 $3,470,293 $ 3,490,048 $1,882,052 $2,064,484 $1,712,466 ================================ ============================ ============================ ============================ * Includes accumulated undistributed net investment income (loss) $ 27,587 $ 15,889 $ 12,122 $ 22,240 $ 7,093 $ 21,079 ================================ ============================ ============================ ============================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 42 AIM INDEPENDENCE FUNDS NOTES TO FINANCIAL STATEMENTS December 31, 2008 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"). The assets, liabilities and operations of each Fund are accounted for separately. Information presented in these financial statements pertains only to the Funds. Matters affecting each Fund or class will be voted on exclusively by the shareholders of such Fund or class. The investment 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 currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. Each Fund is a "fund of funds", in that it 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"). The Advisors 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 the 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 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 43 AIM INDEPENDENCE FUNDS price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. 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. Each Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally each Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. E. EXPENSES -- Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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, 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). 44 AIM INDEPENDENCE FUNDS Prior to May 1, 2008, Invesco Aim 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, Class R and Class Y 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, Invesco Aim 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, Class R, Class Y, and Institutional Class shares for each Fund as shown in the following table under Expense Limit. The Funds operating expenses are limited to the Expense Limit plus the 12b-1 Fee.
ESTIMATED ACQUIRED FUND 12B-1 FEES 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% 0.65% - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 0.04% 0.25% 1.00% 1.00% 0.50% 0.69% - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 0.07% 0.25% 1.00% 1.00% 0.50% 0.74% - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 0.10% 0.25% 1.00% 1.00% 0.50% 0.76% - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 0.09% 0.25% 1.00% 1.00% 0.50% 0.78% - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 0.08% 0.25% 1.00% 1.00% 0.50% 0.78% ==========================================================================================================================
In determining Invesco Aim'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 year ended December 31, 2008, the Advisor reimbursed the following expenses:
INSTITUTIONAL FUND LEVEL CLASS A CLASS B CLASS C CLASS R CLASS Y CLASS - ---------------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $189,423 $ 2,693 $ 874 $ 251 $ 182 $ 9 $13 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 185,215 4,776 1,082 1,854 829 67 14 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 193,492 12,205 3,849 2,143 3,512 43 7 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 190,695 9,612 4,682 4,011 4,822 82 9 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 189,489 8,328 3,429 3,175 2,064 52 15 - ---------------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 181,842 7,423 1,336 1,140 1,273 119 11 ==================================================================================================================================
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 year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which each Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to such Fund. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of each Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to each Fund's Class A, Class 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 under 12b-1 Fees 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 45 AIM INDEPENDENCE FUNDS Authority ("FINRA") impose a cap on the total sales charges, including asset- based sales charges that may be paid by any class of shares of each Fund. For the year ended December 31, 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 year ended December 31, 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 SALES CONTINGENT DEFERRED SALES CHARGES CHARGES ------------------------------------------- CLASS A CLASS A CLASS B CLASS C CLASS R - ------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $1,124 $ 98 $ 455 $ 30 $-- - ------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 3,127 939 180 1,538 -- - ------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 8,682 607 1,952 1,401 -- - ------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 8,491 200 1,705 33 -- - ------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 7,437 -- 116 30 -- - ------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 2,883 -- 38 109 -- ===================================================================================================================
The underlying AIM Funds Class Y and Institutional Class shares 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect 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 valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN SECURITIES INPUT LEVEL ------------------------------------------------- FUND NAME LEVEL 1 LEVEL 2 LEVEL 3 TOTAL - ------------------------------------------------------------------------------------------------------------------ AIM Independence Now Fund $1,664,852 $-- $-- $1,664,852 - ------------------------------------------------------------------------------------------------------------------ AIM Independence 2010 Fund 4,487,855 -- -- 4,487,855 - ------------------------------------------------------------------------------------------------------------------ AIM Independence 2020 Fund 9,176,188 -- -- 9,176,188 - ------------------------------------------------------------------------------------------------------------------ AIM Independence 2030 Fund 7,091,922 -- -- 7,091,922 - ------------------------------------------------------------------------------------------------------------------ AIM Independence 2040 Fund 3,513,356 -- -- 3,513,356 - ------------------------------------------------------------------------------------------------------------------ AIM Independence 2050 Fund 2,080,154 -- -- 2,080,154 ==================================================================================================================
46 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 year ended December 31, 2008, each Fund engaged in transactions with affiliates as listed below:
SECURITIES NET REALIZED PURCHASES SECURITIES SALES GAINS/(LOSSES) - ---------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 25,553 $ 49,028 $(23,393) - ---------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 60,262 67,674 (27,964) - ---------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 196,139 218,105 (62,902) - ---------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 134,638 73,053 (28,176) - ---------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 189,622 102,674 (23,934) - ---------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 68,185 50,391 (14,156) ================================================================================================================
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 year ended December 31, 2008, the Funds received credits from these arrangements, which resulted in the reduction of the Funds' total expenses of:
TRANSFER AGENT CREDITS CUSTODIAN CREDITS - ------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ -- $ -- - ------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 142 -- - ------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 334 404 - ------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 369 330 - ------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 289 209 - ------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 189 257 =============================================================================================================
NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by each Fund to pay remuneration to certain Trustees and Officers of such Fund. Trustees have the option to defer compensation payable by the Funds, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by each Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 Officers' Fees and Benefits" include amounts accrued by each Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Funds. During the year ended December 31, 2008, the Funds in aggregate paid legal fees of $18,559 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 The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (i) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (ii) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco Aim, not to exceed the contractually agreed upon rate. 47 AIM INDEPENDENCE FUNDS NOTE 8--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 --------------------------------------- --------------------------------------- ORDINARY LONG-TERM TOTAL ORDINARY LONG-TERM TOTAL INCOME CAPITAL GAIN DISTRIBUTIONS INCOME CAPITAL GAIN DISTRIBUTIONS - -------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 96,282 $ 4,738 $101,020 $ 55,758 $ 3,018 $ 58,776 - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 185,836 15,290 201,126 81,752 4,027 85,779 - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 301,435 44,488 345,923 115,303 11,047 126,350 - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 181,538 40,573 222,111 82,295 10,051 92,346 - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 77,341 21,279 98,620 50,236 11,046 61,282 - -------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 50,849 21,042 71,891 49,307 10,017 59,324 ==========================================================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
NET UNREALIZED UNDISTRIBUTED APPRECIATION TEMPORARY SHARES OF ORDINARY (DEPRECIATION) BOOK/TAX CAPITAL LOSS BENEFICIAL TOTAL NET INCOME -- INVESTMENTS DIFFERENCES CARRYFORWARD INTEREST ASSETS - ---------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 4,186 $ (415,603) $(4,468) $ (6,029) $ 2,043,320 $1,621,406 - ---------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 14,524 (1,032,465) (4,555) (15,567) 5,508,058 4,469,995 - ---------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 29,925 (2,682,950) (4,477) (49,788) 11,923,316 9,216,026 - ---------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 32,062 (2,818,789) (4,475) (27,022) 9,822,525 7,004,301 - ---------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 16,590 (1,280,324) (4,468) (18,424) 4,776,674 3,490,048 - ---------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 11,562 (954,809) (4,469) (13,277) 3,025,477 2,064,484 ============================================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Funds net unrealized appreciation (depreciation) differences are attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Funds temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. The Funds have a capital loss carryforward as of December 31, 2008 which expires as follows:
2016 - --------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 6,029 - --------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 15,567 - --------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 49,788 - --------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 27,022 - --------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 18,424 - --------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 13,277 =============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. 48 AIM INDEPENDENCE FUNDS NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities purchased and sold by each Fund and aggregate cost and the net unrealized appreciation (depreciation) of investments for tax purposes are as follows:
AT DECEMBER 31, 2008 FOR THE YEAR ENDED ------------------------------------------------------------------ DECEMBER 31, 2008* NET UNREALIZED ------------------------- FEDERAL UNREALIZED UNREALIZED APPRECIATION PURCHASES SALES TAX COST** APPRECIATION (DEPRECIATION) (DEPRECIATION) - ----------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $1,318,226 $ 578,284 $ 2,080,455 $13,662 $ (429,265) $ (415,603) - ----------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 4,234,267 1,373,404 5,520,320 42,294 (1,074,759) (1,032,465) - ----------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 8,904,512 2,097,671 11,859,138 13,754 (2,696,704) (2,682,950) - ----------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 7,250,577 983,165 9,910,711 -- (2,818,789) (2,818,789) - ----------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 3,542,523 728,223 4,793,680 -- (1,280,324) (1,280,324) - ----------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 1,737,400 500,190 3,034,963 -- (954,809) (954,809) =============================================================================================================================
* 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--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of excise taxes paid and distributions, on December 31, 2008. These reclassifications had no effect on the net assets of each Fund.
UNDISTRIBUTED NET UNDISTRIBUTED NET SHARES OF INVESTMENT INCOME (LOSS) REALIZED GAIN (LOSS) BENEFICIAL INTEREST - --------------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ (75) $ 99 $(24) - --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund (209) 238 (29) - --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund (548) 571 (23) - --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund (339) 357 (18) - --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund (192) 210 (18) - --------------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund (239) 258 (19) ===========================================================================================================================
49 AIM INDEPENDENCE FUNDS NOTE 11--SHARE INFORMATION AIM INDEPENDENCE NOW FUND
Summary of Share Activity - -------------------------------------------------------------------------------------------------------- Year ended December 31, ------------------------------------------ 2008(a) 2007(b) ------------------- -------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------- Sold: Class A 88,249 $ 783,977 85,453 $ 862,785 - -------------------------------------------------------------------------------------------------------- Class B 28,090 249,391 34,525 349,508 - -------------------------------------------------------------------------------------------------------- Class C 24,033 196,326 7,350 73,311 - -------------------------------------------------------------------------------------------------------- Class R 8,158 72,016 5,081 50,807 - -------------------------------------------------------------------------------------------------------- Class Y(c) 1,205 10,000 -- -- - -------------------------------------------------------------------------------------------------------- Institutional Class -- -- 9,924 100,030 ======================================================================================================== Issued as reinvestment of dividends: Class A 7,350 63,281 3,726 36,551 - -------------------------------------------------------------------------------------------------------- Class B 2,058 17,647 1,242 12,175 - -------------------------------------------------------------------------------------------------------- Class C 559 4,808 281 2,759 - -------------------------------------------------------------------------------------------------------- Class R 590 4,950 289 2,846 - -------------------------------------------------------------------------------------------------------- Class Y(c) 22 168 -- -- - -------------------------------------------------------------------------------------------------------- Institutional Class 353 3,037 363 3,588 ======================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,045 9,105 2,695 27,219 - -------------------------------------------------------------------------------------------------------- Class B (1,045) (9,105) (2,695) (27,219) ======================================================================================================== Reacquired: Class A (55,100) (454,975) (9,308) (95,195) - -------------------------------------------------------------------------------------------------------- Class B (15,205) (125,343) (1,490) (15,259) - -------------------------------------------------------------------------------------------------------- Class C (9,243) (74,231) (6) (56) - -------------------------------------------------------------------------------------------------------- Class R (1) (12) (2) (20) - -------------------------------------------------------------------------------------------------------- Institutional Class -- -- (4,972) (51,201) ======================================================================================================== Net increase in share activity 81,118 $ 751,040 132,456 $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 17% of the outstanding shares of the Fund. IADI has an agreement with these entities to sell Fund shares. The Fund, Invesco Aim and/or Invesco Aim affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco Aim and/or Invesco Aim affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. In addition, 11% of the outstanding shares are owned by Invesco Aim or an investment advisor under common control with Invesco Aim. (b) Commencement date of January 31, 2007. (c) Commencement date of October 3, 2008. 50 AIM INDEPENDENCE FUNDS NOTE 11--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2010 FUND
SUMMARY OF SHARE ACTIVITY - ----------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 2008(a) 2007(b) ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- Sold: Class A 240,830 $2,142,402 171,813 $1,766,089 - ----------------------------------------------------------------------------------------------------- Class B 36,739 341,611 41,774 429,020 - ----------------------------------------------------------------------------------------------------- Class C 119,316 1,101,784 41,894 425,993 - ----------------------------------------------------------------------------------------------------- Class R 82,317 724,326 14,971 154,400 - ----------------------------------------------------------------------------------------------------- Class Y(c) 9,092 79,916 -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class -- -- 5,001 50,010 ===================================================================================================== Issued as reinvestment of dividends: Class A 15,486 118,930 5,649 56,090 - ----------------------------------------------------------------------------------------------------- Class B 2,160 16,549 973 9,643 - ----------------------------------------------------------------------------------------------------- Class C 3,306 25,324 1,264 12,543 - ----------------------------------------------------------------------------------------------------- Class R 3,488 26,750 394 3,914 - ----------------------------------------------------------------------------------------------------- Class Y 459 3,526 -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class 63 472 188 1,875 ===================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 4,345 35,765 36 370 - ----------------------------------------------------------------------------------------------------- Class B (4,370) (35,765) (36) (370) ===================================================================================================== Reacquired: Class A(c) (85,664) (762,204) (13,228) (137,077) - ----------------------------------------------------------------------------------------------------- Class B (15,210) (136,023) (8,685) (88,752) - ----------------------------------------------------------------------------------------------------- Class C (68,027) (562,672) (3) (31) - ----------------------------------------------------------------------------------------------------- Class R (19,644) (180,598) (3,522) (37,157) - ----------------------------------------------------------------------------------------------------- Class Y (1) (10) -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class (3,970) (38,000) -- -- ===================================================================================================== Net increase in share activity 320,715 $2,902,083 258,483 $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 19% 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) Commencement date of January 31, 2007. (c) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ------------------------------------------------------------------------------------------------- Class Y 7,954 $ 69,916 ------------------------------------------------------------------------------------------------- Class A (7,954) (69,916) =================================================================================================
51 AIM INDEPENDENCE FUNDS NOTE 11--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2020 FUND
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 2008(a) 2007(b) --------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------- Sold: Class A 706,096 $ 5,801,367 322,922 $3,331,014 - ------------------------------------------------------------------------------------------------------- Class B 146,151 1,235,026 109,022 1,120,921 - ------------------------------------------------------------------------------------------------------- Class C 116,951 965,328 66,394 683,482 - ------------------------------------------------------------------------------------------------------- Class R 135,180 1,214,640 70,547 726,797 - ------------------------------------------------------------------------------------------------------- Class Y(c) 6,993 51,448 -- -- - ------------------------------------------------------------------------------------------------------- Institutional Class -- -- 5,989 60,030 ======================================================================================================= Issued as reinvestment of dividends: Class A 33,304 228,130 7,312 72,021 - ------------------------------------------------------------------------------------------------------- Class B 6,924 47,221 2,453 24,064 - ------------------------------------------------------------------------------------------------------- Class C 3,718 25,283 1,312 12,870 - ------------------------------------------------------------------------------------------------------- Class R 5,229 35,765 1,671 16,441 - ------------------------------------------------------------------------------------------------------- Class Y 295 2,020 -- -- - ------------------------------------------------------------------------------------------------------- Institutional Class 53 361 36 359 ======================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 12,541 107,418 4,873 50,323 - ------------------------------------------------------------------------------------------------------- Class B (12,645) (107,418) (4,896) (50,323) ======================================================================================================= Reacquired: Class A(c) (172,658) (1,449,307) (62,885) (648,439) - ------------------------------------------------------------------------------------------------------- Class B (27,672) (219,537) (11,813) (123,238) - ------------------------------------------------------------------------------------------------------- Class C (56,643) (459,243) (7,885) (80,995) - ------------------------------------------------------------------------------------------------------- Class R (67,911) (618,034) (3,974) (41,430) - ------------------------------------------------------------------------------------------------------- Class Y (1) (10) -- -- - ------------------------------------------------------------------------------------------------------- Institutional Class -- -- (4,816) (50,089) ======================================================================================================= Net increase in share activity 835,905 $ 6,860,458 496,262 $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 21% 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) Commencement date of January 31, 2007. (c) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ------------------------------------------------------------------------------------------------ Class Y 448 $ 3,677 ------------------------------------------------------------------------------------------------ Class A (448) (3,677) ================================================================================================
52 AIM INDEPENDENCE FUNDS NOTE 11--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2030 FUND
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------ YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 2008(a) 2007(b) -------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------ Sold: Class A 409,954 $3,260,537 182,962 $1,895,799 - ------------------------------------------------------------------------------------------------------ Class B 160,430 1,287,906 87,208 893,971 - ------------------------------------------------------------------------------------------------------ Class C 125,011 1,061,052 78,331 799,652 - ------------------------------------------------------------------------------------------------------ Class R 213,171 1,846,251 43,006 441,059 - ------------------------------------------------------------------------------------------------------ Class Y(c) 8,107 62,996 -- -- - ------------------------------------------------------------------------------------------------------ Institutional Class -- 2 5,003 50,029 ====================================================================================================== Issued as reinvestment of dividends: Class A 17,015 105,999 4,997 48,768 - ------------------------------------------------------------------------------------------------------ Class B 6,275 38,969 2,049 19,937 - ------------------------------------------------------------------------------------------------------ Class C 3,680 22,851 1,266 12,313 - ------------------------------------------------------------------------------------------------------ Class R 7,732 48,017 931 9,070 - ------------------------------------------------------------------------------------------------------ Class Y 285 1,774 -- -- - ------------------------------------------------------------------------------------------------------ Institutional Class 48 303 42 408 ====================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 6,185 47,275 367 3,750 - ------------------------------------------------------------------------------------------------------ Class B (6,222) (47,275) (368) (3,750) ====================================================================================================== Reacquired: Class A(c) (104,280) (805,320) (28,965) (300,220) - ------------------------------------------------------------------------------------------------------ Class B (17,297) (125,755) (12,226) (128,076) - ------------------------------------------------------------------------------------------------------ Class C (53,933) (393,021) (5,727) (59,680) - ------------------------------------------------------------------------------------------------------ Class R (17,870) (148,814) (3,852) (40,450) - ------------------------------------------------------------------------------------------------------ Class Y (494) (3,251) -- -- - ------------------------------------------------------------------------------------------------------ Institutional Class -- -- (3,797) (40,020) ====================================================================================================== Net increase in share activity 757,797 $6,260,496 351,227 $3,602,560 ======================================================================================================
(a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 19% 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) Commencement date of January 31, 2007. (c) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ------------------------------------------------------------------------------------------------- Class Y 6,821 $ 52,996 ------------------------------------------------------------------------------------------------- Class A (6,821) (52,996) =================================================================================================
53 AIM INDEPENDENCE FUNDS NOTE 11--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2040 FUND
SUMMARY OF SHARE ACTIVITY - ----------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 2008(a) 2007(b) ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- Sold: Class A 269,516 $2,009,513 104,656 $1,083,818 - ----------------------------------------------------------------------------------------------------- Class B 46,516 350,341 49,991 515,565 - ----------------------------------------------------------------------------------------------------- Class C 82,282 661,250 27,424 278,631 - ----------------------------------------------------------------------------------------------------- Class R 63,157 492,672 15,078 153,537 - ----------------------------------------------------------------------------------------------------- Class Y(c) 3,854 29,062 -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class -- -- 5,003 50,030 ===================================================================================================== Issued as reinvestment of dividends: Class A 9,721 58,327 3,208 31,053 - ----------------------------------------------------------------------------------------------------- Class B 2,163 12,933 1,601 15,452 - ----------------------------------------------------------------------------------------------------- Class C 2,401 14,361 809 7,802 - ----------------------------------------------------------------------------------------------------- Class R 1,953 11,676 526 5,083 - ----------------------------------------------------------------------------------------------------- Class Y 126 755 -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class 48 292 195 1,890 ===================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,375 10,726 168 1,695 - ----------------------------------------------------------------------------------------------------- Class B (1,383) (10,726) (168) (1,695) ===================================================================================================== Reacquired: Class A(c) (58,932) (469,793) (16,366) (169,721) - ----------------------------------------------------------------------------------------------------- Class B (12,315) (101,446) (347) (3,667) - ----------------------------------------------------------------------------------------------------- Class C (14,423) (106,941) (9) (91) - ----------------------------------------------------------------------------------------------------- Class R (9,641) (81,695) (2) (21) - ----------------------------------------------------------------------------------------------------- Class Y (114) (683) -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class (3,806) (33,000) (2) (20) ===================================================================================================== Net increase in share activity 382,498 $2,847,624 191,765 $1,969,341 =====================================================================================================
(a) There is one entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 14% 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 also owned beneficially. (b) Commencement date of January 31, 2007. (c) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ------------------------------------------------------------------------------------------------- Class Y 2,482 $ 18,762 ------------------------------------------------------------------------------------------------- Class A (2,482) (18,762) =================================================================================================
54 AIM INDEPENDENCE FUNDS NOTE 11--SHARE INFORMATION--(CONTINUED) AIM INDEPENDENCE 2050 FUND
SUMMARY OF SHARE ACTIVITY - ----------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 2008(a) 2007(b) ------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- Sold: Class A 134,748 $1,029,543 130,666 $1,324,675 - ----------------------------------------------------------------------------------------------------- Class B 23,396 180,640 19,866 204,069 - ----------------------------------------------------------------------------------------------------- Class C 31,290 234,414 15,525 156,791 - ----------------------------------------------------------------------------------------------------- Class R 36,250 278,032 15,221 149,001 - ----------------------------------------------------------------------------------------------------- Class Y(c) 6,935 50,983 -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class -- -- 5,003 50,030 ===================================================================================================== Issued as reinvestment of dividends: Class A 7,775 45,017 4,563 43,941 - ----------------------------------------------------------------------------------------------------- Class B 1,202 6,925 654 6,281 - ----------------------------------------------------------------------------------------------------- Class C 1,280 7,388 486 4,668 - ----------------------------------------------------------------------------------------------------- Class R 1,535 8,870 197 1,901 - ----------------------------------------------------------------------------------------------------- Class Y 290 1,680 -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class 228 1,319 209 2,012 ===================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 798 6,305 1,146 11,361 - ----------------------------------------------------------------------------------------------------- Class B (804) (6,305) (1,146) (11,361) ===================================================================================================== Reacquired: Class A(c) (50,970) (409,945) (16,009) (167,889) - ----------------------------------------------------------------------------------------------------- Class B (5,935) (43,925) (532) (5,446) - ----------------------------------------------------------------------------------------------------- Class C (4,668) (36,615) (663) (6,738) - ----------------------------------------------------------------------------------------------------- Class R (6,202) (51,952) (2) (21) - ----------------------------------------------------------------------------------------------------- Class Y (4) (20) -- -- - ----------------------------------------------------------------------------------------------------- Institutional Class -- -- (2) (20) ===================================================================================================== Net increase in share activity 177,144 $1,302,354 175,182 $1,763,255 =====================================================================================================
(a) 7% of the outstanding shares of the Fund are owned by Invesco Aim or an investment advisor under common control of Invesco Aim. (b) Commencement date of January 31, 2007. (c) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ------------------------------------------------------------------------------------------------- Class Y 5,265 $ 39,063 ------------------------------------------------------------------------------------------------- Class A (5,265) (39,063) =================================================================================================
55 AIM INDEPENDENCE FUNDS NOTE 12--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of each Fund outstanding throughout the periods indicated. AIM INDEPENDENCE NOW FUND
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 9.78 $0.43 $(2.08) $(1.65) $(0.51) $(0.03) $(0.54) $7.59 Year ended 12/31/07(f) 10.02 0.41 (0.07) 0.34 (0.54) (0.04) (0.58) 9.78 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 9.79 0.37 (2.09) (1.72) (0.44) (0.03) (0.47) 7.60 Year ended 12/31/07(f) 10.02 0.34 (0.06) 0.28 (0.47) (0.04) (0.51) 9.79 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 9.79 0.36 (2.09) (1.73) (0.44) (0.03) (0.47) 7.59 Year ended 12/31/07(f) 10.02 0.34 (0.06) 0.28 (0.47) (0.04) (0.51) 9.79 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 9.78 0.40 (2.07) (1.67) (0.49) (0.03) (0.52) 7.59 Year ended 12/31/07(f) 10.02 0.39 (0.07) 0.32 (0.52) (0.04) (0.56) 9.78 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 8.30 0.10 (0.67) (0.57) (0.14) -- (0.14) 7.59 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 9.78 0.46 (2.09) (1.63) (0.53) (0.03) (0.56) 7.59 Year ended 12/31/07(f) 10.02 0.43 (0.07) 0.36 (0.56) (0.04) (0.60) 9.78 ================================================================================================================================= RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (17.45)% $942 0.31%(e) 11.88%(e) 4.89%(e) 36% Year ended 12/31/07(f) 3.47 807 0.41(g) 28.75(g) 4.41(g) 27 - ------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (18.05) 346 1.06(e) 12.63(e) 4.14(e) 36 Year ended 12/31/07(f) 2.79 309 1.16(g) 29.50(g) 3.66(g) 27 - ------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (18.15) 174 1.06(e) 12.63(e) 4.14(e) 36 Year ended 12/31/07(f) 2.79 75 1.16(g) 29.50(g) 3.66(g) 27 - ------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (17.66) 107 0.56(e) 12.13(e) 4.64(e) 36 Year ended 12/31/07(f) 3.21 53 0.66(g) 29.00(g) 4.16(g) 27 - ------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (6.86) 9 0.02(e)(g) 19.09(e)(g) 5.18(e)(g) 36 - ------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (17.23) 43 0.06(e) 11.41(e) 5.14(e) 36 Year ended 12/31/07(f) 3.74 52 0.16(g) 28.35(g) 4.66(g) 27 ===================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.65% and 0.68% for the years ended December 31, 2008 and December 31, 2007, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $1,092, $354, $102, $74, $9 and $48 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 56 AIM INDEPENDENCE FUNDS NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2010 FUND
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $10.02 $0.45 $(2.37) $(1.92) $(0.35) $(0.03) $(0.38) $ 7.72 Year ended 12/31/07(f) 10.02 0.43 (0.07) 0.36 (0.34) (0.02) (0.36) 10.02 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 9.99 0.39 (2.36) (1.97) (0.29) (0.03) (0.32) 7.70 Year ended 12/31/07(f) 10.02 0.35 (0.06) 0.29 (0.30) (0.02) (0.32) 9.99 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 10.00 0.39 (2.36) (1.97) (0.29) (0.03) (0.32) 7.71 Year ended 12/31/07(f) 10.02 0.35 (0.05) 0.30 (0.30) (0.02) (0.32) 10.00 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 10.01 0.43 (2.36) (1.93) (0.33) (0.03) (0.36) 7.72 Year ended 12/31/07(f) 10.02 0.40 (0.06) 0.34 (0.33) (0.02) (0.35) 10.01 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 8.79 0.10 (0.77) (0.67) (0.36) (0.03) (0.39) 7.73 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08(f) 10.03 0.50 (2.39) (1.89) (0.37) (0.03) (0.40) 7.74 Year ended 12/31/07 10.02 0.45 (0.07) 0.38 (0.35) (0.02) (0.37) 10.03 ================================================================================================================================= RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (19.11)% $2,620 0.33%(e) 5.46%(e) 4.99%(e) 37% Year ended 12/31/07(f) 3.65 1,645 0.42(g) 16.42(g) 4.50(g) 15 - ------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (19.66) 411 1.08(e) 6.21(e) 4.24(e) 37 Year ended 12/31/07(f) 2.92 340 1.17(g) 17.17(g) 3.75(g) 15 - ------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (19.64) 753 1.08(e) 6.21(e) 4.24(e) 37 Year ended 12/31/07(f) 3.02 431 1.17(g) 17.17(g) 3.75(g) 15 - ------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (19.20) 602 0.58(e) 5.71(e) 4.74(e) 37 Year ended 12/31/07(f) 3.41 119 0.67(g) 16.67(g) 4.25(g) 15 - ------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (7.62) 74 0.04(e)(g) 8.26(e)(g) 5.28(e)(g) 37 - ------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08(f) (18.82) 10 0.08(e) 5.02(e) 5.24(e) 37 Year ended 12/31/07 3.87 52 0.17(g) 16.02(g) 4.75(g) 15 ===================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.69% and 0.70% for the years ended December 31, 2008 and December 31, 2007, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $2,076, $471, $806, $361, $73 and $37 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 57 AIM INDEPENDENCE FUNDS NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2020 FUND
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 9.96 $0.39 $(3.13) $(2.74) $(0.25) $(0.04) $(0.29) $6.93 Year ended 12/31/07(f) 10.02 0.41 (0.17) 0.24 (0.25) (0.05) (0.30) 9.96 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 9.92 0.32 (3.10) (2.78) (0.20) (0.04) (0.24) 6.90 Year ended 12/31/07(f) 10.02 0.34 (0.17) 0.17 (0.22) (0.05) (0.27) 9.92 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 9.92 0.32 (3.12) (2.80) (0.20) (0.04) (0.24) 6.88 Year ended 12/31/07(f) 10.02 0.34 (0.17) 0.17 (0.22) (0.05) (0.27) 9.92 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 9.95 0.38 (3.14) (2.76) (0.23) (0.04) (0.27) 6.92 Year ended 12/31/07(f) 10.02 0.38 (0.16) 0.22 (0.24) (0.05) (0.29) 9.95 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) 8.21 0.08 (1.07) (0.99) (0.25) (0.04) (0.29) 6.93 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 9.99 0.42 (3.16) (2.74) (0.26) (0.04) (0.30) 6.95 Year ended 12/31/07(f) 10.02 0.43 (0.15) 0.28 (0.26) (0.05) (0.31) 9.99 ================================================================================================================================= RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (27.53)% $5,899 0.38%(e) 3.48%(e) 4.54%(e) 30% Year ended 12/31/07(f) 2.38 2,711 0.50(g) 10.04(g) 4.33(g) 37 - ------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (28.01) 1,431 1.13(e) 4.23(e) 3.79(e) 30 Year ended 12/31/07(f) 1.68 940 1.25(g) 10.79(g) 3.58(g) 37 - ------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (28.21) 852 1.13(e) 4.23(e) 3.79(e) 30 Year ended 12/31/07(f) 1.68 593 1.25(g) 10.79(g) 3.58(g) 37 - ------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (27.72) 974 0.63(e) 3.73(e) 4.29(e) 30 Year ended 12/31/07(f) 2.19 679 0.75(g) 10.29(g) 4.08(g) 37 - ------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (12.03) 50 0.08(e)(g) 4.83(e)(g) 4.84(e)(g) 30 - ------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (27.41) 9 0.13(e) 2.98(e) 4.79(e) 30 Year ended 12/31/07(f) 2.80 12 0.25(g) 9.67(g) 4.58(g) 37 ===================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.74% and 0.78% for the years ended December 31, 2008 and December 31, 2007, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $3,895, $1,228, $684, $1,121, $33 and $11 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 58 AIM INDEPENDENCE FUNDS NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2030 FUND
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - ------------------------------------------------------------------------------------------------------------------------------ CLASS A Year ended 12/31/08 $ 9.89 $0.29 $(3.62) $(3.33) $(0.18) $(0.05) $(0.23) $6.33 Year ended 12/31/07(f) 10.02 0.34 (0.14) 0.20 (0.28) (0.05) (0.33) 9.89 - ------------------------------------------------------------------------------------------------------------------------------ CLASS B Year ended 12/31/08 9.87 0.22 (3.59) (3.37) (0.14) (0.05) (0.19) 6.31 Year ended 12/31/07(f) 10.02 0.27 (0.13) 0.14 (0.24) (0.05) (0.29) 9.87 - ------------------------------------------------------------------------------------------------------------------------------ CLASS C Year ended 12/31/08 9.87 0.23 (3.60) (3.37) (0.14) (0.05) (0.19) 6.31 Year ended 12/31/07(f) 10.02 0.27 (0.13) 0.14 (0.24) (0.05) (0.29) 9.87 - ------------------------------------------------------------------------------------------------------------------------------ CLASS R Year ended 12/31/08 9.88 0.26 (3.61) (3.35) (0.17) (0.05) (0.22) 6.31 Year ended 12/31/07(f) 10.02 0.32 (0.15) 0.17 (0.26) (0.05) (0.31) 9.88 - ------------------------------------------------------------------------------------------------------------------------------ CLASS Y Year ended 12/31/08(f) 7.77 0.06 (1.26) (1.20) (0.19) (0.05) (0.24) 6.33 - ------------------------------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS Year ended 12/31/08 9.90 0.32 (3.63) (3.31) (0.20) (0.05) (0.25) 6.34 Year ended 12/31/07(f) 10.02 0.37 (0.15) 0.22 (0.29) (0.05) (0.34) 9.90 ============================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ---------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (33.64)% $3,088 0.40%(e) 4.07%(e) 3.50%(e) 17% Year ended 12/31/07(f) 2.00 1,577 0.50(g) 13.53(g) 3.60(g) 31 - ---------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (34.18) 1,386 1.15(e) 4.82(e) 2.75(e) 17 Year ended 12/31/07(f) 1.42 756 1.25(g) 14.28(g) 2.85(g) 31 - ---------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (34.18) 938 1.15(e) 4.82(e) 2.75(e) 17 Year ended 12/31/07(f) 1.425 729 1.25(g) 14.28(g) 2.85(g) 31 - ---------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (33.92) 1,534 0.65(e) 4.32(e) 3.25(e) 17 Year ended 12/31/07(f) 1.78 396 0.75(g) 13.78(g) 3.35(g) 31 - ---------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (15.49) 50 0.11(e)(g) 5.07(e)(g) 3.79(e)(g) 17 - ---------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (33.46) 8 0.15(e) 3.50(e) 3.75(e) 17 Year ended 12/31/07(f) 2.23 12 0.25(g) 13.07(g) 3.85(g) 31 ================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.76% and 0.80% for the years ended December 31, 2008 and December 31, 2007, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $2,414, $1,176, $1,007, $1,211, $49 and $11 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 59 AIM INDEPENDENCE FUNDS NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2040 FUND
