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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09913
AIM Counselor Series Trust (Invesco Counselor Series Trust)
(Exact name of registrant as specified in charter)
11 Greenway Plaza,
Suite 1000 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Philip A. Taylor
11 Greenway Plaza,
Suite 1000 Houston, Texas 77046
(Name and address of agent for service)
Registrants telephone number, including area code: (713) 626-1919
Date of fiscal year end: 8/31
Date of reporting period: 08/31/13
Item 1. Report to Stockholders.
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Annual Report to Shareholders |
August 31, 2013 | ||||||
Invesco American Franchise Fund |
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Nasdaq: | |||||||
A: VAFAX ¡ B: VAFBX ¡ C: VAFCX ¡ R: VAFRX ¡ Y: VAFIX ¡ R5: VAFNX ¡ R6: VAFFX |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its |
extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 Source: Reuters
2 Invesco American Franchise Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent legal counsel and review |
performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco American Franchise Fund
Managements Discussion of Fund Performance
4 Invesco American Franchise Fund
5 Invesco American Franchise Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es) since Inception
Fund data from 6/23/05; index data from 6/30/05
6 Invesco American Franchise Fund
7 Invesco American Franchise Fund
Invesco American Franchise Funds investment objective is to seek long-term capital appreciation.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco American Franchise Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco American Franchise Fund
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 & Poors. |
(b) | Non-income producing security. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco American Franchise Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco American Franchise Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $455,575) |
$ | 69,460,859 | ||
Dividends from affiliated money market funds (includes securities lending income of $486,545) |
580,257 | |||
Total investment income |
70,041,116 | |||
Expenses: |
||||
Advisory fees |
34,867,835 | |||
Administrative services fees |
651,042 | |||
Custodian fees |
167,795 | |||
Distribution fees: |
||||
Class A |
12,089,599 | |||
Class B |
613,844 | |||
Class C |
2,512,202 | |||
Class R |
92,939 | |||
Transfer agent fees A, B, C, R and Y |
13,249,273 | |||
Transfer agent fees R5 |
166,300 | |||
Transfer agent fees R6 |
2,027 | |||
Trustees and officers fees and benefits |
206,751 | |||
Other |
1,166,045 | |||
Total expenses |
65,785,652 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) |
(4,287,998 | ) | ||
Net expenses |
61,497,654 | |||
Net investment income |
8,543,462 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain (loss) from: |
||||
Investment securities (includes net gains from securities sold to affiliates of $10,239,424) |
787,955,978 | |||
Foreign currencies |
(1,434 | ) | ||
787,954,544 | ||||
Change in net unrealized appreciation of: |
||||
Investment securities |
189,233,144 | |||
Foreign currencies |
1,317 | |||
189,234,461 | ||||
Net realized and unrealized gain |
977,189,005 | |||
Net increase in net assets resulting from operations |
$ | 985,732,467 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco American Franchise Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income (loss) |
$ | 8,543,462 | $ | (3,482,880 | ) | |||
Net realized gain |
787,954,544 | 5,600,794 | ||||||
Change in net unrealized appreciation |
189,234,461 | 422,392,232 | ||||||
Net increase in net assets resulting from operations |
985,732,467 | 424,510,146 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(1,680,357 | ) | | |||||
Class B |
(88,298 | ) | | |||||
Class Y |
(269,635 | ) | | |||||
Class R5 |
(655,036 | ) | | |||||
Class R6 |
(545,579 | ) | | |||||
Total distributions from net investment income |
(3,238,905 | ) | | |||||
Distributions to shareholders from net realized gains: |
||||||||
Class A |
| (49,936,307 | ) | |||||
Class B |
| (3,657,657 | ) | |||||
Class C |
| (2,792,450 | ) | |||||
Class R |
| (188,148 | ) | |||||
Class Y |
| (1,138,913 | ) | |||||
Class R5 |
| (2,112,110 | ) | |||||
Total distributions from net realized gains |
| (59,825,585 | ) | |||||
Share transactionsnet: |
||||||||
Class A |
(135,809,151 | ) | (464,391,426 | ) | ||||
Class B |
(87,558,797 | ) | (119,780,165 | ) | ||||
Class C |
(22,109,739 | ) | (28,808,170 | ) | ||||
Class R |
(2,317,486 | ) | (165,660 | ) | ||||
Class Y |
(22,131,891 | ) | (23,439,291 | ) | ||||
Class R5 |
(181,966,427 | ) | 79,335,971 | |||||
Class R6 |
99,950,199 | | ||||||
Net increase (decrease) in net assets resulting from share transactions |
(351,943,292 | ) | (557,248,741 | ) | ||||
Net increase (decrease) in net assets |
630,550,270 | (192,564,180 | ) | |||||
Net assets: |
||||||||
Beginning of year |
5,674,011,687 | 5,866,575,867 | ||||||
End of year (includes undistributed net investment income of $8,309,634 and $2,859,270, respectively) |
$ | 6,304,561,957 | $ | 5,674,011,687 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco American Franchise Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to seek long-term capital appreciation.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. On September 24, 2012, Institutional Class shares were renamed Class R5 shares and the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B
13 Invesco American Franchise Fund
shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors |
14 Invesco American Franchise Fund
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 issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income and net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the 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. Prior to June 1, 2010, incremental transfer agency fees which were unique to each class of shares were charged to the operations of such class. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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 Funds 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 Funds policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. |
J. | Foreign Currency Translations Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
K. | Foreign Currency Contracts The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to lock in the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts |
15 Invesco American Franchise Fund
are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||||
First $250 million |
0 | .695% | ||||
Next $250 million |
0 | .67% | ||||
Next $500 million |
0 | .645% | ||||
Next $550 million |
0 | .62% | ||||
Next $3.45 billion |
0 | .60% | ||||
Next $250 million |
0 | .595% | ||||
Next $2.25 billion |
0 | .57% | ||||
Next $2.5 billion |
0 | .545% | ||||
Over $10 billion |
0 | .52% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
Effective July 1, 2013, the Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75% (after 12b-1 fee waivers), 2.75%, 2.25%, 1.75%, 1.75% and 1.75%, respectively, of average daily net assets. Prior to July 1, 2013, the Adviser had contractually agreed to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.05%, 1.22% (after 12b-1fee waivers), 1.80%, 1.30%, 0.80%, 0.80% and 0.80%, respectively, of average daily net assets. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014.
The Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $130,280 and reimbursed class level expenses of $3,670,025, $186,344, $190,656, $14,107 and $67,208 of Class A, Class B, Class C, Class R and Class Y shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the Plans) for Class A, Class B, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% each of Class B and Class C average daily net assets and up to 0.50% of Class R average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
IDI had contractually agreed to limit Rule 12b-1 plan fees on Class B shares to 0.42% of average daily net assets, through June 30, 2013. The Distributor did not waive fees during the period under this expense limitation.
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
16 Invesco American Franchise Fund
proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $334,787 in front-end sales commissions from the sale of Class A shares and $1,438, $156,132 and $13,502 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the year ended August 31, 2013, the Fund incurred $127,319 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 6,275,116,656 | $ | 27,179,656 | $ | | $ | 6,302,296,312 |
NOTE 4Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 5Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended August 31, 2013, the Fund engaged in securities purchases of $13,131,857 and securities sales of $48,113,780, which resulted in net realized gains of $10,239,424.
NOTE 6Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $29,378.
NOTE 7Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
17 Invesco American Franchise Fund
NOTE 8Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 3,238,905 | $ | | ||||
Long-term capital gain |
| 59,825,585 | ||||||
Total distributions |
$ | 3,238,905 | $ | 59,825,585 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 9,212,385 | ||
Undistributed long-term gain |
277,018,328 | |||
Net unrealized appreciation investments |
1,453,560,022 | |||
Net unrealized appreciation other investments |
1,425 | |||
Temporary book/tax differences |
(902,751 | ) | ||
Capital loss carryforward |
(51,998,500 | ) | ||
Shares of beneficial interest |
4,617,671,048 | |||
Total net assets |
$ | 6,304,561,957 |
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 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 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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $345,814,377 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2015 |
$ | 2,422,410 | $ | | $ | 2,422,410 | ||||||
August 31, 2016 |
49,576,090 | | 49,576,090 | |||||||||
$ | 51,998,500 | $ | | $ | 51,998,500 |
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of May 23, 2011, the date of the reorganization of Invesco Large Cap Growth Fund, Invesco Van Kampen Capital Growth Fund and Invesco Van Kampen Enterprise Fund and as of July 15, 2013, the date of the reorganization of Invesco Leisure Fund into the Fund and realized on securities held in each fund at such date of the reorganization, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. |
NOTE 9Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $4,452,496,044 and $4,961,303,704, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities |
$ | 1,500,932,731 | ||
Aggregate unrealized (depreciation) of investment securities |
(47,372,709 | ) | ||
Net unrealized appreciation of investment securities |
$ | 1,453,560,022 |
Cost of investments for tax purposes is $4,848,736,290.
NOTE 10Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of fair funds settlements, on August 31, 2013, undistributed net investment income was increased by $257,428 and undistributed net realized gain was decreased by $257,428.
Further, as a result of tax deferrals acquired in the reorganization of Invesco Leisure Fund into the Fund, undistributed net investment income was decreased by $111,621, undistributed net realized gain was decreased by $798,578 and shares of beneficial interest was increased by $910,199. These reclassifications had no effect on the net assets of the Fund.
18 Invesco American Franchise Fund
NOTE 11Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
9,792,627 | $ | 131,507,521 | 14,165,188 | $ | 170,566,557 | ||||||||||
Class B |
136,087 | 1,766,668 | 226,851 | 2,659,926 | ||||||||||||
Class C |
1,034,373 | 13,366,766 | 1,717,250 | 19,978,836 | ||||||||||||
Class R |
251,276 | 3,336,107 | 402,087 | 4,755,689 | ||||||||||||
Class Y |
1,654,188 | 22,565,414 | 2,652,299 | 31,747,725 | ||||||||||||
Class R5 |
1,428,763 | 19,009,427 | 11,756,254 | 134,787,606 | ||||||||||||
Class R6(b) |
13,767,716 | 181,744,390 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
120,687 | 1,561,209 | 4,169,056 | 47,193,711 | ||||||||||||
Class B |
6,819 | 86,110 | 322,943 | 3,578,212 | ||||||||||||
Class C |
| | 231,774 | 2,572,693 | ||||||||||||
Class R |
| | 16,635 | 188,148 | ||||||||||||
Class Y |
18,246 | 230,140 | 86,240 | 982,277 | ||||||||||||
Class R5 |
52,093 | 654,994 | 185,905 | 2,111,886 | ||||||||||||
Class R6 |
43,407 | 545,579 | | | ||||||||||||
Issued in connection with acquisitions:(c) |
||||||||||||||||
Class A |
28,493,895 | 414,344,182 | | | ||||||||||||
Class B |
240,442 | 3,419,085 | | | ||||||||||||
Class C |
1,148,422 | 16,170,371 | | | ||||||||||||
Class R |
100,907 | 1,459,285 | | | ||||||||||||
Class Y |
801,793 | 11,737,602 | | | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
4,333,763 | 57,758,261 | 6,324,818 | 75,981,272 | ||||||||||||
Class B |
(4,429,532 | ) | (57,758,261 | ) | (6,303,285 | ) | (75,981,272 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(55,559,122 | ) | (740,980,324 | ) | (63,303,335 | ) | (758,132,966 | ) | ||||||||
Class B |
(2,697,669 | ) | (35,072,399 | ) | (4,407,859 | ) | (50,037,031 | ) | ||||||||
Class C |
(4,005,957 | ) | (51,646,876 | ) | (4,365,929 | ) | (51,359,699 | ) | ||||||||
Class R |
(532,067 | ) | (7,112,878 | ) | (422,570 | ) | (5,109,497 | ) | ||||||||
Class Y |
(4,221,766 | ) | (56,665,047 | ) | (4,776,818 | ) | (56,169,293 | ) | ||||||||
Class R5 |
(15,318,838 | ) | (201,630,848 | ) | (4,716,593 | ) | (57,563,521 | ) | ||||||||
Class R6 |
(6,170,925 | ) | (82,339,770 | ) | | | ||||||||||
Net increase (decrease) in share activity |
(29,510,372 | ) | $ | (351,943,292 | ) | (46,039,089 | ) | $ | (557,248,741 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 24% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
(c) | As of the opening of business on July 15, 2013, the Fund acquired all the net assets of Invesco Leisure Fund (the Target Fund) pursuant to a plan of reorganization approved by the Trustees of the Fund and by the shareholders of the Target Fund on April 24, 2013. The acquisition was accomplished by a tax-free exchange of 30,785,459 shares of the Fund for 10,245,465 shares outstanding of the Target Fund as of the close of business on July 12, 2013. Shares of the Target Fund were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Fund to the net asset value of the Fund on the close of business, July 12, 2013. The Target Funds net assets as of the close of business on July 12, 2013 of $447,130,525, including $168,476,621 of unrealized appreciation (depreciation), were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $5,828,287,238 and $6,275,415,763 immediately after the acquisition. |
The pro forma results of operations for the year ended August 31, 2013 assuming the reorganization had been completed on September 1, 2012, the beginning of the annual reporting period are as follows: |
Net investment income |
$ | 8,281,484 | ||
Net realized/unrealized gains |
1,210,553,562 | |||
Change in net assets resulting from operations |
$ | 1,218,835,046 |
The combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Target Fund that have been included in the Funds Statement of Operations since July 15, 2013. |
19 Invesco American Franchise Fund
NOTE 12Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income (loss)(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover(b) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 12.47 | $ | 0.02 | $ | 2.33 | $ | 2.35 | $ | (0.00 | ) | $ | | $ | (0.00 | ) | $ | 14.82 | 18.89 | %(c) | $ | 5,428,321 | 1.06 | %(d) | 1.14 | %(d) | 0.17 | %(d) | 80 | % | ||||||||||||||||||||||||||
Year ended 08/31/12 |
11.72 | (0.01 | ) | 0.88 | 0.87 | | (0.12 | ) | (0.12 | ) | 12.47 | 7.55 | (c) | 4,728,364 | 1.05 | 1.18 | (0.05 | ) | 96 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
9.79 | (0.05 | ) | 1.98 | 1.93 | | | | 11.72 | 19.71 | (c) | 4,894,163 | 1.06 | 1.17 | (0.43 | ) | 179 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
8.87 | 0.01 | 1.03 | 1.04 | (0.12 | ) | | (0.12 | ) | 9.79 | 11.75 | (c) | 168,731 | 1.30 | 1.30 | 0.11 | 101 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
10.23 | 0.13 | (1.33 | ) | (1.20 | ) | (0.16 | ) | (0.00 | ) | (0.16 | ) | 8.87 | (11.40 | )(e) | 200,127 | 1.35 | 1.41 | 1.60 | 105 | ||||||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.20 | 0.02 | 2.28 | 2.30 | (0.00 | ) | | (0.00 | ) | 14.50 | 18.90 | (c)(f) | 226,796 | 1.06 | (d)(f) | 1.14 | (d)(f) | 0.17 | (d)(f) | 80 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.47 | (0.01 | ) | 0.86 | 0.85 | | (0.12 | ) | (0.12 | ) | 12.20 | 7.54 | (c)(f) | 273,177 | 1.05 | (f) | 1.18 | (f) | (0.05 | )(f) | 96 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
9.64 | (0.08 | ) | 1.91 | 1.83 | | | | 11.47 | 18.98 | (c)(f) | 373,157 | 1.28 | (f) | 1.65 | (f) | (0.64 | )(f) | 179 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
8.75 | (0.06 | ) | 1.01 | 0.95 | (0.06 | ) | | (0.06 | ) | 9.64 | 10.89 | (c) | 22,332 | 2.05 | 2.05 | (0.64 | ) | 101 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
10.08 | 0.07 | (1.31 | ) | (1.24 | ) | (0.09 | ) | (0.00 | ) | (0.09 | ) | 8.75 | (12.09 | )(g) | 23,466 | 2.10 | 2.16 | 0.86 | 105 | ||||||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.16 | (0.08 | ) | 2.26 | 2.18 | | | | 14.34 | 17.93 | (c) | 271,960 | 1.81 | (d) | 1.89 | (d) | (0.58 | )(d) | 80 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.51 | (0.09 | ) | 0.86 | 0.77 | | (0.12 | ) | (0.12 | ) | 12.16 | 6.82 | (c) | 252,685 | 1.80 | 1.93 | (0.80 | ) | 96 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
9.68 | (0.11 | ) | 1.94 | 1.83 | | | | 11.51 | 18.90 | (c)(h) | 266,990 | 1.60 | (h) | 1.71 | (h) | (0.97 | )(h) | 179 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
8.76 | (0.05 | ) | 1.03 | 0.98 | (0.06 | ) | | (0.06 | ) | 9.68 | 11.14 | (c)(h) | 23,718 | 1.93 | (h) | 1.93 | (h) | (0.52 | )(h) | 101 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
10.10 | 0.06 | (1.30 | ) | (1.24 | ) | (0.10 | ) | (0.00 | ) | (0.10 | ) | 8.76 | (12.11 | )(i) | 25,063 | 2.16 | 2.22 | 0.78 | 105 | ||||||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.43 | (0.01 | ) | 2.32 | 2.31 | | | | 14.74 | 18.58 | (c) | 19,576 | 1.31 | (d) | 1.39 | (d) | (0.08 | )(d) | 80 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.71 | (0.04 | ) | 0.88 | 0.84 | | (0.12 | ) | (0.12 | ) | 12.43 | 7.30 | (c) | 18,746 | 1.30 | 1.43 | (0.30 | ) | 96 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/11(j) |
12.81 | (0.02 | ) | (1.08 | ) | (1.10 | ) | | | | 11.71 | (8.59 | )(c) | 17,698 | 1.30 | (k) | 1.42 | (k) | (0.66 | )(k) | 179 | |||||||||||||||||||||||||||||||||||
Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.57 | 0.06 | 2.34 | 2.40 | (0.04 | ) | | (0.04 | ) | 14.93 | 19.13 | (c) | 92,418 | 0.81 | (d) | 0.89 | (d) | 0.42 | (d) | 80 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.78 | 0.02 | 0.89 | 0.91 | | (0.12 | ) | (0.12 | ) | 12.57 | 7.86 | (c) | 99,758 | 0.80 | 0.93 | 0.20 | 96 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
9.83 | (0.02 | ) | 1.97 | 1.95 | | | | 11.78 | 19.84 | (c) | 117,471 | 0.81 | 0.92 | (0.18 | ) | 179 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
8.91 | 0.04 | 1.02 | 1.06 | (0.14 | ) | | (0.14 | ) | 9.83 | 11.95 | (c) | 2,592 | 1.05 | 1.05 | 0.35 | 101 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
10.27 | 0.14 | (1.31 | ) | (1.17 | ) | (0.19 | ) | (0.00 | ) | (0.19 | ) | 8.91 | (11.07 | )(l) | 1,451 | 1.10 | 1.18 | 1.77 | 105 | ||||||||||||||||||||||||||||||||||||
Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.55 | 0.06 | 2.34 | 2.40 | (0.05 | ) | | (0.05 | ) | 14.90 | 19.22 | (c) | 151,535 | 0.75 | (d) | 0.75 | (d) | 0.48 | (d) | 80 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.75 | 0.04 | 0.88 | 0.92 | | (0.12 | ) | (0.12 | ) | 12.55 | 7.96 | (c) | 301,283 | 0.69 | 0.69 | 0.31 | 96 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11(j) |
12.07 | (0.00 | ) | (0.32 | ) | (0.32 | ) | | | | 11.75 | (2.65 | )(c) | 197,097 | 0.66 | (k) | 0.66 | (k) | (0.03 | )(k) | 179 | |||||||||||||||||||||||||||||||||||
Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(j) |
13.03 | 0.07 | 1.87 | 1.94 | (0.05 | ) | | (0.05 | ) | 14.92 | 14.98 | (c) | 113,955 | 0.65 | (d)(k) | 0.65 | (d)(k) | 0.58 | (d)(k) | 80 |
(a) | Calculated using average shares outstanding. |
(b) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $4,947,460,310 and sold of $2,251,028,915 in the effort to realign the funds portfolio holdings after the reorganization of Invesco Large Cap Growth Fund, Invesco Van Kampen Capital Growth Fund and Invesco Van Kampen Enterprise Fund into the Fund. For the year ended August 31, 2013, the portfolio turnover calculation excludes the value of securities purchased of $279,161,573 and sales of $299,305,234 in the effort to realign the Funds portfolio holdings after the reorganization of Invesco Leisure Fund into the Fund. |
(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) | Ratios are based on average daily net assets (000s omitted) of $4,835,840, $245,538, $251,220, $18,588, $88,557, $169,515 and $109,547 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(f) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.25%, 0.25% and 0.47% for the years ended August 31, 2013, 2012 and 2011, respectively. |
(g) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(h) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.79% and 0.88% for the years ended August 31, 2011 and 2010, respectively. |
(i) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(j) | Commencement date of May 23, 2011 for Class R shares, December 22, 2010 for Class R5 shares and September 24, 2012 for Class R6 shares. |
(k) | Annualized. |
(l) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption on Fund shares. |
NOTE 13Subsequent Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the Agreement) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco Constellation Fund (the Target Fund) in exchange for shares of the Fund (the Reorganization).
The Agreement was approved by the Target Funds shareholders on August 27, 2013 and the Reorganization was consummated on September 16, 2013. Upon the closing of the Reorganization, shareholders of the Target Fund received a corresponding class of shares of the Fund in exchange for their shares of the Target Fund and the Target Fund liquidated and ceased operations.
20 Invesco American Franchise Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust) and Shareholders of Invesco American Franchise 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 Invesco American Franchise Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 four years in the period then ended, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the period ended August 31, 2009 was audited by another independent registered public accounting firm whose report dated October 26, 2009 expressed an unqualified opinion on such financial statement.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
21 Invesco American Franchise 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, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio2 |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2,3 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2,4 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,130.60 | $ | 5.80 | $ | 1,019.76 | $ | 5.50 | 1.08 | % | ||||||||||||
B | 1,000.00 | 1,131.20 | 5.80 | 1,019.76 | 5.50 | 1.08 | ||||||||||||||||||
C | 1,000.00 | 1,126.50 | 9.81 | 1,015.98 | 9.30 | 1.83 | ||||||||||||||||||
R | 1,000.00 | 1,129.50 | 7.14 | 1,018.50 | 6.77 | 1.33 | ||||||||||||||||||
Y | 1,000.00 | 1,132.10 | 4.46 | 1,021.02 | 4.23 | 0.83 | ||||||||||||||||||
R5 | 1,000.00 | 1,132.40 | 4.03 | 1,021.42 | 3.82 | 0.75 | ||||||||||||||||||
R6 | 1,000.00 | 1,133.90 | 3.50 | 1,021.93 | 3.31 | 0.65 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. Effective July 1, 2013, the Funds adviser has contractually agreed to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expense of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75% (after 12b-1 fee waivers), 2.75%, 2.25%, 1.75%, 1.75% and 1.75% of average daily net assets, respectively. The annualized expense ratios restated as if these agreements had been in effect throughout the entire most recent fiscal half year are 1.13%, 1.13%, 1.88%, 1.38%, 0.88%, 0.75% and 0.65% for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
3 | The actual expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent fiscal half year are $6.07, $6.07, $10.08, $7.41, $4.73, $4.03 and $3.50 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
4 | The hypothetical expenses paid restated as if the changes discussed above had been in effect throughout the entire most recent fiscal half year are $5.75, $5.75, $9.55, $7.02, $4.48, $3.82 and $3.31 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
22 Invesco American Franchise Fund
Approval of Investment Advisory and Sub-Advisory Contracts
23 Invesco American Franchise Fund
24 Invesco American Franchise Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
100 | % | ||
Corporate Dividends Received Deduction* |
100 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
25 Invesco American Franchise Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco American Franchise Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco American Franchise Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco American Franchise Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco American Franchise Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
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SEC file numbers: 811-09913 and 333-36074 VK-AMFR-AR-1 Invesco Distributors, Inc. |
Letters to Shareholders
Phillip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter. |
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 Invesco California Tax-Free Income Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. |
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco California Tax-Free Income Fund
Managements Discussion of Fund Performance
4 Invesco California Tax-Free Income Fund
5 Invesco California Tax-Free Income Fund |
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
continued from page 8
6 Invesco California Tax-Free Income Fund
7 Invesco California Tax-Free Income Fund
Invesco California Tax-Free Income Funds investment objective is to provide a high level of current income exempt from federal and California income tax, consistent with the preservation of capital.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
Schedule of Investments
August 31, 2013
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value |
|||||||||||||
Municipal Obligations106.37% |
| |||||||||||||||
California99.88% | ||||||||||||||||
ABAG Finance Authority for Non-profit Corps. (Episcopal Senior Communities); Series 2012, Ref. RB |
5.00 | % | 07/01/32 | $ | 2,000 | $ | 1,853,600 | |||||||||
ABAG Finance Authority for Non-profit Corps. (Sharp Healthcare); Series 2012 A, RB |
5.00 | % | 08/01/28 | 900 | 917,622 | |||||||||||
Adelanto (City of) Public Utility Authority (Utility System); Series 2009 A, Ref. RB |
6.75 | % | 07/01/39 | 2,300 | 2,369,966 | |||||||||||
Alameda (County of) Joint Powers Authority (Juvenile Justice Refunding); Series 2008 A, Lease RB (INSAGM)(a) |
5.00 | % | 12/01/25 | 750 | 793,418 | |||||||||||
Alhambra (City of) (Atherton Baptist Homes); Series 2010 A, RB |
7.63 | % | 01/01/40 | 1,575 | 1,601,554 | |||||||||||
Alhambra Unified School District (Election of 1999); Series 1999 A, Unlimited Tax CAB GO Bonds (INSAGM)(a)(b) |
0.00 | % | 09/01/20 | 1,925 | 1,501,769 | |||||||||||
Anaheim (City of) Public Financing Authority (Anaheim Public Improvements); Series 1997 C, Sub. Lease RB (INSAGM)(a) |
6.00 | % | 09/01/16 | 4,000 | 4,453,520 | |||||||||||
Anaheim (City of) Public Financing Authority (Electric System Distribution Facilities); Series 2011 A, RB |
5.38 | % | 10/01/36 | 2,500 | 2,642,950 | |||||||||||
Arcadia Unified School District (Election of 2006); Series 2007 A, Unlimited Tax GO Bonds |
5.00 | % | 08/01/37 | 1,500 | 1,503,210 | |||||||||||
Bakersfield (City of); Series 2007 A, Wastewater RB (INSAGM)(a) |
5.00 | % | 09/15/32 | 2,215 | 2,236,397 | |||||||||||
Bay Area Governments Association (California Capital); Series 2001 A, Lease RB (INSAMBAC)(a) |
5.25 | % | 07/01/17 | 1,430 | 1,495,237 | |||||||||||
Bay Area Governments Association (West Sacramento); Series 2004 A, Lease RB(c)(d) |
5.00 | % | 09/01/14 | 2,735 | 2,865,924 | |||||||||||
Bay Area Toll Authority (San Francisco Bay Area); |
|
|||||||||||||||
Series 2008 F-1, Toll Bridge RB(e) |
5.00 | % | 04/01/39 | 1,250 | 1,268,350 | |||||||||||
Series 2008 F-1, Toll Bridge RB |
5.00 | % | 04/01/39 | 2,500 | 2,536,700 | |||||||||||
Series 2009 F-1, Toll Bridge RB(e) |
5.25 | % | 04/01/26 | 4,685 | 5,191,308 | |||||||||||
Series 2009 F-1, Toll Bridge RB(e) |
5.25 | % | 04/01/29 | 5,205 | 5,689,898 | |||||||||||
Series 2009 F-1, Toll Bridge RB(e) |
5.13 | % | 04/01/39 | 1,500 | 1,514,070 | |||||||||||
Bay Area Water Supply & Conservation Agency; Series 2013 A, RB |
5.00 | % | 10/01/34 | 1,500 | 1,539,015 | |||||||||||
Beverly Hills Unified School District (Election of 2008); |
|
|||||||||||||||
Series 2009, Unlimited Tax CAB GO Bonds(b) |
0.00 | % | 08/01/26 | 1,465 | 837,555 | |||||||||||
Series 2009, Unlimited Tax CAB GO Bonds(b) |
0.00 | % | 08/01/32 | 3,045 | 1,127,655 | |||||||||||
Bonita Unified School District (Election of 2004); Series 2004 A, Unlimited Tax GO Bonds(c)(d) |
5.00 | % | 08/01/14 | 1,000 | 1,044,200 | |||||||||||
Brea Olinda Unified School District; Series 2002 A, Ref. COP (INSAGM)(a) |
5.50 | % | 08/01/18 | 1,850 | 1,857,770 | |||||||||||
California (State of) Educational Facilities Authority (California College of the Arts); Series 2005, RB |
5.00 | % | 06/01/35 | 2,000 | 1,796,660 | |||||||||||
California (State of) Educational Facilities Authority (Chapman University); Series 2011, RB |
5.00 | % | 04/01/31 | 1,250 | 1,264,100 | |||||||||||
California (State of) Educational Facilities Authority (Claremont McKenna College); |
5.00 | % | 01/01/38 | 2,100 | 2,150,799 | |||||||||||
California (State of) Educational Facilities Authority (Pitzer College); |
|
|||||||||||||||
Series 2005 A, RB |
5.00 | % | 04/01/35 | 2,000 | 2,000,220 | |||||||||||
Series 2009, RB |
6.00 | % | 04/01/40 | 2,000 | 2,144,540 | |||||||||||
California (State of) Educational Facilities Authority (University of Southern California); Series 2009 B, RB(e) |
5.25 | % | 10/01/39 | 1,800 | 1,881,072 | |||||||||||
California (State of) Health Facilities Financing Authority (Adventist Health System West); Series 2009 A, RB |
5.75 | % | 09/01/39 | 500 | 510,540 | |||||||||||
California (State of) Health Facilities Financing Authority (Catholic Healthcare West); |
|
|||||||||||||||
Series 2009 A, RB |
6.00 | % | 07/01/39 | 500 | 534,250 | |||||||||||
Series 2011 A, RB |
5.25 | % | 03/01/41 | 2,500 | 2,465,975 | |||||||||||
California (State of) Health Facilities Financing Authority (Childrens Hospital Los Angeles); Series 2010, RB (INSAGM)(a) |
5.25 | % | 07/01/38 | 2,950 | 2,829,345 | |||||||||||
California (State of) Health Facilities Financing Authority (Kaiser Permanente); Series 2006 A, RB |
5.25 | % | 04/01/39 | 2,000 | 2,001,100 | |||||||||||
California (State of) Health Facilities Financing Authority (Providence Health & Services); |
|
|||||||||||||||
Series 2008, RB(c)(d) |
6.50 | % | 10/01/18 | 20 | 24,826 | |||||||||||
Series 2008, RB |
6.50 | % | 10/01/38 | 980 | 1,114,995 | |||||||||||
California (State of) Health Facilities Financing Authority (Scripps Health); Series 2010 A, RB |
5.00 | % | 11/15/36 | 4,000 | 3,903,120 | |||||||||||
California (State of) Health Facilities Financing Authority (St. Joseph Health System); Series 2013 A, RB |
5.00 | % | 07/01/37 | 1,000 | 968,800 | |||||||||||
California (State of) Health Facilities Financing Authority (Stanford Hospital); Series 2008 A-2, Ref. RB |
5.25 | % | 11/15/40 | 2,000 | 2,028,460 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco California Tax-Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value |
|||||||||||||
California(continued) | ||||||||||||||||
California (State of) Health Facilities Financing Authority (Sutter Health); Series 2011 B, RB |
5.50 | % | 08/15/26 | $ | 1,000 | $ | 1,087,230 | |||||||||
California (State of) Municipal Finance Authority (American Heritage Education Foundation); Series 2006 A, Education RB |
5.25 | % | 06/01/26 | 1,000 | 879,670 | |||||||||||
California (State of) Municipal Finance Authority (Caritas); Series 2012 A, Mobile Home Park RB |
5.50 | % | 08/15/47 | 1,500 | 1,429,230 | |||||||||||
California (State of) Municipal Finance Authority (Community Hospitals of Central California Obligated Group); |
||||||||||||||||
Series 2007, COP |
5.00 | % | 02/01/20 | 2,385 | 2,513,170 | |||||||||||
Series 2007, COP |
5.25 | % | 02/01/37 | 500 | 464,085 | |||||||||||
California (State of) Municipal Finance Authority (Eisenhower Medical Center); |
|
|||||||||||||||
Series 2010 A, RB |
5.50 | % | 07/01/30 | 1,000 | 985,360 | |||||||||||
Series 2010 A, RB |
5.75 | % | 07/01/40 | 1,500 | 1,481,685 | |||||||||||
California (State of) Municipal Finance Authority (Emerson College); Series 2011, RB |
5.75 | % | 01/01/33 | 1,315 | 1,396,188 | |||||||||||
California (State of) Municipal Finance Authority (University of La Verne); Series 2010 A, RB |
6.13 | % | 06/01/30 | 1,000 | 1,033,620 | |||||||||||
California (State of) Pollution Control Finance Authority; |
|
|||||||||||||||
Series 2012, Water Furnishing RB(f)(g) |
5.00 | % | 07/01/27 | 1,000 | 900,710 | |||||||||||
Series 2012, Water Furnishing RB(f)(g) |
5.00 | % | 07/01/37 | 2,500 | 2,030,325 | |||||||||||
California (State of) Pollution Control Financing Authority (Waste Management Inc.); Series 2002 A, Ref. Solid Waste Disposal RB(f) |
5.00 | % | 01/01/22 | 2,000 | 2,007,600 | |||||||||||
California (State of) Public Works Board (Various Capital); Series 2011 A, Lease RB |
5.13 | % | 10/01/31 | 2,000 | 2,011,080 | |||||||||||
California (State of) Statewide Communities Development Authority (Adventist Health System/West); Series 2005 A, Health Facility RB |
5.00 | % | 03/01/30 | 5,000 | 4,882,000 | |||||||||||
California (State of) Statewide Communities Development Authority (Alliance for College-Ready Public Schools); Series 2012, School Facility RB |
6.10 | % | 07/01/32 | 820 | 798,450 | |||||||||||
California (State of) Statewide Communities Development Authority (American Baptist Homes of the West); Series 2010, RB |
6.25 | % | 10/01/39 | 2,000 | 2,033,700 | |||||||||||
California (State of) Statewide Communities Development Authority (California Baptist University); Series 2007 A, RB |
5.40 | % | 11/01/27 | 1,785 | 1,701,587 | |||||||||||
California (State of) Statewide Communities Development Authority (Cottage Health System Obligated Group); Series 2010, RB |
5.25 | % | 11/01/30 | 1,675 | 1,716,573 | |||||||||||
California (State of) Statewide Communities Development Authority (Methodist Hospital); Series 2009, RB (INSFHA)(a) |
6.75 | % | 02/01/38 | 445 | 513,499 | |||||||||||
California (State of) Statewide Communities Development Authority (Southern California Presbyterian Homes); |
||||||||||||||||
Series 2009, Senior Living RB |
6.25 | % | 11/15/19 | 2,000 | 2,218,980 | |||||||||||
Series 2009, Senior Living RB |
7.25 | % | 11/15/41 | 500 | 535,810 | |||||||||||
California (State of) Statewide Communities Development Authority (Terraces at San Joaquin Garden); Series 2012, RB |
5.63 | % | 10/01/32 | 1,000 | 947,340 | |||||||||||
California (State of) Statewide Communities Development Authority (University of CaliforniaIrvine East Campus Apartments); Series 2012, Ref. Student Housing RB |
5.38 | % | 05/15/38 | 2,000 | 1,960,960 | |||||||||||
California (State of); |
|
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Series 2004 A1, VRD Unlimited Tax GO Bonds (LOC-Citibank, N.A.)(h)(i) |
0.04 | % | 05/01/34 | 3,600 | 3,600,000 | |||||||||||
Series 2009, Various Purpose Unlimited Tax GO Bonds |
5.75 | % | 04/01/31 | 5,000 | 5,341,100 | |||||||||||
Series 2009, Various Purpose Unlimited Tax GO Bonds |
6.00 | % | 11/01/35 | 1,750 | 1,963,955 | |||||||||||
Series 2009, Various Purpose Unlimited Tax GO Bonds |
6.00 | % | 04/01/38 | 1,250 | 1,384,537 | |||||||||||
Series 2010, Unlimited Tax GO Bonds |
5.25 | % | 11/01/40 | 3,000 | 3,046,320 | |||||||||||
Series 2011, Various Purpose Unlimited Tax GO Bonds |
5.00 | % | 09/01/32 | 2,450 | 2,514,998 | |||||||||||
Series 2011, Various Purpose Unlimited Tax GO Bonds |
5.00 | % | 10/01/41 | 2,500 | 2,492,400 | |||||||||||
Series 2012, Ref. Unlimited Tax GO Bonds |
5.25 | % | 02/01/30 | 2,000 | 2,102,660 | |||||||||||
California Infrastructure & Economic Development Bank (Broad Museum); Series 2011 A, RB |