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - ------------------------------------------------------------------------------------------------------------------------------ CLASS A Year ended 12/31/08 $ 9.83 $0.23 $(3.78) $(3.55) $(0.15) $(0.04) $(0.19) $6.09 Year ended 12/31/07(f) 10.02 0.31 (0.13) 0.18 (0.28) (0.09) (0.37) 9.83 - ------------------------------------------------------------------------------------------------------------------------------ CLASS B Year ended 12/31/08 9.80 0.17 (3.76) (3.59) (0.11) (0.04) (0.15) 6.06 Year ended 12/31/07(f) 10.02 0.24 (0.13) 0.11 (0.24) (0.09) (0.33) 9.80 - ------------------------------------------------------------------------------------------------------------------------------ CLASS C Year ended 12/31/08 9.80 0.17 (3.76) (3.59) (0.11) (0.04) (0.15) 6.06 Year ended 12/31/07(f) 10.02 0.24 (0.13) 0.11 (0.24) (0.09) (0.33) 9.80 - ------------------------------------------------------------------------------------------------------------------------------ CLASS R Year ended 12/31/08 9.82 0.21 (3.78) (3.57) (0.14) (0.04) (0.18) 6.07 Year ended 12/31/07(f) 10.02 0.28 (0.13) 0.15 (0.26) (0.09) (0.35) 9.82 - ------------------------------------------------------------------------------------------------------------------------------ CLASS Y Year ended 12/31/08(f) 7.56 0.05 (1.32) (1.27) (0.16) (0.04) (0.20) 6.09 - ------------------------------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS Year ended 12/31/08 9.84 0.28 (3.82) (3.54) (0.17) (0.04) (0.21) 6.09 Year ended 12/31/07(f) 10.02 0.34 (0.14) 0.20 (0.29) (0.09) (0.38) 9.84 ============================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ---------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (36.00)% $1,907 0.41%(e) 8.63%(e) 2.88%(e) 29% Year ended 12/31/07(f) 1.81 901 0.54(g) 22.43(g) 3.26(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (36.53) 522 1.16(e) 9.38(e) 2.13(e) 29 Year ended 12/31/07(f) 1.15 500 1.29(g) 23.18(g) 2.51(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (36.53) 597 1.16(e) 9.38(e) 2.13(e) 29 Year ended 12/31/07(f) 1.15 277 1.29(g) 23.18(g) 2.51(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (36.27) 432 0.66(e) 8.88(e) 2.63(e) 29 Year ended 12/31/07(f) 1.59 153 0.79(g) 22.68(g) 3.01(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (16.73) 24 0.10(e)(g) 10.26(e)(g) 3.19(e)(g) 29 - ---------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (35.94) 9 0.15(e) 7.72(e) 3.14(e) 29 Year ended 12/31/07(f) 2.03 51 0.28(g) 21.86(g) 3.53(g) 20 ================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.78% and 0.81% for the years ended December 31, 2008 and December 31, 2007, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $1,213, $499, $463, $301, $23 and $34 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 60 AIM INDEPENDENCE FUNDS NOTE 12--FINANCIAL HIGHLIGHTS--(CONTINUED) AIM INDEPENDENCE 2050 FUND
NET GAINS NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - ------------------------------------------------------------------------------------------------------------------------------ CLASS A Year ended 12/31/08 $ 9.78 $0.17 $(3.84) $(3.67) $(0.17) $(0.07) $(0.24) $5.87 Year ended 12/31/07(f) 10.02 0.29 (0.14) 0.15 (0.29) (0.10) (0.39) 9.78 - ------------------------------------------------------------------------------------------------------------------------------ CLASS B Year ended 12/31/08 9.75 0.11 (3.82) (3.71) (0.13) (0.07) (0.20) 5.84 Year ended 12/31/07(f) 10.02 0.21 (0.13) 0.08 (0.25) (0.10) (0.35) 9.75 - ------------------------------------------------------------------------------------------------------------------------------ CLASS C Year ended 12/31/08 9.76 0.10 (3.81) (3.71) (0.13) (0.07) (0.20) 5.85 Year ended 12/31/07(f) 10.02 0.21 (0.12) 0.09 (0.25) (0.10) (0.35) 9.76 - ------------------------------------------------------------------------------------------------------------------------------ CLASS R Year ended 12/31/08 9.77 0.14 (3.84) (3.70) (0.15) (0.07) (0.22) 5.85 Year ended 12/31/07(f) 10.02 0.26 (0.14) 0.12 (0.27) (0.10) (0.37) 9.77 - ------------------------------------------------------------------------------------------------------------------------------ CLASS Y Year ended 12/31/08(f) 7.42 0.04 (1.35) (1.31) (0.17) (0.07) (0.24) 5.87 - ------------------------------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS Year ended 12/31/08 9.79 0.19 (3.86) (3.67) (0.18) (0.07) (0.25) 5.87 Year ended 12/31/07(f) 10.02 0.31 (0.14) 0.17 (0.30) (0.10) (0.40) 9.79 ============================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSE AND/OR EXPENSE TO AVERAGE PORTFOLIO RETURN(b) (000S OMITTED) REIMBURSEMENTS(c) REIMBURSEMENTS NET ASSETS TURNOVER(d) - ---------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (37.51)% $1,248 0.42%(e) 11.10%(e) 2.10%(e) 27% Year ended 12/31/07(f) 1.55 1,177 0.54(g) 24.63(g) 3.01(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (38.03) 214 1.17(e) 11.85(e) 1.35(e) 27 Year ended 12/31/07(f) 0.80 184 1.29(g) 25.38(g) 2.26(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (37.99) 253 1.17(e) 11.85(e) 1.35(e) 27 Year ended 12/31/07(f) 0.90 150 1.29(g) 25.38(g) 2.26(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (37.78) 275 0.67(e) 11.35(e) 1.85(e) 27 Year ended 12/31/07(f) 1.29 151 0.79(g) 24.88(g) 2.76(g) 20 - ---------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(f) (17.57) 42 0.09(e)(g) 19.27(e)(g) 2.43(e)(g) 27 - ---------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (37.42) 32 0.15(e) 10.22(e) 2.37(e) 27 Year ended 12/31/07(f) 1.78 51 0.28(g) 24.12(g) 3.27(g) 20 ================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (c) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.78% and 0.82% for the years ended December 31, 2008 and December 31, 2007, respectively. (d) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (e) Ratios are based on average daily net assets (000's omitted) of $1,164, $209, $179, $200, $40 and $43 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (f) Commencement date of January 31, 2007 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares. (g) Annualized. 61 AIM INDEPENDENCE FUNDS NOTE 13--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. PENDING LITIGATION AND REGULATORY INQUIRIES 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 62 AIM INDEPENDENCE FUNDS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and 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: In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Independence Now Fund, AIM Independence 2010 Fund, AIM Independence 2020 Fund, AIM Independence 2030 Fund, AIM Independence 2040 Fund and AIM Independence 2050 Fund (six of the funds constituting AIM Growth Series, hereafter referred to as the "Funds") at December 31, 2008, the results of each of their operations for the year then ended, the changes in each of their net assets for the year then ended and for the period January 31, 2007, commencement date through December 31, 2007 and the financial highlights for each of the periods indicated in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 63 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. With the exception of the actual ending account value and expenses of the Class Y Shares, this example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 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 (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $858.50 $1.26 $1,023.78 $1.37 0.27% - --------------------------------------------------------------------------------------------------- B 1,000.00 855.50 4.76 1,020.01 5.18 1.02 - --------------------------------------------------------------------------------------------------- C 1,000.00 855.30 4.76 1,020.01 5.18 1.02 - --------------------------------------------------------------------------------------------------- R 1,000.00 857.40 2.43 1,022.52 2.64 0.52 - --------------------------------------------------------------------------------------------------- Y 1,000.00 931.40 0.05 1,025.04 0.10 0.02 - ---------------------------------------------------------------------------------------------------
64 AIM INDEPENDENCE FUNDS 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $846.90 $1.35 $1,023.68 $1.48 0.29% - --------------------------------------------------------------------------------------------------- B 1,000.00 843.90 4.82 1,019.91 5.28 1.04 - --------------------------------------------------------------------------------------------------- C 1,000.00 844.10 4.82 1,019.91 5.28 1.04 - --------------------------------------------------------------------------------------------------- R 1,000.00 846.90 2.51 1,022.42 2.75 0.54 - --------------------------------------------------------------------------------------------------- Y 1,000.00 923.80 0.09 1,024.94 0.20 0.04 - ---------------------------------------------------------------------------------------------------
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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $782.10 $1.48 $1,023.48 $1.68 0.33% - --------------------------------------------------------------------------------------------------- B 1,000.00 779.60 4.83 1,019.71 5.48 1.08 - --------------------------------------------------------------------------------------------------- C 1,000.00 778.30 4.83 1,019.71 5.48 1.08 - --------------------------------------------------------------------------------------------------- R 1,000.00 780.80 2.60 1,022.22 2.95 0.58 - --------------------------------------------------------------------------------------------------- Y 1,000.00 879.70 0.18 1,024.73 0.41 0.08 - ---------------------------------------------------------------------------------------------------
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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $736.60 $1.57 $1,023.33 $1.83 0.36% - --------------------------------------------------------------------------------------------------- B 1,000.00 734.10 4.84 1,019.56 5.63 1.11 - --------------------------------------------------------------------------------------------------- C 1,000.00 734.10 4.84 1,019.56 5.63 1.11 - --------------------------------------------------------------------------------------------------- R 1,000.00 735.20 2.66 1,022.07 3.10 0.61 - --------------------------------------------------------------------------------------------------- Y 1,000.00 845.10 0.25 1,024.58 0.56 0.11 - ---------------------------------------------------------------------------------------------------
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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $721.50 $1.56 $1,023.33 $1.83 0.36% - --------------------------------------------------------------------------------------------------- B 1,000.00 717.40 4.79 1,019.56 5.63 1.11 - --------------------------------------------------------------------------------------------------- C 1,000.00 717.40 4.79 1,019.56 5.63 1.11 - --------------------------------------------------------------------------------------------------- R 1,000.00 719.30 2.64 1,022.07 3.10 0.61 - --------------------------------------------------------------------------------------------------- Y 1,000.00 832.70 0.23 1,024.63 0.51 0.10 - ---------------------------------------------------------------------------------------------------
65 AIM INDEPENDENCE FUNDS 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $709.90 $1.50 $1,023.38 $1.78 0.35% - --------------------------------------------------------------------------------------------------- B 1,000.00 705.80 4.72 1,019.61 5.58 1.10 - --------------------------------------------------------------------------------------------------- C 1,000.00 707.00 4.72 1,019.61 5.58 1.10 - --------------------------------------------------------------------------------------------------- R 1,000.00 707.60 2.58 1,022.12 3.05 0.60 - --------------------------------------------------------------------------------------------------- Y 1,000.00 824.30 0.20 1,024.68 0.46 0.09 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 66 AIM INDEPENDENCE FUNDS 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 July 1, 2008, through December 31, 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 INSTITUTIONAL CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $1,000.00 $860.60 $0.09 $1,025.04 $0.10 0.02% - ----------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 1,000.00 848.20 0.19 1,024.94 0.20 0.04 - ----------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 1,000.00 783.10 0.36 1,024.73 0.41 0.08 - ----------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 1,000.00 737.70 0.48 1,024.58 0.56 0.11 - ----------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 1,000.00 720.30 0.43 1,024.63 0.51 0.10 - ----------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 1,000.00 709.90 0.43 1,024.63 0.51 0.10 - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM INDEPENDENCE FUNDS [INVESCO AIM LOGO] - SERVICE MARK - Supplement to Annual Report dated 12/31/08 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 FUND NASDAQ SYMBOLS AIM Independence Now Fund IANIX AIM Independence 2010 Fund INJIX AIM Independence 2020 Fund AFTSX AIM Independence 2030 Fund TNAIX AIM Independence 2040 Fund TNDIX AIM Independence 2050 Fund TNEIX INSTITUTIONAL CLASS SHARES The following information has been prepared to provide Institutional Class shareholders with a performance overview specifi c to their holdings. Institutional Class shares are offered exclusively to institutional investors, including defi ned 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-1 Invesco Aim Distributors, Inc. Supplement to Annual Report dated 12/31/08 AIM INDEPENDENCE NOW FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (1/31/07) -7.65% 1 Year -17.23 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.70%.(1,2) 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 29.03%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. 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 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.68%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 1/31/07
Lipper AIM Mixed-Asset Independence Target Now Fund- Custom Allocation Institutional Class Independence Conservative Date Shares S&P 500 Index(2) Now Index(1) Funds Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 1/31/07 $ 10000 $ 10000 $ 10000 $ 10000 2/07 10020 9805 10054 10041 3/07 10110 9914 10103 10103 4/07 10271 10353 10285 10269 5/07 10361 10714 10364 10350 6/07 10299 10536 10284 10271 7/07 10178 10210 10207 10210 8/07 10239 10363 10315 10260 9/07 10400 10750 10515 10473 10/07 10543 10921 10657 10607 11/07 10380 10464 10593 10521 12/07 10374 10392 10580 10503 1/08 10162 9769 10430 10417 2/08 10045 9452 10347 10375 3/08 10034 9411 10336 10317 4/08 10227 9869 10526 10484 5/08 10292 9997 10551 10587 6/08 9977 9155 10220 10335 7/08 9977 9078 10180 10229 8/08 10010 9209 10258 10227 9/08 9407 8390 9798 9737 10/08 8585 6981 8917 8780 11/08 8418 6480 8789 8514 12/08 8586 6548 9116 8801
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. Supplement to Annual Report dated 12/31/08 AIM INDEPENDENCE 2010 FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (1/31/07) -8.52% 1 Year -18.82 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.74%.(1,2) 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 16.72%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. 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 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.70%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 1/31/07
AIM Independence Lipper 2010 Fund- Custom Mixed-Asset Institutional Class Independence Target 2010 Funds Date Shares S&P 500 Index(2) 2010 Index(1) Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 1/31/07 $ 10000 $ 10000 $ 10000 $ 10000 2/07 10020 9805 10046 10001 3/07 10120 9914 10102 10067 4/07 10290 10353 10303 10297 5/07 10400 10714 10397 10440 6/07 10331 10536 10309 10354 7/07 10181 10210 10216 10251 8/07 10251 10363 10323 10302 9/07 10430 10750 10543 10564 10/07 10590 10921 10695 10741 11/07 10401 10464 10606 10550 12/07 10388 10392 10585 10512 1/08 10150 9769 10394 10265 2/08 10026 9452 10302 10183 3/08 10005 9411 10287 10152 4/08 10222 9869 10502 10414 5/08 10295 9997 10534 10504 6/08 9943 9155 10168 10081 7/08 9933 9078 10121 9968 8/08 9975 9209 10195 9979 9/08 9343 8390 9694 9325 10/08 8421 6981 8752 8275 11/08 8224 6480 8598 7960 12/08 8433 6548 8925 8178
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. Supplement to Annual Report dated 12/31/08 AIM INDEPENDENCE 2020 FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (1/31/07) -14.17% 1 Year -27.41 Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.86%.(1,2) 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 10.45%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. 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 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.78%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 1/31/07
AIM Independence Lipper 2020 Fund- Custom Mixed-Asset Institutional Class Independence Target 2020 Funds Date Shares S&P 500 Index(2) 2020 Index(1) Index(2) - ------- ------------------- ---------------- ------------------ ----------------- 1/31/07 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9980 9805 10008 9974 3/07 10110 9914 10094 10046 4/07 10339 10353 10357 10293 5/07 10509 10714 10517 10481 6/07 10389 10536 10397 10363 7/07 10140 10210 10231 10219 8/07 10230 10363 10325 10310 9/07 10480 10750 10622 10591 10/07 10679 10921 10815 10803 11/07 10339 10464 10595 10569 12/07 10279 10392 10527 10502 1/08 9868 9769 10159 10152 2/08 9693 9452 10045 10044 3/08 9653 9411 10014 10055 4/08 9972 9869 10329 10399 5/08 10065 9997 10404 10518 6/08 9529 9155 9886 9910 7/08 9508 9078 9812 9769 8/08 9560 9209 9857 9768 9/08 8819 8390 9196 8974 10/08 7604 6981 8040 7678 11/08 7223 6480 7753 7273 12/08 7462 6548 8044 7451
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. Supplement to Annual Report dated 12/31/08 AIM INDEPENDENCE 2030 FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (1/31/07) -18.23% 1 Year -33.46
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.91%.(1,2) 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 13.87%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. - ---------- 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 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.80%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 1/31/07
AIM Independence Lipper 2030 Fund- Custom Mixed-Asset Institutional Class Independence Target 2030 Funds Date Shares S&P 500 Index(2) 2030 Index(1) Index(2) - ------- ------------------- ----------------- ------------- ----------------- 1/31/07 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9930 9805 9960 9943 3/07 10110 9914 10074 10048 4/07 10389 10353 10404 10405 5/07 10638 10714 10641 10691 6/07 10499 10536 10494 10567 7/07 10180 10210 10254 10380 8/07 10269 10363 10338 10408 9/07 10548 10750 10704 10792 10/07 10788 10921 10931 11067 11/07 10319 10464 10583 10654 12/07 10222 10392 10482 10562 1/08 9685 9769 9942 9958 2/08 9457 9452 9795 9783 3/08 9395 9411 9747 9708 4/08 9798 9869 10152 10150 5/08 9922 9997 10273 10310 6/08 9219 9155 9596 9592 7/08 9199 9078 9502 9431 8/08 9260 9209 9529 9419 9/08 8455 8390 8727 8531 10/08 7030 6981 7359 7071 11/08 6535 6480 6943 6593 12/08 6802 6548 7202 6785
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. Supplement to Annual Report dated 12/31/08 AIM INDEPENDENCE 2040 FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. In prior periods, the Fund compared itself to the Lipper Mixed-Asset Target 2030+ Funds Index for comparison to a peer group benchmark. That index is no longer available. The new peer group benchmark is the Lipper Mixed-Asset Target 2040 Funds Index. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (1/31/07) -19.91% 1 Year -35.94
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.90%.(1,2) 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 22.67%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. - ---------- 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.81%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 1/31/07
AIM Independence Lipper 2040 Fund- Custom Mixed-Asset Institutional Class Independence Target 2040 Funds Date Shares S&P 500 Index(2) 2040 Index(1) Index(2) - ------- ------------------- ----------------- ------------- ----------------- 1/31/07 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9910 9805 9940 9918 3/07 10079 9914 10065 10043 4/07 10389 10353 10424 10403 5/07 10668 10714 10694 10733 6/07 10519 10536 10534 10602 7/07 10170 10210 10261 10292 8/07 10259 10363 10341 10329 9/07 10559 10750 10738 10723 10/07 10819 10921 10980 11031 11/07 10310 10464 10574 10510 12/07 10204 10392 10458 10400 1/08 9603 9769 9844 9739 2/08 9374 9452 9683 9563 3/08 9302 9411 9629 9471 4/08 9717 9869 10072 9943 5/08 9852 9997 10215 10155 6/08 9075 9155 9460 9404 7/08 9044 9078 9358 9237 8/08 9106 9209 9377 9222 9/08 8308 8390 8511 8319 10/08 6814 6981 7047 6800 11/08 6275 6480 6574 6301 12/08 6536 6548 6820 6514
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. Supplement to Annual Report dated 12/31/08 AIM INDEPENDENCE 2050 FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. In prior periods, the Fund compared itself to the Lipper Mixed-Asset Target 2030+ Funds Index for comparison to a peer group benchmark. That index is no longer available. The new peer group benchmark is the Lipper Mixed-Asset Target 2050+ Funds Category Average. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (1/31/07) -20.98% 1 Year -37.42
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.90%.(1,2) 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 24.94%.(2) The expense ratios presented above may vary from the expense ratios presented in other sections of the actual report that are based on expenses incurred during the period covered by the report. Had the advisor not waived fees and/or reimbursed expenses, performance would have been lower. - ---------- 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 The expense ratio includes estimated acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.82%. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 1/31/07
AIM Lipper Independence Mixed-Asset 2050 Fund- Custom Target 2050+ Institutional Class Independence Category Date Shares S&P 500 Index(2) 2050 Index(1) Average(2) - ------- ------------------- ---------------- -------------- ------------- 1/31/07 $ 10000 $ 10000 $ 10000 $ 10000 2/07 9890 9805 9925 9893 3/07 10070 9914 10058 10034 4/07 10389 10353 10438 10404 5/07 10688 10714 10732 10746 6/07 10529 10536 10563 10641 7/07 10160 10210 10267 10348 8/07 10269 10363 10343 10416 9/07 10578 10750 10762 10904 10/07 10858 10921 11015 11230 11/07 10299 10464 10568 10690 12/07 10177 10392 10441 10587 1/08 9533 9769 9774 9881 2/08 9294 9452 9602 9692 3/08 9231 9411 9543 9611 4/08 9658 9869 10013 10101 5/08 9804 9997 10172 10291 6/08 8972 9155 9361 9505 7/08 8952 9078 9253 9335 8/08 9024 9209 9267 9290 9/08 8203 8390 8356 8319 10/08 6664 6981 6824 6783 11/08 6092 6480 6312 6225 12/08 6370 6548 6549 6488
- ---------- 1 Invesco Aim, Lipper Inc. 2 Lipper Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Funds designate the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008: FEDERAL AND STATE INCOME TAX
CORPORATE LONG TERM QUALIFIED DIVIDENDS CAPITAL GAIN DIVIDEND RECEIVED U.S. TREASURY DISTRIBUTIONS INCOME* DEDUCTION* OBLIGATIONS* - --------------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund $ 4,738 10.00% 8.60% 1.61% - --------------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 15,290 13.00% 11.77% 0.36% - --------------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 44,488 23.00% 4.55% 0.08% - --------------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 40,573 41.00% 25.30% 0.05% - --------------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 21,279 46.30% 28.33% 0.04% - --------------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 21,042 52.00% 31.66% 0.03% =====================================================================================================================
* The above percentage is based on ordinary income dividends paid to shareholders during the Fund's fiscal year. ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the Funds are as follows:
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, 2008 2008 2008 2008 - ----------------------------------------------------------------------------------------------------------------- AIM Independence Now Fund 60.60% 58.61% 62.32% 69.13% - ----------------------------------------------------------------------------------------------------------------- AIM Independence 2010 Fund 58.93% 57.71% 60.09% 65.62% - ----------------------------------------------------------------------------------------------------------------- AIM Independence 2020 Fund 50.79% 53.66% 45.04% 46.93% - ----------------------------------------------------------------------------------------------------------------- AIM Independence 2030 Fund 38.72% 32.59% 32.65% 33.34% - ----------------------------------------------------------------------------------------------------------------- AIM Independence 2040 Fund 32.29% 24.83% 25.81% 25.64% - ----------------------------------------------------------------------------------------------------------------- AIM Independence 2050 Fund 27.59% 18.84% 20.27% 20.27% =================================================================================================================
67 AIM INDEPENDENCE FUNDS TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 68 AIM INDEPENDENCE FUNDS TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
69 AIM INDEPENDENCE FUNDS [GO PAPERLESS GRAPHIC] GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: - - ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of trees used to produce paper. - - ECONOMICAL. Help reduce your fund's printing and delivery expenses and put more capital back in your fund's returns. - - EFFICIENT. Stop waiting for regular mail. Your documents will be sent via email as soon as they're available. - - EASY. Download, save and print files using your home computer with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim. com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim --SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com IND-AR-1 Invesco Aim Distributors, Inc. [INVESCO AIM LOGO] AIM INTERNATIONAL ALLOCATION FUND - - service mark - Annual Report to Shareholders # December 31, 2008 [MOUNTAIN GRAPHIC] 2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 6 Long-Term Fund Performance 8 Supplemental Information 9 Schedule of Investments 10 Financial Statements 13 Notes to Financial Statements 18 Financial Highlights 20 Auditor's Report 21 Fund Expenses 22 Tax Information 23 Trustees and Officers [TAYLOR PHOTO] Philip Taylor Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this opportunity to update you on market developments during calendar year 2008 and provide you with some perspective and encouragement. MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: # INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. # DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. # STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /S/ Philip Taylor Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim 1 U.S. Federal Reserve; 2 Bureau of Labor Statistics; 3 FactSet Research; 4 Wall Street Journal 2 AIM INTERNATIONAL ALLOCATION FUND [CROCKETT PHOTO] Bruce Crockett Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have negatively affected all investors. The new government promises to move quickly with a stimulus package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high" has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com. Best regards, /S/ Bruce L. Crockett Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 3 AIM INTERNATIONAL ALLOCATION FUND MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE PERFORMANCE SUMMARY Global equity markets were turbulent throughout 2008. Most markets registered double-digit losses as global growth slowed and a number of financial institutions worldwide fell victim to the broadening credit crisis. For the year ended December 31, 2008, AIM International Allocation Fund Class A shares at net asset value delivered a return of -44.27%, compared with the MSCI EAFE Index which returned -43.38%.+ There were few hiding places as most markets and sectors declined significantly. Within this environment, each of the Fund's underlying portfolios detracted from absolute results. A modest exposure to emerging markets and smaller capitalization companies (versus the developed market, large-cap oriented Index) was a drag on relative results. Your Fund's long-term performance appears later in this report. FUND VS. INDEXES Total returns, 12/31/07 to 12/31/08, 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 -44.27% Class B Shares -44.74 Class C Shares -44.70 Class R Shares -44.48 Class Y Shares* -44.20 MSCI EAFE Indext+ (Broad Market/Style-Specific Index) -43.38 Lipper International Multi-Cap Core Funds Index+ (Peer Group Index) -41.53
+ Lipper Inc. * Share class incepted during the fiscal year. See page 7 for a detailed explanation of Fund performance. HOW WE INVEST The Fund offers investors convenient entry into international markets through a single, broadly diversified portfolio that has the flexibility to invest across investment styles (growth, value and core), market capitalizations (small and large), sectors and countries, both emerging and developed. The resulting portfolio blends five unique, complementary and established funds -- AIM International Core Equity Fund, AIM International Growth Fund, PowerShares International Dividend Achievers--TRADEMARK-- Portfolio*, AIM International Small Company Fund and AIM Developing Markets Fund -- to create a versatile core holding that provides broad international diversification. We determine target asset class weightings and underlying fund selections for the Fund and also monitor the Fund on an ongoing basis. The underlying funds in the portfolio are actively managed by their respective management teams based on individual fund objectives, investment strategies and management techniques. While the weightings of various underlying funds in the portfolio may vary from their targets during the year due to market movements, we rebalance the portfolio annually to maintain the target asset class allocations. The Fund was rebalanced back to target allocations of its underlying holdings in May of 2008. MARKET CONDITIONS AND YOUR FUND It was a very difficult year for financial markets. During the fiscal year, the banking system came under extreme pressure with a number of major banks facing insolvency. Although global equity prices have shown signs of recovery from their mid-October depressed lows, the world's major stock markets generally finished the calendar year in negative territory.(1) During the year, European equities remained under pressure as macroeconomic conditions continued to deteriorate and turmoil in the financials sector worsened.(1) Asian equities were volatile as well, falling sharply toward the end of the year.(1) While there were sporadic attempts to rally, weakness remained the dominant trend during the year. Emerging market stocks tumbled from record highs as global recession concerns deepened and commodity prices fell sharply.(1) While from a market-cap perspective, investors' risk-averse nature caused them to shun smaller capitalization companies. AIM International Allocation Fund did not emerge unscathed from the carnage of 2008, ending the year down significantly. Although two of the Fund's five underlying portfolios outperformed the MSCI EAFE Index, none of them were able to escape the severe declines of the period. AIM INTERNATIONAL CORE EQUITY FUND: Though down for the period, AIM International Core Equity Fund significantly outperformed the MSCI EAFE Index.(1) The team's focus on investing in what they believe are well-established large capitalization companies with superior financial attributes contributed to the fund's relative results. From a more granular perspective, favorable stock selection across the industrials sector was one of the key drivers of the fund's outperformance. While extraordinary government intervention efforts domestically and abroad may lead to more stability in capital markets, the team believes the underlying weakness in housing and credit conditions may weigh on the broader global economy for some time. Given their preference for investing in companies with proven financial strength, the team believes the fund's investment methodology has provided good relative returns in this type of climate. POWERSHARES INTERNATIONAL DIVIDEND ACHIEVERS--TRADEMARK-- PORTFOLIO*: This fund saw declines over the period trailing INTERNATIONAL ALLOCATION FUND
Target % of Total Net Assets Asset Class Allocation As of 12/31/08 Emerging Markets 5.00% 4.29% International/Global Blend 35.00 37.60 International/Global Growth 32.50 31.99 International/Global Value 27.50 26.06 OTHER ASSETS LESS LIABILITIES 0.00 0.06
Total Net Assets $177.5 million
4 AIM INTERNATIONAL ALLOCATION FUND the MSCI EAFE Index.(1) The PowerShares International Dividend Achievers - --TRADEMARK-- Portfolio is designed to identify an international group of ADR's (American Depository Receipts) that have increased their annual dividend for five or more consecutive fiscal years. Although well diversified across markets and sectors, the fund's overweight exposure in the period's weakest sector, financials, detracted heavily from both absolute and relative fund results. AIM INTERNATIONAL GROWTH FUND: Although down for the period, AIM International Growth Fund fared better than the MSCI EAFE Index.(1) The broad driver of this fund's relative success was the fund's balanced EQV (earnings, quality and valuation) investment process. This focus led to an underweight exposure in the volatile materials sector, one of the period's weakest performing sectors. The fund's relative results suffered early in the year due to its significant underweight position in the materials sector versus the MSCI EAFE Index. In the team's view, underlying assumptions used to justify the sector's dramatic price appreciation over the last several years were unreasonably optimistic and did not support extreme valuations. The latter part of the year brought a dramatic reversal of this upward trend, as the sector declined sharply as a result of falling commodity prices. The fund's limited exposure to this volatile sector, particularly to the metals and mining industry, contributed favorably to relative results. A higher-than-average cash position in a declining market contributed favorably as well. AIM INTERNATIONAL SMALL COMPANY FUND: The fund's small-cap focus drove the fund's underperformance versus the broad large-cap-oriented MSCI EAFE Index.(1) As unprecedented problems in the financial sector unfolded and eventually spread to every nook and cranny of economic life, share prices of smaller capitalization companies came under immense pressure -- even more so than their large-cap counterparts -- as hedge funds were forced to liquidate positions, often within very short time periods. This flight to liquidity and safety negatively affected the returns of small- and mid-cap stocks. This was reflected in the fund's absolute and relative results. An already difficult situation was exacerbated by a surprise strengthening of the U.S. dollar. This sharp correction in the small-cap market did, however, lead to significantly attractive valuations, which in turn led to potential investment opportunities. AIM DEVELOPING MARKETS FUND: Emerging markets generally lagged developed markets over the period. The fund's emerging markets focus drove underperformance versus the developed markets MSCI EAFE Index.(1) Emerging markets continue to face headwinds from rising inflation, higher interest rates and the slowing global economy -- all of which, we believe, may pose downside risks to corporate earnings. However, the team continues to believe the overall backdrop for emerging markets remains favorable due to structural improvements, the growing middle class and significant improvement in corporate governance. Volatile markets can test an investor's resolve. However, it's important to note that real pockets of investment opportunity are often created during turbulent markets. Finally, the annual rebalancing of the underlying funds to their target investment percentages was completed in May 2008. Due to the high level of market volatility, the Fund's underlying holdings have varied more widely relative to their target allocation. The Fund's portfolio manager closely monitors this movement and has the ability to implement an intra period rebalance. Such a move is subject to the degree holdings stray from their target allocations as well as market conditions. We welcome any new investors who may have joined the Fund during the reporting period, and to all of our shareholders we would like to say thank you for your continued investment in AIM International Allocation Fund. * On Aug. 12, 2008, PowerShares International Dividend Achievers--TRADEMARK-- Portfolio replaced AIM Global Core Equity Fund (AIM Global Value Fund was renamed AIM Global Core Equity Fund on July 24, 2008) as an underlying holding of the AIM International Allocation Fund. 1 Lipper Inc. The views and opinions expressed in management's discussion of Fund performance are those of Invesco Aim Advisors, Inc. These views and opinions are subject to change at any time based on factors such as market and economic conditions. These views and opinions may not be relied upon as investment advice or recommendations, or as an offer for a particular security. The information is not a complete analysis of every aspect of any market, country, industry, security or the Fund. Statements of fact are from sources considered reliable, but Invesco Aim Advisors, Inc. makes no representation or warranty as to their completeness or accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report. [WENDLER PHOTO] GARY WENDLER Director of Product Strategy and Investment Services is manager of AIM International Allocation Fund. He began his career in the investment industry in 1986 and joined Invesco Aim in 1995. Mr. Wendler earned a B.B.A. in finance from Texas A&M University. 5 AIM INTERNATIONAL ALLOCATION FUND YOUR FUND'S LONG-TERM PERFORMANCE Past performance cannot guarantee comparable future results. The data shown in the chart include reinvested distributions, applicable sales charges and Fund expenses including management fees. Results for Class B shares are calculated as if a hypothetical shareholder had liquidated his entire investment in the Fund at the close of the reporting period and paid the applicable contingent deferred sales charges. Index results include reinvested dividends, but they do not reflect sales charges. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. continued from page 8 ABOUT INDEXES USED IN THIS REPORT # 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. OTHER INFORMATION # The returns shown in management's discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes, and as such, the net asset values for shareholder transactions and the returns based on those net asset values may differ from the net asset values and returns reported in the Financial Highlights. 6 AIM INTERNATIONAL ALLOCATION FUND [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund and index data from 10/31/05
AIM AIM AIM AIM Lipper International International International International International Allocation Fund- Allocation Fund- Allocation Fund- Allocation Fund- Multi-Cap Core Date Class A Shares Class B Shares Class C Shares Class R Shares MSCI EAFE Index(1) Funds Index(1) 10/31/05 $ 9450 $ 10000 $ 10000 $ 10000 $ 10000 $ 10000 11/05 9768 10336 10336 10336 10245 10199 12/05 10186 10765 10765 10777 10721 10670 1/06 10870 11480 11480 11492 11380 11291 2/06 10860 11469 11469 11482 11354 11266 3/06 11232 11851 11851 11874 11729 11637 4/06 11717 12354 12354 12378 12289 12188 5/06 11280 11881 11881 11915 11812 11692 6/06 11204 11790 11790 11834 11811 11637 7/06 11357 11951 11951 11995 11928 11758 8/06 11670 12272 12272 12327 12256 12074 9/06 11727 12323 12323 12377 12275 12114 10/06 12137 12745 12745 12811 12752 12543 11/06 12498 13117 13117 13194 13133 12931 12/06 12878 13508 13508 13588 13545 13326 1/07 13024 13651 13651 13742 13637 13446 2/07 12985 13610 13601 13701 13747 13432 3/07 13334 13968 13959 14059 14097 13803 4/07 13857 14499 14500 14612 14724 14354 5/07 14254 14908 14909 15021 14982 14774 6/07 14264 14908 14899 15021 15000 14817 7/07 14022 14643 14644 14775 14779 14543 8/07 13935 14540 14531 14673 14548 14435 9/07 14496 15122 15124 15267 15327 15224 10/07 15204 15846 15848 16005 15929 15926 11/07 14362 14957 14959 15113 15405 15270 12/07 14215 14806 14796 14968 15058 15006 1/08 12968 13490 13490 13643 13667 13783 2/08 12939 13448 13448 13601 13863 13730 3/08 12698 13195 13195 13358 13717 13605 4/08 13260 13775 13764 13940 14462 14361 5/08 13502 14017 14017 14195 14603 14571 6/08 12366 12827 12827 12997 13408 13376 7/08 12014 12459 12447 12627 12978 12889 8/08 11682 12101 12100 12277 12452 12383 9/08 10335 10700 10689 10856 10652 10801 10/08 8124 8404 8404 8534 8502 8569 11/08 7500 7751 7751 7866 8043 8034 12/08 7919 7985 8183 8310 8526 8774
1 Lipper Inc. AVERAGE ANNUAL TOTAL RETURNS As of 12/31/08, including maximum applicable sales charges CLASS A SHARES Inception (10/31/05) -7.10% 1 Year -47.33 CLASS B SHARES Inception (10/31/05) -6.86% 1 Year -47.12 CLASS C SHARES Inception (10/31/05) -6.13% 1 Year -45.18 CLASS R SHARES Inception (10/31/05) -5.68% 1 Year -44.48 CLASS Y SHARES Inception -5.39% 1 Year -44.20
CLASS Y SHARES' INCEPTION DATE IS OCTOBER 3, 2008; RETURNS SINCE THAT DATE ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE BLENDED R ETURNS OF ACTUAL CLASS Y SHARE PERFORMANCE AND RESTATED CLASS A SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES APPLICABLE TO CLASS A SHARES AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS OCTOBER 31, 2005. THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE AND CANNOT GUARANTEE COMPARABLE FUTURE RESULTS; CURRENT PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE VISIT INVESCOAIM.COM FOR THE MOST RECENT MONTH-END PERFORMANCE. PERFORMANCE FIGURES REFLECT REINVESTED DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE UNLESS OTHERWISE STATED. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL SHARES. THE NET ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.40%, 2.15%, 2.15%, 1.65% AND 1.15%, RESPECTIVELY.(1),(2) THE TOTAL ANNUAL FUND OPERATING EXPENSE RATIO SET FORTH IN THE MOST RECENT FUND PROSPECTUS AS OF THE DATE OF THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R AND CLASS Y SHARES WAS 1.56%, 2.31%, 2.31%, 1.81% AND 1.31%, RESPECTIVELY.(2) THE EXPENSE RATIOS PRESENTED ABOVE MAY VARY FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE BASED ON EXPENSES INCURRED DURING THE PERIOD COVERED BY THIS REPORT. CLASS A SHARE PERFORMANCE REFLECTS THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE REFLECTS THE APPLICABLE CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE CDSC ON CLASS B SHARES DECLINES FROM 5% BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE BEGINNING OF THE SEVENTH YEAR. THE CDSC ON CLASS C SHARES IS 1% FOR THE FIRST YEAR AFTER PURCHASE. CLASS R 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. CLASS Y SHARES DO NOT HAVE A FRONT-END SALES CHARGE OR A CDSC; THEREFORE, PERFORMANCE IS AT NET ASSET VALUE. THE PERFORMANCE OF THE FUND'S SHARE CLASSES WILL DIFFER PRIMARILY DUE TO DIFFERENT SALES CHARGE STRUCTURES AND CLASS EXPENSES. HAD THE ADVISOR NOT WAIVED FEES AND/OR REIMBURSED EXPENSES, PERFORMANCE WOULD HAVE BEEN LOWER. A REDEMPTION FEE OF 2% WILL BE IMPOSED ON CERTAIN REDEMPTIONS OR EXCHANGES OUT OF THE FUND WITHIN 31 DAYS OF PURCHASE. EXCEPTIONS TO THE REDEMPTION FEE ARE LISTED IN THE FUND'S PROSPECTUS. 1 Total annual 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 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. 7 AIM INTERNATIONAL ALLOCATION FUND AIM INTERNATIONAL ALLOCATION FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. # Unless otherwise stated, information presented in this report is as of December 31, 2008, and is based on total net assets. # Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES # Effective September 30, 2003, only previously established qualified plans are eligible to purchase Class B shares of any AIM fund. # Class R shares are available only to certain retirement plans. Please see the prospectus for more information. # Class Y shares are available to only certain investors. Please see the prospectus for more information. PRINCIPAL RISKS OF INVESTING IN THE FUND # The Fund pursues its investment objectives by investing its assets in other underlying AIM funds rather than investing directly in stocks, bonds, cash or other investments. The Fund's investment performance depends on the investment performance of the underlying funds. There is risk that the advisor's evaluations and assumptions regarding the Fund's broad asset classes or the underlying funds may be incorrect based on actual market conditions, or that the Fund will vary from the target weightings in the underlying funds due to factors such as market fluctuations. There can be no assurance that the underlying funds will achieve their investment objectives, and the performance of the underlying funds may be lower than that of the asset classes they represent. The underlying funds may change their investment objectives or policies without the approval of the Fund. If that were to occur, the Fund might be forced to withdraw its investments from the underlying funds at an unfavorable time. The advisor has the ability to select and substitute the underlying funds in which the Fund invests and may be subject to potential conflicts of interest in selecting underlying funds because it may receive higher fees from certain underlying funds than others. However, as a fiduciary of the Fund, the advisor is required to act in the Fund's best interest when selecting the underlying funds. Because the Fund is a fund of funds, it is subject to the risks associated with the underlying funds in which it invests. There are additional risks of investing in the underlying funds. # To the extent the Fund holds cash or cash equivalents rather than equity securities for risk management purposes, the Fund may not achieve its investment objective. # Since a large percentage of the Fund's assets may be invested in securities of a limited number of companies, each investment has a greater effect on the Fund's overall performance, and any change in the value of those securities could significantly affect the value of your investment in the Fund. # The values of convertible securities in which the Fund invests may be affected by market interest rates, the risk that the issuer may default on interest or principal payments, and the value of the underlying common stock into which these securities may be converted. # Prices of equity securities change in response to many factors, including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity. # ETF shares may trade above or below their net asset value. An active trading market for PowerShares' ETFs may not develop or be maintained. Trading of a PowerShares ETF may be halted if the listing exchange's officials deem such action appropriate. PowerShares' ETFs are not actively managed and may not fulfill their objective of tracking the performance of a specified index. PowerShares' ETFs would not necessarily sell a security because the issuer of the security was in financial trouble unless the security is removed from the index that the ETF seeks to track. The value of an investment in a PowerShares ETF will decline, more or less, in correlation with any decline in the value of the index it seeks to track. In addition, certain PowerShares ETFs may be composed of a significant percentage of issuers in a single industry or sector of the economy and may present more risk than if they were broadly diversified. # Foreign securities have additional risks, including exchange rate changes, political and economic upheaval, relative lack of information, relatively low market liquidity, and the potential lack of strict financial and accounting controls and standards. # Lower rated securities may be more susceptible to real or perceived adverse economic and competitive industry conditions, and the secondary markets in which lower rated securities are traded may be less liquid than higher grade securities. The loans in which the Fund may invest are typically noninvestment-grade and involve a greater risk of default on interest and principal payments and of price changes due to the changes in the credit quality of the issuer. # Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. # The prices of securities held by the Fund may decline in response to market risks. # Nondiversification increases the risk that the value of the Fund's shares may vary more widely, and the Fund may be subject to greater investment and credit risk than if it invested more broadly. # The Fund may use enhanced investment techniques such as short sales. Short sales carry the risk of buying a security back at a higher price at which the Fund's exposure is unlimited. # Investing in developing countries can add additional risk, such as high rates of inflation or sharply devalued currencies against the U.S. dollar. Transaction costs are often higher, and there may be delays in settlement procedures. continued on page 6 THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. FUND NASDAQ SYMBOLS Class A Shares AINAX Class B Shares INABX Class C Shares INACX Class R Shares RINAX Class Y Shares AINYX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE 8 AIM INTERNATIONAL ALLOCATION FUND SCHEDULE OF INVESTMENTS December 31, 2008 AIM INTERNATIONAL ALLOCATION FUND SCHEDULE OF INVESTMENTS IN AFFILIATED ISSUERS-100.27%(A)