5.00 | % | 06/01/21 | 3,000 | 3,483,120 | |||||||||||
California Special Districts Association Finance Corp. (Special Districts Finance Program); Series 1997 DD, COP (INSAGM)(a) |
5.63 | % | 01/01/27 | 1,050 | 1,050,473 | |||||||||||
California State University; Series 2009 A, Systemwide RB (INSAGC)(a) |
5.25 | % | 11/01/38 | 1,000 | 1,031,190 | |||||||||||
Chino Basin Regional Financing Authority (Inland Empire Utilities Agency); Series 2008 A, RB |
5.00 | % | 11/01/33 | 725 | 729,285 | |||||||||||
Clovis Unified School District (Election of 2004); Series 2004 A, Unlimited Tax CAB GO Bonds |
0.00 | % | 08/01/29 | 735 | 311,302 | |||||||||||
Desert Community College District (Election of 2004); Series 2007 C, Unlimited Tax GO Bonds (INSAGM)(a) |
5.00 | % | 08/01/37 | 2,500 | 2,509,600 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco California Tax-Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value |
|||||||||||||
California(continued) | ||||||||||||||||
East Bay Municipal Utility District; Series 2010 A, Ref. Sub. Water System RB |
5.00 | % | 06/01/36 | $ | 2,000 | $ | 2,081,040 | |||||||||
Eden (Township of) Healthcare District; Series 2010, COP |
6.13 | % | 06/01/34 | 1,000 | 1,007,850 | |||||||||||
El Dorado (County of) Irrigation District; Series 2009 A, COP (INSAGC)(a) |
5.75 | % | 08/01/39 | 1,000 | 1,032,260 | |||||||||||
El Monte Union High School District (Election of 2008); Series 2009 A, Unlimited Tax GO Bonds (INSAGC)(a) |
5.50 | % | 06/01/34 | 1,000 | 1,051,150 | |||||||||||
El Segundo Unified School District (Election of 2008); Series 2009 A, Unlimited Tax CAB GO Bonds(b) |
0.00 | % | 08/01/33 | 4,430 | 1,391,197 | |||||||||||
Fairfield (City of) Community Facilities District No. 3 (North Cordelia General Improvements); Series 2008, Special Tax RB |
6.00 | % | 09/01/32 | 1,800 | 1,864,314 | |||||||||||
Fontana (City of) Public Financing Authority (North Fontana Redevelopment); Series 2003 A, Tax Allocation RB (INSAMBAC)(a) |
5.38 | % | 09/01/25 | 1,500 | 1,501,155 | |||||||||||
Fontana (City of) Redevelopment Agency (Downtown Redevelopment); Series 2000, Ref. Tax Allocation RB (INSNATL)(a) |
5.00 | % | 09/01/21 | 1,480 | 1,480,178 | |||||||||||
Foothill-Eastern Transportation Corridor Agency; Series 1999, Ref. Toll Road RB (INSNATL)(a) |
5.13 | % | 01/15/19 | 4,000 | 4,002,400 | |||||||||||
Fullerton (City of) Community Facilities District No. 1 (Amerige Heights); |
|
|||||||||||||||
Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/26 | 960 | 984,240 | |||||||||||
Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/32 | 1,090 | 1,052,395 | |||||||||||
Gilroy Unified School District (Election of 2008); |
|
|||||||||||||||
Series 2009 A, Unlimited Tax CAB GO Bonds(b)(c)(d) |
0.00 | % | 08/01/29 | 615 | 321,307 | |||||||||||
Series 2009 A, Unlimited Tax CAB GO Bonds (INSAGC)(a)(b) |
0.00 | % | 08/01/29 | 4,735 | 1,953,377 | |||||||||||
Series 2009 A, Unlimited Tax CAB GO Bonds(b)(c)(d) |
0.00 | % | 08/01/31 | 2,235 | 1,057,490 | |||||||||||
Series 2009 A, Unlimited Tax CAB GO Bonds (INSAGC)(a)(b) |
0.00 | % | 08/01/31 | 1,415 | 512,371 | |||||||||||
Glendora (City of) Public Finance Authority; Series 2003 A, Project No. One Tax Allocation RB (INSNATL)(a) |
5.00 | % | 09/01/24 | 2,425 | 2,434,166 | |||||||||||
Golden State Tobacco Securitization Corp.; Series 2013 A, Enhanced Tobacco Settlement Asset-Backed RB |
5.00 | % | 06/01/30 | 2,000 | 1,988,620 | |||||||||||
Hanford Joint Union High School District (Election of 1998); Series 2004 C, Unlimited Tax GO Bonds (INSNATL)(a) |
5.70 | % | 08/01/28 | 2,230 | 2,267,865 | |||||||||||
Inglewood (City of) Redevelopment Agency (Merged Redevelopment); Series 1998 A, Ref. Tax Allocation RB (INSAMBAC)(a) |
5.25 | % | 05/01/23 | 1,000 | 1,028,180 | |||||||||||
Irvine (City of) (Reassessment District No. 12-1); Series 2012, Limited Obligation Improvement Bonds |
4.00 | % | 09/02/22 | 2,150 | 2,170,468 | |||||||||||
Irvine (City of) (Reassessment District No. 13-1); Series 2013, Limited Obligation Special Assessment RB |
5.00 | % | 09/02/24 | 825 | 845,237 | |||||||||||
Irvine Unified School District (Community Facilities District No. 06-1- Portola Springs); Series 2010, Special Tax RB |
6.70 | % | 09/01/35 | 515 | 548,367 | |||||||||||
Kern (County of) (Capital Improvements); Series 2009 A, COP (INSAGC)(a) |
5.75 | % | 08/01/35 | 1,000 | 1,075,650 | |||||||||||
Kern (County of) Water Agency Improvement District No. 4; Series 2008 A, COP (INSAGC)(a) |
5.00 | % | 05/01/28 | 1,700 | 1,748,314 | |||||||||||
Lodi (City of); Series 2007 A, Wastewater System Revenue COP (INSAGM)(a) |
5.00 | % | 10/01/37 | 1,000 | 1,005,460 | |||||||||||
Long Beach (City of) Bond Finance Authority (Aquarium of the Pacific); Series 2012, Ref. RB |
5.00 | % | 11/01/29 | 2,000 | 2,038,820 | |||||||||||
Long Beach (City of) Financing Authority; Series 1992, RB (INSAMBAC)(a) |
6.00 | % | 11/01/17 | 15,095 | 15,786,653 | |||||||||||
Long Beach (City of); Series 2010 A, Sr. Airport RB |
5.00 | % | 06/01/40 | 2,500 | 2,376,075 | |||||||||||
Los Angeles (City of) (FHA Insured Mortgage LoansSection 8 Assisted); Series 1997 A, Ref. Mortgage RB (INSNATL)(a) |
6.10 | % | 07/01/25 | 460 | 460,547 | |||||||||||
Los Angeles (City of) Department of Airports (Los Angeles International Airport); |
|
|||||||||||||||
Series 2010 A, Sr. RB |
5.00 | % | 05/15/35 | 2,500 | 2,508,300 | |||||||||||
Series 2010 B, Sub. RB |
5.00 | % | 05/15/40 | 1,000 | 1,003,320 | |||||||||||
Los Angeles (City of) Department of Water & Power; |
|
|||||||||||||||
Series 2004 C, Water System RB(c)(d) |
5.00 | % | 07/01/14 | 1,000 | 1,040,380 | |||||||||||
Series 2011 A, Power System RB(e) |
5.00 | % | 07/01/22 | 1,800 | 2,056,464 | |||||||||||
Series 2011 A, Water System RB |
5.25 | % | 07/01/39 | 1,500 | 1,560,975 | |||||||||||
SubSeries 2006 A-1, Water System RB (INSAMBAC)(a) |
5.00 | % | 07/01/36 | 1,485 | 1,524,961 | |||||||||||
SubSeries 2007 A-1, Power System RB (INSAMBAC)(a) |
5.00 | % | 07/01/37 | 1,000 | 1,013,540 | |||||||||||
SubSeries 2008 A-1, Power System RB |
5.25 | % | 07/01/38 | 2,000 | 2,050,180 | |||||||||||
Los Angeles (City of); Series 2012 B, Ref. Sub. Wastewater System RB |
5.00 | % | 06/01/32 | 3,000 | 3,107,340 | |||||||||||
Los Angeles (County of) Metropolitan Transportation Authority; Series 2005 A, Proposition A First Tier Sr. Sales Tax RB (INSAMBAC)(a) |
5.00 | % | 07/01/35 | 1,000 | 1,019,100 | |||||||||||
Los Angeles Community College District (Election of 2003); Series 2008 F-1, Unlimited Tax GO Bonds(e) |
5.00 | % | 08/01/33 | 2,000 | 2,017,620 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco California Tax-Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value |
|||||||||||||
California(continued) | ||||||||||||||||
Los Angeles County Schools Regionalized Business Services Corp. (Los Angeles County Schools Pooled Financing Program); Series 1999 A, CAB COP (INSAMBAC)(a)(b) |
0.00 | % | 08/01/24 | $ | 1,265 | $ | 685,402 | |||||||||
Los Angeles Unified School District (Election of 2004); |
|
|||||||||||||||
Series 2007 H, Unlimited Tax GO Bonds (INSAGM)(a) |
5.00 | % | 07/01/32 | 1,000 | 1,031,920 | |||||||||||
Series 2009 I, Unlimited Tax GO Bonds (INSAGC)(a) |
5.00 | % | 01/01/34 | 3,000 | 3,023,970 | |||||||||||
Madera (County of) (Valley Childrens Hospital); Series 1995, COP (INSNATL)(a) |
6.50 | % | 03/15/15 | 3,285 | 3,434,172 | |||||||||||
Menifee Union School District (Election of 2008); Series 2009 C, Unlimited Tax CAB GO Bonds (INSAGC)(a)(b) |
0.00 | % | 08/01/35 | 940 | 244,447 | |||||||||||
Montclair (City of) Redevelopment Agency (Montclair Redevelopment Project No. V); Series 2001, Ref. Tax Allocation RB (INSNATL)(a) |
5.00 | % | 10/01/20 | 1,495 | 1,496,884 | |||||||||||
Montebello Unified School District (Election of 2004); Series 2009 A-1, Unlimited Tax GO Bonds (INSAGC)(a) |
5.25 | % | 08/01/34 | 1,000 | 1,016,210 | |||||||||||
Moorpark Unified School District (Election of 2008); Series 2009 A, Unlimited Tax CAB GO Bonds (INSAGC)(a)(b) |
0.00 | % | 08/01/31 | 840 | 305,760 | |||||||||||
Morongo Band of Mission Indians (The) (Enterprise Casino); Series 2008 B, RB(g) |
6.50 | % | 03/01/28 | 1,000 | 1,080,280 | |||||||||||
Mountain View (City of) Shoreline Regional Park Community; Series 2001 A, Tax Allocation RB (INSNATL)(a) |
5.25 | % | 08/01/16 | 1,570 | 1,574,066 | |||||||||||
National City (City of) Community Development Commission (National City Redevelopment); Series 2011, Tax Allocation RB |
7.00 | % | 08/01/32 | 1,500 | 1,707,795 | |||||||||||
Norco (City of) Financing Authority; Series 2009, Ref. Enterprise RB (INSAGM)(a) |
5.63 | % | 10/01/34 | 1,000 | 1,041,980 | |||||||||||
Palomar Pomerado Health; Series 2009, COP |
6.75 | % | 11/01/39 | 2,000 | 2,046,220 | |||||||||||
Panama-Buena Vista Union School District (School Construction); Series 2006, COP (INSNATL)(a) |
5.00 | % | 09/01/30 | 1,045 | 1,049,326 | |||||||||||
Paramount Unified School District (Election of 2006); Series 2007, Unlimited Tax GO Bonds |
5.25 | % | 08/01/30 | 1,600 | 1,640,304 | |||||||||||
Pittsburg Unified School District (Election of 2006); Series 2009 B, Unlimited Tax GO Bonds |
5.50 | % | 08/01/31 | 1,000 | 1,083,620 | |||||||||||
Pomona (City of) Public Financing Authority (Merged Redevelopment); |
|
|||||||||||||||
Series 2001 AD, Tax Allocation RB (INSNATL)(a) |
5.00 | % | 02/01/15 | 2,020 | 2,024,343 | |||||||||||
Series 2001 AD, Tax Allocation RB (INSNATL)(a) |
5.00 | % | 02/01/16 | 1,110 | 1,111,954 | |||||||||||
Series 2007 AW, Sub. RB |
5.13 | % | 02/01/33 | 1,075 | 933,928 | |||||||||||
Port Hueneme (City of) (Capital Improvement Program); Series 1992, Ref. COP (INSNATL)(a) |
6.00 | % | 04/01/19 | 1,195 | 1,319,519 | |||||||||||
Poway Unified School District (Election of 2008School Facilities Improvement District No. 2007-1); Series 2009 A, Unlimited Tax CAB GO Bonds(b) |
0.00 | % | 08/01/32 | 6,460 | 2,190,005 | |||||||||||
Rancho Cordova (City of) Community Facilities District No. 2003-1 (Sunridge Anatolia); |
|
|||||||||||||||
Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/24 | 730 | 724,518 | |||||||||||
Series 2012, Ref. Special Tax RB |
5.00 | % | 09/01/27 | 1,000 | 960,100 | |||||||||||
Rancho Cucamonga (City of) Redevelopment Agency (Rancho Redevelopment Housing Set Aside) Series 2007 A, Tax Allocation RB (INSNATL)(a) |
5.00 | % | 09/01/34 | 1,000 | 913,770 | |||||||||||
Rancho Cucamonga (City of) Redevelopment Agency (Rancho Redevelopment); Series 2001, Tax Allocation RB (INSNATL)(a) |
5.38 | % | 09/01/25 | 3,000 | 3,000,180 | |||||||||||
Redding (City of) Redevelopment Agency (Canby-Hilltop-Cypress Redevelopment); Series 2003 A, Tax Allocation RB (INSNATL)(a) |
5.00 | % | 09/01/23 | 1,400 | 1,404,200 | |||||||||||
Regents of the University of California; |
|
|||||||||||||||
Series 2009 E, Medical Center Pooled RB |
5.50 | % | 05/15/27 | 2,500 | 2,708,225 | |||||||||||
Series 2009 O, General RB(e) |
5.75 | % | 05/15/23 | 705 | 826,309 | |||||||||||
Series 2009 O, General RB(e) |
5.75 | % | 05/15/25 | 1,050 | 1,228,794 | |||||||||||
Series 2009 Q, General RB(e)(j) |
5.00 | % | 05/15/34 | 920 | 951,252 | |||||||||||
Riverside (City of); |
|
|||||||||||||||
Series 2008 B, Water RB (INSAGM)(a) |
5.00 | % | 10/01/33 | 1,000 | 1,013,840 | |||||||||||
Series 2008 D, Electric RB (INSAGM)(a) |
5.00 | % | 10/01/28 | 500 | 519,755 | |||||||||||
Series 2008 D, Electric RB (INSAGM)(a) |
5.00 | % | 10/01/38 | 1,800 | 1,833,876 | |||||||||||
Riverside (County of) Transportation Commission; |
|
|||||||||||||||
Series 2010 A, Limited Sales Tax RB |
5.00 | % | 06/01/32 | 1,500 | 1,545,795 | |||||||||||
Series 2013 A, Limited Sales Tax RB |
5.25 | % | 06/01/24 | 1,325 | 1,533,409 | |||||||||||
Sacramento (City of) Municipal Utility District; Series 2011 X, Ref. Electric RB |
5.00 | % | 08/15/27 | 2,150 | 2,279,860 | |||||||||||
Sacramento (County of) Sanitation Districts Financing Authority (Sacramento Regional County Sanitation District); |
||||||||||||||||
Series 2006, RB (INSNATL)(a) |
5.00 | % | 12/01/29 | 2,000 | 2,078,340 | |||||||||||
Series 2011 A, Ref. RB |
5.00 | % | 12/01/26 | 1,500 | 1,625,475 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco California Tax-Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value |
|||||||||||||
California(continued) | ||||||||||||||||
Sacramento (County of); |
|
|||||||||||||||
Series 2008 A, Sr. Airport System RB (INSAGM)(a) |
5.00 | % | 07/01/32 | $ | 1,000 | $ | 1,006,330 | |||||||||
Series 2008 A, Sr. Airport System RB (INSAGM)(a) |
5.00 | % | 07/01/41 | 1,015 | 1,007,388 | |||||||||||
Series 2010, Sr. Airport System RB |
5.00 | % | 07/01/40 | 2,200 | 2,102,870 | |||||||||||
San Buenaventura (City of) (Community Memorial Health System); Series 2011, RB |
7.50 | % | 12/01/41 | 2,000 | 2,159,000 | |||||||||||
San Diego (City of) Public Facilities Financing Authority (Southcrest & Central Imperial Redevelopment); Series 2007 B, Pooled Financing Tax Allocation RB (INSRadian)(a) |
5.25 | % | 10/01/27 | 2,535 | 2,431,344 | |||||||||||
San Diego (City of) Public Facilities Financing Authority; SubSeries 2012 A, Ref. Water RB |
5.00 | % | 08/01/32 | 2,215 | 2,305,461 | |||||||||||
San Diego (County of) Regional Airport Authority; Series 2013 B, Sr. RB(f) |
5.00 | % | 07/01/29 | 1,270 | 1,265,784 | |||||||||||
San Diego Community College District (Election of 2002); Series 2009, Unlimited Tax GO Bonds(e) |
5.25 | % | 08/01/33 | 1,500 | 1,628,685 | |||||||||||
San Diego Community College District (Election of 2006); Series 2011, Unlimited Tax GO Bonds |
5.00 | % | 08/01/31 | 2,500 | 2,607,800 | |||||||||||
San Francisco (City & County of) Airport Commission (San Francisco International Airport); |
|
|||||||||||||||
Series 2009 E, Second Series RB |
6.00 | % | 05/01/39 | 1,000 | 1,128,780 | |||||||||||
Series 2011 C, Ref. Second Series RB(f) |
5.00 | % | 05/01/23 | 5,000 | 5,366,000 | |||||||||||
Series 2011 G, Second Series RB |
5.25 | % | 05/01/28 | 2,000 | 2,108,200 | |||||||||||
San Francisco (City & County of) Public Utilities Commission (Water System Improvement Program); SubSeries 2011 A, Water RB |
5.00 | % | 11/01/36 | 4,000 | 4,077,640 | |||||||||||
San Francisco (City & County of) Redevelopment Financing Authority (Mission Bay North Redevelopment); Series 2011 C, Tax Allocation RB |
6.75 | % | 08/01/41 | 1,000 | 1,096,290 | |||||||||||
San Francisco (City & County of) Redevelopment Financing Authority (Mission Bay South Redevelopment); Series 2011 D, Tax Allocation RB |
7.00 | % | 08/01/33 | 500 | 536,640 | |||||||||||
San Francisco (City & County of) Successor Agency to the Redevelopment Agency Community Facilities District No. 6 (Mission Bay South Public Improvements); Series 2013 A, Ref. Special Tax RB |
5.00 | % | 08/01/33 | 500 | 476,340 | |||||||||||
San Francisco (City of) Bay Area Rapid Transit District; Series 2012 A, RB |
5.00 | % | 07/01/36 | 1,000 | 1,022,880 | |||||||||||
San Jose Evergreen Community College District (Election of 2004); Series 2008 B, Unlimited Tax CAB GO Bonds (INSAGM)(a)(b) |
0.00 | % | 09/01/31 | 3,110 | 1,181,271 | |||||||||||
San Luis Obispo (County of) Financing Authority (Lopez Dam Improvement); Series 2011 A, Ref. RB (INSAGM)(a) |
5.00 | % | 08/01/30 | 1,500 | 1,520,505 | |||||||||||
San Mateo (City of) Community Facilities District No. 2008-1 (Bay Meadows); Series 2013, Special Tax RB |
5.00 | % | 09/01/42 | 1,000 | 930,670 | |||||||||||
Santa Clara (County of) Financing Authority (Multiple Facilities); Series 2008 L, Ref. Lease RB |
5.25 | % | 05/15/36 | 3,000 | 3,113,130 | |||||||||||
Santa Margarita Water District (Community Facilities District No. 2013-1); |
|
|||||||||||||||
Series 2013, Special Tax RB |
5.63 | % | 09/01/36 | 1,000 | 991,720 | |||||||||||
Series 2013, Special Tax RB |
5.63 | % | 09/01/43 | 1,000 | 976,640 | |||||||||||
Santaluz Community Facilities District No. 2 (Improvement Area No. 1); |
|
|||||||||||||||
Series 2011 A, Ref. Special Tax RB(c)(d) |
5.00 | % | 09/01/28 | 825 | 829,323 | |||||||||||
Series 2011 A, Ref. Special Tax RB(c)(d) |
5.00 | % | 09/01/29 | 715 | 709,559 | |||||||||||
Series 2011 A, Ref. Special Tax RB(c)(d) |
5.10 | % | 09/01/30 | 465 | 460,308 | |||||||||||
Sierra View Local Health Care District; Series 2007, RB |
5.25 | % | 07/01/32 | 1,500 | 1,410,180 | |||||||||||
Simi Valley Unified School District (Election of 2004); |
|
|||||||||||||||
Series 2007 C, Unlimited Tax CAB GO Bonds (INSAGM)(a)(b) |
0.00 | % | 08/01/28 | 3,480 | 1,589,942 | |||||||||||
Series 2007 C, Unlimited Tax CAB GO Bonds (INSAGM)(a)(b) |
0.00 | % | 08/01/30 | 2,765 | 1,073,650 | |||||||||||
Sonoma-Marin Area Rail Transit District; Series 2012 A, Measure Q Sales Tax RB |
5.00 | % | 03/01/29 | 2,000 | 2,075,740 | |||||||||||
South Gate (City of) Public Financing Authority (South Gate Redevelopment Project No. 1); Series 2002, Tax Allocation RB (INSSGI)(a) |
5.75 | % | 09/01/22 | 1,000 | 1,012,070 | |||||||||||
Southern California Metropolitan Water District; |
|
|||||||||||||||
Series 2005 A, RB (INSAGM)(a) |
5.00 | % | 07/01/35 | 1,520 | 1,553,136 | |||||||||||
Series 2009 B, Ref. RB(e) |
5.00 | % | 07/01/27 | 8,585 | 9,342,197 | |||||||||||
Southern California Public Power Authority (Mead-Adelanto); Series 1994 A, RB (INSAMBAC)(a)(k) |
9.68 | % | 07/01/15 | 3,500 | 3,807,020 | |||||||||||
Southern California Public Power Authority (Mead-Phoenix); Series 1994 A, RB (INSAMBAC)(a)(k) |
9.68 | % | 07/01/15 | 2,500 | 2,720,950 | |||||||||||
Southern California Public Power Authority (Milford Wind Corridor Phase II); |
|
|||||||||||||||
Series 2011 1, RB(e) |
5.25 | % | 07/01/29 | 2,100 | 2,202,900 | |||||||||||
Series 2011 1, RB(e) |
5.25 | % | 07/01/31 | 2,100 | 2,174,844 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco California Tax-Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value |
|||||||||||||
California(continued) | ||||||||||||||||
Tejon Ranch Public Facilities Financing Authority Community Facilities District No. 2008-1 (Tejon Industrial Complex Public Improvements-East); |
||||||||||||||||
Series 2012 A, Ref. Special Tax RB |
5.00 | % | 09/01/32 | $ | 750 | $ | 674,280 | |||||||||
Series 2012 B, Special Tax RB |
5.00 | % | 09/01/32 | 750 | 674,280 | |||||||||||
Temecula (City of) Redevelopment Agency (Temecula Redevelopment Project No. 1); Series 2002, Tax Allocation RB (INSNATL)(a) |
5.13 | % | 08/01/27 | 2,150 | 2,183,217 | |||||||||||
Tustin (City of) Public Financing Authority; Series 2011 A, Water RB |
5.00 | % | 04/01/41 | 1,000 | 1,015,090 | |||||||||||
Twin Rivers Unified School District; Series 2009, Unlimited Tax CAB GO BAN(b) |
0.00 | % | 04/01/14 | 1,700 | 1,693,404 | |||||||||||
Val Verde Unified School District; Series 2009 A, Ref. COP (INSAGC)(a) |
5.13 | % | 03/01/36 | 1,475 | 1,466,224 | |||||||||||
Vernon (City of); Series 2009 A, Electric System RB |
5.13 | % | 08/01/21 | 2,000 | 2,139,320 | |||||||||||
Walnut (City of) Energy Center Authority; Series 2010 A, Ref. RB |
5.00 | % | 01/01/35 | 3,000 | 2,953,380 | |||||||||||
West Contra Costa Unified School District; Series 2005, Unlimited Tax CAB GO Bonds |
0.00 | % | 08/01/25 | 2,500 | 1,327,250 | |||||||||||
Western Riverside (County of) Water & Wastewater Financing Authority (Eastern Municipal Water District Improvement); Series 2009, RB (INSAGC)(a) |
5.63 | % | 09/01/39 | 1,000 | 1,034,680 | |||||||||||
Yosemite Community College District (Election of 2004); Series 2008 C, Unlimited Tax CAB GO Bonds (INSAGM)(a)(b) |
0.00 | % | 08/01/24 | 4,685 | 2,876,731 | |||||||||||
362,750,454 | ||||||||||||||||
Guam1.58% | ||||||||||||||||
Guam (Territory of) (Section 30); |
||||||||||||||||
Series 2009 A, Limited Obligation RB |
5.38 | % | 12/01/24 | 1,000 | 1,033,840 | |||||||||||
Series 2009 A, Limited Obligation RB |
5.63 | % | 12/01/29 | 660 | 676,163 | |||||||||||
Guam (Territory of) International Airport Authority; Series 2013 C, General RB(f) |
6.25 | % | 10/01/34 | 1,000 | 998,770 | |||||||||||
Guam (Territory of) Power Authority; Series 2012 A, Ref. RB (INSAGM)(a) |
5.00 | % | 10/01/25 | 1,500 | 1,604,430 | |||||||||||
Guam (Territory of); Series 2011 A, Business Privilege Tax RB |
5.13 | % | 01/01/42 | 1,500 | 1,427,850 | |||||||||||
5,741,053 | ||||||||||||||||
Puerto Rico3.95% | ||||||||||||||||
Puerto Rico (Commonwealth of) Electric Power Authority; |
||||||||||||||||
Series 2007 TT, RB |
5.00 | % | 07/01/37 | 2,000 | 1,370,180 | |||||||||||
Series 2010 AAA, RB |
5.25 | % | 07/01/29 | 2,000 | 1,518,160 | |||||||||||
Puerto Rico (Commonwealth of) Industrial Tourist Educational, Medical & Environmental Control Facilities Financing Authority (Ana G. Mendez University System); Series 2012, Ref. RB |
5.38 | % | 04/01/42 | 2,000 | 1,463,820 | |||||||||||
Puerto Rico (Commonwealth of) Public Buildings Authority; Series 2002 D, RB(c)(d) |
5.45 | % | 07/01/17 | 3,680 | 4,259,416 | |||||||||||
Puerto Rico Sales Tax Financing Corp.; |
||||||||||||||||
First SubSeries 2010 C, RB |
5.00 | % | 08/01/35 | 1,500 | 1,190,220 | |||||||||||
First SubSeries 2011 A-1, RB |
5.00 | % | 08/01/43 | 3,000 | 2,249,100 | |||||||||||
Series 2011 C, RB |
5.00 | % | 08/01/40 | 2,750 | 2,295,453 | |||||||||||
14,346,349 | ||||||||||||||||
Virgin Islands0.96% | ||||||||||||||||
Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan NoteDiageo); Series 2009 A, Sub. RB |
6.63 | % | 10/01/29 | 1,675 | 1,823,087 | |||||||||||
Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan Note); Series 2010 A, Sr. Lien RB |
5.00 | % | 10/01/25 | 1,600 | 1,645,088 | |||||||||||
3,468,175 | ||||||||||||||||
TOTAL INVESTMENTS(l)106.37% (Cost $380,506,412) |
386,306,031 | |||||||||||||||
FLOATING RATE NOTE OBLIGATIONS(6.78)% |
||||||||||||||||
Notes with interest and fee rates ranging from 0.58% to 0.61% at 08/31/13 and contractual maturities of collateral ranging from 07/01/22 to 10/01/39 (See Note 1K)(m) |
(24,620,000 | ) | ||||||||||||||
OTHER ASSETS LESS LIABILITIES0.41% |
1,483,420 | |||||||||||||||
NET ASSETS100.00% |
$ | 363,169,451 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco California Tax-Free Income Fund
Investment Abbreviations:
AGC | Assured Guaranty Corp. | |
AGM | Assured Guaranty Municipal Corp. | |
AMBAC | American Municipal Bond Assurance Corp. | |
BAN | Bond Anticipation Notes | |
CAB | Capital Appreciation Bonds | |
COP | Certificates of Participation | |
FHA | Federal Housing Administration | |
GO | General Obligation | |
INS | Insurer | |
LOC | Letter of Credit | |
NATL | National Public Finance Guarantee Corp. | |
Radian | Radian Asset Assurance, Inc. | |
RB | Revenue Bonds | |
Ref. | Refunding | |
SGI | Syncora Guarantee, Inc. | |
Sr. | Senior | |
Sub. | Subordinated | |
VRD | Variable Rate Demand |
Notes to Schedule of Investments:
(a) | Principal and/or interest payments are secured by the bond insurance company listed. |
(b) | Zero coupon bond issued at a discount. |
(c) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
(d) | Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral. |
(e) | Underlying security related to Dealer Trusts entered into by the Fund. See Note 1K. |
(f) | Security subject to the alternative minimum tax. |
(g) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the 1933 Act). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2013 was $4,011,315, which represented 1.10% of the Funds Net Assets. |
(h) | Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2013. |
(i) | Principal and interest payments are fully enhanced by a letter of credit from the bank listed or a predecessor bank, branch or subsidiary. |
(j) | Security is subject to a shortfall agreement which may require the Fund to pay amounts to a counterparty in the event of a significant decline in the market value of the security underlying the Dealer Trusts. In case of a shortfall, the maximum potential amount of payments the Fund could ultimately be required to make under the agreement is $615,000. However, such shortfall payment would be reduced by the proceeds from the sale of the security underlying the Dealer Trusts. |
(k) | Current coupon rate for inverse floating rate municipal obligations. This rate resets periodically as the rate on the related security changes. Positions in inverse floating rate municipal obligations have a total value of $6,527,970, which represented 1.80% of the Funds Net Assets. |
(l) | This table provides a listing of those entities that have either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuers obligations but may be called upon to satisfy the issuers obligations. |
Entities | Percentage | |||
Assured Guaranty Municipal Corp. |
10.7 | % | ||
National Public Finance Guarantee Corp. |
9.0 | |||
American Municipal Bond Assurance Corp. |
8.1 |
(m) | Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at August 31, 2013. At August 31, 2013, the Funds investments with a value of $40,124,562 are held by Dealer Trusts and serve as collateral for the $24,620,000 in the floating rate note obligations outstanding at that date. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco California Tax-Free Income Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco California Tax-Free Income Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Interest |
$ | 20,374,372 | ||
Expenses: |
||||
Advisory fees |
1,949,887 | |||
Administrative services fees |
110,420 | |||
Custodian fees |
9,490 | |||
Distribution fees: |
||||
Class A |
424,724 | |||
Class B |
517,730 | |||
Class C |
181,540 | |||
Interest, facilities and maintenance fees |
204,418 | |||
Transfer agent fees |
193,465 | |||
Trustees and officers fees and benefits |
41,140 | |||
Other |
192,266 | |||
Total expenses |
3,825,080 | |||
Less: Expense offset arrangement(s) |
(141 | ) | ||
Net expenses |
3,824,939 | |||
Net investment income |
16,549,433 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain from investment securities |
763,454 | |||
Change in net unrealized appreciation (depreciation) of investment securities |
(37,091,954 | ) | ||
Net realized and unrealized gain (loss) |
(36,328,500 | ) | ||
Net increase (decrease) in net assets resulting from operations |
$ | (19,779,067 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco California Tax-Free Income Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income |
$ | 16,549,433 | $ | 17,900,578 | ||||
Net realized gain (loss) |
763,454 | (930,630 | ) | |||||
Change in net unrealized appreciation (depreciation) |
(37,091,954 | ) | 32,828,385 | |||||
Net increase (decrease) in net assets resulting from operations |
(19,779,067 | ) | 49,798,333 | |||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(7,115,529 | ) | (6,564,668 | ) | ||||
Class B |
(7,488,596 | ) | (9,274,169 | ) | ||||
Class C |
(843,990 | ) | (935,612 | ) | ||||
Class Y |
(1,028,342 | ) | (1,087,150 | ) | ||||
Total distributions from net investment income |
(16,476,457 | ) | (17,861,599 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
18,657,510 | 3,515,850 | ||||||
Class B |
(46,199,280 | ) | (20,479,447 | ) | ||||
Class C |
(3,584,104 | ) | 3,695,906 | |||||
Class Y |
(2,122,326 | ) | (1,352,895 | ) | ||||
Net increase (decrease) in net assets resulting from share transactions |
(33,248,200 | ) | (14,620,586 | ) | ||||
Net increase (decrease) in net assets |
(69,503,724 | ) | 17,316,148 | |||||
Net assets: |
||||||||
Beginning of year |
432,673,175 | 415,357,027 | ||||||
End of year (includes undistributed net investment income of $1,194,328 and $1,077,451, respectively) |
$ | 363,169,451 | $ | 432,673,175 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco California Tax-Free Income Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to provide a high level of current income exempt from federal and California income tax, consistent with the preservation of capital.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. 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 (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Securities for which market quotations either are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts officers following procedures approved by the Board of Trustees. Some of the factors which may be considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on
18 Invesco California Tax-Free Income Fund
transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers 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, adjusted for amortization of premiums and accretion of discounts on investments, is recorded on the accrual basis from settlement date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (the Internal Revenue Code), necessary to qualify as a regulated investment company and to distribute substantially all of the Funds taxable and tax-exempt 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. |
In addition, the Fund intends to invest in such municipal securities to allow it to qualify to pay shareholders exempt-interest dividends, as defined in the Internal Revenue Code.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
G. | Interest, Facilities and Maintenance Fees Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining floating rate note obligations, if any. |
H. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
I. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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. |
J. | Other Risks The value of, payment of interest on, repayment of principal for and the 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 in which the issuers are located. |
Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and a Funds investments in municipal securities.