CHANGE IN % OF UNREALIZED NET VALUE PURCHASES PROCEEDS APPRECIATION REALIZED DIVIDEND SHARES VALUE ASSETS 12/31/07 AT COST FROM SALES (DEPRECIATION) GAIN (LOSS) INCOME 12/31/08 12/31/08 - ----------------------------------------------------------------------------------------------------------------------------------- FOREIGN EQUITY FUNDS-99.94% AIM Developing Markets Fund 4.29% $ 22,480,628 $ 1,266,318 $ (5,172,018) $ (11,151,171) $ 388,425 $ 244,162 503,260 $ 7,609,303 - ----------------------------------------------------------------------------------------------------------------------------------- AIM Global Core Equity Fund(b)(c) 0.00% 111,578,603 9,002,457 (103,213,560) 2,664,468 (20,031,968) -- -- -- - ----------------------------------------------------------------------------------------------------------------------------------- AIM International Core Equity Fund 37.60% 145,204,135 8,942,723 (31,232,765) (48,270,703) (7,892,582) 3,096,226 8,022,933 66,750,808 - ----------------------------------------------------------------------------------------------------------------------------------- AIM International Growth Fund 24.03% 95,117,220 4,868,324 (20,603,934) (35,024,073) (1,701,841) 1,181,577 2,271,336 42,655,696 - ----------------------------------------------------------------------------------------------------------------------------------- AIM International Small Company Fund 7.96% 40,595,010 4,118,120 (8,008,044) (15,960,671) (5,662,375) 658,706 1,546,670 14,121,100 - ----------------------------------------------------------------------------------------------------------------------------------- PowerShares International Dividend Achievers Portfo- lio-ETF(b) 26.06% -- 94,378,307 (12,834,389) (30,143,855) (5,141,128) 1,119,908 4,401,421 46,258,935 =================================================================================================================================== Total Foreign Equity Funds 414,975,596 122,576,249 (181,064,710) (137,886,005) (40,041,469) 6,300,579 177,395,842 =================================================================================================================================== MONEY MARKET FUNDS-0.33% Liquid Assets Portfolio 0.17% -- 50,769,979 (50,479,851) -- -- 17,441 290,128 290,128 - ----------------------------------------------------------------------------------------------------------------------------------- Premier Portfolio 0.16% -- 50,769,979 (50,479,851) -- -- 17,451 290,128 290,128 =================================================================================================================================== Total Money Market Funds -- 101,539,958 (100,959,702) -- -- 34,892 580,256 =================================================================================================================================== TOTAL INVESTMENTS IN AFFILIATED MUTUAL FUNDS (Cost $312,318,611) 100.27% $414,975,596 $224,116,207 $(282,024,412) $(137,886,005) $(40,041,469)(d) $6,335,471 $177,976,098 =================================================================================================================================== OTHER ASSETS LESS LIABILITIES (0.27)% (471,789) =================================================================================================================================== NET ASSETS 100.00% $177,504,309 ===================================================================================================================================
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 August 12, 2008, PowerShares International Dividend Achievers Portfolio replaced AIM Global Core Equity Fund. (AIM Global Value Fund was renamed AIM Global Core Equity Fund, July 24, 2008.) (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. (d) Includes $1,163,818 of capital gains from affiliated underlying funds. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM INTERNATIONAL ALLOCATION FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments in affiliated underlying funds, at value (Cost $312,318,611) $ 177,976,098 - --------------------------------------------------------------------------------- Receivables for: Investments sold -- affiliated underlying funds 608,897 - --------------------------------------------------------------------------------- Fund shares sold 469,614 - --------------------------------------------------------------------------------- Dividends 102 - --------------------------------------------------------------------------------- Fund expenses absorbed 45,163 - --------------------------------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 6,007 - --------------------------------------------------------------------------------- Other assets 37,389 ================================================================================= Total assets 179,143,270 ================================================================================= LIABILITIES: Payables for: Fund shares reacquired 1,007,402 - --------------------------------------------------------------------------------- Amount due custodian 390,341 - --------------------------------------------------------------------------------- Accrued fees to affiliates 166,252 - --------------------------------------------------------------------------------- Accrued other operating expenses 59,095 - --------------------------------------------------------------------------------- Trustee deferred compensation and retirement plans 15,871 ================================================================================= Total liabilities 1,638,961 ================================================================================= Net assets applicable to shares outstanding $ 177,504,309 ================================================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $ 347,668,215 - --------------------------------------------------------------------------------- Undistributed net investment income 4,220,842 - --------------------------------------------------------------------------------- Undistributed net realized gain (loss) (40,042,236) - --------------------------------------------------------------------------------- Unrealized appreciation (depreciation) (134,342,512) ================================================================================= $ 177,504,309 ================================================================================= NET ASSETS: Class A $ 120,846,978 ================================================================================= Class B $ 17,571,241 ================================================================================= Class C $ 35,579,161 ================================================================================= Class R $ 2,979,575 ================================================================================= Class Y $ 477,486 ================================================================================= Institutional Class $ 49,868 ================================================================================= SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 17,792,349 ================================================================================= Class B 2,628,570 ================================================================================= Class C 5,323,992 ================================================================================= Class R 441,172 ================================================================================= Class Y 70,213 ================================================================================= Institutional Class 7,299 ================================================================================= Class A: Net asset value per share $ 6.79 - --------------------------------------------------------------------------------- Maximum offering price per share (Net asset value of $6.79 divided by 94.50%) $ 7.19 ================================================================================= Class B: Net asset value and offering price per share $ 6.68 ================================================================================= Class C: Net asset value and offering price per share $ 6.68 ================================================================================= Class R: Net asset value and offering price per share $ 6.75 ================================================================================= Class Y: Net asset value and offering price per share $ 6.80 ================================================================================= Institutional Class: Net asset value and offering price per share $ 6.83 =================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM INTERNATIONAL ALLOCATION FUND STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Dividends from affiliated underlying funds $ 6,335,471 - ------------------------------------------------------------------------------------------------ Other Income 196 ================================================================================================ Total investment income 6,335,667 ================================================================================================ EXPENSES: Administrative services fees 115,262 - ------------------------------------------------------------------------------------------------ Custodian fees 8,941 - ------------------------------------------------------------------------------------------------ Distribution fees: Class A 539,208 - ------------------------------------------------------------------------------------------------ Class B 307,575 - ------------------------------------------------------------------------------------------------ Class C 663,710 - ------------------------------------------------------------------------------------------------ Class R 19,433 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C, R and Y 885,417 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 26 - ------------------------------------------------------------------------------------------------ Trustees' and officers' fees and benefits 25,203 - ------------------------------------------------------------------------------------------------ Other 223,585 ================================================================================================ Total expenses 2,788,360 ================================================================================================ Less: Expenses reimbursed and expense offset arrangement(s) (684,638) ================================================================================================ Net expenses 2,103,722 ================================================================================================ Net investment income 4,231,945 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain (loss) on sales of affiliated underlying funds (includes net gains (losses) from securities sold to affiliates of $(45,419)) (41,205,287) ================================================================================================ Net realized gain from distributions of affiliated underlying fund shares 1,163,818 - ------------------------------------------------------------------------------------------------ Net realized gain (loss) from affiliated underlying fund shares (40,041,469) - ------------------------------------------------------------------------------------------------ Change in net unrealized appreciation (depreciation) of affiliated underlying fund shares (137,886,005) ================================================================================================ Net gain (loss) from affiliated underlying funds (177,927,474) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(173,695,529) ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM INTERNATIONAL ALLOCATION FUND STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 - ---------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 4,231,945 $ 6,627,647 - ---------------------------------------------------------------------------------------------------------- Net realized gain (loss) (40,041,469) 27,481,521 - ---------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (137,886,005) (8,732,328) ========================================================================================================== Net increase (decrease) in net assets resulting from operations (173,695,529) 25,376,840 ========================================================================================================== Distributions to shareholders from net investment income: Class A (92,456) (4,912,958) - ---------------------------------------------------------------------------------------------------------- Class B (13,473) (482,883) - ---------------------------------------------------------------------------------------------------------- Class C (27,397) (1,057,738) - ---------------------------------------------------------------------------------------------------------- Class R (2,137) (64,616) - ---------------------------------------------------------------------------------------------------------- Class Y (352) -- - ---------------------------------------------------------------------------------------------------------- Institutional Class (36) (1,257) ========================================================================================================== Total distributions from net investment income (135,851) (6,519,452) ========================================================================================================== Distributions to shareholders from net realized gains: Class A (17,228,267) (4,929,576) - ---------------------------------------------------------------------------------------------------------- Class B (2,553,180) (724,382) - ---------------------------------------------------------------------------------------------------------- Class C (5,213,581) (1,586,910) - ---------------------------------------------------------------------------------------------------------- Class R (402,844) (73,236) - ---------------------------------------------------------------------------------------------------------- Class Y (66,354) -- - ---------------------------------------------------------------------------------------------------------- Institutional Class (6,883) (1,132) ========================================================================================================== Total distributions from net realized gains (25,471,109) (7,315,236) ========================================================================================================== Share transactions-net: Class A (24,375,722) 142,842,274 - ---------------------------------------------------------------------------------------------------------- Class B (3,270,970) 17,259,257 - ---------------------------------------------------------------------------------------------------------- Class C (12,354,446) 47,695,599 - ---------------------------------------------------------------------------------------------------------- Class R 1,375,328 3,114,835 - ---------------------------------------------------------------------------------------------------------- Class Y 668,077 -- - ---------------------------------------------------------------------------------------------------------- Institutional Class 43,261 (11,107) ========================================================================================================== Net increase (decrease) in net assets resulting from share transactions (37,914,472) 210,900,858 ========================================================================================================== Net increase (decrease) in net assets (237,216,961) 222,443,010 ========================================================================================================== NET ASSETS: Beginning of year 414,721,270 192,278,260 ========================================================================================================== End of year (includes undistributed net investment income of $4,220,842 and $121,739, respectively) $ 177,504,309 $414,721,270 ==========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM INTERNATIONAL ALLOCATION FUND NOTES TO FINANCIAL STATEMENTS December 31, 2008 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 assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The Fund's investment objective is to provide 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. The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- 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. 13 AIM INTERNATIONAL ALLOCATION FUND Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Distributions from 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. The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period. E. EXPENSES -- Expenses included in the accompanying financial statements reflect the expenses of the Funds and do not include any expenses of the underlying funds. The effects of the underlying funds expenses are included in the realized and unrealized gain/loss on the investments in the underlying funds. Fees provided for under the Rule 12b-1 plan of a particular class of each Fund and which are directly attributable to that class are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to the Institutional Class are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. F. ACCOUNTING ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 or exchanges of shares within 31 days of purchase. The redemption fee is recorded as an increase in shareholder capital and is allocated among the share classes based on the relative net assets of each class. NOTE 2--ADVISORY FEES AND OTHER FEES PAID TO AFFILIATES The Trust has entered into a master investment advisory agreement with Invesco 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, 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 12b-1 plan payments and certain items discussed below) of Class A, Class B, Class C, Class R, Class Y 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 will cause other expenses to exceed the numbers reflected above: (i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv) extraordinary items; (v) expenses related to a merger or reorganization, as approved by the Fund's Board of Trustees; (vi) expenses of the underlying funds that are paid indirectly as a result of share ownership of the underlying funds; and (vii) 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. 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. 14 AIM INTERNATIONAL ALLOCATION FUND For the year ended December 31, 2008, the Advisor reimbursed class level expenses of $666,896 for Class A, Class B, Class C, Class R and Class Y 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. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $1,196. The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the course of providing such services. IAIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IAIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority ("FINRA") impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2008, IADI advised the Fund that IADI retained $85,241 in front-end sales commissions from the sale of Class A shares and $13,636, $84,554, $24,168 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN INPUT LEVEL SECURITIES - -------------------------------------- Level 1 $177,976,098 - -------------------------------------- Level 2 -- - -------------------------------------- Level 3 -- ====================================== $177,976,098 ======================================
15 AIM INTERNATIONAL ALLOCATION FUND 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 year ended December 31, 2008, the Fund engaged in securities sales of $113,475, which resulted in net realized gains (losses) of $(45,419). 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 year ended December 31, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $16,546. NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended December 31, 2008, the Fund paid legal fees of $3,972 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 7--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 - -------------------------------------------------------------------------------------------------------- Ordinary income $ 132,842 $ 6,519,452 - -------------------------------------------------------------------------------------------------------- Long-term capital gain 25,474,118 7,315,236 ======================================================================================================== Total distributions $25,606,960 $13,834,688 ========================================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
2008 - ------------------------------------------------------------------------------------------------ Undistributed ordinary income $ 4,239,448 - ------------------------------------------------------------------------------------------------ Net unrealized appreciation/(depreciation) -- investments (141,353,226) - ------------------------------------------------------------------------------------------------ Temporary book/tax differences (18,606) - ------------------------------------------------------------------------------------------------ Capital loss carryforward (27,122,541) - ------------------------------------------------------------------------------------------------ Post-October loss deferrals (5,908,981) - ------------------------------------------------------------------------------------------------ Shares of beneficial interest 347,668,215 ================================================================================================ Total net assets $ 177,504,309 ================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's net unrealized appreciation (depreciation) difference is attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. 16 AIM INTERNATIONAL ALLOCATION FUND The Fund has a capital loss carryforward as of December 31, 2008 which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------------------------- December 31, 2016 $27,122,541 ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2008 was $122,576,249 and $181,064,710, 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 $ -- - ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (141,353,226) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(141,353,226) ================================================================================================ Cost of investments for tax purposes is $319,329,324.
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of equalization and distributions, on December 31, 2008, undistributed net investment income was increased by $3,009, undistributed net realized gain (loss) was decreased by $9,546 and shares of beneficial interest increased by $6,537. This reclassification had no effect on the net assets of the Fund. NOTE 11--SHARE INFORMATION
SUMMARY OF SHARE ACTIVITY - ------------------------------------------------------------------------------------------------------------------------- YEAR ENDED YEAR ENDED DECEMBER 31, 2008(a) DECEMBER 31, 2007 ---------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------------------- Sold: Class A 4,812,618 $ 56,468,493 11,880,798 $169,089,634 - ------------------------------------------------------------------------------------------------------------------------- Class B 599,399 7,202,275 1,674,498 23,632,252 - ------------------------------------------------------------------------------------------------------------------------- Class C 1,061,973 12,135,201 3,826,633 54,094,130 - ------------------------------------------------------------------------------------------------------------------------- Class R 176,502 2,015,562 237,750 3,410,218 - ------------------------------------------------------------------------------------------------------------------------- Class Y(b) 63,427 623,129 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 4,531 60,500 3,740 53,500 ========================================================================================================================= Issued as reinvestment of dividends: Class A 2,322,577 15,910,747 670,710 9,282,552 - ------------------------------------------------------------------------------------------------------------------------- Class B 339,458 2,287,860 82,234 1,130,716 - ------------------------------------------------------------------------------------------------------------------------- Class C 661,912 4,460,957 183,014 2,516,072 - ------------------------------------------------------------------------------------------------------------------------- Class R 59,289 403,757 9,911 136,869 - ------------------------------------------------------------------------------------------------------------------------- Class Y 7,189 49,443 -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class 1,004 6,920 172 2,389 ========================================================================================================================= Automatic conversion of Class B shares to Class A shares: Class A 308,243 3,379,234 220,322 3,154,290 - ------------------------------------------------------------------------------------------------------------------------- Class B (311,404) (3,379,234) (222,068) (3,154,290) ========================================================================================================================= Reacquired:(c) Class A(b) (9,456,798) (100,134,196) (2,707,228) (38,684,202) - ------------------------------------------------------------------------------------------------------------------------- Class B (877,428) (9,381,871) (306,637) (4,349,421) - ------------------------------------------------------------------------------------------------------------------------- Class C (2,792,960) (28,950,604) (627,331) (8,914,603) - ------------------------------------------------------------------------------------------------------------------------- Class R (92,918) (1,043,991) (30,039) (432,252) - ------------------------------------------------------------------------------------------------------------------------- Class Y (403) (4,495) -- -- - ------------------------------------------------------------------------------------------------------------------------- Institutional Class (2,777) (24,159) (4,567) (66,996) ========================================================================================================================= Net increase (decrease) in share activity (3,116,566) $ (37,914,472) 14,891,912 $210,900,858 =========================================================================================================================
17 AIM INTERNATIONAL ALLOCATION FUND (a) There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 30% of the outstanding shares of the Fund. 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) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT -------------------------------------------------------------------------------------------------- Class Y 62,197 $ 611,394 -------------------------------------------------------------------------------------------------- Class A (62,197) (611 394) --------------------------------------------------------------------------------------------------
(c) Net of redemption fees of $22,953 and $15,005 allocated among the classes based on relative net assets of each class for the years ended December 31, 2008 and 2007, respectively. NOTE 12--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
NET GAINS ON NET ASSET NET SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL OF PERIOD (LOSS)(a) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS - ------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $14.14 $0.18 $(6.43) $(6.25) $(0.01) $(1.09) $(1.10) Year ended 12/31/07 13.29 0.32 1.05 1.37 (0.26) (0.26) (0.52) Year ended 12/31/06 10.71 0.42 2.41 2.83 (0.23) (0.02) (0.25) Year ended 12/31/05(g) 10.12 0.32 0.47 0.79 (0.20) -- (0.20) - ------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 14.06 0.09 (6.37) (6.28) (0.01) (1.09) (1.10) Year ended 12/31/07 13.23 0.21 1.05 1.26 (0.17) (0.26) (0.43) Year ended 12/31/06 10.70 0.32 2.41 2.73 (0.18) (0.02) (0.20) Year ended 12/31/05(g) 10.12 0.31 0.46 0.77 (0.19) -- (0.19) - ------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 14.05 0.09 (6.36) (6.27) (0.01) (1.09) (1.10) Year ended 12/31/07 13.23 0.21 1.04 1.25 (0.17) (0.26) (0.43) Year ended 12/31/06 10.70 0.32 2.41 2.73 (0.18) (0.02) (0.20) Year ended 12/31/05(g) 10.12 0.31 0.46 0.77 (0.19) -- (0.19) - ------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 14.12 0.15 (6.42) (6.27) (0.01) (1.09) (1.10) Year ended 12/31/07 13.27 0.29 1.05 1.34 (0.23) (0.26) (0.49) Year ended 12/31/06 10.71 0.39 2.40 2.79 (0.21) (0.02) (0.23) Year ended 12/31/05(g) 10.12 0.32 0.46 0.78 (0.19) -- (0.19) - ------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(g) 9.83 0.03 (1.96) (1.93) (0.01) (1.09) (1.10) - ------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 14.17 0.21 (6.45) (6.24) (0.01) (1.09) (1.10) Year ended 12/31/07 13.31 0.36 1.05 1.41 (0.29) (0.26) (0.55) Year ended 12/31/06 10.72 0.44 2.41 2.85 (0.24) (0.02) (0.26) Year ended 12/31/05(g) 10.12 0.32 0.48 0.80 (0.20) -- (0.20) ========================================================================================================================= RATIO OF RATIO OF EXPENSES TO EXPENSES TO AVERAGE NET AVERAGE NET ASSETS RATIO OF NET ASSETS WITH WITHOUT FEE INVESTMENT NET ASSETS, FEE WAIVERS WAIVERS INCOME NET ASSET END OF AND/OR AND/OR (LOSS) TO VALUE, END OF TOTAL PERIOD (000S EXPENSES EXPENSES AVERAGE NET PORTFOLIO PERIOD(b) RETURN(c) OMITTED) ABSORBED(d) ABSORBED ASSETS TURNOVER(e) - ---------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $ 6.79 (44.27)% $120,847 0.44%(f) 0.65%(f) 1.56%(f) 38% Year ended 12/31/07 14.14 10.37 280,140 0.44 0.60 2.25 2 Year ended 12/31/06 13.29 26.42 129,474 0.44 0.84 3.36 2 Year ended 12/31/05(g) 10.71 7.78 5,848 0.43(h) 7.30(h) 17.87(h) 0.3 - ---------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 6.68 (44.74) 17,571 1.19(f) 1.40(f) 0.81(f) 38 Year ended 12/31/07 14.06 9.61 40,466 1.19 1.34 1.50 2 Year ended 12/31/06 13.23 25.50 21,839 1.19 1.59 2.61 2 Year ended 12/31/05(g) 10.70 7.65 1,430 1.18(h) 8.05(h) 17.12(h) 0.3 - ---------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 6.68 (44.70) 35,579 1.19(f) 1.40(f) 0.81(f) 38 Year ended 12/31/07 14.05 9.53 89,841 1.19 1.35 1.50 2 Year ended 12/31/06 13.23 25.50 39,826 1.19 1.59 2.61 2 Year ended 12/31/05(g) 10.70 7.65 1,937 1.18(h) 8.05(h) 17.12(h) 0.3 - ---------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 6.75 (44.48) 2,980 0.69(f) 0.90(f) 1.31(f) 38 Year ended 12/31/07 14.12 10.16 4,211 0.69 0.85 2.00 2 Year ended 12/31/06 13.27 26.07 1,071 0.69 1.09 3.11 2 Year ended 12/31/05(g) 10.71 7.77 74 0.68(h) 7.55(h) 17.62(h) 0.3 - ---------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(g) 6.80 (19.74) 477 0.19(f)(h) 0.64(f)(h) 1.81(f)(h) 38 - ---------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 6.83 (44.11) 50 0.15(f) 0.15(f) 1.85(f) 38 Year ended 12/31/07 14.17 10.66 64 0.17 0.17 2.52 2 Year ended 12/31/06 13.31 26.64 69 0.18 0.34 3.62 2 Year ended 12/31/05(g) 10.72 7.90 55 0.18(h) 6.92(h) 18.12(h) 0.3 ============================================================================================================================
(a) Calculated using average shares outstanding. (b) Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. (c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (d) In addition to the fees and expenses which the Fund bears directly; the Fund indirectly bears a pro rata share of the fees and expenses of the underlying funds in which the Fund invests. Because the underlying funds have varied expenses and fee levels and the Fund may own different proportions at different times, the amount of fees and expenses incurred indirectly by the Fund will vary. Estimated underlying fund expenses are not expenses that are incurred directly by your Fund. They are expenses that are incurred directly by the underlying funds and are deducted from the value of the funds your Fund invests in. The effect of the estimated underlying fund expenses that you bear indirectly is included in your Fund's total return. Estimated acquired fund fees from underlying funds were 0.98%, 096%, 1.01% and 1.15% for the years ended December 31, 2008, 2007, 2006, and for the period October 31,2005 (commencement date) to December 31, 2005, respectively. (e) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (f) Ratios are based on average daily net assets (000's omitted) of $215,683, $30,758, $66,371, $3,887, $477 and $77 for Class A, Class B, Class C, Class R, Class Y, and Institutional Class shares, respectively. (g) Commencement date of October 31, 2005 for Class A, Class B, Class C, Class R and Institutional Class shares and October 3, 2008 for Class Y shares.. (h) Annualized. 18 AIM INTERNATIONAL ALLOCATION FUND NOTE 13--LEGAL PROCEEDINGS Terms used in the Legal Proceedings Note are defined terms solely for the purpose of this note. PENDING LITIGATION AND REGULATORY INQUIRIES 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 19 AIM INTERNATIONAL ALLOCATION FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM International Allocation: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM International Allocation Fund (one of the funds constituting AIM Growth Series, hereafter referred to as the "Fund") at December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 20 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 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 (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
- --------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $640.60 $1.81 $1,022.92 $2.24 0.44% - --------------------------------------------------------------------------------------------------- B 1,000.00 637.90 4.90 1,019.15 6.04 1.19 - --------------------------------------------------------------------------------------------------- C 1,000.00 637.90 4.90 1,019.15 6.04 1.19 - --------------------------------------------------------------------------------------------------- R 1,000.00 639.40 2.84 1,021.67 3.51 0.69 - --------------------------------------------------------------------------------------------------- Y 1,000.00 802.60 0.42 1,024.18 0.97 0.19 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 21 AIM INTERNATIONAL ALLOCATION 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 July 1, 2008, through December 31, 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 (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $641.80 $0.74 $1,024.23 $0.92 0.18% - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM INTERNATIONAL ALLOCATION FUND Supplement to Annual Report dated 12/31/08 AIM INTERNATIONAL 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. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (10/31/05) -5.17% 1 Year -44.11
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 1.13%.(1,2) 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 31 days of purchase. Exceptions to the redemption fee are listed in the Fund's prospectus. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. - ---------- 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 The expense ratio includes acquired fund fees and expenses of the underlying funds in which the Fund invests of 0.96%. NASDAQ SYMBOL INAIX 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-1 Invesco Aim Distributors, Inc. Supplement to Annual Report dated 12/31/08 AIM INTERNATIONAL ALLOCATION FUND Past performance cannot guarantee comparable future results. The data shown in the chart above includes reinvested distributions and Fund expenses including management fees. Index results include reinvested dividends. Performance of an index of funds reflects fund expenses and management fees; performance of a market index does not. Performance shown in the chart and table(s) does not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Performance of the indexes does not reflect the effects of taxes. The performance data shown in the chart above is that of the Fund's institutional share class. The performance data shown in the chart in the annual report is that of the Fund's Class A, B, C and R shares. The performance of the Fund's other share classes will differ primarily due to different sales charge structures and class expenses, and may be greater than or less than the performance of the Fund's Institutional Class shares shown in the chart above. 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-1 Invesco Aim Distributors, Inc. [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Fund and index data from 10/31/05
AIM International ipper Allocation Fund- International Institutional Class Multi-Cap Core Date Shares MSCI EAFE Index(1) Funds Index(1) - -------- ------------------- ------------------ -------------- 10/31/05 $ 10000 $ 10000 $ 10000 11/05 10336 10245 10199 12/05 10790 10721 10670 1/06 11504 11380 11291 2/06 11504 11354 11266 3/06 11896 11729 11637 4/06 12409 12289 12188 5/06 11946 11812 11692 6/06 11876 11811 11637 7/06 12047 11928 11758 8/06 12379 12256 12074 9/06 12440 12275 12114 10/06 12873 12752 12543 11/06 13265 13133 12931 12/06 13663 13545 13326 1/07 13827 13637 13446 2/07 13786 13747 13432 3/07 14165 14097 13803 4/07 14719 14724 14354 5/07 15140 14982 14774 6/07 15150 15000 14817 7/07 14903 14779 14543 8/07 14801 14548 14435 9/07 15416 15327 15224 10/07 16166 15929 15926 11/07 15273 15405 15270 12/07 15117 15058 15006 1/08 13795 13667 13783 2/08 13763 13863 13730 3/08 13518 13717 13605 4/08 14115 14462 14361 5/08 14382 14603 14571 6/08 13165 13408 13376 7/08 12802 12978 12889 8/08 12450 12452 12383 9/08 11010 10652 10801 10/08 8662 8502 8569 11/08 7990 8043 8034 12/08 8451 8526 8774
- ---------- 1 Lipper Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008:
FEDERAL AND STATE INCOME TAX ---------------------------- Long-Term Capital Gain Dividends $25,480,655 Qualified Dividend Income* 100.00% Corporate Dividends Received Deduction* 15.65%
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund's fiscal year. ADDITIONAL NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 were 92.07%, 91.73%, 71.76%, and 73.61%, respectively. 22 AIM INTERNATIONAL ALLOCATION FUND TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 23 AIM INTERNATIONAL ALLOCATION FUND TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
24 AIM INTERNATIONAL ALLOCATION FUND [GO PAPERLESS GRAPHIC] GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: - - ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of trees used to produce paper. - - ECONOMICAL. Help reduce your fund's printing and delivery expenses and put more capital back in your fund's returns. - - EFFICIENT. Stop waiting for regular mail. Your documents will be sent via email as soon as they're available. - - EASY. Download, save and print files using your home computer with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. [INVESCO AIM LOGO] - SERVICE MARK - invescoaim.com INTAL-AR-1 Invesco Aim Distributors, Inc. [INVESCO AIM LOGO] AIM MID CAP CORE EQUITY FUND - SERVICE MARK - Annual Report to Shareholders o December 31,2008 [MOUNTAIN GRAPHIC] 2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 6 Long-Term Fund Performance 8 Supplemental Information 9 Schedule of Investments 11 Financial Statements 14 Notes to Financial Statements 20 Financial Highlights 22 Auditor's Report 23 Fund Expenses 24 Tax Information 25 Trustees and Officers
Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this opportunity to update you on market developments during calendar year 2008 [TAYLOR PHOTO] and provide you with some perspective and encouragement. MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to Philip Taylor stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of theTreasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of theTreasury to purchase up to $700 billion in troubled mortgage-related assets--the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 9594246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /S/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim (1) U.S. Federal Reserve; (2) Bureau of Labor Statistics; (3) Fact Set Research; (4) Wall Street Journal 2 AIM MID CAP CORE EQUITY FUND Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have negatively affected all [CROCKETT investors. The new government promises to move quickly with PHOTO] a stimulus package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as Bruce Crockett they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollar-cost-averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high "has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from InvescoAim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to meat bruce@brucecrockett.com. Best regards, /S/ BRUCE L.CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 3 AIM MID CAP CORE EQUITY FUND MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE ======================================================================================= We consider selling a stock when: PERFORMANCE SUMMARY o It exceeds our target price. For the year ended December 31,2008, AIM Mid Cap Core Equity Fund Class A shares, at net asset value, delivered a return of-27.45% for shareholders, outpacing the broad o We have not seen a demonstrable market S&P 500 Index, which returned -36.99%, as well as the Fund's style-specific improvement in fundamentals. benchmark, the Russell Midcap Index, which returned -41.46%.(triangle) This was a very challenging year, but the Fund's comparative results were a source of strength during o A more compelling investments these turbulent times. All sectors were down for the period, but the Fund benefited opportunity exists. from the strategic acquisition of several holdings by other companies. Select holdings in financial services and commodity-related sectors were some of the hardest hit. MARKET CONDITIONS AND YOUR FUND Your Fund's long-term performance appears later in this report. The year ended December 31,2008, was a challenging time in the markets, but it is FUND VS. INDEXES worth noting that AIM Mid Cap Core Equity Fund at net asset value held up relatively Total returns, 12/31 /07 to 12/31 /08, at net asset value (NAV). Performance shown well compared to the broad market and our does not include applicable contingent deferred sales charges (CDSC) or front-end sales peers, fulfilling one of our goals--to be charges, which would have reduced performance. a source of strength during turbulent times. It can be difficult to maintain Class A Shares -27.45% perspective during times of crisis, but we Class B Shares -27.97 should rememberthat markets Class C Shares -27.98 have gone through similarly difficult Class R Shares -27.63 environments in the past, and historically Class Y Shares* -27.45 they have recovered. Today's challenges S&P 500 Index(triangle) (Broad Market Index) -36.99 are serious, but the government is taking Russell Midcap Index(triangle) (Style-Specific Index) -41.46 aggressive action. These challenges are Lipper Mid-Cap Core Funds Index(triangle) (Peer Group Index) -38.53 not insurmountable, and we do not believe this is the time to abandon your long-term (triangle) Lipper Inc. investment strategy. * Share class incepted during the fiscal year. See page 7 for a detailed explanation These days we are often asked, "How did of Fund performance. our economy get into this mess? "It is not ======================================================================================= a simple question to answer, but essentially there was an excessive amount HOW WE INVEST o Business analysis to determine of leverage in the system --too much debt competitive positioning and not enough assets to back it up. For We manage your Fund as a conservative many years, financial institutions took on cornerstone, seeking to provide attractive o Valuation analysis to identify too much risk in an effort to keep up with upside participation and stronger downside attractively valued companies one another, and banks stretched beyond protection in difficult markets. As part their traditional revenue sources to keep of a well-diversified asset allocation Financial analysis provides vital up with their competitors. This scenario strategy, the Fund can serve as a insight into historical and potential was part of our reasoning for moving out foundation to a portfolio and complement ROIC, a key indicator of business quality of financials several years ago, a more aggressive or cyclical investments. and the caliber of management. Business decision that helped the Fund avoid much analysis allows us to identify key drivers of the turmoil in financial services. We conduct fundamental research of of the company, understand industry Likewise, many consumers took on more and companies to gain a thorough understanding challenges and evaluate the sustainability more risk through home equity loans, of their business prospects, appreciation of competitive advantages. Both the credit cards and other forms of credit potential and return on invested capital financial and business analyses serve as a they were offered. As our research began (ROIC). The process we use to identify basis to construct valuation models that to uncover cracks in consumers' armor, we potential investments for the Fund help us estimate a company's value. We use includes three phases: three primary valuation techniques, including discounted cash flow, o Financial analysis to evaluate ROIC and traditional valuation multiples and net capital allocation asset value. ========================================== ========================================== ========================================== PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* Top 10 Equity Holdings* By sector 1. People's United Financial Inc. 3.8% Information Technology 17.5% 1. Industrial Machinery 5.9% 2. Symantec Corp. 2.9 Financials 14.7 2. Health Care Equipment 4.7 3. Henkel AG & Co. KGaA-Pfd. 2.7 Industrials 14.6 3. Specialty Chemicals 4.7 4. Cadbury PLC 2.6 Health Care 13.5 4. Life Sciences Tools & Services 4.7 5. Sigma-Aldrich Corp. 2.5 Consumer Staples 9.3 5. Property & Casualty Insurance 4.3 6. Progressive Corp. 2.3 Materials 6.6 ========================================== 7. International Flavors & Energy 5.0 Fragrances Inc. 2.2 Consumer Discretionary 2.4 ========================================== 8. Republic Services, Inc. 2.0 Utilities 1.3 Total Net Assets $1.3 billion 9. Axis Capital Holdings Ltd. 2.0 Money Market Funds 10. Moody's Corp. 1.9 Plus Other Assets Less Liabilities 15.1 Total Number of Holdings* 71 ========================================== ========================================== ========================================== The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings.