There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service.
19 Invesco California Tax-Free Income Fund
K. | Floating Rate Note Obligations The Fund invests in inverse floating rate securities, such as Residual Interest Bonds (RIBs) or Tender Option Bonds (TOBs) for investment purposes and to enhance the yield of the Fund. Inverse floating rate investments tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Such transactions may be purchased in the secondary market without first owning the underlying bond or by the sale of fixed rate bonds by the Fund to special purpose trusts established by a broker dealer (Dealer Trusts) in exchange for cash and residual interests in the Dealer Trusts assets and cash flows, which are in the form of inverse floating rate securities. The Dealer Trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Fund to retain residual interests in the bonds. The floating rate notes issued by the Dealer Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the Dealer Trusts for redemption at par at each reset date. The residual interests held by the Fund (inverse floating rate investments) include the right of the Fund (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the Dealer Trusts to the Fund, thereby collapsing the Dealer Trusts. |
TOBs are presently classified as private placement securities. Private placement securities are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the 1933 Act), or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund or less than what may be considered the fair value of such securities.
The Fund accounts for the transfer of bonds to the Dealer Trusts as secured borrowings, with the securities transferred remaining in the Funds investment assets, and the related floating rate notes reflected as Fund liabilities under the caption Floating rate note obligations on the Statement of Assets and Liabilities. The Fund records the interest income from the fixed rate bonds under the caption Interest and records the expenses related to floating rate obligations and any administrative expenses of the Dealer Trusts as a component of Interest, facilities and maintenance fees on the Statement of Operations.
The Fund generally invests in inverse floating rate securities that include embedded leverage, thus exposing the Fund to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and the changes in the value of such securities in response to changes in market rates of interest to a greater extent than the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity which may cause the Funds net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate interests created by the special purpose trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such interests for repayment of principal, may not be able to be remarketed to third parties. In such cases, the special purpose trust holding the long-term fixed rate bonds may be collapsed. In the case of RIBs or TOBs created by the contribution of long-term fixed income bonds by the Fund, the Fund will then be required to repay the principal amount of the tendered securities. During times of market volatility, illiquidity or uncertainty, the Fund could be required to sell other portfolio holdings at a disadvantageous time to raise cash to meet that obligation.
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||||
First $500 million |
0 | .47% | ||||
Next $250 million |
0 | .445% | ||||
Next $250 million |
0 | .42% | ||||
Next $250 million |
0 | .395% | ||||
Over $1.25 billion |
0 | .37% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 1.50%, 2.00%, 2.00% and 1.25% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the net annual fund operating expenses and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or
20 Invesco California Tax-Free Income Fund
networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the Plan) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A up to 0.25% of the average daily net assets of Class A shares; (2) Class B up to 0.75% of the average daily net assets of Class B shares; and (3) Class C up to 0.75% of the average daily net assets of Class C shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI, may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $51,077 in front-end sales commissions from the sale of Class A shares and $16,582 and $1,813 from Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds 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. |
As of August 31, 2013, all of the securities in this Fund were valued based on Level 2 inputs (see the Schedule of Investments for security categories). 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.
NOTE 4Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $141.
NOTE 5Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6Cash Balances and Borrowings
The Trust is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Trust may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
Inverse floating rate obligations resulting from the transfer of bonds to Dealer Trusts are accounted for as secured borrowings. The average floating rate notes outstanding and average annual interest and fee rate related to inverse floating rate note obligations during the year ended August 31, 2013 were $24,635,000 and 0.83%, respectively.
21 Invesco California Tax-Free Income Fund
NOTE 7Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 16,476,457 | $ | 17,861,599 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 857,899 | ||
Net unrealized appreciation investments |
6,049,108 | |||
Temporary book/tax differences |
(103,142 | ) | ||
Post-October deferrals |
(1,207,266 | ) | ||
Capital loss carryforward |
(28,564,962 | ) | ||
Shares of beneficial interest |
386,137,814 | |||
Total net assets |
$ | 363,169,451 |
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 difference is attributable primarily to TOBs and book to tax accretion and amortization differences.
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 and bond market discount recognition.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $1,970,720 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2015 |
$ | 803,875 | $ | | $ | 803,875 | ||||||
August 31, 2016 |
4,399,730 | | 4,399,730 | |||||||||
August 31, 2017 |
9,460,903 | | 9,460,903 | |||||||||
August 31, 2018 |
6,678,872 | | 6,678,872 | |||||||||
August 31, 2019 |
1,906,728 | | 1,906,728 | |||||||||
Not subject to expiration |
266,902 | 5,047,952 | 5,314,854 | |||||||||
$ | 23,517,010 | $ | 5,047,952 | $ | 28,564,962 |
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of June 6, 2011, the date of reorganization of Invesco Van Kampen California Insured Tax Free Fund into the Fund, are realized on securities held in each fund at such date of reorganization, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. |
NOTE 8Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $53,734,363 and $83,106,736, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities |
$ | 13,985,528 | ||
Aggregate unrealized (depreciation) of investment securities |
(7,936,420 | ) | ||
Net unrealized appreciation of investment securities |
$ | 6,049,108 |
Cost of investments for tax purposes is $380,256,923.
NOTE 9Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of taxable income and federal income taxes paid, on August 31, 2013, undistributed net investment income was increased by $43,901 and shares of beneficial interest was decreased by $43,901. This reclassification had no effect on the net assets of the Fund.
22 Invesco California Tax-Free Income Fund
NOTE 10Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
2,224,815 | $ | 27,215,833 | 1,639,489 | $ | 21,137,398 | ||||||||||
Class B |
6,140 | 76,451 | 22,625 | 315,968 | ||||||||||||
Class C |
501,900 | 6,196,506 | 1,218,195 | 14,630,674 | ||||||||||||
Class Y |
333,425 | 4,091,272 | 217,431 | 2,652,455 | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
359,160 | 4,327,235 | 338,136 | 4,039,533 | ||||||||||||
Class B |
299,001 | 3,622,292 | 388,933 | 4,693,892 | ||||||||||||
Class C |
32,695 | 394,972 | 42,402 | 511,702 | ||||||||||||
Class Y |
36,081 | 434,393 | 42,726 | 513,795 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
2,053,203 | 25,178,400 | | | ||||||||||||
Class B |
(2,038,370 | ) | (25,178,400 | ) | | | ||||||||||
Reacquired: |
||||||||||||||||
Class A |
(3,169,198 | ) | (38,063,958 | ) | (1,827,423 | ) | (21,661,081 | ) | ||||||||
Class B |
(2,031,233 | ) | (24,719,623 | ) | (2,128,577 | ) | (25,489,307 | ) | ||||||||
Class C |
(838,544 | ) | (10,175,582 | ) | (953,703 | ) | (11,446,470 | ) | ||||||||
Class Y |
(547,077 | ) | (6,647,991 | ) | (378,170 | ) | (4,519,145 | ) | ||||||||
Net increase (decrease) in share activity |
(2,778,002 | ) | $ | (33,248,200 | ) | (1,377,936 | ) | $ | (14,620,586 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 68% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
23 Invesco California Tax-Free Income Fund
NOTE 11Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(a) |
Net assets, end of period (000s omitted) |
Ratio
of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio
of expenses to average net assets without fee waivers and/or expenses absorbed |
Supplemental ratio of expenses to average net assets (excluding interest, facilities and maintenance fees)(b) |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
||||||||||||||||||||||||||||||||||||||||||||||
Class A |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 12.28 | $ | 0.49 | (d) | $ | (1.08 | ) | $ | (0.59 | ) | $ | (0.49 | ) | $ | | $ | (0.49 | ) | $ | 11.20 | (5.06 | )% | $ | 165,142 | 0.89 | %(e) | 0.89 | %(e) | 0.84 | %(e) | 4.02 | %(e) | 12 | % | |||||||||||||||||||||||||
Year ended 08/31/12 |
11.34 | 0.50 | (d) | 0.94 | 1.44 | (0.50 | ) | | (0.50 | ) | 12.28 | 12.91 | 163,047 | 0.87 | 0.87 | 0.82 | 4.21 | 18 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.75 | 0.52 | (d) | (0.41 | ) | 0.11 | (0.52 | ) | | (0.52 | ) | 11.34 | 1.13 | 148,884 | 0.90 | 0.90 | 0.85 | 4.66 | 25 | |||||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
11.21 | 0.37 | 0.52 | 0.89 | (0.35 | ) | | (0.35 | ) | 11.75 | 8.05 | 26,015 | 0.88 | (f) | 0.91 | (f) | 0.84 | (f) | 4.88 | (f) | 15 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
10.23 | 0.51 | 0.97 | 1.48 | (0.50 | ) | | (0.50 | ) | 11.21 | 14.74 | 24,377 | 0.86 | 0.92 | 0.85 | 4.65 | 19 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
11.83 | 0.49 | (1.56 | ) | (1.07 | ) | (0.49 | ) | (0.04 | ) | (0.53 | ) | 10.23 | (9.28 | ) | 22,799 | 0.86 | 0.90 | 0.86 | 4.33 | 10 | |||||||||||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.37 | 0.49 | (d) | (1.09 | ) | (0.60 | ) | (0.49 | ) | | (0.49 | ) | 11.28 | (5.11 | )(g) | 155,900 | 0.93 | (e)(g) | 0.93 | (e)(g) | 0.88 | (e)(g) | 3.98 | (e)(g) | 12 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.42 | 0.50 | (d) | 0.95 | 1.45 | (0.50 | ) | | (0.50 | ) | 12.37 | 12.93 | (g) | 217,489 | 0.88 | (g) | 0.88 | (g) | 0.83 | (g) | 4.20 | (g) | 18 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.83 | 0.52 | (d) | (0.41 | ) | 0.11 | (0.52 | ) | | (0.52 | ) | 11.42 | 1.16 | (g) | 220,478 | 0.89 | (g) | 0.89 | (g) | 0.84 | (g) | 4.67 | (g) | 25 | ||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
11.28 | 0.37 | 0.53 | 0.90 | (0.35 | ) | | (0.35 | ) | 11.83 | 8.10 | 254,907 | 0.88 | (f) | 0.91 | (f) | 0.84 | (f) | 4.88 | (f) | 15 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
10.30 | 0.51 | 0.98 | 1.49 | (0.51 | ) | | (0.51 | ) | 11.28 | 14.68 | 266,270 | 0.85 | 0.94 | 0.84 | 4.66 | 19 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
11.91 | 0.50 | (1.57 | ) | (1.07 | ) | (0.50 | ) | (0.04 | ) | (0.54 | ) | 10.30 | (9.23 | ) | 267,308 | 0.85 | 0.89 | 0.85 | 4.34 | 10 | |||||||||||||||||||||||||||||||||||||||
Class C |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.36 | 0.43 | (d) | (1.09 | ) | (0.66 | ) | (0.43 | ) | | (0.43 | ) | 11.27 | (5.57 | ) | 21,558 | 1.40 | (e) | 1.40 | (e) | 1.35 | (e) | 3.51 | (e) | 12 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.41 | 0.44 | (d) | 0.95 | 1.39 | (0.44 | ) | | (0.44 | ) | 12.36 | 12.37 | 27,394 | 1.38 | 1.38 | 1.33 | 3.70 | 18 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.82 | 0.46 | (d) | (0.40 | ) | 0.06 | (0.47 | ) | | (0.47 | ) | 11.41 | 0.65 | 21,800 | 1.40 | 1.40 | 1.35 | 4.16 | 25 | |||||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
11.27 | 0.34 | 0.52 | 0.86 | (0.31 | ) | | (0.31 | ) | 11.82 | 7.76 | 17,528 | 1.38 | (f) | 1.41 | (f) | 1.34 | (f) | 4.38 | (f) | 15 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
10.29 | 0.46 | 0.97 | 1.43 | (0.45 | ) | | (0.45 | ) | 11.27 | 14.11 | 17,245 | 1.36 | 1.42 | 1.35 | 4.15 | 19 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
11.90 | 0.44 | (1.57 | ) | (1.13 | ) | (0.44 | ) | (0.04 | ) | (0.48 | ) | 10.29 | (9.74 | ) | 17,105 | 1.36 | 1.40 | 1.36 | 3.83 | 10 | |||||||||||||||||||||||||||||||||||||||
Class Y |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
12.33 | 0.52 | (d) | (1.09 | ) | (0.57 | ) | (0.52 | ) | | (0.52 | ) | 11.24 | (4.88 | ) | 20,569 | 0.65 | (e) | 0.65 | (e) | 0.60 | (e) | 4.26 | (e) | 12 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
11.38 | 0.53 | (d) | 0.95 | 1.48 | (0.53 | ) | | (0.53 | ) | 12.33 | 13.24 | 24,742 | 0.63 | 0.63 | 0.58 | 4.45 | 18 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.79 | 0.55 | (d) | (0.41 | ) | 0.14 | (0.55 | ) | | (0.55 | ) | 11.38 | 1.40 | 24,195 | 0.65 | 0.65 | 0.60 | 4.91 | 25 | |||||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
11.25 | 0.39 | 0.52 | 0.91 | (0.37 | ) | | (0.37 | ) | 11.79 | 8.21 | 26,837 | 0.63 | (f) | 0.66 | (f) | 0.59 | (f) | 5.13 | (f) | 15 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
10.26 | 0.54 | 0.98 | 1.52 | (0.53 | ) | | (0.53 | ) | 11.25 | 15.10 | 27,388 | 0.61 | 0.67 | 0.60 | 4.90 | 19 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
11.86 | 0.52 | (1.56 | ) | (1.04 | ) | (0.52 | ) | (0.04 | ) | (0.56 | ) | 10.26 | (9.02 | ) | 28,450 | 0.61 | 0.65 | 0.61 | 4.58 | 10 |
(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) | For the years ended August 31, 2011 and prior, ratio does not exclude facilities and maintenance fees. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ending August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $139,542,348 and sold of $13,399,363 in the effort to realign the Funds portfolio holdings after the reorganization of Invesco Van Kampen California Insured Tax Free Income Fund into the Fund. |
(d) | Calculated using average shares outstanding. |
(e) | Ratios are based on average daily net assets (000s omitted) of $177,678, $188,736, $24,205 and $24,250 for Class A, Class B, Class C and Class Y shares, respectively. |
(f) | Annualized. |
(g) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.27%, 0.25% and 0.25% for the years ended August 31, 2013, 2012 and 2011, respectively. |
24 Invesco California Tax-Free Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco California Tax-Free Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco California Tax-Free Income Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 three years in the period then ended and the eight month period ended August 31, 2010, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the periods ended December 31, 2009 and prior were audited by another independent registered public accounting firm whose report dated February 25, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
25 Invesco California Tax-Free Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 922.80 | $ | 4.31 | $ | 1,020.72 | $ | 4.53 | 0.89 | % | ||||||||||||
B | 1,000.00 | 923.20 | 4.51 | 1,020.52 | 4.74 | 0.93 | ||||||||||||||||||
C | 1,000.00 | 921.00 | 6.78 | 1,018.15 | 7.12 | 1.40 | ||||||||||||||||||
Y | 1,000.00 | 924.20 | 3.15 | 1,021.93 | 3.31 | 0.65 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
26 Invesco California Tax-Free Income Fund
Approval of Investment Advisory and Sub-Advisory Contracts
27 Invesco California Tax-Free Income Fund
28 Invesco California Tax-Free Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
0.00 | % | ||
Corporate Dividends Received Deduction* |
0.00 | % | ||
Tax-Exempt Interest Dividends* |
100 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
29 Invesco California Tax-Free Income Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco California Tax-Free Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco California Tax-Free Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco California Tax-Free Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco California Tax-Free Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. | ||
SEC file numbers: 811-09913 and 333-36074 MS-CTFI-AR-1 Invesco Distributors, Inc. |
Letters to Shareholders
Phillip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily accommodative monetary policies together with uncertainty about |
who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments - Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices - We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you - Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 Invesco Core Plus Bond Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent |
Trustees on the Board. Additionally, we meet with independent legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Core Plus Bond Fund
Managements Discussion of Fund Performance
4 Invesco Core Plus Bond Fund
5 Invesco Core Plus Bond Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es) since Inception
Fund data from 6/3/09; index data from 5/31/09
continued from page 8
6 Invesco Core Plus Bond Fund
7 Invesco Core Plus Bond Fund
Invesco Core Plus Bond Funds investment objective is total return, comprised of current income and capital appreciation.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
|
|||||||
Fund Nasdaq Symbols | |||||||
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. | Class A Shares | ACPSX | |||||
Class B Shares | CPBBX | ||||||
Class C Shares | CPCFX | ||||||
Class R Shares | CPBRX | ||||||
Class Y Shares | CPBYX | ||||||
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE | Class R5 Shares | CPIIX | |||||
Class R6 Shares | CPBFX |
8 Invesco Core Plus Bond Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26 Invesco Core Plus Bond Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
27 Invesco Core Plus Bond Fund
Investment Abbreviations:
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 & Poors. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the 1933 Act). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2013 was $135,686,539, which represented 23.89% of the Funds Net Assets. |
(c) | Perpetual bond with no specified maturity date. |
(d) | Step coupon bond. The interest rate represents the coupon rate at which the bond will accrue at a specified future date. |
(e) | Defaulted security. Currently, the issuer is partially or fully in default with respect to interest payments. The value of this security at August 31, 2013 represented less than 1% of the Funds Net Assets. |
(f) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
(g) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2013. |
(h) | Security purchased on a forward commitment basis. This security is subject to dollar roll transactions. See Note 1I. |
(i) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1L and Note 4. |
(j) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(k) | Foreign denominated security. Principal amount is denominated in currency indicated. |
(l) | Non-income producing security acquired as part of the NewPage Corp. bankruptcy reorganization. |
(m) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
28 Invesco Core Plus Bond Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
29 Invesco Core Plus Bond Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Interest (net of foreign withholding taxes of $ 765) |
$ | 20,390,162 | ||
Dividends |
285,955 | |||
Dividends from affiliated money market funds |
77,875 | |||
Total investment income |
20,753,992 | |||
Expenses: |
||||
Advisory fees |
2,584,084 | |||
Administrative services fees |
162,765 | |||
Custodian fees |
39,447 | |||
Distribution fees: |
||||
Class A |
825,243 | |||
Class B |
204,154 | |||
Class C |
404,158 | |||
Class R |
16,623 | |||
Transfer agent fees A, B, C, R and Y |
779,091 | |||
Transfer agent fees R5 |
2,230 | |||
Transfer agent fees R6 |
427 | |||
Trustees and officers fees and benefits |
41,358 | |||
Other |
303,620 | |||
Total expenses |
5,363,200 | |||
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) |
(1,132,431 | ) | ||
Net expenses |
4,230,769 | |||
Net investment income |
16,523,223 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain (loss) from: |
||||
Investment securities |
3,902,294 | |||
Foreign currencies |
(16,607 | ) | ||
Foreign currency contracts |
(25,999 | ) | ||
Futures contracts |
1,824,954 | |||
Swap agreements |
(477,323 | ) | ||
5,207,319 | ||||
Change in net unrealized appreciation (depreciation) of: |
||||
Investment securities |
(33,388,070 | ) | ||
Foreign currencies |
(2,255 | ) | ||
Foreign currency contracts |
2,000 | |||
Futures contracts |
(453,802 | ) | ||
Swap agreements |
(29,987 | ) | ||
(33,872,114 | ) | |||
Net realized and unrealized gain (loss) |
(28,664,795 | ) | ||
Net increase (decrease) in net assets resulting from operations |
$ | (12,141,572 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
30 Invesco Core Plus Bond Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income |
$ | 16,523,223 | $ | 16,609,289 | ||||
Net realized gain |
5,207,319 | 11,951,519 | ||||||
Change in net unrealized appreciation (depreciation) |
(33,872,114 | ) | 8,386,426 | |||||
Net increase (decrease) in net assets resulting from operations |
(12,141,572 | ) | 36,947,234 | |||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(10,265,479 | ) | (10,466,088 | ) | ||||
Class B |
(483,301 | ) | (808,278 | ) | ||||
Class C |
(953,544 | ) | (1,160,409 | ) | ||||
Class R |
(95,262 | ) | (104,533 | ) | ||||
Class Y |
(141,229 | ) | (238,402 | ) | ||||
Class R5 |
(498,139 | ) | (7,232,345 | ) | ||||
Class R6 |
(5,578,061 | ) | | |||||
Total distributions from net investment income |
(18,015,015 | ) | (20,010,055 | ) | ||||
Distributions to shareholders from net realized gains: |
||||||||
Class A |
| (418,836 | ) | |||||
Class B |
| (43,158 | ) | |||||
Class C |
| (58,620 | ) | |||||
Class R |
| (4,312 | ) | |||||
Class Y |
| (9,454 | ) | |||||
Class R5 |
| (289,097 | ) | |||||
Total distributions from net realized gains |
| (823,477 | ) | |||||
Share transactionsnet: |
||||||||
Class A |
46,603,321 | 61,184,360 | ||||||
Class B |
(5,686,495 | ) | (2,679,847 | ) | ||||
Class C |
(32,154 | ) | 3,325,390 | |||||
Class R |
(335,712 | ) | 918,843 | |||||
Class Y |
(4,179,243 | ) | 341,572 | |||||
Class R5 |
(167,831,897 | ) | (2,421,580 | ) | ||||
Class R6 |
195,283,747 | | ||||||
Net increase in net assets resulting from share transactions |
63,821,567 | 60,668,738 | ||||||
Net increase in net assets |
33,664,980 | 76,782,440 | ||||||
Net assets: |
||||||||
Beginning of year |
534,267,230 | 457,484,790 | ||||||
End of year (includes undistributed net investment income of $943,304 and $(605,532), respectively) |
$ | 567,932,210 | $ | 534,267,230 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Core Plus Bond Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is total return, comprised of current income and capital appreciation.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. On September 24, 2012, Institutional Class shares were renamed Class R5 shares and the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent
31 Invesco Core Plus Bond Fund
deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are valued based on a model which may include end of day net present values, spreads, ratings, industry, and company performance.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net
32 Invesco Core Plus Bond Fund
realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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. | Dollar Rolls and Forward Commitment Transactions The Fund may enter into dollar roll transactions to enhance the Funds performance. The Fund executes its dollar roll transactions in the to be announced (TBA) market whereby the Fund makes a forward commitment to purchase a security and, instead of accepting delivery, the position is offset by the sale of the security with a simultaneous agreement to repurchase at a future date. |
The Fund accounts for dollar roll transactions as purchases and sales and realizes gains and losses on these transactions. These transactions increase the Funds portfolio turnover rate. The Fund will segregate liquid assets in an amount equal to its dollar roll commitments. Dollar roll transactions are considered borrowings under the 1940 Act.