4 AIM MID CAP CORE EQUITY FUND moved into more attractive areas. While investors, including select holdings in RONALD SLOAN Chartered financial institutions and individual financial services, industrials and Financial Analyst, senior consumers are not exclusively behind the information technology (IT). The Fund's [SLOAN PHOTO] portfolio manager, is lead current crisis, they played a role, and cash position was down to 15.09% at year manager of AIM Mid Cap our economy is now going through the end. Core Equity Fund. Mr. painful process of "deleveraging." Sloan has been A primary detractor from returns was our in the investment industry since 1971. He While the year ended with negative investment in the asset management firm joined Invesco Aim in 1998. Mr. Sloan returns across all sectors of the LEGG MASON. The business had relatively attended the University of Missouri, where portfolio, acquisitions of several Fund high margins and returns, economies of he earned both a B.S. in business holdings benefited the Fund during scale and minimal capital intensity but administration and an M.B.A. the year, including Dow Chemical's (not a has been challenged by Fund holding) acquisition of ROHM AND HAAS weak investment flow sand recent poor DOUGLAS ASIELLO Chartered and the purchase of FOUNDRY NETWORKS by performance of some managers. The biggest Financial Analyst, Brocade Communications Systems (not a Fund anchor on Legg's share price performance [ASIELLO PHOTO] portfolio manager, is holding). was fear about subprime-related exposure manager of AIM Mid Cap in its money market division. We believe Core Equity Fund. Mr. In addition, on July 18,TEVA THAT LEGG HAS MADE INTELLIGENT MOVES TO ASIELLO JOINED INVESCO PHARMACEUTICALS announced its acquisition manage this exposure, which is sizable but Aim in 2001. He earned a B.A. in of BARR PHARMACEUTICALS for more than $7 manageable in our estimation. international relations, an M.B.A. from billion, making Barr the Fund's top Buttheseconcerns have helped to push the The Wharton School at the University of contributor for the year. We originally share price well below our calculation of Pennsylvania and an M.A. in international invested in early 2007 when Barr was the company's value, and we added to our management from The Joseph H. Lauder working through its acquisition of Pliva position throughout the year. Institute of Management and International (not a Fund holding) and predicted lower Studies. earnings. The market responded negatively, Maintaining a conservative approach is and Barr's stock price fell to an an enduring part of our investment BRIAN NELSON Chartered attractive valuation based on our strategy. We have capitalized on the Financial Analyst, long-term perspective. The Pliva market's volatility to make what we portfolio manager, is acquisition gave Barr a strong presence in believe to be judicious long-term [NELSON PHOTO] manager of AIM Mid Cap Europe and Russia and introduced investments in high-quality businesses Core Equity Fund. Mr. cross-selling opportunities in the U.S. We that are less dependent on external Nelson has been in the viewed Barr as high-margin business that sources of financing. Attheend of 2008, investment industry since 1988 and joined would work through short-term the Fund's largest sector weightings were Invesco Aim in 2004. He earned a B.A. from difficulties. They boasted a solid generic in IT and financial services, while the University of California-Santa drug platform with reasonable competitive exposure to consumer discretionary and Barbara. barriers, creating an attractive business utilities were minimal. profile. This perspective was affirmed Assisted by the Mid/Large Cap Core Team by Teva's acquisition. We continue to focus on what we believe are good companies with sound balance Just as important as where we invested sheets, reliable management teams and was what we avoided. In early 2008, we attractive valuations. This long-term took profits in many of our energy strategy supports our role as a holdings as oil and natural gas prices conservative cornerstone within your rallied due to fundamental factors and broader asset allocation strategy. speculative activity. We believed the prices of many energy companies had Thank you for your continued trust and reached unjustified levels, reducing their investment in AIM Mid Cap Core Equity attractiveness. As a result of our Fund. actions, the Fund was under weight in the energy sector versus our style-specific The views and opinions expressed in index -- a contrast to the notable management's discussion of Fund overweight position we had in energy for performance are those of Invesco Aim quite some time. It was a move that Advisors, Inc. These views and opinions are benefited shareholders as energy subject to change at anytime based on companies' share prices fell sharply factors such as market and economic beginning in the summer. conditions. These views and opinions may not be relied upon as investment advice or The Fund had 18.59% in cash at the recommendations, or as an offer for a beginning of 2008 because the number of particular security. The information is not attractive investments from a risk-reward a complete analysis of every aspect of any perspective had diminished. This provided market, country, industry, security or the protection for the portfolio over the Fund. Statements of fact are from sources course of the year and allowed us to take considered reliable, but Invesco Aim advantage of market turmoil to invest in Advisors, Inc. makes no representation or high-quality companies that we believed warranty as to their completeness or had been unduly punished by accuracy. Although historical performance is no guarantee of future results, these insights may help you understand our investment management philosophy. See important Fund and index disclosures later in this report.
5 AIM MID CAP CORE EQUITY FUND YOUR FUND'S LONG-TERM PERFORMANCE Past performance cannot guarantee This chart, which is a logarithmic comparable future results. chart, presents the fluctuations in the value of the Fund and its indexes. We The data shown in the chart include believe that a logarithmic chart is more reinvested distributions, applicable sales effective than other types of charts in charges and Fund expenses including illustrating changes in value during management fees. Index results include the early years shown in the chart. The reinvested dividends, but they do not vertical axis, the one that indicates the reflect sales charges. Performance of an dollar value of an investment, is index of funds reflects fund expenses and constructed with each segment representing management fees; performance of a market a percent change in the value of the index does not. Performance shown in the investment. In this chart, each segment chart and table(s) does not reflect represents a doubling, or 100% change, in deduction of taxes a shareholder would pay the value of the investment. In other on Fund distributions or sale of Fund words, the space between $5,000 and $ shares. 10,000 is the same size as the space between $10,000 and $20,000, and so on. continued from page 8 o The returns shown in management's based on those net asset values may discussion of Fund performance are differ from the net asset values and based on net asset values calculated returns reported in the Financial for shareholder transactions. Generally Highlights. accepted accounting principles require adjustments to be made to the net o Industry classifications used in this assets of the Fund at period end for report are generally according to the financial reporting purposes, and as Global Industry Classification such, the net asset values for Standard, which was developed by and is shareholder transactions and the the exclusive property and a service returns mark of MSCI Inc. and Standard& Poor's.
6 AIM MID CAP CORE EQUITY FUND
==================================================================================================================================== [MOUNTAIN CHART] RESULTS OF A $ 10,000 INVESTMENT -- OLDEST SHARE CLASS SINCE INCEPTION Index data from 5/31/87, Fund data from 6/9/87, AIM Mid Cap Core Equity Fund- Russell Class A S&P 500 Midcap Date Shares Index(1) Index - ---- ----------- --------- ------- 5/31/87 $10000 $10000 6/87 $ 9837 10505 10407 7/87 10149 11037 10852 8/87 10612 11449 11236 9/87 10357 11198 11021 10/87 7409 8787 8307 11/87 7172 8062 7845 12/87 8089 8676 8526 1/88 8250 9040 8922 2/88 8940 9460 9554 3/88 8817 9168 9567 4/88 9016 9269 9626 5/88 8741 9349 9603 6/88 9554 9777 10261 7/88 9318 9740 10055 8/88 8949 9410 9831 9/88 9204 9810 10166 10/88 8959 10083 10209 11/88 8685 9939 9964 12/88 8990 10113 10214 1/89 9647 10852 10825 2/89 9760 10583 10800 3/89 10263 10829 10977 4/89 11217 11391 11507 5/89 12120 11850 12025 6/89 11689 11783 11981 7/89 12664 12846 12816 8/89 13023 13097 13244 9/89 13311 13043 13123 10/89 13187 12741 12504 11/89 13331 13000 12675 12/89 13914 13311 12898 1/90 12538 12418 11863 2/90 13318 12578 12104 3/90 14282 12911 12398 4/90 14022 12589 11866 5/90 16016 13814 12941 6/90 16081 13721 12857 7/90 15453 13677 12475 8/90 13405 12443 11133 9/90 12158 11838 10308 10/90 11876 11788 9982 11/90 12581 12548 10944 12/90 12884 12898 11415 1/91 13513 13458 12188 2/91 14368 14419 13204 3/91 15094 14768 13752 4/91 14876 14803 13835 5/91 15397 15439 14491 6/91 14248 14733 13824 7/91 15126 15419 14501 (1) Lipper Inc. ====================================================================================================================================
==================================================================================================================================== [MOUNTAIN CHART] 8/91 15852 15783 14935 9/91 15332 15519 14848 10/91 15028 15727 15152 11/91 14064 15095 14526 12/91 15367 16818 16153 1/92 17184 16505 16457 2/92 17347 16719 16835 3/92 16336 16394 16405 4/92 15836 16875 16533 5/92 15977 16958 16640 6/92 15052 16705 16370 7/92 16182 17387 17054 8/92 15627 17032 16662 9/92 16116 17232 17007 10/92 17422 17292 17423 11/92 19706 17879 18301 12/92 20243 18098 18793 1/93 20409 18249 19168 2/93 19109 18498 19190 3/93 18909 18888 19814 4/93 17680 18431 19289 5/93 18921 18923 19902 6/93 18470 18978 20127 7/93 18707 18902 20224 8/93 19736 19618 21123 9/93 19665 19467 21204 10/93 20646 19870 21222 11/93 20729 19680 20730 12/93 21933 19918 21480 1/94 22214 20595 22073 2/94 22840 20036 21773 3/94 23057 19164 20845 4/94 23594 19410 20988 5/94 23811 19727 21017 6/94 23735 19244 20394 7/94 23569 19876 21094 8/94 25037 20689 22094 9/94 25243 20183 21555 10/94 25306 20636 21719 11/94 24974 19885 20761 12/94 25376 20180 21031 1/95 25549 20703 21463 2/95 26826 21509 22574 3/95 27830 22142 23220 4/95 28876 22794 23570 5/95 29563 23704 24344 6/95 31455 24253 25163 7/95 33176 25057 26384 8/95 33405 25120 26789 9/95 33605 26179 27394 10/95 32271 26086 26781 11/95 32975 27229 28113 12/95 31267 27754 28277 1/96 31364 28697 28873 2/96 32003 28964 29551 3/96 32333 29243 29979 4/96 34645 29674 30828 5/96 34742 30438 31294 6/96 33366 30554 30824 7/96 31201 29205 28916 8/96 32842 29822 30293 9/96 35137 31499 31789 10/96 35155 32367 32044 11/96 36631 34812 33996 12/96 36163 34122 33649 1/97 36756 36253 34908 2/97 33797 36537 34855 ====================================================================================================================================
==================================================================================================================================== [MOUNTAIN CHART] 3/97 30748 35039 33373 4/97 31409 37129 34204 5/97 34265 39399 36699 6/97 35467 41150 37900 7/97 38549 44424 41062 8/97 37801 41937 40616 9/97 41442 44232 42934 10/97 39424 42757 41264 11/97 39861 44734 42246 12/97 41252 45502 43410 1/98 39978 46005 42592 2/98 43807 49321 45922 3/98 46672 51845 48100 4/98 44750 52376 48221 5/98 42100 51477 46728 6/98 46184 53566 47375 7/98 43219 53000 45116 8/98 33694 45343 37899 9/98 34637 48250 40352 10/98 35991 52169 43104 11/98 37013 55329 45145 12/98 39312 58515 47792 1/99 39497 60961 47710 2/99 36886 59067 46123 3/99 39269 61430 47568 4/99 40824 63808 51082 5/99 41342 62303 50936 6/99 44699 65751 52732 7/99 43394 63707 51285 8/99 41962 63392 49956 9/99 41983 61656 48200 10/99 43184 65556 50484 11/99 48448 66889 51936 12/99 53908 70823 56506 1/00 52528 67265 54636 2/00 57718 65993 58835 3/00 61389 72445 62204 4/00 61161 70266 59261 5/00 60843 68826 57691 6/00 60290 70521 59397 7/00 59301 69419 58731 8/00 65130 73729 64360 9/00 64303 69837 63442 10/00 63268 69541 62463 11/00 59548 64062 56841 12/00 64038 64377 61167 1/01 65952 66659 62152 2/01 63637 60585 58369 3/01 60576 56749 54748 4/01 66380 61156 59430 5/01 67521 61566 60537 6/01 66698 60068 59967 7/01 66884 59477 58251 8/01 64356 55757 56011 9/01 56872 51255 49257 10/01 59078 52233 51207 11/01 61849 56238 55498 12/01 64360 56731 57727 1/02 64360 55904 57382 2/02 65062 54826 56773 3/02 67866 56888 60178 4/02 66977 53440 59011 5/02 67352 53048 58344 6/02 63115 49271 54433 7/02 57365 45431 49120 8/02 58742 45728 49389 9/02 53996 40764 44832 ====================================================================================================================================
==================================================================================================================================== [MOUNTAIN CHART] 10/02 56129 44347 47098 11/02 59715 46955 50368 12/02 57219 44198 48384 1/03 55840 43042 47405 2/03 54869 42396 46777 3/03 54627 42806 47239 4/03 58003 46330 50670 5/03 62945 48769 55308 6/03 63675 49392 55867 7/03 65515 50263 57708 8/03 67920 51242 60214 9/03 66297 50699 59460 10/03 69134 53566 63998 11/03 70295 54036 65794 12/03 72728 56868 67766 1/04 74131 57912 69735 2/04 75429 58717 71236 3/04 75210 57831 71251 4/04 75699 56924 68635 5/04 76615 57704 70338 6/04 78722 58826 72284 7/04 75455 56879 69123 8/04 75108 57107 69423 9/04 76512 57726 71676 10/04 77698 58607 73653 11/04 80915 60978 78141 12/04 82776 63052 81467 1/05 81095 61515 79450 2/05 83926 62809 81904 3/05 83229 61698 81260 4/05 80483 60529 78671 5/05 82792 62453 82440 6/05 84150 62542 84657 7/05 88055 64867 89120 8/05 88169 64276 88496 9/05 87384 64796 89670 10/05 84728 63715 86976 11/05 88024 66123 90835 12/05 88913 66146 91773 1/06 92994 67898 96489 2/06 92213 68081 96373 3/06 93338 68929 98761 4/06 94085 69854 99454 5/06 91253 67846 96107 6/06 90349 67936 96218 7/06 89139 68355 94112 8/06 90476 69978 96502 9/06 93027 71781 98249 10/06 95669 74118 102118 11/06 97688 75526 105792 12/06 98782 76585 105780 1/07 101133 77742 109355 2/07 101547 76226 109531 3/07 103182 77077 110410 4/07 107650 80490 114615 5/07 111020 83296 118938 6/07 108977 81913 116256 7/07 106361 79377 111928 8/07 104777 80564 112119 9/07 107574 83574 115807 10/07 111135 84904 117676 11/07 108334 81353 112056 12/07 108573 80789 111702 1/08 103057 75944 104424 2/08 103335 73479 102035 3/08 103015 73162 100558 4/08 106734 76724 107354 ====================================================================================================================================
==================================================================================================================================== [MOUNTAIN CHART] 5/08 109221 77717 112218 6/08 102744 71172 103247 7/08 106515 70573 100621 8/08 108166 71594 102480 9/08 100215 65222 89914 10/08 82066 54270 69817 11/08 77380 50374 62712 12/08 78814 50905 65390 ====================================================================================================================================
========================================== AVERAGE ANNUAL TOTAL RETURNS THE MOST RECENT MONTH-END PERFORMANCE. As of 12/31/08, including maximum PERFORMANCE FIGURES REFLECT REINVESTED applicable sales charges DISTRIBUTIONS, CHANGES IN NET ASSET VALUE AND THE EFFECT OF THE MAXIMUM SALES CHARGE CLASS A SHARES UNLESS OTHERWISE STATED. INVESTMENT RETURN Inception (6/9/87) 10.05% AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT 10 Years 6.60 YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL 5 Years 0.47 SHARES. 1 Year -31.46 CLASS B SHARES THE NET ANNUAL FUND OPERATING EXPENSE Inception (4/1/93) 9.16% RATIO SET FORTH IN THE MOST RECENT FUND 10 Years 6.61 PROSPECTUS AS OF THE DATE OF THIS REPORT 5 Years 0.65 FOR CLASS A, CLASS B, CLASS C, CLASS R AND 1 Year -31.35 CLASS Y SHARES WAS 1.22%, 1.97%, 1.97%, CLASS C SHARES 1.47% AND 0.97%, RESPECTIVELY.(1) THE Inception (5/3/99) 6.17% TOTAL ANNUAL FUND OPERATING EXPENSE RATIO 5 Years 0.86 SET FORTH IN THE MOST RECENT FUND 1 Year -28.65 PROSPECTUS AS OF THE DATE OF THIS REPORT CLASS R SHARES FOR CLASS A, CLASS B, CLASS C, CLASS R AND 10 Years 7.00% CLASS Y SHARES WAS 1.24%, 1.99%, 1.99%, 5 Years 1.36 1.49%, AND 0.99%, RESPECTIVELY. THE 1 Year -27.63 EXPENSE RATIOS PRESENTED ABOVE MAY VARY CLASS Y SHARES FROM THE EXPENSE RATIOS PRESENTED IN OTHER 10 Years 7.20% SECTIONS OF THIS REPORT THAT ARE BASED ON 5 Years 1.61 EXPENSES INCURRED DURING THE PERIOD 1 Year -27.45 COVERED BY THIS REPORT. ========================================== CLASS A SHARE PERFORMANCE REFLECTS THE CLASS R SHARES' INCEPTION DATE IS JUNE MAXIMUM 5.50% SALES CHARGE, AND CLASS B 3,2002. RETURNS SINCE THAT DATE ARE AND CLASS C SHARE PERFORMANCE REFLECTS THE HISTORICAL RETURNS. ALL OTHER RETURNS ARE APPLICABLE CONTINGENT DEFERRED SALES BLENDED RETURNS OF HISTORICAL CLASS R CHARGE (CDSC) FOR THE PERIOD INVOLVED. THE SHARE PERFORMANCE AND RESTATED CLASS A CDSC ON CLASS B SHARES DECLINES FROM 5% SHARE PERFORMANCE (FOR PERIODS PRIOR TO BEGINNING AT THE TIME OF PURCHASE TO 0% AT THE INCEPTION DATE OF CLASS R SHARES) AT THE BEGINNING OF THE SEVENTH YEAR. THE NET ASSET VALUE, ADJUSTED TO REFLECT THE CDSC ON CLASS C SHARES IS 1 % FOR THE HIGHER RULE 12B-1 FEES APPLICABLE TO CLASS FIRST YEAR AFTER PURCHASE. CLASS R SHARES R SHARES. CLASS A SHARES' INCEPTION DATE IS DO NOT HAVE A FRONT-END SALES CHARGE; JUNE 9,1987. RETURNS SHOWN ARE AT NET ASSET VALUE AND DO NOT REFLECT A 0.75% CDSC THAT MAY BE CLASS Y SHARES' INCEPTION DATE IS IMPOSED ON A TOTAL REDEMPTION OF OCTOBER 3,2008; RETURNS SINCE THAT DATE RETIREMENT PLAN ASSETS WITHIN THE FIRST ARE ACTUAL RETURNS. ALL OTHER RETURNS ARE YEAR. CLASS Y SHARES DO NOT HAVE A BLENDED RETURNS OF ACTUAL CLASS Y SHARE FRONT-END SALES CHARGE OR A CDSC; PERFORMANCE AND RESTATED CLASS A SHARE THEREFORE, PERFORMANCE IS AT NET ASSET PERFORMANCE (FOR PERIODS PRIOR TO THE VALUE. INCEPTION DATE OF CLASS Y SHARES) AT NET ASSET VALUE. THE RESTATED CLASS A SHARE THE PERFORMANCE OF THE FUND'S SHARE PERFORMANCE REFLECTS THE RULE 12B-1 FEES CLASSES WILL DIFFER PRIMARILY DUE TO APPLICABLE TO CLASS A SHARES AS WELL AS DIFFERENT SALES CHARGE STRUCTURES AND ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS CLASS EXPENSES. RECEIVED BY CLASS A SHARES. CLASS A SHARES INCEPTION DATE IS JUNE 9, 1987. (1) Total annual operating expenses less any contractual fee waivers and/or THE PERFORMANCE DATA QUOTED REPRESENT expense reimbursements by the advisor PAST PERFORMANCE AND CANNOT GUARANTEE COM in effect through at least June PARABLE FUTURE RESULTS; CURRENT 30,2009. See current prospectus for PERFORMANCE MAY BE LOWER OR HIGHER. PLEASE more information. VISIT INVESCOAIM.COM FOR
7 AIM MID CAP CORE EQUITY FUND AIM MID CAP CORE EQUITY FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of December 31,2008, and is based on total net assets. o Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES o Interest rate risk refers to the ABOUT INDEXES USED IN THIS REPORT risk that bond prices generally fall as o Effective September 30,2003, only interest rates rise and vice versa. o The S&P 500--registered trademark-- previously established qualified plans Index is a market are eligible to purchase Class B shares o The Fund may use enhanced invest- capitalization-weighted index covering of any AIM fund. ment techniques such as leveraging and all major areas of the U.S. economy. It derivatives. Leveraging entails risks is not the 500 largest companies, but o Class R shares are available only to such as magnifying changes in the value rather the most widely held 500 certain retirement plans. Please see of the portfolio's securities. companies chosen with respect to market the prospectus for more information. Derivatives are subject to counterparty size, liquidity, and their industry. risk--the risk that the other party o Class Y shares are available to only will not complete the transaction with o The RUSSELL MIDCAP--REGISTERED certain investors. Please seethe the Fund. TRADEMARK- Index measures the prospectus for more information. performance of the 800 smallest o There is no guarantee that the invest- companies in the Russell PRINCIPAL RISKS OF INVESTING IN THE FUND ment techniques and riskanalysis used by 1000--REGISTERED TRADEMARK-- Index, the Fund's portfolio managers will which represent approximately 30% of o To the extent the Fund holds cash or produce the desired results. the total market capitalization of the cash equivalents rather than equity Russell 1000 Index. The Russell Midcap securities for risk management o Small-and mid-cap companies tend to be Index and the Russell 1000 Index are purposes, the Fund may not achieve its more vulnerable to adverse develop trademarks/service marks of the Frank investment objective. ments and more volatile than larger Russell Company. Russell--registered companies. Investments in these sized trademark- is a trademark of the Frank o The values of convertible securities in companies may involve special risks, Russell Company. which the Fund invests may be affected including those associated with by market interest rates, the risk that dependence on a small management group, o The LIPPER MID-CAP CORE FUNDS INDEX is the issuer may default on interest or little or no operating history, little an equally weighted representation of principal payments, and the value of or no track record of success, limited the largest funds in the Lipper Mid-Cap the underlying common stock into which product lines, less publicly available Core Funds category. These funds have these securities may be converted. information, illiquidity, restricted an average price-to-earnings ratio, resale or less frequent trading. price-to-book ratio, and three-year o Credit risk is the risk of losson an sales-per-share growth value, compared investment due to the deterioration of o The prices of securities held by the to the S&P MidCap 400 Index. an issuer's financial health. Such a Fund may decline in response to market deterioration of financial health may risks. o The Fund is not managed to track the result in a reduction of the credit performance of any particular index, rating of the issuer's securities and o The Fund may invest in obligations including the indexes defined here, and may lead to the issuer's inability to issued by agencies and instrumentali- consequently, the performance of the honor its contractual obligations, ties of the U.S. government that may Fund may deviate significantly from the including making timely payment of vary in the level of support they performance of the indexes. interest and principal. receive from the U.S. government. The U.S. government may choose not to o A direct investment cannot be made in o Prices of equity securities change in provide financial support to an index. Unless otherwise indicated, response to many factors, including the U.S.-government- sponsored agencies or index results include reinvested historical and prospective earnings of instrumentalities if it is not legally dividends, and they do not reflect the issuer, the value of its assets, obligated to do so. In this case, if sales charges. Performance of an index general economic conditions, interest the issuer defaulted, the underlying of funds reflects fund expenses; rates, investor perceptions and market fund holding securities of such an performance of a market index does liquidity. issuer might not be able to recover its not. investment from the U.S. government. o Foreign securities have additional OTHER INFORMATION risks, including exchange rate changes, political and economic upheaval, o The Chartered Financial Analyst relative lack of information, -REGISTERED TRADEMARK- (CFA--REGISTERED relatively low market liquidity, and TRADEMARK--) designation is a globally the potential lack of strict financial recognized standard for measuring the and accounting controls and standards. competence and integrity of investment professionals. continued on page 6 ======================================================================================= ========================================== THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, FUND NASDAQ SYMBOLS WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. Class A Shares GTAGX INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class B Shares GTABX ======================================================================================= Class C Shares GTACX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares GTARX Class Y Shares GTAYX ==========================================
8 AIM MID CAP CORE EQUITY FUND SCHEDULE OF INVESTMENTS(a) December 31, 2008
SHARES VALUE - --------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-82.19% AEROSPACE & DEFENSE-2.11% Goodrich Corp. 354,402 $ 13,119,962 - --------------------------------------------------------------------------------- Precision Castparts Corp. 245,802 14,620,303 ================================================================================= 27,740,265 ================================================================================= APPAREL, ACCESSORIES & LUXURY GOODS-0.88% Polo Ralph Lauren Corp.(b) 254,144 11,540,679 ================================================================================= APPLICATION SOFTWARE-2.13% Adobe Systems Inc.(c) 344,563 7,335,746 - --------------------------------------------------------------------------------- Amdocs Ltd.(c) 1,127,988 20,630,901 ================================================================================= 27,966,647 ================================================================================= ASSET MANAGEMENT & CUSTODY BANKS-1.35% Legg Mason, Inc.(b) 808,901 17,723,021 ================================================================================= COMMUNICATIONS EQUIPMENT-1.54% Motorola, Inc. 2,826,484 12,521,324 - --------------------------------------------------------------------------------- Polycom, Inc.(c) 569,281 7,690,986 ================================================================================= 20,212,310 ================================================================================= COMPUTER STORAGE & PERIPHERALS-1.95% NetApp, Inc.(c) 913,396 12,760,142 - --------------------------------------------------------------------------------- QLogic Corp.(c) 957,290 12,865,978 ================================================================================= 25,626,120 ================================================================================= CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-0.29% Joy Global Inc. 164,200 3,758,538 ================================================================================= DATA PROCESSING & OUTSOURCED SERVICES-1.25% Alliance Data Systems Corp.(b)(c) 351,829 16,370,603 ================================================================================= DISTRIBUTORS-1.45% Genuine Parts Co. 502,083 19,008,862 ================================================================================= ELECTRICAL COMPONENTS & EQUIPMENT-1.53% Rockwell Automation, Inc. 622,053 20,054,989 ================================================================================= ELECTRONIC MANUFACTURING SERVICES-2.23% Molex Inc.(b) 1,313,377 19,030,833 - --------------------------------------------------------------------------------- Tyco Electronics Ltd. 633,399 10,267,398 ================================================================================= 29,298,231 ================================================================================= ENVIRONMENTAL & FACILITIES SERVICES-2.02% Republic Services, Inc.(b) 1,069,576 26,514,789 ================================================================================= FOOD RETAIL-1.10% SUPERVALU, Inc. 989,175 14,441,955 ================================================================================= GAS UTILITIES-1.35% UGI Corp. 726,728 17,746,698 ================================================================================= HEALTH CARE EQUIPMENT-4.74% Hospira, Inc.(c) 576,581 15,463,902 - --------------------------------------------------------------------------------- Teleflex Inc. 315,800 15,821,580 - --------------------------------------------------------------------------------- Varian Medical Systems, Inc. 273,023 9,566,726 - --------------------------------------------------------------------------------- Zimmer Holdings, Inc.(c) 529,131 21,387,475 ================================================================================= 62,239,683 ================================================================================= HEALTH CARE SERVICES-1.60% Quest Diagnostics Inc. 403,174 20,928,762 ================================================================================= HEALTH CARE TECHNOLOGY-0.95% IMS Health Inc. 821,035 12,446,891 ================================================================================= HOUSEHOLD PRODUCTS-1.32% Energizer Holdings, Inc.(b)(c) 319,834 17,315,813 ================================================================================= INDUSTRIAL CONGLOMERATES-1.65% Tyco International Ltd. 1,001,300 21,628,080 ================================================================================= INDUSTRIAL GASES-0.78% Air Products and Chemicals, Inc. 202,242 10,166,705 ================================================================================= INDUSTRIAL MACHINERY-5.94% Atlas Copco A.B.-Class A (Sweden) 1,316,577 11,448,857 - --------------------------------------------------------------------------------- Danaher Corp. 181,900 10,297,359 - --------------------------------------------------------------------------------- Graco Inc.(b) 380,618 9,032,065 - --------------------------------------------------------------------------------- ITT Corp. 339,926 15,633,197 - --------------------------------------------------------------------------------- Pall Corp. 506,583 14,402,154 - --------------------------------------------------------------------------------- Parker Hannifin Corp. 403,618 17,169,910 ================================================================================= 77,983,542 ================================================================================= INSURANCE BROKERS-1.07% Marsh & McLennan Cos., Inc. 579,413 14,062,354 ================================================================================= LIFE SCIENCES TOOLS & SERVICES-4.65% PerkinElmer, Inc. 909,279 12,648,071 - --------------------------------------------------------------------------------- Pharmaceutical Product Development, Inc. 489,032 14,186,818 - --------------------------------------------------------------------------------- Techne Corp. 169,081 10,909,106 - --------------------------------------------------------------------------------- Thermo Fisher Scientific, Inc.(c) 410,554 13,987,575 - --------------------------------------------------------------------------------- Waters Corp.(c) 254,558 9,329,551 ================================================================================= 61,061,121 ================================================================================= METAL & GLASS CONTAINERS-1.15% Pactiv Corp.(c) 605,802 15,072,354 ================================================================================= MULTI-SECTOR HOLDINGS-0.12% PICO Holdings, Inc.(c) 59,030 1,569,017 ================================================================================= OFFICE ELECTRONICS-1.24% Xerox Corp. 2,041,535 16,271,034 =================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM MID CAP CORE EQUITY FUND
SHARES VALUE - --------------------------------------------------------------------------------- OFFICE SERVICES & SUPPLIES-1.02% Pitney Bowes Inc. 524,573 $ 13,366,120 ================================================================================= OIL & GAS EQUIPMENT & SERVICES-1.42% BJ Services Co. 1,600,467 18,677,450 ================================================================================= OIL & GAS EXPLORATION & PRODUCTION-3.06% Chesapeake Energy Corp.(b) 368,012 5,950,754 - --------------------------------------------------------------------------------- Newfield Exploration Co.(c) 544,438 10,752,651 - --------------------------------------------------------------------------------- Penn West Energy Trust (Canada) 1,302,109 14,479,452 - --------------------------------------------------------------------------------- Pioneer Natural Resources Co. 253,300 4,098,394 - --------------------------------------------------------------------------------- Whiting Petroleum Corp.(c) 145,116 4,855,581 ================================================================================= 40,136,832 ================================================================================= OIL & GAS STORAGE & TRANSPORTATION-0.51% Williams Cos., Inc. (The) 462,500 6,697,000 ================================================================================= PACKAGED FOODS & MEATS-3.25% Cadbury PLC (United Kingdom) 3,890,324 34,557,147 - --------------------------------------------------------------------------------- Del Monte Foods Co. 1,129,968 8,067,972 ================================================================================= 42,625,119 ================================================================================= PERSONAL PRODUCTS-0.96% Avon Products, Inc. 523,662 12,583,598 ================================================================================= PHARMACEUTICALS-1.53% Allergan, Inc. 254,552 10,263,537 - --------------------------------------------------------------------------------- Teva Pharmaceutical Industries Ltd.-ADR (Israel) 231,902 9,872,049 ================================================================================= 20,135,586 ================================================================================= PROPERTY & CASUALTY INSURANCE-4.27% Axis Capital Holdings Ltd. 871,896 25,389,611 - --------------------------------------------------------------------------------- Progressive Corp. (The)(c) 2,066,796 30,609,249 ================================================================================= 55,998,860 ================================================================================= REGIONAL BANKS-2.15% BB&T Corp.(b) 491,129 13,486,402 - --------------------------------------------------------------------------------- PNC Financial Services Group, Inc.(b) 299,356 14,668,444 ================================================================================= 28,154,846 ================================================================================= SEMICONDUCTORS-3.15% Linear Technology Corp.(b) 1,050,245 23,231,420 - --------------------------------------------------------------------------------- Microchip Technology Inc.(b) 378,300 7,388,199 - --------------------------------------------------------------------------------- Xilinx, Inc. 600,455 10,700,108 ================================================================================= 41,319,727 ================================================================================= SPECIALIZED CONSUMER SERVICES-0.07% Hillenbrand, Inc.(b) 57,090 952,261 ================================================================================= SPECIALIZED FINANCE-1.91% Moody's Corp.(b) 1,243,941 24,990,775 ================================================================================= SPECIALTY CHEMICALS-4.70% International Flavors & Fragrances Inc. 960,772 28,554,144 - --------------------------------------------------------------------------------- Sigma-Aldrich Corp.(b) 783,127 33,079,284 ================================================================================= 61,633,428 ================================================================================= SYSTEMS SOFTWARE-3.99% McAfee Inc.(c) 431,771 14,926,323 - --------------------------------------------------------------------------------- Symantec Corp.(c) 2,769,984 37,450,184 ================================================================================= 52,376,507 ================================================================================= THRIFTS & MORTGAGE FINANCE-3.81% People's United Financial Inc. 2,800,929 49,940,564 ================================================================================= Total Common Stocks & Other Equity Interests (Cost $1,362,926,793) 1,078,337,736 ================================================================================= PREFERRED STOCKS-2.72% HOUSEHOLD PRODUCTS-2.72% Henkel AG & Co. KGaA (Germany)-Pfd. (Cost $43,693,429) 1,108,673 35,718,086 ================================================================================= MONEY MARKET FUNDS-14.91% Liquid Assets Portfolio-Institutional Class(d) 97,805,145 97,805,145 - --------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(d) 97,805,145 97,805,145 ================================================================================= Total Money Market Funds (Cost $195,610,290) 195,610,290 ================================================================================= TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-99.82% (Cost $1,602,230,512) 1,309,666,112 ================================================================================= INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-7.01% Liquid Assets Portfolio-Institutional Class (Cost $91,945,160)(d)(e) 91,945,160 91,945,160 ================================================================================= TOTAL INVESTMENTS-106.83% (Cost $1,694,175,672) 1,401,611,272 ================================================================================= OTHER ASSETS LESS LIABILITIES-(6.83)% (89,563,076) ================================================================================= NET ASSETS-100.00% $1,312,048,196 _________________________________________________________________________________ =================================================================================
Investment Abbreviations: ADR - American Depositary Receipt 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 December 31, 2008. (c) Non-income producing security. (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. 10 AIM MID CAP CORE EQUITY FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments, at value (Cost $1,406,620,222)* $1,114,055,822 - ------------------------------------------------------- Investments in affiliated money market funds, at value and cost 287,555,450 ======================================================= Total investments (Cost $1,694,175,672) 1,401,611,272 ======================================================= Foreign currencies, at value (Cost $54) 52 - ------------------------------------------------------- Receivables for: Fund shares sold 9,681,374 - ------------------------------------------------------- Dividends 2,782,962 - ------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 37,451 - ------------------------------------------------------- Other assets 39,011 ======================================================= Total assets 1,414,152,122 _______________________________________________________ ======================================================= LIABILITIES: Payables for: Investments purchased 194,357 - ------------------------------------------------------- Fund shares reacquired 7,554,928 - ------------------------------------------------------- Foreign currency contracts outstanding 864,467 - ------------------------------------------------------- Collateral upon return of securities loaned 91,945,160 - ------------------------------------------------------- Accrued fees to affiliates 1,130,146 - ------------------------------------------------------- Accrued other operating expenses 170,535 - ------------------------------------------------------- Trustee deferred compensation and retirement plans 244,333 ======================================================= Total liabilities 102,103,926 ======================================================= Net assets applicable to shares outstanding $1,312,048,196 _______________________________________________________ ======================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $1,617,702,512 - ------------------------------------------------------- Undistributed net investment income 1,731,546 - ------------------------------------------------------- Undistributed net realized gain (loss) (13,956,993) - ------------------------------------------------------- Unrealized appreciation (depreciation) (293,428,869) ======================================================= $1,312,048,196 _______________________________________________________ ======================================================= NET ASSETS: Class A $ 879,531,227 _______________________________________________________ ======================================================= Class B $ 197,598,531 _______________________________________________________ ======================================================= Class C $ 115,734,974 _______________________________________________________ ======================================================= Class R $ 49,456,274 _______________________________________________________ ======================================================= Class Y $ 2,348,663 _______________________________________________________ ======================================================= Institutional Class $ 67,378,527 _______________________________________________________ ======================================================= SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 54,606,642 _______________________________________________________ ======================================================= Class B 14,949,208 _______________________________________________________ ======================================================= Class C 8,775,132 _______________________________________________________ ======================================================= Class R 3,099,066 _______________________________________________________ ======================================================= Class Y 145,842 _______________________________________________________ ======================================================= Institutional Class 4,040,837 _______________________________________________________ ======================================================= Class A: Net asset value per share $ 16.11 - ------------------------------------------------------- Maximum offering price per share (Net asset value of $16.11 divided by 94.50%) $ 17.05 _______________________________________________________ ======================================================= Class B: Net asset value and offering price per share $ 13.22 _______________________________________________________ ======================================================= Class C: Net asset value and offering price per share $ 13.19 _______________________________________________________ ======================================================= Class R: Net asset value and offering price per share $ 15.96 _______________________________________________________ ======================================================= Class Y: Net asset value and offering price per share $ 16.10 _______________________________________________________ ======================================================= Institutional Class: Net asset value and offering price per share $ 16.67 _______________________________________________________ =======================================================
* At December 31, 2008, securities with an aggregate value of $92,185,520 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 11 AIM MID CAP CORE EQUITY FUND STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Dividends (net of foreign withholding taxes of $804,697) $ 24,395,685 - ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $1,084,766) 9,835,502 ================================================================================================ Total investment income 34,231,187 ================================================================================================ EXPENSES: Advisory fees 11,626,388 - ------------------------------------------------------------------------------------------------ Administrative services fees 409,905 - ------------------------------------------------------------------------------------------------ Custodian fees 83,110 - ------------------------------------------------------------------------------------------------ Distribution fees: Class A 2,723,132 - ------------------------------------------------------------------------------------------------ Class B 3,039,960 - ------------------------------------------------------------------------------------------------ Class C 1,518,866 - ------------------------------------------------------------------------------------------------ Class R 312,480 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C, R and Y 4,079,479 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 65,278 - ------------------------------------------------------------------------------------------------ Trustees' and officers' fees and benefits 64,244 - ------------------------------------------------------------------------------------------------ Other 811,913 ================================================================================================ Total expenses 24,734,755 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (483,311) ================================================================================================ Net expenses 24,251,444 ================================================================================================ Net investment income 9,979,743 ================================================================================================ REALIZED AND UNREALIZED GAIN (LOSS) FROM: Net realized gain from: Investment securities (includes net gains from securities sold to affiliates of $568,689) 28,973,629 - ------------------------------------------------------------------------------------------------ Foreign currencies 97,865 - ------------------------------------------------------------------------------------------------ Foreign currency contracts 8,985,845 ================================================================================================ 38,057,339 ================================================================================================ Change in net unrealized appreciation (depreciation) of: Investment securities (556,654,016) - ------------------------------------------------------------------------------------------------ Foreign currencies (15,918) - ------------------------------------------------------------------------------------------------ Foreign currency contracts (864,467) ================================================================================================ (557,534,401) ================================================================================================ Net realized and unrealized gain (loss) (519,477,062) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(509,497,319) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM MID CAP CORE EQUITY FUND STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 - ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income $ 9,979,743 $ 17,031,757 - ----------------------------------------------------------------------------------------------------------- Net realized gain 38,057,339 327,285,489 - ----------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (557,534,401) (128,749,023) =========================================================================================================== Net increase (decrease) in net assets resulting from operations (509,497,319) 215,568,223 =========================================================================================================== Distributions to shareholders from net investment income: Class A (8,928,126) (16,275,716) - ----------------------------------------------------------------------------------------------------------- Class B (560,500) (2,444,969) - ----------------------------------------------------------------------------------------------------------- Class C (321,473) (1,130,405) - ----------------------------------------------------------------------------------------------------------- Class R (353,960) (718,689) - ----------------------------------------------------------------------------------------------------------- Class Y (23,660) -- - ----------------------------------------------------------------------------------------------------------- Institutional Class (937,859) (1,068,419) =========================================================================================================== Total distributions from net investment income (11,125,578) (21,638,198) =========================================================================================================== Distributions to shareholders from net realized gains: Class A (41,466,896) (213,526,286) - ----------------------------------------------------------------------------------------------------------- Class B (11,714,333) (77,277,032) - ----------------------------------------------------------------------------------------------------------- Class C (6,717,400) (35,725,927) - ----------------------------------------------------------------------------------------------------------- Class R (2,386,017) (11,722,473) - ----------------------------------------------------------------------------------------------------------- Class Y (103,425) -- - ----------------------------------------------------------------------------------------------------------- Institutional Class (2,906,794) (10,571,933) =========================================================================================================== Total distributions from net realized gains (65,294,865) (348,823,651) =========================================================================================================== Share transactions-net: Class A (21,402,821) (187,700,557) - ----------------------------------------------------------------------------------------------------------- Class B (95,424,066) (59,508,754) - ----------------------------------------------------------------------------------------------------------- Class C (12,165,695) (18,808,145) - ----------------------------------------------------------------------------------------------------------- Class R 223,939 4,315,028 - ----------------------------------------------------------------------------------------------------------- Class Y 2,872,013 -- - ----------------------------------------------------------------------------------------------------------- Institutional Class 27,463,965 (2,718,185) =========================================================================================================== Net increase (decrease) in net assets resulting from share transactions (98,432,665) (264,420,613) =========================================================================================================== Net increase (decrease) in net assets (684,350,427) (419,314,239) =========================================================================================================== NET ASSETS: Beginning of year 1,996,398,623 2,415,712,862 =========================================================================================================== End of year (includes undistributed net investment income of $1,731,546 and $2,665,234, respectively) $1,312,048,196 $1,996,398,623 ___________________________________________________________________________________________________________ ===========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM MID CAP CORE EQUITY FUND NOTES TO FINANCIAL STATEMENTS December 31, 2008 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 assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The Fund's investment objective is long-term growth of capital. The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Institutional Class. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y and Institutional Class shares are sold at net asset value. Under certain circumstances, Class R shares are subject to a CDSC. Generally, Class B shares will automatically convert to Class A shares on or about the month-end which is at least eight years after the date of purchase. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME -- Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income is recorded on the ex-dividend date. 14 AIM MID CAP CORE 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 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. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. J. FOREIGN CURRENCY TRANSLATIONS -- Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or 15 AIM MID CAP CORE EQUITY FUND 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. 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, effective May 1, 2008, between the Advisor and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the "Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Advisor(s). The Advisor has contractually agreed, through at least June 30, 2009, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Advisor receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. For the year ended December 31, 2008, the Advisor waived advisory fees of $423,240. At the request of the Trustees of the Trust, Invesco agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $6,449. The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the course of providing such services. IAIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IAIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A, Class B, Class C and Class R shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays IADI compensation at the annual rate of 0.25% of the Fund's average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority ("FINRA") impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2008, IADI advised the Fund that IADI retained $111,796 in front-end sales commissions from the sale 16 AIM MID CAP CORE EQUITY FUND of Class A shares and $11,224, $139,497, $8,429 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. Level 3 -- Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund's own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. Below is a summary of the tiered valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN OTHER INPUT LEVEL SECURITIES INVESTMENTS* - --------------------------------------------------------------- Level 1 $1,319,887,182 $(864,467) - --------------------------------------------------------------- Level 2 81,724,090 -- - --------------------------------------------------------------- Level 3 -- -- =============================================================== $1,401,611,272 $(864,467) _______________________________________________________________ ===============================================================
* Other investments include foreign currency contracts, which are included at unrealized appreciation/(depreciation). 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 year ended December 31, 2008, the Fund engaged in securities purchases of $709,402 and securities sales of $2,247,153, which resulted in net realized gains of $568,689. 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 year ended December 31, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $53,622. NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended December 31, 2008, the Fund paid legal fees of $7,712 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. 17 AIM MID CAP CORE EQUITY 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, 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--FOREIGN CURRENCY CONTRACTS AT PERIOD-END
OPEN FOREIGN CURRENCY CONTRACTS - ------------------------------------------------------------------------------------------------------------------- CONTRACT TO UNREALIZED SETTLEMENT ----------------------------------------- APPRECIATION DATE DELIVER RECEIVE VALUE (DEPRECIATION) - ------------------------------------------------------------------------------------------------------------------- 3/04/09 GBP 10,820,000 USD 16,167,176 $15,762,881 $ 404,294 - ------------------------------------------------------------------------------------------------------------------- 3/10/09 EUR 12,300,000 USD 15,872,043 17,140,804 (1,268,761) =================================================================================================================== Total open foreign currency contracts $ (864,467) ===================================================================================================================
Currency Abbreviations: EUR - Euro GBP - British Pound Sterling USD - U.S. Dollar
NOTE 9--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 - -------------------------------------------------------------------------------------------------------- Ordinary income $24,021,879 $ 28,130,779 - -------------------------------------------------------------------------------------------------------- Long-term capital gain 52,398,564 342,331,070 ======================================================================================================== Total distributions $76,420,443 $370,461,849 ________________________________________________________________________________________________________ ========================================================================================================
TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
2008 - ------------------------------------------------------------------------------------------------- Undistributed ordinary income $ 2,038,916 - ------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) -- investments (299,055,757) - ------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) -- other investments (2) - ------------------------------------------------------------------------------------------------- Temporary book/tax differences (261,380) - ------------------------------------------------------------------------------------------------- Post-October loss deferrals (8,376,093) - ------------------------------------------------------------------------------------------------- Shares of beneficial interest 1,617,702,512 ================================================================================================= Total net assets $1,312,048,196 _________________________________________________________________________________________________ =================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's net unrealized appreciation (depreciation) difference is attributable primarily to wash sales and the realization for tax purposes of gains/(losses) on certain foreign currency contracts. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. The Fund does not have a capital loss carryforward at period-end. NOTE 10--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2008 was $835,074,536 and $825,746,367, 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 $ 45,375,964 - ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (344,431,721) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(299,055,757) ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $1,700,667,029.