Dollar roll transactions involve the risk that a counter-party to the transaction may fail to complete the transaction. If this occurs, the Fund may lose the opportunity to purchase or sell the security at the agreed upon price. Dollar rolls transactions also involve the risk that the value of the securities retained by the Fund may decline below the price of the securities that the Fund has sold but is obligated to purchase under the agreement.
J. | Foreign Currency Translations Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds 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.
33 Invesco Core Plus Bond Fund
K. | Foreign Currency Contracts The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to lock in the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
L. | Futures Contracts The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Funds basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchanges clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
M. | Swap Agreements The Fund may enter into various swap transactions, including interest rate, total return, index, currency exchange rate and credit default swap contracts (CDS) for investment purposes or to manage interest rate, currency or credit risk. Such transactions are agreements between two parties (Counterparties). These agreements may contain among other conditions, events of default and termination events, and various covenants and representations such as provisions that require the Fund to maintain a pre-determined level of net assets, and/or provide limits regarding the decline of the Funds NAV over specific periods of time. If the Fund were to trigger such provisions and have open derivative positions at that time, the Counterparty may be able to terminate such agreement and request immediate payment in an amount equal to the net liability positions, if any. |
Interest rate, total return, index, and currency exchange rate swap agreements are two-party contracts entered into primarily to exchange the returns (or differentials in rates of returns) earned or realized on particular predetermined investments or instruments. The gross returns to be exchanged or swapped between the parties are calculated with respect to a notional amount, i.e., the return on or increase in value of a particular dollar amount invested at a particular interest rate or return of an underlying asset, in a particular foreign currency, or in a basket of securities representing a particular index.
A CDS is an agreement between Counterparties to exchange the credit risk of an issuer. A buyer of a CDS is said to buy protection by paying a fixed payment over the life of the agreement and in some situations an upfront payment to the seller of the CDS. If a defined credit event occurs (such as payment default or bankruptcy), the Fund as a protection buyer would cease paying its fixed payment, the Fund would deliver eligible bonds issued by the reference entity to the seller, and the seller would pay the full notional value, or the par value, of the referenced obligation to the Fund. A seller of a CDS is said to sell protection and thus would receive a fixed payment over the life of the agreement and an upfront payment, if applicable. If a credit event occurs, the Fund as a protection seller would cease to receive the fixed payment stream, the Fund would pay the buyer par value or the full notional value of the referenced obligation, and the Fund would receive the eligible bonds issued by the reference entity. In turn, these bonds may be sold in order to realize a recovery value. Alternatively, the seller of the CDS and its counterparty may agree to net the notional amount and the market value of the bonds and make a cash payment equal to the difference to the buyer of protection. If no credit event occurs, the Fund receives the fixed payment over the life of the agreement. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional amount of the CDS. In connection with these agreements, cash and securities may be identified as collateral in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default under the swap agreement or bankruptcy/insolvency of a party to the swap agreement. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the Fund may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding. The Fund may obtain only limited recovery or may obtain no recovery in such circumstances. The Funds maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the value of the contract. The risk may be mitigated by having a master netting arrangement between the Fund and the counterparty and by the designation of collateral by the counterparty to cover the Funds exposure to the counterparty.
Implied credit spreads represent the current level at which protection could be bought or sold given the terms of the existing CDS contract and serve as an indicator of the current status of the payment/performance risk of the CDS. An implied spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets.
Changes in the value of swap agreements are recognized as unrealized gains (losses) in the Statement of Operations by marking to market on a daily basis to reflect the value of the swap agreement at the end of each trading day. Payments received or paid at the beginning of the agreement are reflected as such on the Statement of Assets and Liabilities and may be referred to as upfront payments. The Fund accrues for the fixed payment
34 Invesco Core Plus Bond Fund
stream and amortizes upfront payments, if any, on swap agreements on a daily basis with the net amount, recorded as a component of realized gain (loss) on the Statement of Operations. A liquidation payment received or made at the termination of a swap agreement is recorded as realized gain (loss) on the Statement of Operations. The Fund segregates liquid securities having a value at least equal to the amount of the potential obligation of a Fund under any swap transaction. Entering into these agreements involves, to varying degrees, lack of liquidity and elements of credit, market, and counterparty risk in excess of amounts recognized on the Statement of Assets and Liabilities. Such risks involve the possibility that a swap is difficult to sell or liquidate; the counterparty does not honor its obligations under the agreement and unfavorable interest rates and market fluctuations. It is possible that developments in the swaps market, including potential government regulation, could adversely affect the Funds ability to terminate existing swap agreements or to realize amounts to be received under such agreements.
N. | Other Risks The Funds may invest in obligations issued by agencies and instrumentalities of the U.S. Government that may vary in the level of support they receive from the government. The government may choose not to provide financial support to government sponsored agencies or instrumentalities if it is not legally obligated to do so. In this case, if the issuer defaulted, the underlying fund holding securities of such issuer might not be able to recover its investment from the U.S. Government. Many securities purchased by the Fund are not guaranteed by the U.S. Government. |
O. | Leverage Risk Leverage exists when a Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
P. | Collateral To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Funds practice to replace such collateral no later than the next business day. |
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||||
First $500 million |
0 | .45% | ||||
Next $500 million |
0 | .425% | ||||
Next $1.5 billion |
0 | .40% | ||||
Next $2.5 billion |
0 | .375% | ||||
Over $5 billion |
0 | .35% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least December 31, 2013, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 0.75%, 1.50%, 1.50%, 1.00%, 0.50%, 0.50% and 0.50%, respectively, of average daily net assets. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on December 31, 2013.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $350,683 and reimbursed Class specific expenses of $644,364, $39,852, $78,893, $6,490, $8,071, $2,230 and $427 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (IDI) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Funds Class A, Class B, Class C and Class R shares (collectively, the Plans). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Funds 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)
35 Invesco Core Plus Bond Fund
impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended August 31, 2013, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $187,648 in front-end sales commissions from the sale of Class A shares and $3,695, $22,904 and $4,909 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 12,181,614 | $ | 2,060,919 | $ | | $ | 14,242,533 | ||||||||
U.S. Treasury Securities |
| 41,219,785 | | 41,219,785 | ||||||||||||
U.S. Government Sponsored Agency Securities |
| 142,973,431 | | 142,973,431 | ||||||||||||
Corporate Debt Securities |
| 308,172,434 | 0 | 308,172,434 | ||||||||||||
Asset-Backed Securities |
| 109,180,409 | | 109,180,409 | ||||||||||||
Municipal Obligations |
| 2,435,696 | | 2,435,696 | ||||||||||||
Foreign Securities Debt |
| 2,479,687 | | 2,479,687 | ||||||||||||
Foreign Sovereign Debt |
| 24,012,054 | | 24,012,054 | ||||||||||||
$ | 12,181,614 | $ | 632,534,415 | $ | 0 | $ | 644,716,029 | |||||||||
Foreign Currency Contracts* |
| (5,260 | ) | | (5,260 | ) | ||||||||||
Futures* |
(599,399 | ) | | | (599,399 | ) | ||||||||||
Swap Agreements* |
| (366,414 | ) | | (366,414 | ) | ||||||||||
Total Investments |
$ | 11,582,215 | $ | 632,162,741 | $ | 0 | $ | 643,744,956 |
* | Unrealized appreciation (depreciation). |
NOTE 4Derivative Investments
Value of Derivative Investments at Period-End
The table below summarizes the value of the Funds derivative investments, detailed by primary risk exposure, held as of August 31, 2013:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Credit risk |
||||||||
Swap agreements(a) |
$ | | $ | (366,414 | ) | |||
Currency risk |
||||||||
Foreign currency contracts(a) |
1,606 | (6,866 | ) | |||||
Interest rate risk |
||||||||
Futures contracts(a) |
| (599,399 | ) | |||||
Total |
$ | 1,606 | $ | (972,679 | ) |
(a) | Values are disclosed on the Statement of Assets and Liabilities under Unrealized depreciation on swap agreements. |
(b) | Values are disclosed on the Statement of Assets and Liabilities under Foreign currency contracts outstanding. |
(c) | Includes cumulative appreciation (depreciation) of futures contracts. Only current days variation margin payable is reported within the Statement of Assets and Liabilities. |
36 Invesco Core Plus Bond Fund
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||||||||||
Futures* | Foreign Currency Contracts* |
Swap Agreements* |
||||||||||
Realized Gain (Loss) |
||||||||||||
Credit risk |
$ | | $ | | $ | (477,323 | ) | |||||
Currency risk |
| (25,999 | ) | | ||||||||
Interest rate risk |
1,824,954 | | | |||||||||
Change in Unrealized Appreciation (Depreciation) |
||||||||||||
Credit risk |
$ | | $ | | $ | (29,987 | ) | |||||
Currency risk |
| 2,000 | | |||||||||
Interest rate risk |
(453,802 | ) | | | ||||||||
Total |
$ | 1,371,152 | $ | (23,999 | ) | $ | (507,310 | ) |
* | The average notional value of futures contracts, foreign currency contracts and swap agreements outstanding during the period was $24,704,707, $933,781 and $6,875,000, respectively. |
Open Foreign Currency Contracts | ||||||||||||||||||||||||||
Settlement
|
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
Deliver | Receive | |||||||||||||||||||||||||
12/09/13 |
Morgan Stanley & Co., Inc. |
EUR | 365,000 | USD | 484,191 | $ | 482,585 | $ | 1,606 | |||||||||||||||||
12/09/13 |
RBC Capital Markets Corp. |
GBP | 416,000 | USD | 637,312 | 644,178 | (6,866 | ) | ||||||||||||||||||
$ | (5,260 | ) |
Currency Abbreviations:
EUR | Euro | |
GBP | British Pound Sterling | |
USD | U.S. Dollar |
Open Futures Contracts | ||||||||||||||||
Short Contracts | Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||
U.S. Ultra Bond |
119 | December-2013 | $ | (16,883,125 | ) | $ | (193,836 | ) | ||||||||
U.S. 10 Year Treasury Notes |
845 | December-2013 | (105,017,656 | ) | (405,563 | ) | ||||||||||
Total |
$ | (599,399 | ) |
Open Credit Default Swap Agreements | ||||||||||||||||||||||||||||||
Counterparty | Reference Entity | Buy/Sell Protection |
(Pay)/Receive Fixed Rate |
Expiration Date |
Implied Credit |
Notional Value |
Upfront Payments |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
Bank of America Securities LLC |
Citigroup Inc. | Buy | (1.00 | )% | 06/20/17 | 0.82 | % | $ | 5,500,000 | $ | 328,984 | $ | (366,414 | ) |
(a) | Implied credit spreads represent the current level as of August 31, 2013 at which protection could be bought or sold given the terms of the existing credit default swap contract and serve as an indicator of the current status of the payment/performance risk of the credit default swap contract. An implied credit spread that has widened or increased since entry into the initial contract may indicate a deteriorating credit profile and increased risk of default for the reference entity. A declining or narrowing spread may indicate an improving credit profile or decreased risk of default for the reference entity. Alternatively, credit spreads may increase or decrease reflecting the general tolerance for risk in the credit markets generally. |
NOTE 5Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $1,421.
37 Invesco Core Plus Bond Fund
NOTE 6Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7Cash Balances
The Fund may borrow for leveraging in an amount up to 5% of the Funds total assets (excluding the amount borrowed) at the time the borrowing is made. In doing so, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate. A Fund may not purchase additional securities when any borrowings from banks exceeds 5% of the Funds total assets.
NOTE 8Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 18,015,015 | $ | 20,605,590 | ||||
Long-term capital gain |
| 227,942 | ||||||
Total distributions |
$ | 18,015,015 | $ | 20,833,532 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 1,742,403 | ||
Net unrealized appreciation (depreciation) investments |
(1,437,695 | ) | ||
Net unrealized appreciation (depreciation) other investments |
(368,242 | ) | ||
Temporary book/tax differences |
(143,065 | ) | ||
Post-October deferrals |
(5,061,906 | ) | ||
Capital loss carryforward |
(81,094,105 | ) | ||
Shares of beneficial interest |
654,294,820 | |||
Total net assets |
$ | 567,932,210 |
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) difference is attributable primarily to wash sales, book to tax accretion and amortization differences and mortgage-backed dollar rolls.
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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $6,843,187 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2016 |
$ | 81,094,105 | $ | | $ | 81,094,105 |
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of June 6, 2011, the date of reorganizations of Invesco Core Bond Fund and Invesco Van Kampen Core Plus Fixed Income Fund into the Fund, are realized on securities held in each fund at such date of reorganizations, the capital loss carryforward may be further limited for up to five years from the date of the reorganizations. |
38 Invesco Core Plus Bond Fund
NOTE 9Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $1,505,868,252 and $1,356,754,778, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $113,655,502 and $142,680,980, 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 |
$ | 15,058,950 | ||
Aggregate unrealized (depreciation) of investment securities |
(16,496,645 | ) | ||
Net unrealized appreciation (depreciation) of investment securities |
$ | (1,437,695 | ) |
Cost of investments for tax purposes is $646,153,724.
NOTE 10Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of mortgage-backed dollar rolls, paydown gains and bond premium amortization, on August 31, 2013, undistributed net investment income was increased by $3,040,628, undistributed net realized gain (loss) was decreased by $3,160,360 and shares of beneficial interest was increased by $119,732. This reclassification had no effect on the net assets of the Fund.