18 AIM MID CAP CORE EQUITY FUND NOTE 11--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of proxy costs, foreign currency transactions and distributions, on December 31, 2008, undistributed net investment income was increased by $212,147, undistributed net realized gain was decreased by $10,347,843 and shares of beneficial interest increased by $10,135,696. This reclassification had no effect on the net assets of the Fund. NOTE 12--SHARE INFORMATION
SUMMARY OF SHARE ACTIVITY - -------------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, ----------------------------- 2008(a) 2007 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Sold: Class A 14,208,613 $ 283,577,132 6,241,450 $ 173,257,488 - -------------------------------------------------------------------------------------------------------------------------- Class B 1,051,452 18,200,693 535,435 12,686,772 - -------------------------------------------------------------------------------------------------------------------------- Class C 1,913,785 32,502,457 563,606 13,325,886 - -------------------------------------------------------------------------------------------------------------------------- Class R 1,026,966 20,914,067 788,477 21,570,907 - -------------------------------------------------------------------------------------------------------------------------- Class Y(b) 143,594 2,848,921 -- -- - -------------------------------------------------------------------------------------------------------------------------- Institutional Class 1,837,004 40,091,580 1,288,870 37,175,632 ========================================================================================================================== Issued as reinvestment of dividends: Class A 3,131,743 48,509,915 9,450,420 221,707,505 - -------------------------------------------------------------------------------------------------------------------------- Class B 932,941 11,860,287 3,899,443 75,883,852 - -------------------------------------------------------------------------------------------------------------------------- Class C 531,303 6,742,423 1,806,333 35,078,987 - -------------------------------------------------------------------------------------------------------------------------- Class R 178,240 2,735,974 534,950 12,431,951 - -------------------------------------------------------------------------------------------------------------------------- Class Y(b) 8,017 124,099 -- -- - -------------------------------------------------------------------------------------------------------------------------- Institutional Class 235,204 3,770,322 479,817 11,640,352 ========================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 1,806,010 38,743,173 1,122,892 31,000,501 - -------------------------------------------------------------------------------------------------------------------------- Class B (2,290,580) (38,743,173) (1,316,265) (31,000,501) ========================================================================================================================== Reacquired: Class A(b) (18,754,306) (392,233,041) (22,287,869) (613,666,051) - -------------------------------------------------------------------------------------------------------------------------- Class B (4,898,948) (86,741,873) (4,955,405) (117,078,877) - -------------------------------------------------------------------------------------------------------------------------- Class C (3,000,199) (51,410,575) (2,857,879) (67,213,018) - -------------------------------------------------------------------------------------------------------------------------- Class R (1,137,264) (23,426,102) (1,086,424) (29,687,830) - -------------------------------------------------------------------------------------------------------------------------- Class Y(b) (5,769) (101,007) -- -- - -------------------------------------------------------------------------------------------------------------------------- Institutional Class (780,522) (16,397,937) (1,815,982) (51,534,169) ========================================================================================================================== Net increase (decrease) in share activity (3,862,716) $ (98,432,665) (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. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A shares into Class Y shares of the Fund:
CLASS SHARES AMOUNT ---------------------------------------------------------------------------------------------------- Class Y 123,854 $ 2,531,583 ---------------------------------------------------------------------------------------------------- Class A (123,854) (2,531,583) ____________________________________________________________________________________________________ ====================================================================================================
19 AIM MID CAP CORE EQUITY FUND NOTE 13--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
NET GAINS (LOSSES) NET ASSET NET ON SECURITIES DIVIDENDS DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT INVESTMENT REALIZED TOTAL VALUE, END OF PERIOD (LOSS) UNREALIZED) OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD - --------------------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $23.63 $ 0.17(c) $(6.69) $(6.52) $(0.18) $(0.82) $(1.00) $16.11 Year ended 12/31/07 26.08 0.32 2.23 2.55 (0.36) (4.64) (5.00) 23.63 Year ended 12/31/06 28.57 0.25 2.97 3.22 (0.22) (5.49) (5.71) 26.08 Year ended 12/31/05 28.64 0.06(c) 2.08 2.14 -- (2.21) (2.21) 28.57 Year ended 12/31/04 26.92 (0.01)(c) 3.71 3.70 -- (1.98) (1.98) 28.64 - --------------------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 19.59 0.01(c) (5.52) (5.51) (0.04) (0.82) (0.86) 13.22 Year ended 12/31/07 22.39 0.08 1.91 1.99 (0.15) (4.64) (4.79) 19.59 Year ended 12/31/06 25.23 (0.02) 2.67 2.65 -- (5.49) (5.49) 22.39 Year ended 12/31/05 25.73 (0.14)(c) 1.85 1.71 -- (2.21) (2.21) 25.23 Year ended 12/31/04 24.54 (0.19)(c) 3.36 3.17 -- (1.98) (1.98) 25.73 - --------------------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 19.55 0.01(c) (5.51) (5.50) (0.04) (0.82) (0.86) 13.19 Year ended 12/31/07 22.35 0.08 1.91 1.99 (0.15) (4.64) (4.79) 19.55 Year ended 12/31/06 25.20 (0.02) 2.66 2.64 -- (5.49) (5.49) 22.35 Year ended 12/31/05 25.70 (0.14)(c) 1.85 1.71 -- (2.21) (2.21) 25.20 Year ended 12/31/04 24.51 (0.19)(c) 3.36 3.17 -- (1.98) (1.98) 25.70 - --------------------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 23.40 0.11(c) (6.61) (6.50) (0.12) (0.82) (0.94) 15.96 Year ended 12/31/07 25.88 0.22 2.23 2.45 (0.29) (4.64) (4.93) 23.40 Year ended 12/31/06 28.38 0.14 2.98 3.12 (0.13) (5.49) (5.62) 25.88 Year ended 12/31/05 28.54 (0.01)(c) 2.06 2.05 -- (2.21) (2.21) 28.38 Year ended 12/31/04 26.89 (0.07)(c) 3.70 3.63 -- (1.98) (1.98) 28.54 - --------------------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(e) 20.44 0.04(c) (3.37) (3.33) (0.19) (0.82) (1.01) 16.10 - --------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 24.44 0.26(c) (6.95) (6.69) (0.26) (0.82) (1.08) 16.67 Year ended 12/31/07 26.82 0.43 2.30 2.73 (0.47) (4.64) (5.11) 24.44 Year ended 12/31/06 29.26 0.38 3.06 3.44 (0.40) (5.48) (5.88) 26.82 Year ended 12/31/05 29.15 0.20(c) 2.12 2.32 -- (2.21) (2.21) 29.26 Year ended 12/31/04 27.23 0.14(c) 3.76 3.90 -- (1.98) (1.98) 29.15 _________________________________________________________________________________________________________________________________ ================================================================================================================================= RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) TOTAL END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO RETURN(a) (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b) - ------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 (27.45)% $ 879,531 1.25%(d) 1.28%(d) 0.79%(d) 60% Year ended 12/31/07 9.90 1,280,918 1.21 1.22 0.97 49 Year ended 12/31/06 11.11 1,556,658 1.28 1.28 0.65 51 Year ended 12/31/05 7.43 2,186,823 1.27 1.32 0.23 61 Year ended 12/31/04 13.82 2,552,041 1.30 1.40 (0.02) 56 - ------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 (27.97) 197,599 2.00(d) 2.03(d) 0.04(d) 60 Year ended 12/31/07 9.03 394,916 1.96 1.97 0.22 49 Year ended 12/31/06 10.32 492,311 2.03 2.03 (0.10) 51 Year ended 12/31/05 6.59 609,073 2.02 2.02 (0.52) 61 Year ended 12/31/04 13.00 702,361 2.04 2.05 (0.76) 56 - ------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 (27.98) 115,735 2.00(d) 2.03(d) 0.04(d) 60 Year ended 12/31/07 9.05 182,444 1.96 1.97 0.22 49 Year ended 12/31/06 10.29 219,435 2.03 2.03 (0.10) 51 Year ended 12/31/05 6.60 286,025 2.02 2.02 (0.52) 61 Year ended 12/31/04 13.01 324,873 2.04 2.05 (0.76) 56 - ------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 (27.63) 49,456 1.50(d) 1.53(d) 0.54(d) 60 Year ended 12/31/07 9.59 70,940 1.46 1.47 0.71 49 Year ended 12/31/06 10.83 72,308 1.53 1.53 0.40 51 Year ended 12/31/05 7.14 85,631 1.52 1.52 (0.02) 61 Year ended 12/31/04 13.57 61,303 1.54 1.55 (0.26) 56 - ------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(e) (16.12) 2,349 1.06(d)(f) 1.09(d)(f) 0.98(d)(f) 60 - ------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 (27.19) 67,379 0.85(d) 0.88(d) 1.19(d) 60 Year ended 12/31/07 10.33 67,180 0.82 0.83 1.35 49 Year ended 12/31/06 11.62 75,000 0.82 0.82 1.10 51 Year ended 12/31/05 7.92 88,077 0.82 0.82 0.68 61 Year ended 12/31/04 14.40 51,579 0.80 0.81 0.48 56 ___________________________________________________________________________________________________________________ ===================================================================================================================
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges, if applicable. (b) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (c) Calculated using average shares outstanding. (d) Ratios are based on average daily net assets (000's omitted) of $1,089,253, $303,996, $151,887, $62,496, $2,105 and $65,159 for Class A, Class B, Class C, Class R, Class Y and Institutional Class shares, respectively. (e) Commencement date of October 3, 2008 (f) Annualized. NOTE 14--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. 20 AIM MID CAP CORE EQUITY FUND NOTE 14--LEGAL PROCEEDINGS--(CONTINUED) 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 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 21 AIM MID CAP CORE EQUITY FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM Mid Cap Core Equity Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Mid Cap Core Equity Fund (one of the funds constituting AIM Growth Series, hereafter referred to as the "Fund") at December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 22 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period (as of close of business October 3, 2008 through October 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $766.70 $5.73 $1,018.65 $ 6.55 1.29% - --------------------------------------------------------------------------------------------------- B 1,000.00 763.50 9.04 1,014.88 10.33 2.04 - --------------------------------------------------------------------------------------------------- C 1,000.00 763.50 9.04 1,014.88 10.33 2.04 - --------------------------------------------------------------------------------------------------- R 1,000.00 765.60 6.83 1,017.39 7.81 1.54 - --------------------------------------------------------------------------------------------------- Y 1,000.00 838.80 2.40 1,019.81 5.38 1.06 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 23 AIM MID CAP CORE EQUITY FUND 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 July 1, 2008, through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
- ----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $768.00 $3.82 $1,020.81 $4.37 0.86% - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM MID CAP CORE EQUITY FUND Supplement to Annual Report dated 12/31/08 AIM MID CAP CORE EQUITY 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. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (3/15/02) 2.79% 5 Years 2.05 1 Year -27.19
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.83%.(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. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. - ---------- 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. NASDAQ SYMBOL GTAVX 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-1 Invesco Aim Distributors, Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008:
FEDERAL AND STATE INCOME TAX ---------------------------- Long-Term Capital Gain Dividends $62,668,564 Qualified Dividend Income* 80.71% Corporate Dividends Received Deduction* 66.85%
* The above percentages are based on ordinary income dividends paid to shareholders during the Fund's fiscal year. NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 were 26.66%, 26.00%, 25.96%, and 22.20%, respectively. 24 AIM MID CAP CORE EQUITY FUND TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 25 AIM MID CAP CORE EQUITY FUND TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
26 AIM MID CAP CORE EQUITY FUND [GO PAPERLESS GRAPHIC] ==================================================================================================================================== GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: o ENVIRONMENTALLY FRIENDLY. Gogreen by reducing the number of o EFFICIENT. Stop waiting for regular mail. Your documents will trees used to produce paper. be sent via email as soon as they're available. o ECONOMICAL. Helph reduce your fund's printing and delivery o EASY. Download, save and print files using your home computer expenses and put more capital back in your fund's returns. with a few clicks of your mouse. - This service is provided by Invesco Aim Investment Services, Inc. ==================================================================================================================================== FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim.com. On the home page, scroll down and clickon Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30,2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20,2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributer for the STIC Global Funds represented by Invesco AIM. All entities are [INVESCO LOGO indirect, wholly owned subsidiaries of Invesco Ltd. LOGO] -SERVICE MARK- It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1,2009. Additional information will be posted at invescoaim.com on or about Aug. 1,2009. invescoaim.com MCCE-AR-1 Invesco Aim Distributors, Inc.
[INVESCO AIM LOGO] AIM SMALL CAP GROWTH FUND - - SERVICE MARK - Annual Report to Shareholders o December 31, 2008 [MOUNTAIN GRAPHIC] 2 Letters to Shareholders 4 Performance Summary 4 Management Discussion 6 Long-Term Fund Performance 8 Supplemental Information 9 Schedule of Investments 12 Financial Statements 15 Notes to Financial Statements 21 Financial Highlights 23 Auditor's Report 24 Fund Expenses 25 Tax Information 26 Trustees and Officers
Dear Shareholder: In previous reports, I've talked with you about short-term market volatility. I'd like to take this [TAYLOR opportunity to update you on market developments during calendar year 2008 and provide you with PHOTO] some perspective and encouragement. MARKET OVERVIEW At the start of 2008, we saw warning signs of increasing economic ills -- a weakening housing Philip Taylor market, rising inflation and slowing job growth, among others. In response, the U.S. Federal Reserve Board (the Fed) cut short-term interest rate targets throughout 2008 in an effort to stimulate economic growth. The Fed reduced its short-term interest rate target from 4.25% to a range of zero to 0.25% during the year.(1) In the spring of 2008, more serious factors came to the forefront -- driving unemployment sharply higher(2) and causing major stock market indexes to hit multi-year lows in the U.S. and overseas.(3) For example, the S&P 500 Index, considered representative of the U.S. stock market, had its worst one-year performance since 1937.(4) During the second half of 2008, the Fed, the U.S. Department of the Treasury and other federal agencies took unprecedented action to rescue the troubled financials sector and domestic automobile industry, stabilize the stock market and inject liquidity into the credit markets. HOW WE GOT HERE The cause of this correction was years of lax lending associated with the recent housing boom. Mortgage loans of questionable quality were bundled into hard-to-value securities that were bought by, and traded among, financial institutions. As the value of those securities declined, financial institutions sought to unload them -- but there were few buyers. With the value of their assets falling and access to credit tightening, a number of well-established financial firms faced severe difficulties, and investor uncertainty and market volatility spiked. In October 2008, the administration and Congress enacted a plan, the Troubled Assets Relief Program, authorizing the U.S. Department of the Treasury to purchase up to $700 billion in troubled mortgage-related assets -- the largest and most direct effort to resolve a credit crisis in the last half century. The Fed, in concert with other central banks, cut short-term interest rate targets and undertook other initiatives intended to restore investor confidence, expand lending and mitigate the effects of the global credit crisis. Following his election, President Barack Obama again pledged to act boldly to stimulate the U.S. economy. As we enter 2009, the volatility in the stock, fixed-income and credit markets we saw last year emphasized the importance of three timeless investing principles. INVESTING IN VOLATILE MARKETS Through up markets and down, we believe history shows investors should: o INVEST FOR THE LONG TERM. Short-term fluctuations have always been a reality of the markets. We urge you to stick to your investment plan and stay focused on your long-term goals. o DIVERSIFY. Although diversification doesn't eliminate the risk of loss or guarantee a profit, a careful selection of complementary asset classes may cushion your portfolio against excessive volatility. o STAY FULLY INVESTED. Trying to time the market is a gamble, not an investment strategy. A sound investment strategy includes viewing market volatility as a matter of course, not a reason to panic. A trusted financial advisor can explain more fully the potential value of following these principles. An experienced advisor who knows your individual investment goals, financial situation and risk tolerance can be your most valuable asset during times of market volatility. Your advisor can provide guidance and can monitor your investments to ensure they're on course. It's also helpful to remember that many of history's significant buying opportunities resulted from short-term economic crises that, in their time, were considered unprecedented. We believe current market uncertainty may represent a buying opportunity for patient, long-term investors. Rest assured that Invesco Aim's portfolio managers are working diligently on your behalf to attempt to capitalize on this situation. MANAGING MONEY IS OUR FOCUS I believe Invesco Aim is uniquely positioned to navigate current difficult markets. Our parent company, Invesco Ltd., is one of the world's largest and most diversified global investment managers. Invesco provides clients with diversified investment strategies from distinct management teams around the globe and a range of investment products. Invesco's single focus is asset management -- which means we focus on doing one thing well: managing your money. That can be reassuring in uncertain times. While market conditions change often, our commitment to putting shareholders first, helping clients achieve their investment goals and providing excellent customer service remains constant. If you have questions about this report or your account, please contact one of our client service representatives at 800 959 4246. Thank you for your continued confidence, and all of us at Invesco Aim look forward to serving you. Sincerely, /s/ PHILIP TAYLOR Philip Taylor Senior Managing Director, Invesco Ltd. CEO, Invesco Aim (1) U.S. Federal Reserve; (2) Bureau of Labor Statistics; (3) FactSet Research; (4) Wall Street Journal
2 AIM SMALL CAP GROWTH FUND Dear Fellow Shareholders: Since my last letter, continuing troubles in the global economy and financial markets have [CROCKETT negatively affected all investors. The new government promises to move quickly with a stimulus PHOTO] package, yet considerable anxiety remains about how, when and what kind of a recovery will occur. While no one likes to see investment values decline as sharply as they have recently, as mutual fund investors we can find some consolation in the knowledge that our fund investments are more transparent, more comprehensively governed and more closely regulated than most other kinds of Bruce Crockett investments. In addition, mutual funds generally are more diversified than other investments; as shareholders we invest not in a single security but in a portfolio of multiple securities. The benefits of diversification have been reiterated by the stories of investors who "lost everything" because they had too many of their assets in one place, whether that place was a single money manager or their employer's stock. Mutual fund investors also have the opportunity to diversify further among different types of funds that each deploy a different strategy and focus on different kinds of securities. These include conservatively managed money market funds, which, relative to other securities, continue to offer a more safe, liquid, and convenient way to invest short-term assets. In addition to diversification, investing discipline is essential during challenging times such as these. Strategies such as dollarcost- averaging, where individuals invest a consistent amount at regular intervals, can help investors acquire more fund shares when prices are low. Periodic rebalancing of asset allocation plans achieves the same effect. "Buy low, sell high" has long been the mantra of investment success, but the advice is not always easy to follow because it requires the discipline to resist prevailing trends. Of course, investment strategies, such as dollar-cost-averaging and portfolio rebalancing do not guarantee a profit or eliminate the risk of loss. Investors should consider their ability to continue investing regardless of fluctuating security prices. A long-term view is also important, particularly for assets that are not needed right away. In the past, it has often proven better to keep long-term assets invested through a downturn than to miss the beginning of the upward trend. To develop a diversified and disciplined investing plan that is right for your individual goals, I encourage you to consult an experienced and trustworthy investment professional who has the knowledge and the tools to help you establish and implement the plan, monitor its results and adapt it to changing goals and circumstances. Even when working with a personal financial advisor, investors should supplement the relationship with their own knowledge and awareness of the investments they hold. Visit the Invesco Aim website at invescoaim.com regularly to find out what is happening in your AIM funds and to read timely market commentary from Invesco Aim management, strategists and portfolio managers. The site's "Education and Planning" section can also help you clarify basic investment concepts, learn how to choose a financial advisor, evaluate different investment choices and make more informed investment decisions. Invesco Aim's redesigned public home page recently received a Gold Award for its user-friendly navigation and graphics from The Mutual Funds Monitor Awards, sponsored by Corporate Insight. As always, your Board of Trustees and Invesco Aim are committed to putting your interests first by controlling costs, monitoring investment performance and streamlining the investment management process during these difficult times. Your Board has already begun the annual review and management contract renewal process with the continuing goal of making AIM funds one of the best and most cost-effective ways for you to invest your hard-earned money. While the investing climate may remain uncertain for a while, economies and markets are dynamic, and no stage is ever permanent. Please feel free to contact me in writing with your questions or concerns. You can send an email to me at bruce@brucecrockett.com.
Best regards, /s/ BRUCE L. CROCKETT Bruce L. Crockett Independent Chair AIM Funds Board of Trustees 3 AIM SMALL CAP GROWTH FUND MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE ======================================================================================= class. We seek to manage risk by keeping PERFORMANCE SUMMARY the Fund's sector weightings in line with the benchmark by staying fully diversified For the fiscal year ended December 31, 2008, AIM Small Cap Growth Fund had negative in all those sectors. returns and, at net asset value (NAV), performed in line with its style-specific index, the Russell 2000 Growth Index(triangle), as outperformance in some sectors was offset We consider selling a stock when it no by underperformance in other sectors. longer meets our investment criteria, based on: Class A shares at NAV narrowly underperformed the broad market, as measured by the S&P 500 Index.(triangle) o Our original investment thesis is not valid because the fundamentals are no Your Fund's long-term performance appears later in this report. longer intact. FUND VS. INDEXES o The price target set at purchase is exceeded. Total returns, 12/31/07 to 12/31/08, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales o The company's timeliness profile charges, which would have reduced performance. deteriorates. Class A Shares -38.77% MARKET CONDITIONS AND YOUR FUND Class B Shares -39.22 Class C Shares -39.21 Many factors contributed to sharp Class R Shares -38.91 negative performance of most major Class Y Shares* -38.73 market indexes for the fiscal year ended Investor Class Shares -38.75 December 31, 2008.1 The chief catalyst S&P 500 Index(triangle) (Broad Market Index) -36.99 was the ongoing subprime loan crisis and Russell 2000 Growth Index(triangle) (Style-Specific Index) -38.54 its far-reaching effects on overall credit Lipper Small-Cap Growth Funds Index(triangle) (Peer Group Index) -42.62 availability. Additionally, record high crude oil prices,2 falling home values and (triangle)Lipper Inc. the weak U.S. dollar placed significant pressure on the purchasing power of * Share class incepted during the fiscal year. See page 7 for a detailed explanation consumers. Later in the fiscal year, of Fund performance. consumer confidence fell and market volatility increased dramatically due to ======================================================================================= growing fears of a global recession. HOW WE INVEST 1. Fundamental analysis. Building financial models and conducting To facilitate the orderly functioning We believe a growth investment strategy is in-depth interviews with company of the credit markets and possibly prevent an essential component of a diversified management. a more severe economic downturn, in early portfolio. October Congress enacted a $700 billion 2. Valuation analysis. Identifying rescue plan -- the Troubled Assets Relief Our investment process seeks to attractively valued stocks given their Program. In addition, the U.S. Federal identify attractively valued small-cap growth potential over a one- to Reserve, in concert with other central companies with high growth potential, two-year horizon. banks, dramatically lowered short-term demonstrated by consistent and interest rates. accelerating revenue and earnings growth. 3. Timeliness analysis. Identifying the "timeliness" of a stock purchase. We In this environment, the Fund had We begin with a quantitative model that review trading volume characteristics double-digit negative returns and at NAV ranks companies based on a set of growth, and trend analysis to make sure there performed in line with the Russell 2000 quality and timeliness factors. This are no signs of stock deterioration. Growth Index1, as outperformance in the proprietary model provides an objective This also serves as a risk management consumer discretionary, consumer staples approach to identifying new investment measure that helps us confirm our high and information technology (IT) sectors opportunities, as the highest ranked conviction candidates. was generally offset by underperformance stocks become the primary focus of our in the health care, industrials, research efforts. Portfolio construction plays an financials and energy sectors. important role in risk management. We Our stock selection process is based on align the Fund with the Russell 2000 a rigorous three-step process that Growth Index, the benchmark we believe includes fundamental, valuation and represents the small-cap-growth asset timeliness analysis. ========================================== ========================================== ========================================== PORTFOLIO COMPOSITION TOP FIVE INDUSTRIES* TOP 10 EQUITY HOLDINGS* By sector Information Technology 24.0% 1. Biotechnology 6.8% 1. Tetra Tech, Inc. 1.9% Health Care 22.6 2. Health Care Equipment 5.8 2. Myriad Genetics, Inc. 1.8 Industrials 16.9 3. Application Software 5.1 3. Quality Systems, Inc. 1.7 Consumer Discretionary 12.9 4. Semiconductors 4.1 4. Greenhill & Co., Inc. 1.6 Financials 7.7 5. Oil & Gas Exploration & Production 4.0 5. Strayer Education, Inc. 1.5 Energy 6.5 ========================================== 6. DeVry, Inc. 1.5 Consumer Staples 2.7 7. Ralcorp Holdings, Inc. 1.4 Materials 2.2 ========================================== 8. TransDigm Group, Inc. 1.4 Utilities 1.1 Total Net Assets $983.5 million 9. Cogent Inc. 1.4 Telecommunication Services 0.7 10. Marvel Equipment, Inc. 1.4 Money Market Funds Total Number of Holdings* 116 ========================================== Plus Other Assets Less Liabilities 2.7 ========================================== ========================================== The Fund's holdings are subject to change, and there is no assurance that the Fund will continue to hold any particular security. * Excluding money market fund holdings.
4 AIM SMALL CAP GROWTH FUND The Fund outperformed the Russell 2000 GENERAL CABLE, a global supplier of JULIET ELLIS Growth Index by the widest margin in the aluminum, copper and fiber optic wire and Chartered Financial consumer discretionary sector, driven by cable. [ELLIS Analyst, senior portfolio stock selection and an under-weight PHOTO] manager, is lead manager of position. The Fund's underweight position The financials sector experienced AIM Small Cap Growth Fund. was beneficial during the year as many significant volatility during the fiscal Ms. Ellis joined Invesco Aim consumer discretionary stocks had weak year, as the credit crisis intensified and in 2004. She previously served as senior performance due to significant reductions a liquidity crunch emerged. portfolio manager of two small-cap funds in consumer spending. The Fund also Underperformance in this sector was driven for another company and was responsible benefited from strong stock selection. Two largely by stock selection and an for the management of more than $2 billion holdings that held up well in this underweight position in the real estate in assets. Ms. Ellis began her investment difficult environment were teen retailer industry, and stock selection in the bank career in 1981 as a financial consultant. HOT TOPIC and adult education provider group. One of the leading detractors from She is a cum laude and Phi Beta Kappa DEVRY. These two holdings were among the overall Fund performance was SVB FINANCIAL graduate of Indiana University with a B.A. Fund's leading contributors to performance GROUP, the holding company for Silicon in economics and political science. during the fiscal year. Valley Bank. JUAN HARTSFIELD The Fund also outperformed the Russell Lastly, the Fund underperformed the Chartered Financial 2000 Growth Index in the consumer staples Russell 2000 Growth Index in the energy [HARTSFIELD Analyst, portfolio manager, sector, due to both stock selection and an sector. After reaching highs earlier in PHOTO] is manager of AIM Small Cap overweight position. While the consumer the fiscal year, the price of oil fell Growth Fund. Prior to joining staples sector had negative returns, its sharply due to weakening demand caused by Invesco Aim in 2004, he began more defensive nature made it a refuge in the global economic slowdown, negatively his investment career in 2000 as an equity the volatile market environment, and it affecting many companies in the energy analyst and most recently served as a held up better than all other sectors in sector. As a result, two of the leading portfolio manager. Mr. Hartsfield earned a the index. Within this sector, one of the detractors from Fund performance were B.S. in petroleum engineering from The leading contributors to Fund performance energy holdings -- CARRIZO OIL & GAS and University of Texas at Austin and his was LONG'S DRUG STORES. We sold our ION GEOPHYSICAL. M.B.A. from the University of Michigan. position in Long's Drug Stores after the company agreed to be acquired at a During the year, the most significant CLAY MANLEY significant premium by a key competitor. positioning changes included additions in Chartered Financial the health care and consumer [MANLEY Analyst, portfolio manager, A third area of strength for the Fund discretionary sectors. These purchases PHOTO] is manager of AIM Small Cap was the IT sector. Outperformance versus were funded by reducing exposure to the Growth Fund. Mr. Manley the Russell 2000 Growth Index was driven IT, energy and materials sectors. All joined Invesco in 2001. He primarily by stock selection in the changes to the Fund were based on our graduated cum laude with a B.A. in history technology hardware and equipment industry bottom-up stock selection process of and geology from Vanderbilt University and group. Within this industry group, identifying high-quality growth companies earned an M.B.A. with concentrations in fiber-optic IP network provider COGENT was trading at what we believe are attractive finance and accounting from Goizueta among the leading contributors to overall valuations. Business School at Emory University. Fund performance. In addition, information management software maker QUALITY SYSTEMS We thank you for your commitment to AIM Assisted by the Small Cap Core/Growth Team made a key contribution to Fund Small Cap Growth Fund. performance during the fiscal year. 1 Lipper Inc. The Fund underperformed the Russell 2000 Growth Index by the widest margin in 2 Bloomberg L.P. the health care sector, driven largely by stock selection and an underweight The views and opinions expressed in position in the pharmaceutical, management's discussion of Fund biotechnology and life sciences performance are those of Invesco Aim industries. Examples of holdings that Advisors, Inc. These views and opinions detracted from performance included are subject to change at any time based on BIOMARIN PHARMACEUTICAL and VARIAN. The factors such as market and economic Fund also lost some ground to the index conditions. These views and opinions may because it did not own several of the more not be relied upon as investment advice or speculative companies in this industry recommendations, or as an offer for a that performed well late in the reporting particular security. The information is period. not a complete analysis of every aspect of any market, country, industry, security or Underperformance in the industrials the Fund. Statements of fact are from sector was due to stock selection. Many sources considered reliable, but Invesco holdings in the industrials sector were Aim Advisors, Inc. makes no representation hurt by concerns that the slowdown in the or warranty as to their completeness or U.S. economy would lead to a global accuracy. Although historical performance recession. As an example, one of the is no guarantee of future results, these leading detractors from overall Fund insights may help you understand our performance was capital goods holding investment management philosophy. See important Fund and index diseport.
5 AIM SMALL CAP GROWTH FUND YOUR FUND'S LONG-TERM PERFORMANCE Past performance cannot guarantee Performance of an index of funds shown in the chart. The vertical axis, the comparable future results. reflects fund expenses and management one that indicates the dollar value of an fees; performance of a market index does investment, is constructed with each The data shown in the chart include not. Performance shown in the chart and segment representing a percent change in reinvested distributions, applicable sales table(s) does not reflect deduction of the value of the investment. In this charges and Fund expenses including taxes a shareholder would pay on Fund chart, each segment represents a doubling, management fees. Results for Class B distributions or sale of Fund shares. or 100% change, in the value of the shares are calculated as if a hypothetical investment. In other words, the space shareholder had liquidated his entire This chart, which is a logarithmic between $5,000 and $10,000 is the same investment in the Fund at the close of the chart, presents the fluctuations in the size as the space between $10,000 and reporting period and paid the applicable value of the Fund and its indexes. We $20,000, and so on. contingent deferred sales charges. Index believe that a logarithmic chart is more results include reinvested dividends, but effective than other types of charts in they do not reflect sales charges. illustrating changes in value during the early years continued from page 8 OTHER INFORMATION o The Chartered Financial Analyst accepted accounting principles require o Industry clasifications used in this --REGISTERED TRADEMARK-- adjustments to be made to the net assets report are generally according to the (CFA--REGISTERED TRADEMARK--) of the Fund at period end for financial Global Industry Classification designation is a globally recognized reporting purposes, and as such, the net Standard, which was developed by and is standard for measuring the competence asset values for shareholder transactions the exclusive property and a service and integrity of investment and the returns based on those net asset mark of MSCI Inc. and Standard & professionals. values may differ from the net asset Poor's. values and returns reported in the o The returns shown in managements's Financial Highlights. discussion of Fund performance are based on net asset values calculated for shareholder transactions. Generally
6 AIM SMALL CAP GROWTH FUND ================================================================================================== [MOUNTAIN CHART] RESULTS OF A $10,000 INVESTMENT -- OLDEST SHARE CLASSES SINCE INCEPTION Fund data from 10/18/95, index data from 10/31/95 AIM Small Cap AIM Small Cap Lipper Growth Fund- Growth Fund- Russell 2000 Small-Cap Growth Date Class A Shares Class B Shares S&P 500 Index(1) Growth Index(1) Funds Index(1) ---- -------------- -------------- ---------------- --------------- ---------------- 10/18/95 $ 9450 $10000 10/95 9483 10035 $10000 $10000 $10000 11/95 9665 10219 10438 10441 10367 12/95 9756 10307 10640 10673 10624 1/96 9822 10367 11001 10584 10579 2/96 10376 10953 11104 11067 11092 3/96 10781 11373 11211 11286 11452 4/96 11790 12439 11376 12152 12615 5/96 12229 12886 11669 12775 13188 6/96 11517 12133 11713 11945 12451 7/96 10632 11198 11196 10487 11083 8/96 10790 11356 11432 11263 11868 9/96 11592 12196 12075 11843 12625 10/96 11211 11785 12408 11333 12089 11/96 11096 11654 13345 11648 12279 12/96 11104 11661 13081 11875 12435 1/97 11352 11914 13898 12171 12724 2/97 10377 10891 14007 11436 11805 3/97 9552 10009 13432 10629 10953 4/97 9446 9896 14233 10506 10790 5/97 10670 11172 15104 12086 12287 6/97 11256 11782 15775 12495 12945 7/97 12232 12797 17030 13136 13724 8/97 12499 13069 16077 13530 13942 9/97 13661 14272 16957 14609 15115 10/97 13057 13634 16391 13732 14342 11/97 12907 13465 17149 13404 14018 12/97 12908 13466 17443 13412 13831 1/98 13044 13590 17636 13233 13626 2/98 14175 14768 18907 14401 14728 3/98 15106 15726 19875 15006 15394 4/98 15423 16043 20078 15098 15506 5/98 14574 15152 19734 14001 14409 6/98 15288 15890 20535 14144 14831 7/98 14347 14894 20318 12963 13715 8/98 11227 11656 17382 9970 10719 9/98 12204 12642 18497 10981 11293 10/98 12439 12891 19999 11554 11738 11/98 13752 14232 21211 12450 12692 12/98 15900 16458 22432 13577 13965 1/99 16534 17101 23370 14188 14303 2/99 15553 16082 22643 12890 12926 3/99 16907 17476 23549 13349 13511 4/99 18166 18762 24461 14528 14038 5/99 18987 19593 23884 14551 14115 6/99 21023 21700 25206 15317 15436 7/99 21405 22075 24422 14844 15381 8/99 21647 22314 24301 14288 15166 9/99 21946 22610 23636 14564 15715 10/99 22890 23569 25131 14937 16632 11/99 25831 26576 25642 16516 18730 ==================================================================================================
(1) Lipper Inc. ================================================================================================== [MOUNTAIN CHART] 12/99 30307 31172 27150 19428 22507 1/00 30707 31564 25786 19247 22272 2/00 40322 41425 25299 23725 28798 3/00 38999 40054 27772 21231 26537 4/00 35263 36193 26937 19087 23257 5/00 31755 32563 26385 17416 21355 6/00 38668 39629 27034 19666 25116 7/00 34646 35487 26612 17980 23482 8/00 39697 40630 28264 19872 26008 9/00 38491 39370 26772 18884 24720 10/00 35373 36153 26659 17352 22865 11/00 28210 28825 24559 14201 18971 12/00 30086 30722 24679 15070 20649 1/01 31316 31954 25554 16290 21279 2/01 26544 27065 23226 14057 18554 3/01 23860 24310 21755 12779 16752 4/01 27160 27655 23444 14343 18561 5/01 27494 27987 23602 14676 19064 6/01 27788 28266 23027 15076 19545 7/01 26427 26862 22801 13790 18455 8/01 24669 25059 21375 12928 17363 9/01 21006 21318 19649 10842 14653 10/01 22701 23034 20024 11885 15726 11/01 24438 24782 21559 12878 16945 12/01 25943 26294 21748 13679 17972 1/02 25165 25489 21431 13193 17428 2/02 23416 23708 21018 12339 16373 3/02 25184 25479 21808 13411 17712 4/02 24637 24910 20486 13121 17245 5/02 23566 23827 20336 12354 16553 6/02 21756 21980 18888 11306 15323 7/02 18775 18951 17416 9569 13150 8/02 18796 18951 17530 9564 13131 9/02 17715 17856 15627 8873 12334 10/02 18523 18661 17001 9322 12861 11/02 20029 20163 18000 10246 13938 12/02 18675 18778 16943 9540 13007 1/03 18150 18252 16500 9281 12663 2/03 17675 17758 16253 9033 12269 3/03 17917 17994 16410 9170 12522 4/03 19221 19282 17761 10038 13557 5/03 21039 21097 18696 11169 14939 6/03 21656 21698 18935 11384 15445 7/03 22656 22696 19269 12245 16348 8/03 24070 24092 19644 12902 17215 9/03 23293 23287 19436 12576 16793 10/03 25163 25146 20535 13662 18316 11/03 25961 25930 20715 14108 18804 12/03 25981 25930 21801 14171 18831 1/04 26831 26768 22201 14915 19712 2/04 26721 26639 22509 14892 19637 3/04 26590 26487 22170 14962 19502 4/04 25396 25285 21822 14211 18549 5/04 26064 25940 22121 14493 18936 6/04 26903 26744 22551 14975 19476 7/04 24428 24275 21805 13631 17757 8/04 23651 23482 21892 13338 17182 9/04 24522 24341 22129 14075 18164 10/04 25230 25027 22467 14417 18673 11/04 26959 26714 23376 15636 19980 12/04 27757 27497 24171 16198 20862 1/05 26980 26702 23582 15468 20073 2/05 27738 27431 24078 15681 20469 3/05 27030 26713 23652 15092 19782 4/05 25827 25521 23204 14132 18676 5/05 27860 27507 23942 15128 19914 6/05 28275 27895 23976 15617 20610 ==================================================================================================
================================================================================================== [MOUNTAIN CHART] 7/05 29813 29398 24867 16709 21868 8/05 29500 29066 24640 16474 21490 9/05 29542 29086 24840 16604 21607 10/05 28520 28057 24425 15990 20875 11/05 30236 29743 25348 16896 21994 12/05 30070 29553 25357 16871 21976 1/06 32256 31692 26029 18498 23767 2/06 32247 31657 26099 18399 23674 3/06 33669 33038 26424 19294 24660 4/06 34073 33411 26779 19238 24743 5/06 32062 31413 26009 17884 23204 6/06 32008 31344 26043 17895 23011 7/06 30523 29871 26204 16965 21756 8/06 31243 30549 26826 17462 22194 9/06 31387 30677 27517 17580 22484 10/06 33157 32383 28413 18720 23499 11/06 34546 33714 28953 19168 24292 12/06 34377 33518 29359 19122 24317 1/07 35106 34215 29803 19478 24930 2/07 35425 34520 29222 19416 24882 3/07 35907 34951 29548 19596 25143 4/07 37002 36003 30856 20109 25869 5/07 39130 38041 31932 21027 27056 6/07 38719 37623 31402 20906 26986 7/07 37650 36558 30429 19821 26001 8/07 38049 36923 30885 20319 26348 9/07 39438 38253 32038 20909 27374 10/07 41106 39848 32548 21851 28561 11/07 38447 37238 31187 20342 26680 12/07 38289 37052 30971 20470 26670 1/08 35398 34239 29113 18592 24033 2/08 33788 32668 28169 17948 23069 3/08 33325 32191 28047 17844 22748 4/08 35464 34238 29412 18761 24050 5/08 37259 35954 29793 19823 25044 6/08 34129 32897 27284 18642 23315 7/08 34115 32868 27054 19075 23090 8/08 35384 34077 27446 19549 23529 9/08 31977 30779 25003 17339 20846 10/08 25217 24251 20804 13576 16411 11/08 22602 21714 19311 11933 14587 12/08 23409 23412 19515 12581 15304 ==================================================================================================
========================================== AVERAGE ANNUAL TOTAL RETURNS RETURNS ARE BLENDED RETURNS OF HISTORICAL INVESTOR CLASS SHARE PERFORMANCE AND As of 12/31/08, including maximum RESTATED CLASS A SHARE PERFORMANCE applicable sales charges (FOR PERIODS PRIOR TO THE INCEPTION DATE OF INVESTOR CLASS SHARES) AT NET ASSET CLASS A SHARES VALUE, WHICH RESTATED PERFORMANCE WILL Inception (10/18/95) 6.65% REFLECT THE RULE 12B-1 FEES APPLICABLE 10 Years 3.37 TO CLASS A SHARES FOR THE PERIOD USING 5 Years -3.15 BLENDED RETURNS. CLASS A SHARES' 1 Year -42.14 INCEPTION DATE IS OCTOBER 18, 1995. CLASS B SHARES THE PERFORMANCE DATA QUOTED REPRESENT Inception (10/18/95) 6.66% PAST PERFORMANCE AND CANNOT GUARANTEE 10 Years 3.34 COMPARABLE FUTURE RESULTS; CURRENT 5 Years -3.05 PERFORMANCE MAY BE LOWER OR HIGHER. 1 Year -42.08 PLEASE VISIT invescoaim.com FOR THE MOST RECENT MONTH-END PERFORMANCE. CLASS C SHARES PERFORMANCE FIGURES REFLECT REINVESTED Inception (5/3/99) 1.87% DISTRIBUTIONS, CHANGES IN NET ASSET 5 Years -2.78 VALUE AND THE EFFECT OF THE MAXIMUM 1 Year -39.78 SALES CHARGE UNLESS OTHERWISE STATED. CLASS R SHARES THE TOTAL ANNUAL FUND OPERATING 10 Years 3.73% EXPENSE RATIO SET FORTH IN THE MOST 5 Years -2.30 RECENT FUND PROSPECTUS AS OF THE DATE OF 1 Year -38.91 THIS REPORT FOR CLASS A, CLASS B, CLASS C, CLASS R, CLASS Y AND INVESTOR CLASS CLASS Y SHARES SHARES WAS 1.23%, 1.98%, 1.98%, 1.48%, 10 Years 3.96% 0.98% AND 1.23%, RESPECTIVELY. THE 5 Years -2.03 EXPENSE RATIOS PRESENTED ABOVE MAY VARY 1 Year -38.73 FROM THE EXPENSE RATIOS PRESENTED IN OTHER SECTIONS OF THIS REPORT THAT ARE INVESTOR CLASS SHARES BASED ON EXPENSES INCURRED DURING THE 10 Years 3.95% PERIOD COVERED BY THIS REPORT. 5 Years -2.05 1 Year -38.75 CLASS A SHARE PERFORMANCE REFLECTS ========================================== THE MAXIMUM 5.50% SALES CHARGE, AND CLASS B AND CLASS C SHARE PERFORMANCE CLASS R SHARES' INCEPTION DATE IS REFLECTS THE APPLICABLE CONTINGENT JUNE 3, 2002. RETURNS SINCE THAT DATE DEFERRED SALES CHARGE (CDSC) FOR THE ARE HISTORICAL RETURNS. ALL OTHER RETURNS PERIOD INVOLVED. THE CDSC ON CLASS B ARE BLENDED RETURNS OF HISTORICAL CLASS R SHARES DECLINES FROM 5% BEGINNING AT THE SHARE PERFORMANCE AND RESTATED CLASS TIME OF PURCHASE TO 0% AT THE BEGINNING A SHARE PERFORMANCE (FOR PERIODS PRIOR OF THE SEVENTH YEAR. THE CDSC ON CLASS C TO THE INCEPTION DATE OF CLASS R SHARES) SHARES IS 1% FOR THE FIRST YEAR AFTER AT NET ASSET VALUE, ADJUSTED TO REFLECT PURCHASE. CLASS R SHARES DO NOT HAVE A THE HIGHER RULE 12B-1 FEES APPLICABLE TO FRONT-END SALES CHARGE; RETURNS SHOWN CLASS R SHARES. CLASS A SHARES' INCEPTION ARE AT NET ASSET VALUE AND DO NOT DATE IS OCTOBER 18, 1995. REFLECT A 0.75% CDSC THAT MAY BE IMPOSED ON A TOTAL REDEMPTION OF RETIREMENT PLAN CLASS Y SHARES' INCEPTION DATE IS ASSETS WITHIN THE FIRST YEAR. CLASS Y OCTOBER 3, 2008; RETURNS SINCE THAT DATE SHARES AND INVESTOR CLASS SHARES DO NOT ARE ACTUAL RETURNS. ALL OTHER RETURNS HAVE A FRONT-END SALES CHARGE OR A CDSC; ARE BLENDED RETURNS OF ACTUAL CLASS Y THEREFORE, PERFORMANCE IS AT NET ASSET SHARE PERFORMANCE AND RESTATED CLASS A VALUE. SHARE PERFORMANCE (FOR PERIODS PRIOR TO THE INCEPTION DATE OF CLASS Y SHARES) AT THE PERFORMANCE OF THE FUND'S SHARE NET ASSET VALUE. THE RESTATED CLASS A CLASSES WILL DIFFER PRIMARILY DUE TO SHARE PERFORMANCE REFLECTS THE RULE DIFFERENT SALES CHARGE STRUCTURES AND 12B-1 FEES APPLICABLE TO CLASS A SHARES CLASS EXPENSES. AS WELL AS ANY FEE WAIVERS OR EXPENSE REIMBURSEMENTS RECEIVED BY CLASS A SHARES. CLASS A SHARES' INCEPTION DATE IS OCTOBER 18, 1995. INVESTOR CLASS SHARES' INCEPTION DATE IS APRIL 7, 2006. RETURNS SINCE THAT DATE ARE HISTORICAL RETURNS. ALL OTHER
7 AIM SMALL CAP GROWTH FUND AIM SMALL CAP GROWTH FUND'S INVESTMENT OBJECTIVE IS LONG-TERM GROWTH OF CAPITAL. o Unless otherwise stated, information presented in this report is as of December 31, 2008, and is based on total net assets. o Unless otherwise noted, all data provided by Invesco Aim. ABOUT SHARE CLASSES o Small- and mid-cap companies tend to o Although the Fund's return during be more vulnerable to adverse certain periods was positively o Effective September 30, 2003, only developments and more volatile than impacted by its investments in previously established qualified larger companies. Investments in initial public offerings (IPOs), plans are eligible to purchase Class these sized companies may involve there can be no assurance that the B shares of any AIM fund. special risks, including those Fund will have favorable IPO associated with dependence on a small investment opportunities in the o Class R shares are available only to management group, little or no future. certain retirement plans. Please see operating history, little or no track the prospectus for more information. record of success, limited product ABOUT INDEXES USED IN THIS REPORT lines, less publicly available o Class Y shares are available to only information, illiquidity, restricted o The S&P 500--REGISTERED TRADEMARK-- certain investors. Please see the resale or less frequent trading. Index is a market prospectus for more information. capitalization-weighted index o The Fund may invest in obligations covering all major areas of the U.S. o All Investor Class shares are closed issued by agencies and economy. It is not the 500 largest to new investors. Contact your instrumentalities of the U.S. companies, but rather the most widely financial advisor about purchasing government that may vary in the level held 500 companies chosen with our other share classes. of support they receive from the U.S. respect to market size, liquidity, government. The U.S. government may and their industry. PRINCIPAL RISKS OF INVESTING choose not to provide financial IN THE FUND support to U.S.-government- sponsored o The Russell 2000--REGISTERED agencies or instrumentalities if it TRADEMARK-- Growth Index measures the o Credit risk is the risk of loss on an is not legally obligated to do so. In performance of those Russell 2000 investment due to the deterioration this case, if the issuer defaulted, companies with higher price-to-book of an issuer's financial health. Such the underlying fund holding ratios and higher forecasted growth a deterioration of financial health securities of such an issuer might values. The Russell 2000 Growth Index may result in a reduction of the not be able to recover its investment is a trademark/ service mark of the credit rating of the issuer's from the U.S. government. Frank Russell Company. securities and may lead to the Russell--REGISTERED TRADEMARK-- is a issuer's inability to honor its o The values of convertible securities trademark of the Frank Russell contractual obligations, including in which the Fund invests may be Company. making timely payment of interest and affected by market interest rates, principal. the risk that the issuer may default o The Lipper Small-Cap Growth Funds on interest or principal payments, Index is an equally weighted o The Fund invests in "growth" stocks, and the value of the underlying representation of the largest funds which may be more volatile than other common stock into which these in the Lipper Small-Cap Growth Funds investment styles because growth securities may be converted. category. These funds typically have stocks are more sensitive to investor an aboveaverage price-to-earnings perceptions of an issuing company's o Prices of equity securities change in ratio, price-to-book ratio, and growth potential. response to many factors, including three-year sales-per-share growth the historical and prospective value, compared to the S&P SmallCap o Interest rate risk refers to the risk earnings of the issuer, the value of 600 Index. that bond prices generally fall as its assets, general economic interest rates rise and vice versa. conditions, interest rates, investor o The Fund is not managed to track the perceptions and market liquidity. performance of any particular index, o The Fund may use enhanced investment including the indexes defined here, techniques such as leveraging and o Foreign securities have additional and consequently, the performance of derivatives. Leveraging entails risks risks, including exchange rate the Fund may deviate significantly such as magnifying changes in the changes, political and economic from the performance of the indexes. value of the portfolio's securities. upheaval, relative lack of Derivatives are subject to information, relatively low market o A direct investment cannot be made in counterparty risk -- the risk that liquidity, and the potential lack of an index. Unless otherwise indicated, the other party will not complete the strict financial and accounting index results include reinvested transaction with the Fund. controls and standards. dividends, and they do not reflect sales charges or fund expenses. o There is no guarantee that the o The prices of securities held by the investment techniques and risk Fund may decline in response to continued on page 6 analysis used by the Fund's portfolio market risks. managers will produce the desired results. ======================================================================================= ========================================== THIS REPORT MUST BE ACCOMPANIED OR PRECEDED BY A CURRENTLY EFFECTIVE FUND PROSPECTUS, FUND NASDAQ SYMBOLS WHICH CONTAINS MORE COMPLETE INFORMATION, INCLUDING SALES CHARGES AND EXPENSES. INVESTORS SHOULD READ IT CAREFULLY BEFORE INVESTING. Class A Shares GTSAX ======================================================================================= Class B Shares GTSBX Class C Shares GTSDX NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE Class R Shares GTSRX Class Y Shares GTSYX Investor Class Shares GTSIX ==========================================
8 AIM SMALL CAP GROWTH FUND SCHEDULE OF INVESTMENTS(a) December 31, 2008
SHARES VALUE - ---------------------------------------------------------------------------------- COMMON STOCKS & OTHER EQUITY INTERESTS-97.33% ADVERTISING-0.43% National CineMedia, Inc. 420,784 $ 4,266,750 ================================================================================== AEROSPACE & DEFENSE-1.82% Hexcel Corp.(b) 572,375 4,229,851 - ---------------------------------------------------------------------------------- TransDigm Group, Inc.(b)(c) 408,411 13,710,358 ================================================================================== 17,940,209 ================================================================================== AIR FREIGHT & LOGISTICS-2.13% Forward Air Corp. 390,388 9,474,717 - ---------------------------------------------------------------------------------- Hub Group, Inc.-Class A(b) 430,960 11,433,369 ================================================================================== 20,908,086 ================================================================================== APPAREL RETAIL-2.01% AnnTaylor Stores Corp.(b) 480,796 2,774,193 - ---------------------------------------------------------------------------------- Hot Topic, Inc.(b) 1,338,401 12,406,977 - ---------------------------------------------------------------------------------- Zumiez Inc.(b)(c) 610,147 4,545,595 ================================================================================== 19,726,765 ================================================================================== APPAREL, ACCESSORIES & LUXURY GOODS-0.77% Warnaco Group, Inc. (The)(b) 385,534 7,568,033 ================================================================================== APPLICATION SOFTWARE-5.10% ANSYS, Inc.(b) 346,642 9,667,845 - ---------------------------------------------------------------------------------- Aspen Technology, Inc.(b) 865,082 6,418,909 - ---------------------------------------------------------------------------------- Blackboard Inc.(b) 378,979 9,940,619 - ---------------------------------------------------------------------------------- Informatica Corp.(b) 737,172 10,121,372 - ---------------------------------------------------------------------------------- Lawson Software, Inc.(b) 1,280,955 6,071,727 - ---------------------------------------------------------------------------------- Manhattan Associates, Inc.(b) 504,546 7,976,872 ================================================================================== 50,197,344 ================================================================================== ASSET MANAGEMENT & CUSTODY BANKS-0.86% Affiliated Managers Group, Inc.(b) 168,841 7,077,815 - ---------------------------------------------------------------------------------- Riskmetrics Group Inc.(b)(c) 89,971 1,339,668 ================================================================================== 8,417,483 ================================================================================== BIOTECHNOLOGY-6.77% Acorda Therapeutics Inc.(b) 354,266 7,265,996 - ---------------------------------------------------------------------------------- BioMarin Pharmaceutical Inc.(b)(c) 536,477 9,549,290 - ---------------------------------------------------------------------------------- Cepheid, Inc.(b) 490,952 5,096,082 - ---------------------------------------------------------------------------------- Human Genome Sciences, Inc.(b) 659,472 1,398,081 - ---------------------------------------------------------------------------------- Martek Biosciences Corp.(b)(c) 336,330 10,194,162 - ---------------------------------------------------------------------------------- Myriad Genetics, Inc.(b) 264,517 17,526,896 - ---------------------------------------------------------------------------------- OSI Pharmaceuticals, Inc.(b) 183,814 7,177,937 - ---------------------------------------------------------------------------------- United Therapeutics Corp.(b) 134,511 8,413,663 ================================================================================== 66,622,107 ================================================================================== COMMODITY CHEMICALS-0.79% Calgon Carbon Corp.(b)(c) 507,075 7,788,672 ================================================================================== COMMUNICATIONS EQUIPMENT-3.28% Harmonic Inc.(b) 1,361,686 7,639,059 - ---------------------------------------------------------------------------------- NICE Systems Ltd.-ADR (Israel)(b) 406,061 9,124,191 - ---------------------------------------------------------------------------------- Polycom, Inc.(b) 554,738 7,494,510 - ---------------------------------------------------------------------------------- Starent Networks Corp.(b) 668,994 7,981,098 ================================================================================== 32,238,858 ================================================================================== CONSTRUCTION & ENGINEERING-1.60% Pike Electric Corp.(b) 844,630 10,388,949 - ---------------------------------------------------------------------------------- Quanta Services, Inc.(b) 272,098 5,387,540 ================================================================================== 15,776,489 ================================================================================== CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS-2.19% Bucyrus International, Inc. 241,576 4,473,988 - ---------------------------------------------------------------------------------- Lindsay Corp.(c) 167,600 5,328,004 - ---------------------------------------------------------------------------------- Wabtec Corp. 295,538 11,747,635 ================================================================================== 21,549,627 ================================================================================== DATA PROCESSING & OUTSOURCED SERVICES-2.51% Global Payments Inc. 233,701 7,663,056 - ---------------------------------------------------------------------------------- NeuStar, Inc.-Class A(b) 467,030 8,934,284 - ---------------------------------------------------------------------------------- Syntel, Inc.(c) 348,846 8,065,319 ================================================================================== 24,662,659 ================================================================================== EDUCATION SERVICES-3.01% DeVry, Inc. 250,410 14,376,038 - ---------------------------------------------------------------------------------- Strayer Education, Inc. 71,258 15,278,428 ================================================================================== 29,654,466 ================================================================================== ELECTRIC UTILITIES-1.09% ITC Holdings Corp. 245,321 10,715,621 ================================================================================== ELECTRICAL COMPONENTS & EQUIPMENT-1.63% General Cable Corp.(b)(c) 328,492 5,811,023 - ---------------------------------------------------------------------------------- Regal-Beloit Corp. 270,207 10,265,164 ================================================================================== 16,076,187 ================================================================================== ELECTRONIC EQUIPMENT & INSTRUMENTS-2.01% Cogent Inc.(b) 1,002,164 13,599,365 - ---------------------------------------------------------------------------------- Coherent, Inc.(b) 286,445 6,147,110 ================================================================================== 19,746,475 ================================================================================== ENVIRONMENTAL & FACILITIES SERVICES-2.88% EnergySolutions Inc. 590,184 3,334,540 - ---------------------------------------------------------------------------------- Fuel Tech, Inc.(b)(c) 587,044 6,216,796 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 9 AIM SMALL CAP GROWTH FUND
SHARES VALUE - ---------------------------------------------------------------------------------- ENVIRONMENTAL & FACILITIES SERVICES-(CONTINUED) Tetra Tech, Inc.(b) 776,624 $ 18,755,469 ================================================================================== 28,306,805 ================================================================================== GENERAL MERCHANDISE STORES-0.57% Big Lots, Inc.(b) 386,341 5,598,081 ================================================================================== HEALTH CARE DISTRIBUTORS-0.76% PSS World Medical, Inc.(b) 395,179 7,437,269 ================================================================================== HEALTH CARE EQUIPMENT-5.80% Gen-Probe Inc.(b) 184,122 7,887,787 - ---------------------------------------------------------------------------------- Insulet Corp.(b)(c) 480,313 3,708,016 - ---------------------------------------------------------------------------------- Mentor Corp.(c) 276,836 8,562,538 - ---------------------------------------------------------------------------------- Meridian Bioscience, Inc. 414,522 10,557,875 - ---------------------------------------------------------------------------------- NuVasive, Inc.(b)(c) 335,091 11,610,903 - ---------------------------------------------------------------------------------- Wright Medical Group, Inc.(b) 402,766 8,228,509 - ---------------------------------------------------------------------------------- Zoll Medical Corp.(b) 343,203 6,483,105 ================================================================================== 57,038,733 ================================================================================== HEALTH CARE FACILITIES-1.82% LifePoint Hospitals, Inc.(b)(c) 414,402 9,464,942 - ---------------------------------------------------------------------------------- VCA Antech, Inc.(b) 425,006 8,449,119 ================================================================================== 17,914,061 ================================================================================== HEALTH CARE SERVICES-2.37% Chemed Corp. 276,468 10,995,132 - ---------------------------------------------------------------------------------- inVentiv Health Inc.(b) 427,568 4,934,135 - ---------------------------------------------------------------------------------- MEDNAX, Inc.(b) 232,080 7,356,936 ================================================================================== 23,286,203 ================================================================================== HEALTH CARE TECHNOLOGY-1.08% Eclipsys Corp.(b) 747,465 10,606,528 ================================================================================== HOTELS, RESORTS & CRUISE LINES-0.92% Choice Hotels International, Inc.(c) 300,335 9,028,070 ================================================================================== HOUSEHOLD PRODUCTS-1.25% Church & Dwight Co., Inc. 218,675 12,272,041 ================================================================================== INDUSTRIAL MACHINERY-1.29% Barnes Group Inc. 454,997 6,597,457 - ---------------------------------------------------------------------------------- Dynamic Materials Corp.(c) 317,246 6,126,020 ================================================================================== 12,723,477 ================================================================================== INTERNET SOFTWARE & SERVICES-2.13% Bankrate, Inc.(b)(c) 278,707 10,590,866 - ---------------------------------------------------------------------------------- Omniture, Inc.(b)(c) 250,505 2,665,373 - ---------------------------------------------------------------------------------- Websense, Inc.(b) 513,676 7,689,730 ================================================================================== 20,945,969 ================================================================================== INVESTMENT BANKING & BROKERAGE-3.31% Greenhill & Co., Inc.(c) 225,184 15,711,088 - ---------------------------------------------------------------------------------- optionsXpress Holdings Inc. 435,290 5,815,474 - ---------------------------------------------------------------------------------- Stifel Financial Corp.(b) 241,420 11,069,107 ================================================================================== 32,595,669 ================================================================================== IT CONSULTING & OTHER SERVICES-0.81% SRA International, Inc.-Class A(b) 461,231 7,956,235 ================================================================================== LIFE SCIENCES TOOLS & SERVICES-2.59% AMAG Pharmaceuticals, Inc.(b)(c) 218,159 7,821,000 - ---------------------------------------------------------------------------------- PAREXEL International Corp.(b) 472,657 4,589,500 - ---------------------------------------------------------------------------------- Techne Corp. 19,706 1,271,431 - ---------------------------------------------------------------------------------- Varian Inc.(b) 352,177 11,801,451 ================================================================================== 25,483,382 ================================================================================== METAL & GLASS CONTAINERS-0.90% Greif Inc.-Class A 265,880 8,888,368 ================================================================================== MOVIES & ENTERTAINMENT-1.70% Live Nation Inc.(b) 554,893 3,185,086 - ---------------------------------------------------------------------------------- Marvel Entertainment, Inc.(b) 440,207 13,536,365 ================================================================================== 16,721,451 ================================================================================== OFFICE REIT'S-0.70% BioMed Realty Trust, Inc. 591,748 6,935,287 ================================================================================== OFFICE SERVICES & SUPPLIES-0.40% Interface, Inc.-Class A 841,357 3,903,897 ================================================================================== OIL & GAS DRILLING-0.92% Unit Corp.(b) 340,511 9,098,454 ================================================================================== OIL & GAS EQUIPMENT & SERVICES-1.57% Dril-Quip, Inc.(b) 328,744 6,742,540 - ---------------------------------------------------------------------------------- FMC Technologies, Inc.(b) 243,780 5,809,277 - ---------------------------------------------------------------------------------- ION Geophysical Corp.(b) 829,942 2,846,701 ================================================================================== 15,398,518 ================================================================================== OIL & GAS EXPLORATION & PRODUCTION-4.04% Arena Resources, Inc.(b)(c) 425,552 11,953,756 - ---------------------------------------------------------------------------------- Bill Barrett Corp.(b) 427,753 9,038,421 - ---------------------------------------------------------------------------------- Carrizo Oil & Gas, Inc.(b)(c) 360,854 5,809,749 - ---------------------------------------------------------------------------------- Goodrich Petroleum Corp.(b)(c) 267,599 8,014,590 - ---------------------------------------------------------------------------------- Whiting Petroleum Corp.(b) 147,057 4,920,527 ================================================================================== 39,737,043 ================================================================================== PACKAGED FOODS & MEATS-1.46% Ralcorp Holdings, Inc.(b) 245,611 14,343,682 ==================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 10 AIM SMALL CAP GROWTH FUND
SHARES VALUE - ---------------------------------------------------------------------------------- PHARMACEUTICALS-1.42% Medicines Co. (The)(b) 509,406 $ 7,503,550 - ---------------------------------------------------------------------------------- Perrigo Co. 199,822 6,456,249 ================================================================================== 13,959,799 ================================================================================== PROPERTY & CASUALTY INSURANCE-1.16% ProAssurance Corp.(b) 215,803 11,390,082 ================================================================================== REGIONAL BANKS-1.65% City National Corp. 171,057 8,330,476 - ---------------------------------------------------------------------------------- SVB Financial Group(b) 302,192 7,926,496 ================================================================================== 16,256,972 ================================================================================== RESEARCH & CONSULTING SERVICES-1.21% CoStar Group Inc.(b)(c) 360,070 11,860,706 ================================================================================== RESTAURANTS-2.87% Buffalo Wild Wings Inc.(b)(c) 350,118 8,980,527 - ---------------------------------------------------------------------------------- Jack in the Box Inc.(b) 540,587 11,941,567 - ---------------------------------------------------------------------------------- P.F. Chang's China Bistro, Inc.(b)(c) 349,240 7,313,085 ================================================================================== 28,235,179 ================================================================================== SEMICONDUCTOR EQUIPMENT-1.65% Advanced Energy Industries, Inc.(b) 772,181 7,683,201 - ---------------------------------------------------------------------------------- Varian Semiconductor Equipment Associates, Inc.(b) 470,007 8,516,527 ================================================================================== 16,199,728 ================================================================================== SEMICONDUCTORS-4.08% Hittite Microwave Corp.(b) 297,763 8,772,098 - ---------------------------------------------------------------------------------- Microsemi Corp.(b) 459,330 5,805,931 - ---------------------------------------------------------------------------------- Monolithic Power Systems Inc.(b) 562,173 7,089,002 - ---------------------------------------------------------------------------------- Power Integrations, Inc.(c) 418,641 8,322,583 - ---------------------------------------------------------------------------------- Silicon Laboratories Inc.(b) 408,376 10,119,557 ================================================================================== 40,109,171 ================================================================================== SPECIALTY STORES-0.64% Tractor Supply Co.(b) 175,523 6,343,401 ================================================================================== STEEL-0.51% Carpenter Technology Corp. 243,543 5,002,373 ================================================================================== SYSTEMS SOFTWARE-1.72% Quality Systems, Inc.(c) 386,947 16,878,628 ================================================================================== TECHNOLOGY DISTRIBUTORS-0.71% Tech Data Corp.(b) 389,084 6,941,259 ================================================================================== TRADING COMPANIES & DISTRIBUTORS-0.44% WESCO International, Inc.(b) 225,957 4,345,153 ================================================================================== TRUCKING-1.29% Knight Transportation, Inc.(c) 785,026 12,654,619 ================================================================================== WIRELESS TELECOMMUNICATION SERVICES-0.71% SBA Communications Corp.-Class A(b)(c) 431,267 7,038,278 ================================================================================== Total Common Stocks & Other Equity Interests (Cost $1,151,698,436) 957,290,402 ================================================================================== MONEY MARKET FUNDS-2.68% Liquid Assets Portfolio-Institutional Class(d) 13,157,702 13,157,702 - ---------------------------------------------------------------------------------- Premier Portfolio-Institutional Class(d) 13,157,702 13,157,702 ================================================================================== Total Money Market Funds (Cost $26,315,404) 26,315,404 ================================================================================== TOTAL INVESTMENTS (excluding investments purchased with cash collateral from securities on loan)-100.01% (Cost $1,178,013,840) 983,605,806 ================================================================================== INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES ON LOAN MONEY MARKET FUNDS-13.94% Liquid Assets Portfolio-Institutional Class (Cost $137,072,961)(d)(e) 137,072,961 137,072,961 ================================================================================== TOTAL INVESTMENTS-113.95% (Cost $1,315,086,801) 1,120,678,767 ================================================================================== OTHER ASSETS LESS LIABILITIES-(13.95)% (137,180,604) ================================================================================== NET ASSETS-100.00% $ 983,498,163 __________________________________________________________________________________ ==================================================================================
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 December 31, 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. 11 AIM SMALL CAP GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES December 31, 2008 ASSETS: Investments, at value (Cost $1,151,698,436)* $ 957,290,402 - ------------------------------------------------------- Investments in affiliated money market funds, at value and cost 163,388,365 ======================================================= Total investments (Cost $1,315,086,801) 1,120,678,767 ======================================================= Receivables for: Investments sold 7,837,179 - ------------------------------------------------------- Fund shares sold 832,204 - ------------------------------------------------------- Dividends 610,047 - ------------------------------------------------------- Investment for trustee deferred compensation and retirement plans 83,801 - ------------------------------------------------------- Other assets 33,743 ======================================================= Total assets 1,130,075,741 _______________________________________________________ ======================================================= LIABILITIES: Payables for: Investments purchased 4,176,560 - ------------------------------------------------------- Fund shares reacquired 4,205,317 - ------------------------------------------------------- Collateral upon return of securities loaned 137,072,961 - ------------------------------------------------------- Accrued fees to affiliates 762,075 - ------------------------------------------------------- Accrued other operating expenses 128,365 - ------------------------------------------------------- Trustee deferred compensation and retirement plans 232,300 ======================================================= Total liabilities 146,577,578 ======================================================= Net assets applicable to shares outstanding $ 983,498,163 _______________________________________________________ ======================================================= NET ASSETS CONSIST OF: Shares of beneficial interest $1,315,368,154 - ------------------------------------------------------- Undistributed net investment income (loss) (224,116) - ------------------------------------------------------- Undistributed net realized gain (loss) (137,237,841) - ------------------------------------------------------- Unrealized appreciation (depreciation) (194,408,034) ======================================================= $ 983,498,163 _______________________________________________________ ======================================================= NET ASSETS: Class A $ 630,728,671 _______________________________________________________ ======================================================= Class B $ 25,347,154 _______________________________________________________ ======================================================= Class C $ 14,888,726 _______________________________________________________ ======================================================= Class R $ 27,217,584 _______________________________________________________ ======================================================= Class Y $ 2,136,395 _______________________________________________________ ======================================================= Investor Class $ 149,594,195 _______________________________________________________ ======================================================= Institutional Class $ 133,585,438 _______________________________________________________ SHARES OUTSTANDING, $0.01 PAR VALUE PER SHARE, UNLIMITED NUMBER OF SHARES AUTHORIZED: Class A 37,469,068 _______________________________________________________ ======================================================= Class B 1,724,709 _______________________________________________________ ======================================================= Class C 1,013,704 _______________________________________________________ ======================================================= Class R 1,652,581 _______________________________________________________ ======================================================= Class Y 126,875 _______________________________________________________ ======================================================= Investor Class 8,648,957 _______________________________________________________ ======================================================= Institutional Class 7,623,071 _______________________________________________________ ======================================================= Class A: Net asset value per share $ 16.83 - ------------------------------------------------------- Maximum offering price per share (Net asset value of $16.83 divided by 94.50%) $ 17.81 _______________________________________________________ ======================================================= Class B: Net asset value and offering price per share $ 14.70 _______________________________________________________ ======================================================= Class C: Net asset value and offering price per share $ 14.69 _______________________________________________________ ======================================================= Class R: Net asset value and offering price per share $ 16.47 _______________________________________________________ ======================================================= Class Y: Net asset value and offering price per share $ 16.84 _______________________________________________________ ======================================================= Investor Class: Net asset value and offering price per share $ 17.30 _______________________________________________________ ======================================================= Institutional Class: Net asset value and offering price per share $ 17.52 _______________________________________________________ =======================================================
* At December 31, 2008, securities with an aggregate value of $137,377,393 were on loan to brokers. See accompanying Notes to Financial Statements which are an integral part of the financial statements. 12 AIM SMALL CAP GROWTH FUND STATEMENT OF OPERATIONS For the year ended December 31, 2008 INVESTMENT INCOME: Dividends $ 5,299,181 - ------------------------------------------------------------------------------------------------ Dividends from affiliated money market funds (includes securities lending income of $3,426,451) 4,508,682 ================================================================================================ Total investment income 9,807,863 ================================================================================================ EXPENSES: Advisory fees 9,516,650 - ------------------------------------------------------------------------------------------------ Administrative services fees 363,871 - ------------------------------------------------------------------------------------------------ Custodian fees 35,381 - ------------------------------------------------------------------------------------------------ Distribution fees: Class A 2,149,943 - ------------------------------------------------------------------------------------------------ Class B 416,916 - ------------------------------------------------------------------------------------------------ Class C 221,540 - ------------------------------------------------------------------------------------------------ Class R 167,374 - ------------------------------------------------------------------------------------------------ Investor Class 548,091 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- A, B, C, R, Y and Investor 3,052,059 - ------------------------------------------------------------------------------------------------ Transfer agent fees -- Institutional 160,308 - ------------------------------------------------------------------------------------------------ Trustees' and officers' fees and benefits 56,193 - ------------------------------------------------------------------------------------------------ Other 504,094 ================================================================================================ Total expenses 17,192,420 ================================================================================================ Less: Fees waived, expenses reimbursed and expense offset arrangement(s) (90,397) ================================================================================================ Net expenses 17,102,023 ================================================================================================ Net investment income (loss) (7,294,160) ================================================================================================ Net realized gain (loss) from investment securities (includes net gains (losses) from securities sold to affiliates of $(1,333,232)) (66,579,899) ================================================================================================ Change in net unrealized appreciation (depreciation) (567,437,033) ================================================================================================ Net realized and unrealized gain (loss) (634,016,932) ================================================================================================ Net increase (decrease) in net assets resulting from operations $(641,311,092) ________________________________________________________________________________________________ ================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 13 AIM SMALL CAP GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS For the years ended December 31, 2008 and 2007
2008 2007 - ----------------------------------------------------------------------------------------------------------- OPERATIONS: Net investment income (loss) $ (7,294,160) $ (13,803,257) - ----------------------------------------------------------------------------------------------------------- Net realized gain (loss) (66,579,899) 216,189,108 - ----------------------------------------------------------------------------------------------------------- Change in net unrealized appreciation (depreciation) (567,437,033) (11,203,457) =========================================================================================================== Net increase (decrease) in net assets resulting from operations (641,311,092) 191,182,394 =========================================================================================================== Distributions to shareholders from net realized gains: Class A (31,255,519) (116,301,535) - ----------------------------------------------------------------------------------------------------------- Class B (1,454,953) (7,490,512) - ----------------------------------------------------------------------------------------------------------- Class C (836,950) (3,483,918) - ----------------------------------------------------------------------------------------------------------- Class R (1,341,078) (4,004,380) - ----------------------------------------------------------------------------------------------------------- Class Y (97,468) -- - ----------------------------------------------------------------------------------------------------------- Investor Class (7,234,846) (29,163,541) - ----------------------------------------------------------------------------------------------------------- Institutional Class (6,306,767) (25,832,340) =========================================================================================================== Total distributions from net realized gains (48,527,581) (186,276,226) =========================================================================================================== Share transactions-net: Class A 16,299,668 (20,896,701) - ----------------------------------------------------------------------------------------------------------- Class B (14,095,130) (43,973,533) - ----------------------------------------------------------------------------------------------------------- Class C (2,606,763) (1,515,213) - ----------------------------------------------------------------------------------------------------------- Class R 7,814,278 13,958,156 - ----------------------------------------------------------------------------------------------------------- Class Y 2,708,938 -- - ----------------------------------------------------------------------------------------------------------- Investor Class (14,887,944) (9,311,730) - ----------------------------------------------------------------------------------------------------------- Institutional Class (19,284,222) 65,670,923 =========================================================================================================== Net increase (decrease) in net assets resulting from share transactions (24,051,175) 3,931,902 =========================================================================================================== Net increase (decrease) in net assets (713,889,848) 8,838,070 =========================================================================================================== NET ASSETS: Beginning of year 1,697,388,011 1,688,549,941 =========================================================================================================== End of year (includes undistributed net investment income (loss) of $(224,116) and $(214,159), respectively) $ 983,498,163 $1,697,388,011 ___________________________________________________________________________________________________________ ===========================================================================================================