NOTE 11Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
11,443,179 | $ | 124,770,153 | 9,948,952 | $ | 106,394,842 | ||||||||||
Class B |
259,725 | 2,842,268 | 484,939 | 5,170,584 | ||||||||||||
Class C |
1,644,469 | 17,949,741 | 1,374,205 | 14,701,103 | ||||||||||||
Class R |
97,728 | 1,065,927 | 128,962 | 1,380,248 | ||||||||||||
Class Y |
342,319 | 3,760,180 | 65,961 | 707,807 | ||||||||||||
Class R5 |
302,401 | 3,240,211 | 1,896,102 | 20,306,223 | ||||||||||||
Class R6(b) |
17,635,417 | 193,142,924 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
816,836 | 8,849,484 | 894,234 | 9,577,150 | ||||||||||||
Class B |
37,163 | 403,488 | 66,220 | 707,879 | ||||||||||||
Class C |
74,719 | 809,654 | 98,725 | 1,056,143 | ||||||||||||
Class R |
8,695 | 94,324 | 10,094 | 108,082 | ||||||||||||
Class Y |
4,187 | 45,485 | 5,812 | 62,515 | ||||||||||||
Class R5 |
8,502 | 92,331 | 703,096 | 7,518,852 | ||||||||||||
Class R6 |
515,819 | 5,577,578 | | | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
311,678 | 3,391,634 | 368,284 | 3,989,575 | ||||||||||||
Class B |
(311,701 | ) | (3,391,634 | ) | (369,811 | ) | (3,989,575 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(8,373,749 | ) | (90,407,950 | ) | (5,503,380 | ) | (58,777,207 | ) | ||||||||
Class B |
(512,456 | ) | (5,540,617 | ) | (431,301 | ) | (4,568,735 | ) | ||||||||
Class C |
(1,749,709 | ) | (18,791,549 | ) | (1,164,354 | ) | (12,431,856 | ) | ||||||||
Class R |
(138,164 | ) | (1,495,963 | ) | (53,449 | ) | (569,487 | ) | ||||||||
Class Y |
(731,992 | ) | (7,984,908 | ) | (40,125 | ) | (428,750 | ) | ||||||||
Class R5 |
(15,607,029 | ) | (171,164,439 | ) | (2,841,591 | ) | (30,246,655 | ) | ||||||||
Class R6 |
(322,143 | ) | (3,436,755 | ) | | | ||||||||||
Net increase in share activity |
5,755,894 | $ | 63,821,567 | 5,641,575 | $ | 60,668,738 |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 33% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
In addition, 33% of the outstanding shares of the Fund are owned by affiliated mutual funds. Affiliated mutual funds are mutual funds that are advised by Invesco. |
(b) | Commencement date of September 24, 2012. |
39 Invesco Core Plus Bond Fund
NOTE 12Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 10.95 | $ | 0.31 | $ | (0.51 | ) | $ | (0.20 | ) | $ | (0.34 | ) | $ | | $ | (0.34 | ) | $ | 10.41 | (1.92 | )% | $ | 324,537 | 0.73 | %(d) | 0.99 | %(d) | 2.86 | %(d) | 252 | % | ||||||||||||||||||||||||
Year ended 08/31/12 |
10.60 | 0.37 | 0.44 | 0.81 | (0.44 | ) | (0.02 | ) | (0.46 | ) | 10.95 | 7.86 | 295,311 | 0.74 | 1.01 | 3.44 | 297 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.75 | 0.35 | (0.03 | ) | 0.32 | (0.32 | ) | (0.15 | ) | (0.47 | ) | 10.60 | 3.10 | 225,417 | 0.75 | 1.20 | 3.27 | 138 | ||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.29 | 0.37 | 0.65 | 1.02 | (0.49 | ) | (0.07 | ) | (0.56 | ) | 10.75 | 10.26 | 7,219 | 0.87 | 5.61 | 3.55 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
10.00 | 0.09 | 0.27 | 0.36 | (0.07 | ) | | (0.07 | ) | 10.29 | 3.58 | 2,882 | 0.84 | (f) | 12.89 | (f) | 3.47 | (f) | 43 | |||||||||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
10.95 | 0.23 | (0.51 | ) | (0.28 | ) | (0.26 | ) | | (0.26 | ) | 10.41 | (2.66 | ) | 15,876 | 1.48 | (d) | 1.74 | (d) | 2.11 | (d) | 252 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
10.60 | 0.29 | 0.44 | 0.73 | (0.36 | ) | (0.02 | ) | (0.38 | ) | 10.95 | 7.06 | 22,465 | 1.49 | 1.76 | 2.69 | 297 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.74 | 0.27 | (0.02 | ) | 0.25 | (0.24 | ) | (0.15 | ) | (0.39 | ) | 10.60 | 2.43 | 24,401 | 1.50 | 1.95 | 2.52 | 138 | ||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.29 | 0.29 | 0.64 | 0.93 | (0.41 | ) | (0.07 | ) | (0.48 | ) | 10.74 | 9.34 | 954 | 1.62 | 6.36 | 2.80 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
10.00 | 0.07 | 0.27 | 0.34 | (0.05 | ) | | (0.05 | ) | 10.29 | 3.39 | 205 | 1.59 | (f) | 13.64 | (f) | 2.72 | (f) | 43 | |||||||||||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
10.94 | 0.23 | (0.50 | ) | (0.27 | ) | (0.26 | ) | | (0.26 | ) | 10.41 | (2.56 | ) | 35,770 | 1.48 | (d) | 1.74 | (d) | 2.11 | (d) | 252 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
10.60 | 0.29 | 0.44 | 0.73 | (0.37 | ) | (0.02 | ) | (0.39 | ) | 10.94 | 6.96 | 37,950 | 1.49 | 1.76 | 2.69 | 297 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.74 | 0.27 | (0.02 | ) | 0.25 | (0.24 | ) | (0.15 | ) | (0.39 | ) | 10.60 | 2.43 | 33,476 | 1.50 | 1.95 | 2.52 | 138 | ||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.29 | 0.29 | 0.64 | 0.93 | (0.41 | ) | (0.07 | ) | (0.48 | ) | 10.74 | 9.34 | 844 | 1.62 | 6.36 | 2.80 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
10.00 | 0.07 | 0.27 | 0.34 | (0.05 | ) | | (0.05 | ) | 10.29 | 3.39 | 223 | 1.59 | (f) | 13.64 | (f) | 2.72 | (f) | 43 | |||||||||||||||||||||||||||||||||||||
Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
10.95 | 0.28 | (0.51 | ) | (0.23 | ) | (0.31 | ) | | (0.31 | ) | 10.41 | (2.16 | ) | 2,820 | 0.98 | (d) | 1.24 | (d) | 2.61 | (d) | 252 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
10.60 | 0.34 | 0.44 | 0.78 | (0.41 | ) | (0.02 | ) | (0.43 | ) | 10.95 | 7.59 | 3,313 | 0.99 | 1.26 | 3.19 | 297 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.74 | 0.32 | (0.02 | ) | 0.30 | (0.29 | ) | (0.15 | ) | (0.44 | ) | 10.60 | 2.94 | 2,301 | 1.00 | 1.45 | 3.02 | 138 | ||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.29 | 0.34 | 0.64 | 0.98 | (0.46 | ) | (0.07 | ) | (0.53 | ) | 10.74 | 9.88 | 153 | 1.12 | 5.86 | 3.30 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
10.00 | 0.08 | 0.27 | 0.35 | (0.06 | ) | | (0.06 | ) | 10.29 | 3.51 | 105 | 1.09 | (f) | 13.14 | (f) | 3.22 | (f) | 43 | |||||||||||||||||||||||||||||||||||||
Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
10.95 | 0.34 | (0.50 | ) | (0.16 | ) | (0.37 | ) | | (0.37 | ) | 10.42 | (1.58 | ) | 1,456 | 0.48 | (d) | 0.74 | (d) | 3.11 | (d) | 252 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
10.60 | 0.39 | 0.45 | 0.84 | (0.47 | ) | (0.02 | ) | (0.49 | ) | 10.95 | 8.12 | 5,753 | 0.49 | 0.76 | 3.69 | 297 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.74 | 0.37 | (0.01 | ) | 0.36 | (0.35 | ) | (0.15 | ) | (0.50 | ) | 10.60 | 3.46 | 5,234 | 0.50 | 0.95 | 3.52 | 138 | ||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.29 | 0.40 | 0.63 | 1.03 | (0.51 | ) | (0.07 | ) | (0.58 | ) | 10.74 | 10.43 | 144 | 0.62 | 5.36 | 3.80 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
10.00 | 0.09 | 0.27 | 0.36 | (0.07 | ) | | (0.07 | ) | 10.29 | 3.64 | 126 | 0.59 | (f) | 12.64 | (f) | 3.72 | (f) | 43 | |||||||||||||||||||||||||||||||||||||
Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
10.94 | 0.34 | (0.51 | ) | (0.17 | ) | (0.37 | ) | | (0.37 | ) | 10.40 | (1.68 | ) | 1,960 | 0.48 | (d) | 0.56 | (d) | 3.11 | (d) | 252 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
10.60 | 0.39 | 0.44 | 0.83 | (0.47 | ) | (0.02 | ) | (0.49 | ) | 10.94 | 8.03 | 169,474 | 0.49 | 0.56 | 3.69 | 297 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.74 | 0.37 | (0.01 | ) | 0.36 | (0.35 | ) | (0.15 | ) | (0.50 | ) | 10.60 | 3.46 | 166,656 | 0.50 | 0.66 | 3.52 | 138 | ||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.29 | 0.40 | 0.64 | 1.04 | (0.52 | ) | (0.07 | ) | (0.59 | ) | 10.74 | 10.43 | 115 | 0.62 | 5.29 | 3.80 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
10.00 | 0.09 | 0.27 | 0.36 | (0.07 | ) | | (0.07 | ) | 10.29 | 3.64 | 104 | 0.59 | (f) | 12.68 | (f) | 3.72 | (f) | 43 | |||||||||||||||||||||||||||||||||||||
Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(e) |
10.97 | 0.32 | (0.54 | ) | (0.22 | ) | (0.34 | ) | | (0.34 | ) | 10.41 | (2.07 | ) | 185,513 | 0.48 | (d)(f) | 0.54 | (d)(f) | 3.11 | (d)(f) | 252 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $390,261,951 and sold of $29,803,473 in the effort to realign the Funds portfolio holdings after the reorganizations of Invesco Core Bond Fund and Invesco Van Kampen Core Plus Fixed Income Fund into the Fund. |
(d) | Ratios are based on average daily net assets (000s omitted) of $330,097, $20,415, $40,416, $3,325, $4,135, $13,934 and $177,470 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Commencement date of June 3, 2009 for Class A, Class B, Class C, Class R, Class Y and Class R5 shares and September 24, 2012 for Class R6 shares. |
(f) | Annualized. |
40 Invesco Core Plus Bond Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Core Plus Bond Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Core Plus Bond Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
41 Invesco Core Plus Bond Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
Class A |
$ | 1,000.00 | $ | 966.50 | $ | 3.62 | $ | 1,021.53 | $ | 3.72 | 0.73 | % | ||||||||||||
Class B |
1,000.00 | 962.80 | 7.32 | 1,017.74 | 7.53 | 1.48 | ||||||||||||||||||
Class C |
1,000.00 | 962.80 | 7.32 | 1,017.74 | 7.53 | 1.48 | ||||||||||||||||||
Class R |
1,000.00 | 965.30 | 4.85 | 1,020.27 | 4.99 | 0.98 | ||||||||||||||||||
Class Y |
1,000.00 | 968.60 | 2.38 | 1,022.79 | 2.45 | 0.48 | ||||||||||||||||||
Class R5 |
1,000.00 | 968.60 | 2.38 | 1,022.79 | 2.45 | 0.48 | ||||||||||||||||||
Class R6 |
1,000.00 | 968.60 | 2.38 | 1,022.79 | 2.45 | 0.48 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
42 Invesco Core Plus Bond Fund
Approval of Investment Advisory and Sub-Advisory Contracts
43 Invesco Core Plus Bond Fund
44 Invesco Core Plus Bond Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
1.31 | % | ||
Corporate Dividends Received Deduction* |
1.42 | % | ||
U.S. Treasury Obligations* |
6.50 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
45 Invesco Core Plus Bond Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Core Plus Bond Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Core Plus Bond Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Core Plus Bond Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Core Plus Bond Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|||||
SEC file numbers: 811-09913 and 333-36074 CPB-AR-1 Invesco Distributors, Inc. |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily accommodative monetary policies together with uncertainty | |
about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter. Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change. Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you. |
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 Invesco Equally-Weighted S&P 500 Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent legal counsel and review | |||
performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. |
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Equally-Weighted S&P 500 Fund
Managements Discussion of Fund Performance
4 Invesco Equally-Weighted S&P 500 Fund
5 Invesco Equally-Weighted S&P 500 Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
6 Invesco Equally-Weighted S&P 500 Fund
7 Invesco Equally-Weighted S&P 500 Fund
Invesco Equally-Weighted S&P 500 Funds investment objective is to achieve a high level of total return on its assets through a combination of capital appreciation and current income.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Equally-Weighted S&P 500 Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Equally-Weighted S&P 500 Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Equally-Weighted S&P 500 Fund
Investment Abbreviations:
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 & Poors. |
(b) | Non-income producing security. |
(c) | The Funds Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. See Note 5. |
(d) | All or a portion of this security was out on loan at August 31, 2013. |
(e) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1J and Note 4. |
(f) | The money market fund and the Fund are affiliated by having the same investment adviser. |
(g) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrowers return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Equally-Weighted S&P 500 Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Equally-Weighted S&P 500 Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $22,753) |
$ | 28,162,533 | ||
Dividends from affiliates (includes securities lending income of $282,124) |
376,811 | |||
Total investment income |
28,539,344 | |||
Expenses: |
||||
Advisory fees |
1,671,960 | |||
Administrative services fees |
345,144 | |||
Custodian fees |
70,040 | |||
Distribution fees: |
||||
Class A |
2,130,182 | |||
Class B |
322,824 | |||
Class C |
1,011,042 | |||
Class R |
89,896 | |||
Transfer agent fees A,B,C,R, & Y |
1,647,447 | |||
Transfer agent fees R6 |
8 | |||
Trustees and officers fees and benefits |
69,807 | |||
Other |
663,510 | |||
Total expenses |
8,021,860 | |||
Less: Fees waived and expense offset arrangement(s) |
(26,440 | ) | ||
Net expenses |
7,995,420 | |||
Net investment income |
20,543,924 | |||
Realized and unrealized gain from: |
||||
Net realized gain from: |
||||
Investment securities |
38,566,055 | |||
Futures contracts |
2,623,651 | |||
41,189,706 | ||||
Change in net unrealized appreciation (depreciation) of: |
||||
Investment securities |
233,280,176 | |||
Futures contracts |
(338,758 | ) | ||
232,941,418 | ||||
Net realized and unrealized gain |
274,131,124 | |||
Net increase in net assets resulting from operations |
$ | 294,675,048 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Equally-Weighted S&P 500 Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income |
$ | 20,543,924 | $ | 13,805,766 | ||||
Net realized gain |
41,189,706 | 51,147,573 | ||||||
Change in net unrealized appreciation |
232,941,418 | 71,326,622 | ||||||
Net increase in net assets resulting from operations |
294,675,048 | 136,279,961 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(11,160,240 | ) | (11,216,679 | ) | ||||
Class B |
(254,363 | ) | (345,338 | ) | ||||
Class C |
(631,218 | ) | (365,417 | ) | ||||
Class R |
(152,295 | ) | (19,599 | ) | ||||
Class Y |
(5,410,532 | ) | (4,510,536 | ) | ||||
Class R6 |
(170 | ) | | |||||
Total distributions from net investment income |
(17,608,818 | ) | (16,457,569 | ) | ||||
Distributions to shareholders from net realized gains: |
||||||||
Class A |
(18,393,200 | ) | | |||||
Class B |
(869,049 | ) | | |||||
Class C |
(2,156,598 | ) | | |||||
Class R |
(301,636 | ) | | |||||
Class Y |
(7,685,801 | ) | | |||||
Class R6 |
(240 | ) | | |||||
Total distributions from net realized gains |
(29,406,524 | ) | | |||||
Share transactionsnet: |
||||||||
Class A |
115,974,489 | 15,259,422 | ||||||
Class B |
(25,161,061 | ) | (42,838,095 | ) | ||||
Class C |
47,119,734 | 1,457,548 | ||||||
Class R |
17,285,208 | 7,253,744 | ||||||
Class Y |
103,991,172 | 103,884,907 | ||||||
Class R6 |
9,805 | | ||||||
Net increase in net assets resulting from share transactions |
259,219,347 | 85,017,526 | ||||||
Net increase in net assets |
506,879,053 | 204,839,918 | ||||||
Net assets: |
||||||||
Beginning of year |
1,169,040,630 | 964,200,712 | ||||||
End of year (includes undistributed net investment income of $12,133,943 and $9,153,063, respectively) |
$ | 1,675,919,683 | $ | 1,169,040,630 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Equally-Weighted S&P 500 Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to achieve a high level of total return on its assets through a combination of capital appreciation and current income.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Class R6. On September 24, 2012, the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they
19 Invesco Equally-Weighted S&P 500 Fund
convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors |
20 Invesco Equally-Weighted S&P 500 Fund
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 issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income and net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R6 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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 Funds 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 Funds policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. |
J. | Futures Contracts The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Funds basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchanges clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
K. | Collateral To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Funds practice to replace such collateral no later than the next business day. This practice does not apply to securities pledged as collateral for securities lending transactions. |
21 Invesco Equally-Weighted S&P 500 Fund
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $2 billion |
0.12% | |||
Over $2 billion |
0.10% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y and Class R6 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 1.75% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the net annual fund operating expenses and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $25,711.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the Plan) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A up to 0.25% of the average daily net assets of Class A shares; (2) Class B up to 1.00% of the average daily net assets of Class B shares; (3) Class C up to 1.00% of the average daily net assets of Class C shares; and (4) Class R up to 0.50% of the average daily net assets of Class R shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI, may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $158,939 in front-end sales commissions from the sale of Class A shares and $165, $11,655 and $7,608 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
22 Invesco Equally-Weighted S&P 500 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 Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 1,707,952,423 | $ | | $ | | $ | 1,707,952,423 | ||||||||
Futures* |
(182,791 | ) | | | (182,791 | ) | ||||||||||
Total Investments |
$ | 1,707,769,632 | $ | | $ | | $ | 1,707,769,632 |
* | Unrealized appreciation (depreciation). |
NOTE 4Derivative Investments
Value of Derivative Investments at Period-End
The table below summarizes the value of the Funds derivative investments, detailed by primary risk exposure, held as of August 31, 2013:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Market Risk |
||||||||
Futures contracts(a) |
$ | | $ | (182,791 | ) |
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current days variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||
Futures* | ||||
Realized Gain |
||||
Equity risk |
$ | 2,623,651 | ||
Change in Unrealized Appreciation (Depreciation) |
||||
Equity risk |
$ | (338,758 | ) | |
Total |
$ | 2,284,893 |
* | The average notional value of futures contracts outstanding during the period was $17,233,268. |
Open Futures Contracts | ||||||||||||||||
Long Contracts | Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||
E-Mini S&P 500 |
227 | September-2013 | $ | 18,515,255 | $ | (182,791 | ) |
NOTE 5Investments in Affiliates
The Funds Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. The following is a summary of the transactions in and earnings from investments in Invesco Ltd. for the year ended August 31, 2013.