See accompanying Notes to Financial Statements which are an integral part of the financial statements. 14 AIM SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS December 31, 2008 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 assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class. The Fund's investment objective is long-term growth of capital. The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges ("CDSC"). Class B shares and Class C shares are sold with a CDSC. Class R, Class Y, 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. Effective as of the close of business on March 18, 2002, the Fund's shares were offered on a limited basis to certain investors. The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements. A. SECURITY VALUATIONS -- Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange ("NYSE"). Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded. Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Short-term obligations, including commercial paper, having 60 days or less to maturity are recorded at amortized cost which approximates value. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments. Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economical upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards. Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and asked prices. Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value. Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer's assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments. 15 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 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. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliates on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. 16 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, effective May 1, 2008, between the Advisor and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and Invesco Trimark Ltd. (collectively, the "Affiliated Sub-Advisors") the Advisor, not the Fund, may pay 40% of the fees paid to the Advisor to any such Affiliated Sub-Advisor(s) that provide discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Advisor(s). The Advisor has contractually agreed, through at least June 30, 2009, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Advisor receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds. For the year ended December 31, 2008, the Advisor waived advisory fees of $48,564. At the request of the Trustees of the Trust, Invesco agreed to reimburse expenses incurred by the Fund in connection with market timing matters in the AIM Funds, which may include legal, audit, shareholder reporting, communications and trustee expenses. These expenses along with the related expense reimbursement are included in the Statement of Operations. For the year ended December 31, 2008, Invesco reimbursed expenses of the Fund in the amount of $3,453. The Trust has entered into a master administrative services agreement with Invesco Aim pursuant to which the Fund has agreed to pay Invesco Aim for certain administrative costs incurred in providing accounting services to the Fund. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as administrative services fees. The Trust has entered into a transfer agency and service agreement with Invesco Aim Investment Services, Inc. ("IAIS") pursuant to which the Fund has agreed to pay IAIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IAIS for certain expenses incurred by IAIS in the course of providing such services. IAIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IAIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended December 31, 2008, expenses incurred under the agreement are shown in the Statement of Operations as transfer agent fees. The Trust has entered into master distribution agreements with Invesco Aim Distributors, Inc. ("IADI") to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Class A, Class B, Class C, Class R and Investor Class shares (collectively the "Plans"). The Fund, pursuant to the Plans, pays 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 year ended December 31, 2008, expenses incurred under the Plans are shown in the Statement of Operations as distribution fees. Front-end sales commissions and CDSC (collectively the "sales charges") are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended December 31, 2008, IADI advised the Fund that IADI retained $16,101 in front-end sales commissions from the sale of Class A shares and $89, $31,483, $648 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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 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 significant unobservable inputs (Level 3) generally when market prices are not readily available or are unreliable. Based on the valuation inputs the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment's assigned level, Level 1 -- Prices are determined using quoted prices in an active market for identical assets. Level 2 -- Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others. 17 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 valuation input levels, as of the end of the reporting period, December 31, 2008. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
INVESTMENTS IN INPUT LEVEL SECURITIES - -------------------------------------- Level 1 $1,120,678,767 - -------------------------------------- Level 2 -- - -------------------------------------- Level 3 -- ====================================== $1,120,678,767 ______________________________________ ======================================
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 year ended December 31, 2008, the Fund engaged in securities purchases of $11,298,315 and securities sales of $6,290,351, which resulted in net realized gains (losses) of $(1,333,232). 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 year ended December 31, 2008, the Fund received credits from these arrangements, which resulted in the reduction of the Fund's total expenses of $38,380. NOTE 6--TRUSTEES' AND OFFICERS' FEES AND BENEFITS "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and "Trustees' and Officers' Fees and Benefits" also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various AIM Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. "Trustees' and Officers' Fees and Benefits" include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund. During the year ended December 31, 2008, the Fund paid legal fees of $6,939 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the Independent Trustees. A member of that firm is a Trustee of the Trust. NOTE 7--CASH BALANCES The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with The State Street Bank and Trust Company, the custodian bank. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (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--DISTRIBUTIONS TO SHAREHOLDERS AND TAX COMPONENTS OF NET ASSETS TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS PAID DURING THE YEARS ENDED DECEMBER 31, 2008 AND 2007:
2008 2007 - -------------------------------------------------------------------------------------------------------- Long-term capital gain $48,527,581 $186,276,226 ________________________________________________________________________________________________________ ========================================================================================================
18 AIM SMALL CAP GROWTH FUND TAX COMPONENTS OF NET ASSETS AT PERIOD-END:
2008 - ------------------------------------------------------------------------------------------------- Net unrealized appreciation (depreciation) -- investments $ (195,116,519) - ------------------------------------------------------------------------------------------------- Temporary book/tax differences (224,116) - ------------------------------------------------------------------------------------------------- Capital loss carryforward (89,216,388) - ------------------------------------------------------------------------------------------------- Post-October loss deferrals (47,312,968) - ------------------------------------------------------------------------------------------------- Shares of beneficial interest 1,315,368,154 ================================================================================================= Total net assets $ 983,498,163 _________________________________________________________________________________________________ =================================================================================================
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is due to differences in the timing of recognition of gains and losses on investments for tax and book purposes. The Fund's net unrealized appreciation (depreciation) difference is attributable primarily to wash sales. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses. The Fund's temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits. Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions. Under these limitation rules, the Fund is limited to utilizing $57,577,709 of capital loss carryforward in the fiscal year ending December 31, 2009. The Fund has a capital loss carryforward as of December 31, 2008 which expires as follows:
CAPITAL LOSS EXPIRATION CARRYFORWARD* - ----------------------------------------------------------------------------------------------- December 31, 2010 $70,424,303 - ----------------------------------------------------------------------------------------------- December 31, 2016 18,792,085 =============================================================================================== Total capital loss carryforward $89,216,388 _______________________________________________________________________________________________ ===============================================================================================
* Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. NOTE 9--INVESTMENT SECURITIES The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended December 31, 2008 was $389,293,499 and $470,267,669, 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 $ 104,042,042 - ------------------------------------------------------------------------------------------------ Aggregate unrealized (depreciation) of investment securities (299,158,561) ================================================================================================ Net unrealized appreciation (depreciation) of investment securities $(195,116,519) ________________________________________________________________________________________________ ================================================================================================ Cost of investments for tax purposes is $1,315,795,286.
NOTE 10--RECLASSIFICATION OF PERMANENT DIFFERENCES Primarily as a result of differing book/tax treatment of net operating losses and proxy costs, on December 31, 2008, undistributed net investment income (loss) was increased by $7,284,203, undistributed net realized gain (loss) was increased by $7,787,820 and shares of beneficial interest decreased by $15,072,023. This reclassification had no effect on the net assets of the Fund. 19 AIM SMALL CAP GROWTH FUND NOTE 11--SHARE INFORMATION
SUMMARY OF SHARE ACTIVITY - -------------------------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31, --------------------------------------------------------------- 2008(a) 2007 ----------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------------------------------- Sold: Class A 10,303,280 $ 248,521,396 7,628,780 $ 243,008,419 - -------------------------------------------------------------------------------------------------------------------------- Class B 77,088 1,625,340 89,915 2,569,076 - -------------------------------------------------------------------------------------------------------------------------- Class C 179,353 3,735,000 171,861 4,910,680 - -------------------------------------------------------------------------------------------------------------------------- Class R 781,622 17,983,819 639,590 20,286,616 - -------------------------------------------------------------------------------------------------------------------------- Class Y(b) 128,206 2,745,444 -- -- - -------------------------------------------------------------------------------------------------------------------------- Investor Class 1,255,568 30,786,087 920,180 30,104,070 - -------------------------------------------------------------------------------------------------------------------------- Institutional Class 2,104,863 47,981,026 2,986,532 97,694,692 ========================================================================================================================== Issued as reinvestment of dividends: Class A 1,934,746 30,726,884 3,980,841 114,409,369 - -------------------------------------------------------------------------------------------------------------------------- Class B 100,145 1,393,859 279,229 7,120,338 - -------------------------------------------------------------------------------------------------------------------------- Class C 57,990 806,635 130,748 3,331,458 - -------------------------------------------------------------------------------------------------------------------------- Class R 85,973 1,341,078 141,798 4,004,380 - -------------------------------------------------------------------------------------------------------------------------- Class Y(b) 6,102 97,266 -- -- - -------------------------------------------------------------------------------------------------------------------------- Investor Class 434,836 7,122,502 972,104 28,677,140 - -------------------------------------------------------------------------------------------------------------------------- Institutional Class 379,923 6,302,927 832,135 24,747,697 ========================================================================================================================== Automatic conversion of Class B shares to Class A shares: Class A 224,506 5,552,942 1,016,530 32,907,168 - -------------------------------------------------------------------------------------------------------------------------- Class B (254,098) (5,552,942) (1,127,536) (32,907,168) ========================================================================================================================== Reacquired: Class A(b) (11,424,979) (268,501,554) (12,866,163) (411,221,657) - -------------------------------------------------------------------------------------------------------------------------- Class B (540,738) (11,561,387) (729,187) (20,755,779) - -------------------------------------------------------------------------------------------------------------------------- Class C (341,486) (7,148,398) (338,328) (9,757,351) - -------------------------------------------------------------------------------------------------------------------------- Class R (499,616) (11,510,619) (328,628) (10,332,840) - -------------------------------------------------------------------------------------------------------------------------- Class Y(b) (7,433) (133,772) -- -- - -------------------------------------------------------------------------------------------------------------------------- Investor Class(b) (2,230,804) (52,796,533) (2,112,401) (68,092,940) - -------------------------------------------------------------------------------------------------------------------------- Institutional Class (2,925,555) (73,568,175) (1,733,377) (56,771,466) ========================================================================================================================== Net increase (decrease) in share activity (170,508) $ (24,051,175) 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 are owned beneficially. (b) Effective upon the commencement date of Class Y shares, October 3, 2008, the following shares were converted from Class A and Investor Class into Class Y shares of the Fund:
CLASS SHARES AMOUNT ---------------------------------------------------------------------------------------------------- Class Y 116,752 $ 2,553,360 ---------------------------------------------------------------------------------------------------- Class A (108,371) (2,370,071) ---------------------------------------------------------------------------------------------------- Investor Class (8,164) (183,289) ====================================================================================================
20 AIM SMALL CAP GROWTH FUND NOTE 12--FINANCIAL HIGHLIGHTS The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
NET GAINS ON NET ASSET NET SECURITIES DISTRIBUTIONS VALUE, INVESTMENT (BOTH TOTAL FROM FROM NET NET ASSET BEGINNING INCOME REALIZED AND INVESTMENT REALIZED VALUE, END TOTAL OF PERIOD (LOSS) UNREALIZED) OPERATIONS GAINS OF PERIOD RETURN(a) - --------------------------------------------------------------------------------------------------------------------- CLASS A Year ended 12/31/08 $29.00 $(0.13)(c) $(11.16) $(11.29) $(0.88) $16.83 (38.77)% Year ended 12/31/07 29.23 (0.25)(c) 3.54 3.29 (3.52) 29.00 11.38 Year ended 12/31/06 27.51 (0.25)(c) 4.21 3.96 (2.24) 29.23 14.30 Year ended 12/31/05 27.46 (0.31) 2.61 2.30 (2.25) 27.51 8.32 Year ended 12/31/04 25.71 (0.32) 2.07 1.75 -- 27.46 6.81 - --------------------------------------------------------------------------------------------------------------------- CLASS B Year ended 12/31/08 25.71 (0.28)(c) (9.85) (10.13) (0.88) 14.70 (39.22) Year ended 12/31/07 26.47 (0.44)(c) 3.20 2.76 (3.52) 25.71 10.55 Year ended 12/31/06 25.29 (0.43)(c) 3.85 3.42 (2.24) 26.47 13.42 Year ended 12/31/05 25.61 (0.47) 2.40 1.93 (2.25) 25.29 7.47 Year ended 12/31/04 24.15 (0.52) 1.98 1.46 -- 25.61 6.05 - --------------------------------------------------------------------------------------------------------------------- CLASS C Year ended 12/31/08 25.69 (0.28)(c) (9.84) (10.12) (0.88) 14.69 (39.21) Year ended 12/31/07 26.46 (0.44)(c) 3.19 2.75 (3.52) 25.69 10.52 Year ended 12/31/06 25.27 (0.43)(c) 3.86 3.43 (2.24) 26.46 13.47 Year ended 12/31/05 25.60 (0.47) 2.39 1.92 (2.25) 25.27 7.44 Year ended 12/31/04 24.14 (0.52) 1.98 1.46 -- 25.60 6.05 - --------------------------------------------------------------------------------------------------------------------- CLASS R Year ended 12/31/08 28.48 (0.19)(c) (10.94) (11.13) (0.88) 16.47 (38.91) Year ended 12/31/07 28.84 (0.33)(c) 3.49 3.16 (3.52) 28.48 11.07 Year ended 12/31/06 27.23 (0.32)(c) 4.17 3.85 (2.24) 28.84 14.04 Year ended 12/31/05 27.28 (0.30) 2.50 2.20 (2.25) 27.23 8.01 Year ended 12/31/04 25.61 (0.27) 1.94 1.67 -- 27.28 6.52 - --------------------------------------------------------------------------------------------------------------------- CLASS Y Year ended 12/31/08(e) 21.87 (0.02)(c) (4.13) (4.15) (0.88) 16.84 (18.76) - --------------------------------------------------------------------------------------------------------------------- INVESTOR CLASS Year ended 12/31/08 29.76 (0.14)(c) (11.44) (11.58) (0.88) 17.30 (38.75) Year ended 12/31/07 29.91 (0.26)(c) 3.63 3.37 (3.52) 29.76 11.39 Year ended 12/31/06(e) 31.20 (0.19)(c) 1.14 0.95 (2.24) 29.91 2.96 - --------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS Year ended 12/31/08 30.01 (0.03)(c) (11.58) (11.61) (0.88) 17.52 (38.53) Year ended 12/31/07 30.01 (0.12)(c) 3.64 3.52 (3.52) 30.01 11.85 Year ended 12/31/06 28.08 (0.13)(c) 4.30 4.17 (2.24) 30.01 14.76 Year ended 12/31/05 27.83 (0.11) 2.61 2.50 (2.25) 28.08 8.93 Year ended 12/31/04 25.91 (0.16) 2.08 1.92 -- 27.83 7.41 _____________________________________________________________________________________________________________________ ===================================================================================================================== RATIO OF RATIO OF EXPENSES EXPENSES TO AVERAGE TO AVERAGE NET RATIO OF NET NET ASSETS ASSETS WITHOUT INVESTMENT NET ASSETS, WITH FEE WAIVERS FEE WAIVERS INCOME (LOSS) END OF PERIOD AND/OR EXPENSES AND/OR EXPENSES TO AVERAGE PORTFOLIO (000S OMITTED) ABSORBED ABSORBED NET ASSETS TURNOVER(b) - ------------------------------------------------------------------------------------------------------------------ CLASS A Year ended 12/31/08 $ 630,729 1.28%(d) 1.28%(d) (0.56)%(d) 29% Year ended 12/31/07 1,056,349 1.23 1.23 (0.78) 29 Year ended 12/31/06 1,071,753 1.25 1.25 (0.84) 49 Year ended 12/31/05 1,099,696 1.45 1.50 (0.95) 41 Year ended 12/31/04 1,491,940 1.40 1.51 (1.12) 69 - ------------------------------------------------------------------------------------------------------------------ CLASS B Year ended 12/31/08 25,347 2.03(d) 2.03(d) (1.31)(d) 29 Year ended 12/31/07 60,227 1.98 1.98 (1.53) 29 Year ended 12/31/06 101,394 2.00 2.00 (1.59) 49 Year ended 12/31/05 117,307 2.20 2.20 (1.70) 41 Year ended 12/31/04 149,400 2.15 2.16 (1.87) 69 - ------------------------------------------------------------------------------------------------------------------ CLASS C Year ended 12/31/08 14,889 2.03(d) 2.03(d) (1.31)(d) 29 Year ended 12/31/07 28,722 1.98 1.98 (1.53) 29 Year ended 12/31/06 30,521 2.00 2.00 (1.59) 49 Year ended 12/31/05 31,141 2.20 2.20 (1.70) 41 Year ended 12/31/04 40,904 2.15 2.16 (1.87) 69 - ------------------------------------------------------------------------------------------------------------------ CLASS R Year ended 12/31/08 27,218 1.53(d) 1.53(d) (0.81)(d) 29 Year ended 12/31/07 36,591 1.48 1.48 (1.03) 29 Year ended 12/31/06 23,988 1.50 1.50 (1.09) 49 Year ended 12/31/05 21,276 1.70 1.70 (1.20) 41 Year ended 12/31/04 19,506 1.65 1.66 (1.37) 69 - ------------------------------------------------------------------------------------------------------------------ CLASS Y Year ended 12/31/08(e) 2,136 1.10(d)(f) 1.11(d)(f) (0.38)(d)(f) 29 - ------------------------------------------------------------------------------------------------------------------ INVESTOR CLASS Year ended 12/31/08 149,594 1.28(d) 1.28(d) (0.56)(d) 29 Year ended 12/31/07 273,506 1.23 1.23 (0.78) 29 Year ended 12/31/06(e) 281,479 1.26(f) 1.26(f) (0.85)(f) 49 - ------------------------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS Year ended 12/31/08 133,585 0.86(d) 0.86(d) (0.14)(d) 29 Year ended 12/31/07 241,992 0.81 0.81 (0.36) 29 Year ended 12/31/06 179,414 0.84 0.84 (0.43) 49 Year ended 12/31/05 107,023 0.84 0.84 (0.35) 41 Year ended 12/31/04 112,547 0.85 0.86 (0.57) 69 __________________________________________________________________________________________________________________ ==================================================================================================================
(a) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. (b) Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. (c) Calculated using average shares outstanding. (d) Ratios are based on average daily net assets (000's omitted) of $859,977, $41,692, $22,154, $33,475, $1,972, $219,236 and $177,316 for Class A, Class B, Class C, Class R, Class Y, Investor Class and Institutional Class shares, respectively. (e) Commencement date of October 3, 2008 and April 7, 2006 for Class Y and Investor Class shares, respectively. (f) Annualized. 21 AIM SMALL CAP GROWTH FUND NOTE 13--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 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 alleging that the defendants permitted improper market timing and related activity in the AIM Funds. These lawsuits allege as theories of recovery, depending on the lawsuit, violations of various provisions of the Federal and state securities laws and the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), negligence, breach of fiduciary duty and/or breach of contract. These lawsuits seek remedies that include, depending on the lawsuit, damages, restitution, injunctive relief, imposition of a constructive trust, removal of certain directors and/or employees, various corrective measures under ERISA, rescission of certain AIM Funds' advisory agreements and/or distribution plans and recovery of all fees paid. All lawsuits based on allegations of market timing, late trading and related issues were 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 January 5, 2008, the parties reached an agreement in principle to settle both the Consolidated Amended Class Action Complaint and Consolidated Amended Fund Derivative Complaint, subject to the MDL Court approval. Individual class members have the right to object. On December 15, 2008, the parties reached an agreement in principle to settle the Amended Class Action Complaint for Violations of ERISA, subject to the MDL Court approval. Individual class members have the right to object. No payments are required under the settlement; however, the parties agreed that certain limited changes to benefit plans and participants' accounts would be made. 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. Management of Invesco Aim and the Fund believe that the outcome of the Pending Litigation and Regulatory Inquiries described above will have no material adverse affect on the Fund or on the ability of Invesco Aim and IADI to provide ongoing services to the Fund. 22 AIM SMALL CAP GROWTH FUND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Trustees of AIM Growth Series and Shareholders of AIM Small Cap Growth Fund: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of AIM Small Cap Growth Fund (one of the funds constituting AIM Growth Series, hereafter referred to as the "Fund") at December 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2008 by correspondence with the custodian and broker, provide a reasonable basis for our opinion. PRICEWATERHOUSECOOPERS LLP February 17, 2009 Houston, Texas 23 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. With the exception of the actual ending account value and expenses of the Class Y Shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period July 1, 2008, through December 31, 2008. The actual ending account and expenses of the Class Y shares in the below example are based on an investment of $1,000 invested as of close of business October 3, 2008 (commencement date) and held through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period (as of close of business October 3, 2008 through December 31, 2008 for the Class Y shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class Y shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
- --------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2,3) RATIO - --------------------------------------------------------------------------------------------------- A $1,000.00 $687.00 $5.47 $1,018.65 $ 6.55 1.29% - --------------------------------------------------------------------------------------------------- B 1,000.00 684.50 8.64 1,014.88 10.33 2.04 - --------------------------------------------------------------------------------------------------- C 1,000.00 684.40 8.64 1,014.88 10.33 2.04 - --------------------------------------------------------------------------------------------------- R 1,000.00 686.00 6.53 1,017.39 7.81 1.54 - --------------------------------------------------------------------------------------------------- Y 1,000.00 812.40 2.45 1,019.61 5.58 1.10 - --------------------------------------------------------------------------------------------------- Investor 1,000.00 687.10 5.47 1,018.65 6.55 1.29 - ---------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008 (as of close of business October 3, 2008, through December 31, 2008 for the Class Y shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For the Class Y shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 90 (as of close of business October 3, 2008, through December 31, 2008)/366. Because the Class Y shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. (3) Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class Y shares of the Fund and other funds because such data is based on a full six month period. 24 AIM SMALL CAP GROWTH FUND 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 July 1, 2008, through December 31, 2008. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Actual Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
- ----------------------------------------------------------------------------------------------------------- HYPOTHETICAL (5% ANNUAL RETURN BEFORE ACTUAL EXPENSES) ------------------------------------------------------ BEGINNING ENDING EXPENSES ENDING EXPENSES ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE PAID DURING ACCOUNT VALUE PAID DURING EXPENSE CLASS (07/01/08) (12/31/08)(1) PERIOD(2) (12/31/08) PERIOD(2) RATIO - ----------------------------------------------------------------------------------------------------------- Institutional $1,000.00 $688.30 $3.61 $1,020.86 $4.32 0.85% - -----------------------------------------------------------------------------------------------------------
(1) The actual ending account value is based on the actual total return of the Fund for the period July 1, 2008, through December 31, 2008, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund's expense ratio and a hypothetical annual return of 5% before expenses. (2) Expenses are equal to the Fund's annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. AIM SMALL CAP GROWTH FUND Supplement to Annual Report dated 12/31/08 AIM SMALL CAP GROWTH FUND INSTITUTIONAL CLASS SHARES The following information has been prepared to provide Institutional Class shareholders with a performance overview specific to their holdings. Institutional Class shares are offered exclusively to institutional investors, including defined contribution plans that meet certain criteria. AVERAGE ANNUAL TOTAL RETURNS For periods ended 12/31/08 Inception (3/15/02) -0.42% 5 Years -1.59 1 Year -38.53
Institutional Class shares have no sales charge; therefore, performance is at net asset value (NAV). Performance of Institutional Class shares will differ from performance of other share classes primarily due to differing sales charges and class expenses. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this supplement for Institutional Class shares was 0.81%.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. Please note that past performance is not indicative of future results. More recent returns may be more or less than those shown. All returns assume reinvestment of distributions at NAV. Investment return and principal value will fluctuate so your shares, when redeemed, may be worth more or less than their original cost. See full report for information on comparative benchmarks. Please consult your Fund prospectus for more information. For the most current month-end performance, please call 800 451 4246 or visit invescoaim.com. NASDAQ SYMBOL GTSVX 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-1 Invesco Aim Distributors, Inc. TAX INFORMATION Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors. The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific state's requirement. The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended December 31, 2008:
FEDERAL AND STATE INCOME TAX ---------------------------- Long-Term Capital Gain Dividends $48,527,581
NON-RESIDENT ALIEN SHAREHOLDER INFORMATION The percentages of qualifying assets not subject to the U.S. estate tax for the fiscal quarters ended March 31, 2008, June 30, 2008, September 30, 2008 and December 31, 2008 were 4.83%, 2.47%, 2.74%, and 3.57%, respectively. 25 AIM SMALL CAP GROWTH FUND TRUSTEES AND OFFICERS The address of each trustee and officer of AIM Growth Series (the "Trust"), is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 104 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- INTERESTED PERSONS - -------------------------------------------------------------------------------------------------------------------------------- Martin L. 2007 Executive Director, Chief Executive Officer and President, None Flanagan(1) -- 1960 Invesco Ltd. (ultimate parent of Invesco Aim and a global Trustee investment management firm); Chairman, Invesco Aim Advisors, Inc. (registered investment advisor); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company); INVESCO North American Holdings, Inc. (holding company); and, INVESCO Group Services, Inc. (service provider); Trustee, The AIM Family of Funds--Registered Trademark--; Vice Chairman, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business Formerly: Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco Aim and a global investment management firm); Chairman, Investment Company Institute; President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) - -------------------------------------------------------------------------------------------------------------------------------- Philip A. Taylor(2) -- 1954 2006 Head of North American Retail and Senior Managing Director, None Trustee, President and Invesco Ltd.; Director, Chief Executive Officer and Principal President, Invesco Trimark Dealer Inc. (formerly AIM Mutual Executive Officer Fund Dealer Inc.) (registered broker dealer), Invesco Aim Advisors, Inc., and 1371 Preferred Inc. (holding company); Director, Chairman, Chief Executive Officer and President, Invesco Aim Management Group, Inc. (financial services holding company) and Invesco Aim Capital Management, Inc. (registered investment advisor); Director and President, INVESCO Funds Group, Inc. (registered investment advisor and register transfer agent) and AIM GP Canada Inc. (general partner for a limited partnership); Director, Invesco Aim Distributors, Inc. (registered broker dealer); Director and Chairman, Invesco Aim Investment Services, Inc. (registered transfer agent) and INVESCO Distributors, Inc. (registered broker dealer); Director, President and Chairman, IVZ Callco Inc. (holding company), INVESCO Inc. (holding company) and Invesco Canada Holdings Inc. (formerly AIM Canada Holdings Inc.) (holding company); Chief Executive Officer, AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund Inc. (corporate mutual fund company); Director and Chief Executive Officer, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services) (registered investment advisor and registered transfer agent) and Invesco Trimark Dealer Inc. (formerly AIM Mutual Fund Dealer Inc.) (registered broker dealer); Trustee, President and Principal Executive Officer of The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); Trustee and Executive Vice President, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only); and Manager, Invesco PowerShares Capital Management LLC Formerly: President, Invesco Trimark Dealer Inc.; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Director and President, Invesco Trimark Ltd./Invesco Trimark Ltee (formerly AIM Funds Management Inc. d/b/a INVESCO Enterprise Services); Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (registered broker dealer); President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc.; and Director, Trimark Trust (federally regulated Canadian Trust Company) - -------------------------------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES - -------------------------------------------------------------------------------------------------------------------------------- Bruce L. Crockett -- 1944 2001 Chairman, Crockett Technology Associates (technology ACE Limited Trustee and Chair consulting company) (insurance company); Captaris, Inc. (unified messaging provider); and Investment Company Institute - -------------------------------------------------------------------------------------------------------------------------------- Bob R. Baker -- 1936 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Frank S. Bayley -- 1939 1985 Retired Trustee Formerly: Partner, law firm of Baker & McKenzie; and None Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- James T. Bunch -- 1942 2003 Founder, Green, Manning & Bunch Ltd., (investment banking Director, Van Gilder Trustee firm) Insurance Company, Board of Governors, Western Golf Association/Evans Scholars Foundation and Executive Committee, United States Golf Association - -------------------------------------------------------------------------------------------------------------------------------- Albert R. Dowden -- 1941 2001 Director of a number of public and private business None Trustee corporations, including the Boss Group Ltd. (private investment and management); Continental Energy Services, LLC (oil and gas pipeline service); Reich & Tang Funds (registered investment company); Annuity and Life Re (Holdings), Ltd. (reinsurance company), and Homeowners of America Holding Corporation/Homeowners of America Insurance Company (property casualty company) Formerly: Director, CompuDyne Corporation (provider of product and services to the public security market); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations - -------------------------------------------------------------------------------------------------------------------------------- Jack M. Fields -- 1952 2001 Chief Executive Officer, Twenty First Century Group, Inc. Administaff Trustee (government affairs company); and Owner and Chief Executive Officer, Dos Angelos Ranch, L.P. (cattle, hunting, corporate entertainment) Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); and Discovery Global Education Fund (non-profit) - -------------------------------------------------------------------------------------------------------------------------------- Carl Frischling -- 1937 2001 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich & Trustee Tang Funds) (15 portfolios) - -------------------------------------------------------------------------------------------------------------------------------- Prema Mathai-Davis -- 1950 2001 Formerly: Chief Executive Officer, YWCA of the USA None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Lewis F. Pennock -- 1942 2001 Partner, law firm of Pennock & Cooper None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Larry Soll -- 1942 2003 Retired None Trustee - -------------------------------------------------------------------------------------------------------------------------------- Raymond Stickel, Jr. -- 1944 2005 Retired Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay None VP Series Funds, Inc. (25 portfolios) - --------------------------------------------------------------------------------------------------------------------------------
(1) Mr. Flanagan is considered an interested person of the Trust because he is an officer of the advisor to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the advisor to the Trust. (2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust. 26 AIM SMALL CAP GROWTH FUND TRUSTEES AND OFFICERS--(CONTINUED)
NAME, YEAR OF BIRTH AND TRUSTEE AND/ OTHER POSITION(S) HELD WITH THE OR OFFICER PRINCIPAL OCCUPATION(S) DIRECTORSHIP(S) TRUST SINCE DURING PAST 5 YEARS HELD BY TRUSTEE - -------------------------------------------------------------------------------------------------------------------------------- OTHER OFFICERS - -------------------------------------------------------------------------------------------------------------------------------- Russell C. Burk -- 1958 2005 Senior Vice President and Senior Officer of The AIM Family of N/A Senior Vice President and Funds--Registered Trademark-- Senior Officer Formerly: Director of Compliance and Assistant General Counsel, ICON Advisers, Inc.; Financial Consultant, Merrill Lynch; General Counsel and Director of Compliance, ALPS Mutual Funds, Inc. - -------------------------------------------------------------------------------------------------------------------------------- John M. Zerr -- 1962 2006 Director, Senior Vice President, Secretary and General Counsel, N/A Senior Vice President, Chief Invesco Aim Management Group, Inc., Invesco Aim Advisors, Inc. Legal Officer and Secretary and Invesco Aim Capital Management, Inc.; Director, Senior Vice President and Secretary, Invesco Aim Distributors, Inc.; Director, Vice President and Secretary, Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.; Director and Vice President, INVESCO Funds Group Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; and Manager, Invesco PowerShares Capital Management LLC Formerly: Director, Vice President and Secretary, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer, Senior Vice President, General Counsel and Secretary, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company); Vice President and Secretary, PBHG Insurance Series Fund (an investment company); Chief Operating Officer, General Counsel and Secretary, Old Mutual Investment Partners (a broker- dealer); General Counsel and Secretary, Old Mutual Fund Services (an administrator); General Counsel and Secretary, Old Mutual Shareholder Services (a shareholder servicing center); Executive Vice President, General Counsel and Secretary, Old Mutual Capital, Inc. (an investment adviser); and Vice President and Secretary, Old Mutual Advisors Funds (an investment company) - -------------------------------------------------------------------------------------------------------------------------------- Lisa O. Brinkley -- 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The N/A Vice President AIM Family of Funds--Registered Trademark-- Formerly: Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark--; Vice President and Chief Compliance Officer, Invesco Aim Capital Management, Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim Investment Services, Inc. and Fund Management Company; and Senior Vice President and Compliance Director, Delaware Investments Family of Funds - -------------------------------------------------------------------------------------------------------------------------------- Kevin M. Carome -- 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco N/A Vice President Ltd.; Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and INVESCO Group Services, Inc.; Director, INVESCO Funds Group, Inc.; Secretary, INVESCO North American Holdings, Inc.; and Vice President, The AIM Family of Funds--Registered Trademark-- Formerly: Director, Senior Vice President, Secretary and General Counsel, Invesco Aim Management Group, Inc. and Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim Distributors, Inc.; Director, General Counsel and Vice President, Fund Management Company; Vice President, Invesco Aim Capital Management, Inc. and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The AIM Family of Funds--Registered Trademark--; Director and Vice President, INVESCO Distributors, Inc. and Chief Executive Officer and President, INVESCO Funds Group, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Sheri Morris -- 1964 1999 Vice President, Treasurer and Principal Financial Officer, The N/A Vice President, Treasurer AIM Family of Funds--Registered Trademark--; and Vice President, and Principal Financial Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. Officer and Invesco Aim Private Asset Management Inc. Formerly: Assistant Vice President and Assistant Treasurer, The AIM Family of Funds--Registered Trademark-- and Assistant Vice President, Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Karen Dunn Kelley -- 1960 2004 Head of Invesco's World Wide Fixed Income and Cash Management N/A Vice President Group; Director of Cash Management and Senior Vice President, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc; Executive Vice President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco Aim Management Group, Inc.; Vice President, The AIM Family of Funds--Registered Trademark-- (other than AIM Treasurer's Series Trust and Short-Term Investments Trust); and President and Principal Executive Officer, The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust and Short-Term Investments Trust only) Formerly President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer and Managing Director, Invesco Aim Capital Management, Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family of Funds--Registered Trademark-- (AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust only) - -------------------------------------------------------------------------------------------------------------------------------- Lance A. Rejsek -- 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, N/A Anti-Money Laundering Inc., Invesco Aim Capital Management, Inc., Invesco Aim Compliance Officer Distributors, Inc., Invesco Aim Investment Services, Inc., Invesco Aim Private Asset Management, Inc. and The AIM Family of Funds--Registered Trademark-- Formerly: Anti-Money Laundering Compliance Officer, Fund Management Company; and Manager of the Fraud Prevention Department, Invesco Aim Investment Services, Inc. - -------------------------------------------------------------------------------------------------------------------------------- Todd L. Spillane -- 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior N/A Chief Compliance Officer Vice President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM Family of Funds--Registered Trademark--, Invesco Global Asset Management (N.A.), Inc. (registered investment advisor), Invesco Institutional (N.A.), Inc., (registered investment advisor), INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment advisor) and Invesco Senior Secured Management, Inc. (registered investment advisor); and Vice President, Invesco Aim Distributors, Inc. and Invesco Aim Investment Services, Inc. Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company; and Global Head of Product Development, AIG-Global Investment Group, Inc. - --------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information of the Trust includes additional information about the Fund's Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Fund's prospectus for information on the Fund's sub- advisors. OFFICE OF THE FUND INVESTMENT ADVISOR DISTRIBUTOR AUDITORS 11 Greenway Plaza Invesco Aim Advisors, Invesco Aim Distributors, PricewaterhouseCoopers Suite 100 Inc. Inc. LLP Houston, TX 77046-1173 11 Greenway Plaza 11 Greenway Plaza 1201 Louisiana Street Suite 100 Suite 100 Suite 2900 Houston, TX 77046-1173 Houston, TX 77046-1173 Houston, TX 77002-5678 COUNSEL TO THE FUND COUNSEL TO THE TRANSFER AGENT CUSTODIAN Stradley Ronon Stevens INDEPENDENT TRUSTEES Invesco Aim Investment State Street Bank and & Young, LLP Kramer, Levin, Naftalis & Services, Inc. Trust Company 2600 One Commerce Square Frankel LLP P.O. Box 4739 225 Franklin Street Philadelphia, PA 19103 1177 Avenue of the Houston, TX 77210-4739 Boston, MA 02110-2801 Americas New York, NY 10036-2714
27 AIM SMALL CAP GROWTH FUND [GO PAPERLESS GRAPHIC] ==================================================================================================================================== GO PAPERLESS WITH EDELIVERY Visit invescoaim.com/edelivery to receive quarterly statements, tax forms, fund reports and prospectuses with a service that's all about eeees: o ENVIRONMENTALLY FRIENDLY. Go green by reducing the number of o EFFICIENT. Stop waiting for regular mail. Your documents will trees used to produce paper. be sent via email as soon as they're available. o ECONOMICAL. Help reduce your fund's printing and delivery o EASY. Download, save and print 3les using your home computer expenses and put more capital back in your fund's returns. with a few clicks of your mouse. This service is provided by Invesco Aim Investment Services, Inc. ==================================================================================================================================== FUND HOLDINGS AND PROXY VOTING INFORMATION The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter-ends. For the second and fourth quarters, the lists appear in the Fund's semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invescoaim.com. From our home page, click on Products & Performance, then Mutual Funds, then Fund Overview. Select your Fund from the drop-down menu and click on Complete Quarterly Holdings. Shareholders can also look up the Fund's Forms N-Q on the SEC website at sec.gov. Copies of the Fund's Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 942 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are 811-02699 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 website, invescoaim.com. On the home page, scroll down and click on Proxy Policy. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the 12 months ended June 30, 2008, is available at our website. Go to invescoaim.com, access the About Us tab, click on Required Notices and then click on Proxy Voting Activity. Next, select the Fund from the drop-down menu. The information is also available on the SEC website, sec.gov. If used after April 20, 2009, this report must be accompanied by a Fund fact sheet or Invesco Aim Quarterly Performance Review for the most recent quarter-end. Invesco Aim--SERVICE MARK-- is a service mark of Invesco Aim Management Group, Inc. Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc., Invesco Aim Private Asset Management, Inc. and Invesco PowerShares Capital Management LLC are the investment advisors for the products and services represented by Invesco Aim; they each provide investment advisory services to individual and institutional clients and do not sell securities. Please refer to each fund's prospectus for information on the fund's subadvisors. Invesco Aim Distributors, Inc. is the U.S. distributor for the retail mutual funds, exchange-traded funds and institutional money market funds and the subdistributor for the STIC Global Funds represented by Invesco Aim. All entities are indirect, wholly owned subsidiaries of Invesco Ltd. It is anticipated that the businesses of the affiliated investment adviser firms -- Invesco Aim Advisors, [INVESCO AIM Inc., Invesco Aim Capital Management, Inc., Invesco Private Asset Management, Inc. and Invesco Global Asset LOGO] Management (N.A.), Inc. -- will be combined into Invesco Institutional (N.A.), Inc., and the consolidated -- SERVICE MARK -- adviser firm will be renamed Invesco Advisers, Inc., on or about Aug. 1, 2009. Additional information will be posted at invescoaim.com on or about Aug. 1, 2009. invescoaim.com SCG-AR-1 Invesco Aim Distributors, Inc.
ITEM 2. CODE OF ETHICS. As of the end of the period covered by this report, the Registrant had adopted a code of ethics (the "Code") that applies to the Registrant's principal executive officer ("PEO") and principal financial officer ("PFO"). There were no amendments to the Code during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Trustees has determined that the Registrant has at least one audit committee financial expert serving on its Audit Committee. The Audit Committee financial expert is Raymond Stickel, Jr. Mr. Stickel is "independent" within the meaning of that term as used in Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. FEES BILLED BY PRINCIPAL ACCOUNTANT RELATED TO THE REGISTRANT PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:
Percentage of Fees Percentage of Fees Billed Applicable to Billed Applicable to Non-Audit Services Non-Audit Services Fees Billed by PWC Provided for fiscal Provided for fiscal for Services year end 2008 Fees Billed by PWC year end 2007 Rendered to the Pursuant to Waiver of for Services Rendered Pursuant to Waiver of Registrant for fiscal Pre-Approval to the Registrant for Pre-Approval year end 2008 Requirement(1) fiscal year end 2007 Requirement(1) --------------------- --------------------- ---------------------- --------------------- Audit Fees $443,378 N/A $414,551 N/A Audit-Related Fees(2) $ 0 0% $ 5,556 0% Tax Fees(3) $130,048 0% $130,667 0% All Other Fees $ 0 0% $ 0 0% -------- -------- Total Fees $573,426 0% $550,774 0%
PWC billed the Registrant aggregate non-audit fees of $130,048 for the fiscal year ended 2008, and $136,223 for the fiscal year ended 2007, for non-audit services rendered to the Registrant. - ---------- (1) With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant's Audit Committee and approved by the Registrant's Audit Committee prior to the completion of the audit. (2) Audit-Related Fees for the fiscal year ended December 31, 2007 includes fees billed for completing agreed-upon procedures related to reorganization transactions. (3) Tax fees for the fiscal year end December 31, 2008 includes fees billed for reviewing tax returns and consultation services. Tax fees for fiscal year end December 31, 2007 includes fees billed for reviewing tax returns and consultation services. FEES BILLED BY PRINCIPAL ACCOUNTANT RELATED TO INVESCO AIM AND INVESCO AIM AFFILIATES PWC billed Invesco Aim Advisors, Inc. ("Invesco Aim"), the Registrant's adviser, and any entity controlling, controlled by or under common control with Invesco Aim that provides ongoing services to the Registrant ("Invesco Aim Affiliates") aggregate fees for pre-approved non-audit services rendered to Invesco Aim and Invesco Aim Affiliates as follows:
Fees Billed for Non- Fees Billed for Non- Audit Services Audit Services Rendered to Invesco Percentage of Fees Rendered to Invesco Percentage of Fees Aim and Invesco Aim Billed Applicable to Aim and Invesco Aim Billed Applicable to Affiliates for fiscal Non-Audit Services Affiliates for fiscal Non-Audit Services year end 2008 That Provided for fiscal year year end 2007 That Provided for fiscal year Were Required end 2008 Pursuant to Were Required end 2007 Pursuant to to be Pre-Approved Waiver of Pre- to be Pre-Approved Waiver of Pre- by the Registrant's Approval by the Registrant's Approval Audit Committee Requirement(1) Audit Committee Requirement(1) --------------------- ------------------------ --------------------- ------------------------ Audit-Related Fees $0 0% $0 0% Tax Fees $0 0% $0 0% All Other Fees $0 0% $0 0% --- --- Total Fees(2) $0 0% $0 0%
- ---------- (1) With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant, Invesco Aim and Invesco Aim Affiliates during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrant's Audit Committee and approved by the Registrant's Audit Committee prior to the completion of the audit. (2) Including the fees for services not required to be pre-approved by the registrant's audit committee, PWC billed Invesco Aim and Invesco Aim Affiliates aggregate non-audit fees of $0 for the fiscal year ended 2008, and $0 for the fiscal year ended 2007, for non-audit services rendered to Invesco Aim and Invesco Aim Affiliates. The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco Aim and Invesco Aim Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining the principal accountant's independence. PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND PROCEDURES As adopted by the Audit Committees of the AIM Funds (the "Funds") Last Amended September 18, 2006 STATEMENT OF PRINCIPLES Under the Sarbanes-Oxley Act of 2002 and rules adopted by the Securities and Exchange Commission ("SEC") ("Rules"), the Audit Committees of the Funds' (the "Audit Committee") Board of Trustees (the "Board") are responsible for the appointment, compensation and oversight of the work of independent accountants (an "Auditor"). As part of this responsibility and to assure that the Auditor's independence is not impaired, the Audit Committees pre-approve the audit and non-audit services provided to the Funds by each Auditor, as well as all non-audit services provided by the Auditor to the Funds' investment adviser and to affiliates of the adviser that provide ongoing services to the Funds ("Service Affiliates") if the services directly impact the Funds' operations or financial reporting. The SEC Rules also specify the types of services that an Auditor may not provide to its audit client. The following policies and procedures comply with the requirements for pre-approval and provide a mechanism by which management of the Funds may request and secure pre-approval of audit and non-audit services in an orderly manner with minimal disruption to normal business operations. Proposed services either may be pre-approved without consideration of specific case-by-case services by the Audit Committees ("general pre-approval") or require the specific pre-approval of the Audit Committees ("specific pre-approval"). As set forth in these policies and procedures, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committees. Additionally, any fees exceeding 110% of estimated pre-approved fee levels provided at the time the service was pre-approved will also require specific approval by the Audit Committees before payment is made. The Audit Committees will also consider the impact of additional fees on the Auditor's independence when determining whether to approve any additional fees for previously pre-approved services. The Audit Committees will annually review and generally pre-approve the services that may be provided by each Auditor without obtaining specific pre-approval from the Audit Committee. The term of any general pre-approval runs from the date of such pre-approval through September 30th of the following year, unless the Audit Committees consider a different period and state otherwise. The Audit Committees will add to or subtract from the list of general pre-approved services from time to time, based on subsequent determinations. The purpose of these policies and procedures is to set forth the guidelines to assist the Audit Committees in fulfilling their responsibilities. DELEGATION The Audit Committees may from time to time delegate pre-approval authority to one or more of its members who are Independent Trustees. All decisions to pre-approve a service by a delegated member shall be reported to the Audit Committee at its next quarterly meeting. AUDIT SERVICES The annual audit services engagement terms will be subject to specific pre-approval of the Audit Committees. Audit services include the annual financial statement audit and other procedures such as tax provision work that is required to be performed by the independent auditor to be able to form an opinion on the Funds' financial statements. The Audit Committee will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditor's qualifications and independence. In addition to the annual Audit services engagement, the Audit Committees may grant either general or specific pre-approval of other audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services such as issuing consents for the inclusion of audited financial statements with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings. NON-AUDIT SERVICES The Audit Committees may provide either general or specific pre-approval of any non-audit services to the Funds and its Service Affiliates if the Audit Committees believe that the provision of the service will not impair the independence of the Auditor, is consistent with the SEC's Rules on auditor independence, and otherwise conforms to the Audit Committee's general principles and policies as set forth herein. AUDIT-RELATED SERVICES "Audit-related services" are assurance and related services that are reasonably related to the performance of the audit or review of the Fund's financial statements or that are traditionally performed by the independent auditor. Audit-related services include, among others, accounting consultations related to accounting, financial reporting or disclosure matters not classified as "Audit services"; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; and agreed-upon procedures related to mergers, compliance with ratings agency requirements and interfund lending activities. TAX SERVICES "Tax services" include, but are not limited to, the review and signing of the Funds' federal tax returns, the review of required distributions by the Funds and consultations regarding tax matters such as the tax treatment of new investments or the impact of new regulations. The Audit Committee will scrutinize carefully the retention of the Auditor in connection with a transaction initially recommended by the Auditor, the major business purpose of which may be tax avoidance or the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Funds' Treasurer (or his or her designee) and may consult with outside counsel or advisors as necessary to ensure the consistency of Tax services rendered by the Auditor with the foregoing policy. No Auditor shall represent any Fund or any Service Affiliate before a tax court, district court or federal court of claims. Under rules adopted by the Public Company Accounting Oversight Board and approved by the SEC, in connection with seeking Audit Committee pre-approval of permissible Tax services, the Auditor shall: 1. Describe in writing to the Audit Committees, which writing may be in the form of the proposed engagement letter: a. The scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the Fund, relating to the service; and b. Any compensation arrangement or other agreement, such as a referral agreement, a referral fee or fee-sharing arrangement, between the Auditor and any person (other than the Fund) with respect to the promoting, marketing, or recommending of a transaction covered by the service; 2. Discuss with the Audit Committees the potential effects of the services on the independence of the Auditor; and 3. Document the substance of its discussion with the Audit Committees. ALL OTHER AUDITOR SERVICES The Audit Committees may pre-approve non-audit services classified as "All other services" that are not categorically prohibited by the SEC, as listed in Exhibit 1 to this policy. PRE-APPROVAL FEE LEVELS OR ESTABLISHED AMOUNTS Pre-approval of estimated fees or established amounts for services to be provided by the Auditor under general or specific pre-approval policies will be set periodically by the Audit Committees. Any proposed fees exceeding 110% of the maximum estimated pre-approved fees or established amounts for pre-approved audit and non-audit services will be reported to the Audit Committees at the quarterly Audit Committees meeting and will require specific approval by the Audit Committees before payment is made. The Audit Committee will always factor in the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services and in determining whether to approve any additional fees exceeding 110% of the maximum pre-approved fees or established amounts for previously pre-approved services. PROCEDURES On an annual basis, A I M Advisors, Inc. ("AIM") will submit to the Audit Committees for general pre-approval, a list of non-audit services that the Funds or Service Affiliates of the Funds may request from the Auditor. The list will describe the non-audit services in reasonable detail and will include an estimated range of fees and such other information as the Audit Committee may request. Each request for services to be provided by the Auditor under the general pre-approval of the Audit Committees will be submitted to the Funds' Treasurer (or his or her designee) and must include a detailed description of the services to be rendered. The Treasurer or his or her designee will ensure that such services are included within the list of services that have received the general pre-approval of the Audit Committees. The Audit Committees will be informed at the next quarterly scheduled Audit Committees meeting of any such services for which the Auditor rendered an invoice and whether such services and fees had been pre-approved and if so, by what means. Each request to provide services that require specific approval by the Audit Committees shall be submitted to the Audit Committees jointly by the Fund's Treasurer or his or her designee and the Auditor, and must include a joint statement that, in their view, such request is consistent with the policies and procedures and the SEC Rules. Each request to provide tax services under either the general or specific pre-approval of the Audit Committees will describe in writing: (i) the scope of the service, the fee structure for the engagement, and any side letter or amendment to the engagement letter, or any other agreement between the Auditor and the audit client, relating to the service; and (ii) any compensation arrangement or other agreement between the Auditor and any person (other than the audit client) with respect to the promoting, marketing, or recommending of a transaction covered by the service. The Auditor will discuss with the Audit Committees the potential effects of the services on the Auditor's independence and will document the substance of the discussion. Non-audit services pursuant to the de minimis exception provided by the SEC Rules will be promptly brought to the attention of the Audit Committees for approval, including documentation that each of the conditions for this exception, as set forth in the SEC Rules, has been satisfied. On at least an annual basis, the Auditor will prepare a summary of all the services provided to any entity in the investment company complex as defined in section 2-01(f)(14) of Regulation S-X in sufficient detail as to the nature of the engagement and the fees associated with those services. The Audit Committees have designated the Funds' Treasurer to monitor the performance of all services provided by the Auditor and to ensure such services are in compliance with these policies and procedures. The Funds' Treasurer will report to the Audit Committee on a periodic basis as to the results of such monitoring. Both the Funds' Treasurer and management of AIM will immediately report to the chairman of the Audit Committee any breach of these policies and procedures that comes to the attention of the Funds' Treasurer or senior management of AIM. EXHIBIT 1 TO PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES POLICIES AND PROCEDURES CONDITIONALLY PROHIBITED NON-AUDIT SERVICES (NOT PROHIBITED IF THE FUND CAN REASONABLY CONCLUDE THAT THE RESULTS OF THE SERVICE WOULD NOT BE SUBJECT TO AUDIT PROCEDURES IN CONNECTION WITH THE AUDIT OF THE FUND'S FINANCIAL STATEMENTS) - Bookkeeping or other services related to the accounting records or financial statements of the audit client - Financial information systems design and implementation - Appraisal or valuation services, fairness opinions, or contribution-in-kind reports - Actuarial services - Internal audit outsourcing services CATEGORICALLY PROHIBITED NON-AUDIT SERVICES - Management functions - Human resources - Broker-dealer, investment adviser, or investment banking services - Legal services - Expert services unrelated to the audit - Any service or product provided for a contingent fee or a commission - Services related to marketing, planning, or opining in favor of the tax treatment of confidential transactions or aggressive tax position transactions, a significant purpose of which is tax avoidance - Tax services for persons in financial reporting oversight roles at the Fund - Any other service that the Public Company Oversight Board determines by regulation is impermissible. PwC advised the Funds' Audit Committee that PwC had identified three matters for consideration under the SEC's auditor independence rules. First, PwC was engaged to perform services to an affiliate of Invesco Ltd. ("Invesco"), including (a) consulting with respect to the acquisition by the affiliate of certain assets from a third party; and (b) providing expert testimony in connection with any arbitration proceeding or litigation arising from or relating to the transaction. Rules of the Securities and Exchange Commission ("SEC") provide that an accountant is not independent if, at any point during the audit and professional engagement period, the accountant provides expert services unrelated to the audit to an audit client. Specifically, PwC would not be permitted to provide expert testimony nor perform other services in support of the client or its counsel in connection with a proceeding. Within days of being engaged to provide the services it was determined that some of the services contemplated in the engagement terms would be inconsistent with the SEC's auditor independence rules. A review of the services performed pursuant to the original agreement was conducted. After a review, PwC concluded that the actual services provided were not inconsistent with the SEC's independence rules. Following the review, the initial engagement terms were modified to limit PwC's services to those permitted under the rules. Second, an employee of PwC served as a nominee shareholder (effectively equivalent to a Trustee) of various companies or trusts since 2001. Some of these companies held shares of Invesco Nippon Warrants Fund (the "Investment."), an affiliate of Invesco, formerly known as AMVESCAP PLC (the "Company"). The investment, which consisted of 2,070 shares, was initially entered into during July 1, 2001 - December 31, 2005. PwC informed the Audit Committee that this matter could have constituted an investment in an affiliate of an audit client in violation of Rule 2-01(c)(1) of Regulation S-X. Third, PwC became aware that certain aspects of investment advisory services provided by a PwC network member Firm's Wealth Advisory Practice to its clients (generally high net worth individuals not associated with Invesco) were inconsistent with the SEC's auditor independence requirements of the SEC. The technical violations occurred as a result of professionals of the Wealth Advisory Practice making a single recommendation of an audit client's product to its clients rather than also identifying one or more suitable alternatives for the Wealth Advisory Practice's client to consider. The Wealth Advisory Practice also received commissions from the fund manager. With respect to Invesco and its affiliates, there were 33 cases of single product recommendation and 20 cases of commissions received totaling approximately Pound Sterling 7,000. These violations occurred over a two year period and ended in November 2007. It should be noted that at no time did The Wealth Advisory Practice recommend products on behalf Invesco and its affiliates. Additionally, members of the audit engagement team were not aware of these violations or services; the advice provided was based on an understanding of the investment objectives of the clients of the Wealth Advisory Practice and not to promote the Company and its affiliates, and the volume and nature of the violations were insignificant. Although PwC received commissions, PwC derived no economic benefit from the commission as any commissions received were deducted from the time based fees charged to the investor client and created no incentive for PwC to recommend the investment. PwC advised the Audit Committee that it believes its independence had not been adversely affected as it related to the audits of the Funds by any of these matters. In reaching this conclusion, PwC noted that during the time of its audits, the engagement team was not aware of the services provided or the investments and noted the insignificance of the services provided. Based on the foregoing, PwC did not believe any of these matters affected PwC's ability to act objectively and impartially and to issue a report on financial statements as the Funds' independent auditor, and, believes that a reasonable investor with knowledge of all the facts would agree with this conclusion. Based upon PwC's review, discussion and representations above, the audit committee, in its business judgment, concurred with PwC's conclusions in relation to its independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None ITEM 11. CONTROLS AND PROCEDURES. (a) As of December 16, 2008, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the PEO and PFO, to assess the effectiveness of the Registrant's disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act"), as amended. Based on that evaluation, the Registrant's officers, including the PEO and PFO, concluded that, as of December 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 this report that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting. ITEM 12. EXHIBITS. 12(a) (1) Code of Ethics. 12(a) (2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. 12(a) (3) Not applicable. 12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AIM Growth Series By: /s/ PHILIP A. TAYLOR --------------------------------- Philip A. Taylor Principal Executive Officer Date: March 6, 2009 Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By: /s/ PHILIP A. TAYLOR --------------------------------- Philip A. Taylor Principal Executive Officer Date: March 6, 2009 By: /s/ Sheri Morris --------------------------------- Sheri Morris Principal Financial Officer Date: March 6, 2009 EXHIBIT INDEX 12(a)(1) Code of Ethics. 12(a)(2) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. 12(a)(3) Not applicable. 12(b) Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. EX-99.CODE ETH 2 h65412exv99wcodeeth.txt EX-99.CODE ETH EXHIBIT - CODE OF ETHICS DISCLOSURE CONTROLS PROCEDURE THE AIM FAMILY OF FUNDS CODE OF ETHICS FOR SENIOR OFFICERS I. INTRODUCTION The Boards of Directors/Trustees ("Board") of The AIM Family of Funds (the "Companies") have adopted this code of ethics (this "Code") applicable to their Principal Executive Officer and Principal Financial and Accounting Officer (the "Covered Officers") to promote: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - full, fair, accurate, timely and understandable disclosure in documents filed with the Securities and Exchange Commission ("SEC") and in other public communications; - compliance with applicable governmental laws, rules and regulations; - the prompt internal reporting to an appropriate person or persons identified in the Code of violations of the Code; and - accountability for adherence to the Code. II. COVERED OFFICERS SHOULD ACT HONESTLY AND CANDIDLY Each Covered Officer named in Exhibit A to this Code owes a duty to the Companies to act with integrity. Integrity requires, among other things, being honest and candid. Deceit and subordination of principle are inconsistent with integrity. Each Covered Officer must: - act with integrity, including being honest and candid while still maintaining the confidentiality of information where required by law or the Companies' policies; - observe both the form and spirit of laws and governmental rules and regulations, accounting standards and policies of the Companies; - adhere to a high standard of business ethics; and - place the interests of the Companies before the Covered Officer's own personal interests. Business practices Covered Officers should be guided by and adhere to these fiduciary standards. III. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST GUIDING PRINCIPLES. A "conflict of interest" occurs when an individual's private interest interferes with the interests of the Companies. A conflict of interest can arise when a Covered Officer takes actions or has interests that may make it difficult to perform his or her work for the Companies objectively and effectively. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his or her position in any of the Companies. In addition, investment companies should be sensitive to situations that create apparent, but not actual, conflicts of interest. Service to the Companies should never be subordinated to personal gain and advantage. Certain conflicts of interest covered by this Code arise out of the relationships between Covered Officers and the Companies that already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended and the Investment Advisers Act of 1940, as amended. For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Companies because of their status as "affiliated persons" of the Companies. Therefore, as to the existing statutory and regulatory prohibitions on individual behavior, they will be deemed to be incorporated in this Code and therefore any material violation will also be deemed a violation of this Code. Covered Officers must in all cases comply with applicable statutes and regulations. As to conflicts arising from, or as a result of the contractual relationship between, the Companies and the investment adviser of which the Covered Officers are also officers or employees, it is recognized by the Board that, subject to the adviser's fiduciary duties to the Companies, the Covered Officers will in the normal course of their duties (whether formally for the Companies or for the adviser, or for both) be involved in establishing policies and implementing decisions which will have different effects on the adviser and the Companies. The Board recognizes that the participation of the Covered Officers in such activities is inherent in the contractual relationship between the Companies and the adviser and is consistent with the expectation of the Board of the performance by the Covered Officers of their duties as officers of the Companies. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of other investment companies advised by the same adviser and the codes which apply to senior officers of those investment companies will apply to the Covered Officers acting in those distinct capacities. Each Covered Officer must: - avoid conflicts of interest wherever possible; - handle any actual or apparent conflict of interest ethically; - not use his or her personal influence or personal relationships to influence investment decisions or financial reporting by an investment company whereby the Covered Officer would benefit personally to the detriment of any of the Companies; - not cause an investment company to take action, or fail to take action, for the personal benefit of the Covered Officer rather than the benefit of such company; - not use knowledge of portfolio transactions made or contemplated for an investment company to profit or cause others to profit, by the market effect of such transactions; and - as described in more detail below, discuss any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest with the Chief Legal Officer of the AIM Funds (the "Chief Legal Officer"). Some conflict of interest situations that should always be discussed with the Chief Legal Officer, if material, include the following: - any outside business activity that detracts from an individual's ability to devote appropriate time and attention to his or her responsibilities with the Companies; - being in the position of supervising, reviewing or having any influence on the job evaluation, pay or benefit of any immediate family member; - any direct ownership interest in, or any consulting or employment relationship with, any of the Companies' service providers, other than its investment adviser, distributor or other AMVESCAP affiliated entities and other than a de minimis ownership interest (for purposes of this section of the Code an ownership interest of 1% or less shall constitute a de minimis ownership interest, and an ownership interest of more than 1% creates a rebuttable presumption that there may be a material conflict of interest); and - a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Companies for effecting portfolio transactions or for selling or redeeming shares, other than an interest arising from the Covered Officer's employment with Invesco Aim, its subsidiaries, its parent organizations and any affiliates or subsidiaries thereof, such as compensation or equity ownership, and other than an interest arising from a de minimis ownership interest in a company with which the Companies execute portfolios transactions or a company that receives commissions or other fees related to its sales and redemptions of shares of the Companies (for purposes of this section of the Code an ownership interest of 1% or less shall constitute a de minimis ownership interest, and an ownership interest of more than 1% creates a rebuttable presumption that there may be a material conflict of interest). IV. DISCLOSURE Each Covered Officer is required to be familiar, and comply, with the Companies' disclosure controls and procedures so that the Companies' subject reports and documents filed with the SEC comply in all material respects with the applicable federal securities laws and SEC rules. In addition, each Covered Officer having direct or supervisory authority regarding these SEC filings or the Companies' other public communications should, to the extent appropriate within his area of responsibility, consult with other officers and employees of the Companies and take other appropriate steps regarding these disclosures with the goal of making full, fair, accurate, timely and understandable disclosure. Each Covered Officer must: - familiarize himself/herself with the disclosure requirements applicable to the Companies as well as the business and financial operations of the Companies; and - not knowingly misrepresent, or cause others to misrepresent, facts about the Companies to others, whether within or outside the Companies, including representations to the Companies' internal auditors, independent Directors/Trustees, independent auditors, and to governmental regulators and self-regulatory organizations. V. COMPLIANCE It is the Companies' policy to comply in all material respects with all applicable governmental laws, rules and regulations. It is the personal responsibility of each Covered Officer to adhere to the standards and restrictions imposed by those laws, rules and regulations, including those relating to affiliated transactions, accounting and auditing matters. VI. REPORTING AND ACCOUNTABILITY Each Covered Officer must: - upon receipt of the Code, sign and submit to the Chief Compliance Officer of the Companies an acknowledgement stating that he or she has received, read, and understands the Code. - annually thereafter submit a form to the Chief Compliance Officer of the Companies confirming that he or she has received, read and understands the Code and has complied with the requirements of the Code. - not retaliate against any employee or other Covered Officer for reports of potential violations that are made in good faith. - notify the Chief Legal Officer promptly if he becomes aware of any existing or potential violation of this Code. Failure to do so is itself a violation of this Code. Except as described otherwise below, the Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented to him or her and has the authority to interpret this Code in any particular situation. The Chief Legal Officer shall take all action he or she considers appropriate to investigate any actual or potential violations reported to him or her. The Chief Legal Officer is authorized to consult, as appropriate, with the Chairman of the Audit Committees of the Board, counsel to the Companies and counsel to the independent Directors/Trustees, and is encouraged to do so. The Chief Legal Officer is responsible for granting waivers and determining sanctions, as appropriate. In addition, approvals, interpretations, or waivers sought by the Covered Officers may also be considered by the Chairman of the AIM Funds Audit Committees. The Companies will follow these procedures in investigating and enforcing this Code, and in reporting on the Code: - the Chief Legal Officer will take all appropriate action to investigate any violations reported to him or her; - violations and potential violations will be reported to the Chairman of the Audit Committees of the Board after such investigation; - if the Chairman of the Audit Committees determines that a violation has occurred, he or she will inform the Board, which will take all appropriate disciplinary or preventive action; - appropriate disciplinary or preventive action may include a letter of censure, suspension, dismissal or, in the event of criminal or other serious violations of law, notification to the SEC or other appropriate law enforcement authorities; - the Chief Legal Officer will be responsible for granting waivers, as appropriate; and - any changes to or waivers of this Code will, to the extent required, be disclosed on Form N-CSR as provided by SEC rules. VII. OTHER POLICIES AND PROCEDURES The Companies' and the Advisers' and Principal Underwriters' codes of ethics under Rule 17j-1 under the Investment Company Act and the Advisers' more detailed policies and procedures set forth in its Compliance and Supervisory Procedures Manual are separate requirements applying to Covered Officers and others, and are not part of this Code. VIII. AMENDMENTS This Code may not be amended except in written form, which is specifically approved by a majority vote of the Companies' Board, including a majority of independent Directors/Trustees. IX. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code shall be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the members of the Companies' Board, counsel to the Companies, and counsel to the independent Directors/Trustees. EXHIBIT A Persons Covered by this Code of Ethics: Philip A. Taylor Sheri Morris Karen Dunn Kelley THE AIM FAMILY OF FUNDS CODE OF ETHICS--ACKNOWLEDGEMENT I hereby acknowledge that I am a Principal Officer of the Companies and I am aware of and subject to the Companies' Code of Ethics for Principal Officers. Accordingly, I have read and understood the requirements of the Code of Ethics and I am committed to fully comply with the Code of Ethics. I recognize my obligation to promote: 1. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; 2. Full, fair, accurate, timely, and understandable disclosure in reports and documents that the Companies file with, or submit to, the Commission and in other public communications made by the Companies; and 3. Compliance with applicable governmental laws, rules, and regulations. - ------------------------------------- ---------------------------------------- Date Name: Title: EX-99.CERT 3 h65412exv99wcert.txt EX-99.CERT I, Philip A. Taylor, Principal Executive Officer, certify that: 1. I have reviewed this report on Form N-CSR of AIM Growth Series; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3 (d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidating subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filling date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 6, 2009 /s/ PHILIP A. TAYLOR ---------------------------------------- Philip A. Taylor, Principal Executive Officer I, Sheri Morris, Principal Financial Officer, certify that: 1. I have reviewed this report on Form N-CSR of AIM Growth Series; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3 (d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidating subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filling date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: March 6, 2009 /s/ Sheri Morris ---------------------------------------- Sheri Morris, Principal Financial Officer EX-99.906CERT 4 h65412exv99w906cert.txt EX-99.906CERT CERTIFICATION OF SHAREHOLDER REPORT In connection with the Certified Shareholder Report of AIM Growth Series (the "Company") on Form N-CSR for the period ended December 31, 2008, as filed with the Securities and Exchange Commission (the "Report"), I, Philip A. Taylor, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 6, 2009 /s/ Philip A. Taylor ---------------------------------------- Philip A. Taylor, Principal Executive Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. CERTIFICATION OF SHAREHOLDER REPORT In connection with the Certified Shareholder Report of AIM Growth Series (the "Company") on Form N-CSR for the period ended December 31, 2008, as filed with the Securities and Exchange Commission (the "Report"), I, Sheri Morris, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 6, 2009 /s/ Sheri Morris ---------------------------------------- Sheri Morris, Principal Financial Officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided by the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----