Value 08/31/12 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation |
Realized Gain |
Value 08/31/13 |
Dividend Income |
||||||||||||||||||||||
Invesco Ltd. |
$ | 2,262,766 | $ | 503,603 | $ | (461,159 | ) | $ | 603,167 | $ | 51,996 | $ | 2,960,373 | $ | 77,526 |
NOTE 6Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $729.
23 Invesco Equally-Weighted S&P 500 Fund
NOTE 7Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 8Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 9Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 19,912,458 | $ | 16,457,569 | ||||
Long-term capital gain |
27,102,884 | | ||||||
Total distributions |
$ | 47,015,342 | $ | 16,457,569 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 24,128,031 | ||
Undistributed long-term gain |
24,099,712 | |||
Net unrealized appreciation investments |
722,347,979 | |||
Temporary book/tax differences |
(154,911 | ) | ||
Shares of beneficial interest |
905,498,872 | |||
Total net assets |
$ | 1,675,919,683 |
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 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 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 Trust to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of August 31, 2013.
NOTE 10Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $485,411,369 and $252,836,288, 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 |
$ | 733,436,127 | ||
Aggregate unrealized (depreciation) of investment securities |
(11,088,148 | ) | ||
Net unrealized appreciation of investment securities |
$ | 722,347,979 |
Cost of investments for tax purposes is $985,604,444.
24 Invesco Equally-Weighted S&P 500 Fund
NOTE 11Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of real estate investment trusts distributions, on August 31, 2013, undistributed net investment income was increased by $45,774, undistributed net realized gain was decrease by $45,774. This reclassification had no effect on the net assets of the Fund.
NOTE 12Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
6,938,918 | $ | 263,020,016 | 3,958,683 | $ | 123,974,664 | ||||||||||
Class B |
65,896 | 2,465,090 | 39,680 | 1,248,979 | ||||||||||||
Class C |
1,723,158 | 63,962,776 | 525,225 | 16,022,658 | ||||||||||||
Class R |
629,268 | 23,479,568 | 247,288 | 7,832,303 | ||||||||||||
Class Y |
4,878,656 | 185,994,372 | 4,809,146 | 151,977,766 | ||||||||||||
Class R6(b) |
286 | 9,805 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
788,153 | 26,190,326 | 326,598 | 9,824,076 | ||||||||||||
Class B |
30,790 | 1,027,145 | 10,380 | 313,479 | ||||||||||||
Class C |
75,170 | 2,568,785 | 11,417 | 334,292 | ||||||||||||
Class R |
13,660 | 453,388 | 648 | 19,471 | ||||||||||||
Class Y |
353,324 | 11,808,079 | 133,786 | 4,047,035 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
639,095 | 23,292,837 | 1,024,779 | 32,654,725 | ||||||||||||
Class B |
(638,871 | ) | (23,292,837 | ) | (1,025,555 | ) | (32,654,725 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(5,290,801 | ) | (196,528,690 | ) | (4,830,637 | ) | (151,194,043 | ) | ||||||||
Class B |
(148,389 | ) | (5,360,459 | ) | (376,796 | ) | (11,745,828 | ) | ||||||||
Class C |
(537,590 | ) | (19,411,827 | ) | (486,834 | ) | (14,899,402 | ) | ||||||||
Class R |
(176,971 | ) | (6,647,748 | ) | (19,491 | ) | (598,030 | ) | ||||||||
Class Y |
(2,498,828 | ) | (93,811,279 | ) | (1,648,309 | ) | (52,139,894 | ) | ||||||||
Net increase in share activity |
6,844,924 | $ | 259,219,347 | 2,700,008 | $ | 85,017,526 |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 54% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
25 Invesco Equally-Weighted S&P 500 Fund
NOTE 13Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 33.40 | $ | 0.55 | $ | 7.47 | $ | 8.02 | $ | (0.51 | ) | $ | (0.84 | ) | $ | (1.35 | ) | $ | 40.07 | 24.83 | % | $ | 999,730 | 0.57 | %(d) | 0.57 | %(d) | 1.48 | %(d) | 18 | % | |||||||||||||||||||||||||
Year ended 08/31/12 |
29.89 | 0.42 | 3.61 | 4.03 | (0.52 | ) | | (0.52 | ) | 33.40 | 13.66 | 730,648 | 0.60 | 0.60 | 1.34 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
25.26 | 0.39 | 4.65 | 5.04 | (0.41 | ) | | (0.41 | ) | 29.89 | 19.91 | 639,478 | 0.56 | 0.56 | 1.26 | 22 | ||||||||||||||||||||||||||||||||||||||||
Two months ended 08/31/10 |
24.74 | 0.08 | 0.44 | 0.52 | | | | 25.26 | 2.10 | 556,910 | 0.65 | (e) | 0.65 | (e) | 1.81 | (e) | 0 | |||||||||||||||||||||||||||||||||||||||
Year ended 06/30/10 |
20.14 | 0.30 | 4.56 | 4.86 | (0.26 | ) | | (0.26 | ) | 24.74 | 24.08 | 552,673 | 0.64 | 0.64 | 1.17 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 06/30/09 |
33.39 | 0.37 | (9.39 | ) | (9.02 | ) | (0.46 | ) | (3.77 | ) | (4.23 | ) | 20.14 | (24.61 | ) | 486,937 | 0.75 | (f) | 0.75 | (f) | 1.62 | (f) | 39 | |||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
33.34 | 0.27 | 7.49 | 7.76 | (0.25 | ) | (0.84 | ) | (1.09 | ) | 40.01 | 23.90 | 22,925 | 1.32 | (d) | 1.32 | (d) | 0.73 | (d) | 18 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
29.70 | 0.18 | 3.61 | 3.79 | (0.15 | ) | | (0.15 | ) | 33.34 | 12.82 | 42,131 | 1.35 | 1.35 | 0.59 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
25.05 | 0.16 | 4.60 | 4.76 | (0.11 | ) | | (0.11 | ) | 29.70 | 18.98 | 77,702 | 1.31 | 1.31 | 0.51 | 22 | ||||||||||||||||||||||||||||||||||||||||
Two months ended 08/31/10 |
24.56 | 0.05 | 0.44 | 0.49 | | | | 25.05 | 2.00 | 110,367 | 1.40 | (e) | 1.40 | (e) | 1.06 | (e) | 0 | |||||||||||||||||||||||||||||||||||||||
Year ended 06/30/10 |
20.08 | 0.10 | 4.54 | 4.64 | (0.16 | ) | | (0.16 | ) | 24.56 | 23.09 | 118,559 | 1.39 | 1.39 | 0.42 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 06/30/09 |
33.02 | 0.20 | (9.22 | ) | (9.02 | ) | (0.15 | ) | (3.77 | ) | (3.92 | ) | 20.08 | (25.14 | ) | 155,328 | 1.50 | (f) | 1.50 | (f) | 0.87 | (f) | 39 | |||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
32.33 | 0.26 | 7.24 | 7.50 | (0.24 | ) | (0.84 | ) | (1.08 | ) | 38.75 | 23.88 | 141,986 | 1.32 | (d) | 1.32 | (d) | 0.73 | (d) | 18 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
28.81 | 0.18 | 3.49 | 3.67 | (0.15 | ) | | (0.15 | ) | 32.33 | 12.80 | 77,691 | 1.35 | 1.35 | 0.59 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
24.29 | 0.16 | 4.47 | 4.63 | (0.11 | ) | | (0.11 | ) | 28.81 | 19.04 | 67,788 | 1.31 | 1.31 | 0.51 | 22 | ||||||||||||||||||||||||||||||||||||||||
Two months ended 08/31/10 |
23.82 | 0.04 | 0.43 | 0.47 | | | | 24.29 | 1.97 | 55,797 | 1.40 | (e) | 1.40 | (e) | 1.06 | (e) | 0 | |||||||||||||||||||||||||||||||||||||||
Year ended 06/30/10 |
19.49 | 0.10 | 4.42 | 4.52 | (0.19 | ) | | (0.19 | ) | 23.82 | 23.15 | 56,462 | 1.39 | 1.39 | 0.42 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 06/30/09 |
32.33 | 0.19 | (9.06 | ) | (8.87 | ) | (0.20 | ) | (3.77 | ) | (3.97 | ) | 19.49 | (25.17 | ) | 51,534 | 1.50 | (f) | 1.50 | (f) | 0.87 | (f) | 39 | |||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
33.31 | 0.46 | 7.44 | 7.90 | (0.42 | ) | (0.84 | ) | (1.26 | ) | 39.95 | 24.48 | 29,320 | 0.82 | (d) | 0.82 | (d) | 1.23 | (d) | 18 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
29.77 | 0.35 | 3.59 | 3.94 | (0.40 | ) | | (0.40 | ) | 33.31 | 13.36 | 8,924 | 0.85 | 0.85 | 1.09 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
25.14 | 0.31 | 4.63 | 4.94 | (0.31 | ) | | (0.31 | ) | 29.77 | 19.62 | 1,176 | 0.81 | 0.81 | 1.01 | 22 | ||||||||||||||||||||||||||||||||||||||||
Two months ended 08/31/10 |
24.63 | 0.07 | 0.44 | 0.51 | | | | 25.14 | 2.07 | 205 | 0.90 | (e) | 0.90 | (e) | 1.56 | (e) | 0 | |||||||||||||||||||||||||||||||||||||||
Year ended 06/30/10 |
20.10 | 0.23 | 4.56 | 4.79 | (0.26 | ) | | (0.26 | ) | 24.63 | 23.78 | 208 | 0.89 | 0.89 | 0.92 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 06/30/09 |
33.36 | 0.30 | (9.35 | ) | (9.05 | ) | (0.44 | ) | (3.77 | ) | (4.21 | ) | 20.10 | (24.78 | ) | 73 | 1.00 | (f) | 1.00 | (f) | 1.37 | (f) | 39 | |||||||||||||||||||||||||||||||||
Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
33.64 | 0.65 | 7.52 | 8.17 | (0.59 | ) | (0.84 | ) | (1.43 | ) | 40.38 | 25.16 | 481,948 | 0.32 | (d) | 0.32 | (d) | 1.73 | (d) | 18 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
30.13 | 0.50 | 3.63 | 4.13 | (0.62 | ) | | (0.62 | ) | 33.64 | 13.94 | 309,645 | 0.35 | 0.35 | 1.59 | 27 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
25.47 | 0.47 | 4.68 | 5.15 | (0.49 | ) | | (0.49 | ) | 30.13 | 20.19 | 178,056 | 0.31 | 0.31 | 1.51 | 22 | ||||||||||||||||||||||||||||||||||||||||
Two months ended 08/31/10 |
24.94 | 0.09 | 0.44 | 0.53 | | | | 25.47 | 2.12 | 155,551 | 0.40 | (e) | 0.40 | (e) | 2.06 | (e) | 0 | |||||||||||||||||||||||||||||||||||||||
Year ended 06/30/10 |
20.27 | 0.36 | 4.59 | 4.95 | (0.28 | ) | | (0.28 | ) | 24.94 | 24.39 | 151,901 | 0.39 | 0.39 | 1.42 | 24 | ||||||||||||||||||||||||||||||||||||||||
Year ended 06/30/09 |
33.62 | 0.43 | (9.46 | ) | (9.03 | ) | (0.55 | ) | (3.77 | ) | (4.32 | ) | 20.27 | (24.41 | ) | 148,051 | 0.50 | (f) | 0.50 | (f) | 1.87 | (f) | 39 | |||||||||||||||||||||||||||||||||
Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(g) |
34.93 | 0.62 | 6.27 | 6.89 | (0.59 | ) | (0.84 | ) | (1.43 | ) | 40.39 | 20.58 | 12 | 0.27 | (d) | 0.27 | (d) | 1.78 | (d) | 18 |
(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. Total returns are not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000s omitted) of $856,715, $32,282, $101,104, $17,979, $385,209 and $11 for Class A, Class B, Class C, Class R, Class Y and Class R6 shares, respectively. |
(e) | Annualized. |
(f) | The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios is less than 0.005%. |
(g) | Commencement date of September 24, 2012. |
26 Invesco Equally-Weighted S&P 500 Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Equally-Weighted S&P 500 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 Invesco Equally-Weighted S&P 500 Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 three years in the period then ended, the two month period ended August 31, 2010, and the year ended June 30, 2010, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the period ended June 30, 2009 was audited by another independent registered public accounting firm whose report dated August 24, 2009 expressed an unqualified opinion on such financial statement.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
27 Invesco Equally-Weighted S&P 500 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, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period 2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,102.00 | $ | 3.01 | $ | 1,022.27 | $ | 2.90 | 0.57 | % | ||||||||||||
B | 1,000.00 | 1,098.00 | 6.96 | 1,018.50 | 6.70 | 1.32 | ||||||||||||||||||
C | 1,000.00 | 1,097.70 | 6.96 | 1,018.50 | 6.70 | 1.32 | ||||||||||||||||||
R | 1,000.00 | 1,100.50 | 4.33 | 1,021.01 | 4.17 | 0.82 | ||||||||||||||||||
Y | 1,000.00 | 1,103.60 | 1.69 | 1,023.53 | 1.63 | 0.32 | ||||||||||||||||||
R6 | 1,000.00 | 1,103.50 | 1.43 | 1,023.78 | 1.37 | 0.27 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
28 Invesco Equally-Weighted S&P 500 Fund
Approval of Investment Advisory and Sub-Advisory Contracts
29 Invesco Equally-Weighted S&P 500 Fund
30 Invesco Equally-Weighted S&P 500 Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Long-Term Capital Gain Distributions |
$ | 27,102,884 | ||
Qualified Dividend Income* |
85.55 | % | ||
Corporate Dividends Received Deduction* |
83.75 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
31 Invesco Equally-Weighted S&P 500 Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Equally-Weighted S&P 500 Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Equally-Weighted S&P 500 Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Equally-Weighted S&P 500 Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Equally-Weighted S&P 500 Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in
each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange
Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds
Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q
may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330,
or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. |
||
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-09913 and 333-36074 MS-EWSP-AR-1 Invesco Distributors, Inc. |
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Annual Report to Shareholders
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August 31, 2013
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Invesco Equity and Income Fund
Nasdaq: A: ACEIX n B: ACEQX n C: ACERX n R: ACESX n Y: ACETX n R5: ACEKX n R6: IEIFX |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its |
extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 Source: Reuters
2 Invesco Equity and Income Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent |
Trustees on the Board. Additionally, we meet with independent legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Equity and Income Fund
Managements Discussion of Fund Performance
4 Invesco Equity and Income Fund
5 Invesco Equity and Income Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
continued from page 8
6 Invesco Equity and Income Fund
7 Invesco Equity and Income Fund
Invesco Equity and Income Funds investment objective is to seek the highest possible income consistent with safety of principal. Long-term growth of capital is an important secondary investment objective.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Equity and Income Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Equity and Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Equity and Income Fund
Investment Abbreviations:
ADR | American Depositary Receipt | |
Conv. | Convertible | |
Ctfs. | Certificates | |
Deb. | Debentures | |
Gtd. | Guaranteed | |
Jr. | Junior | |
Pfd. | Preferred | |
RB | Revenue Bonds | |
REIT | Real Estate Investment Trust | |
Sec. | Secured | |
Sr. | Senior | |
Sub. | Subordinated | |
Unsec. | Unsecured |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poors. |
(b) | Non-income producing security. |
(c) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the 1933 Act). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2013 was $546,688,728, which represented 4.73% of the Funds Net Assets. |
(d) | Perpetual bond with no specified maturity date. |
(e) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
(f) | Each unit represents one common share and one trust share. |
(g) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(h) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1K and Note 4. |
(i) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2013. |
(j) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Equity and Income Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 Invesco Equity and Income Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $1,092,251) |
$ | 174,072,526 | ||
Dividends from affiliated money market funds |
406,892 | |||
Interest |
105,038,339 | |||
Total investment income |
279,517,757 | |||
Expenses: |
||||
Advisory fees |
39,080,641 | |||
Administrative services fees |
811,447 | |||
Custodian fees |
301,810 | |||
Distribution fees: |
||||
Class A |
20,729,091 | |||
Class B |
6,683,845 | |||
Class C |
12,030,658 | |||
Class R |
910,338 | |||
Transfer agent fees A, B, C, R and Y |
17,356,933 | |||
Transfer agent fees R5 |
224,915 | |||
Transfer agent fees R6 |
2,191 | |||
Trustees and officers fees and benefits |
378,809 | |||
Other |
1,453,858 | |||
Total expenses |
99,964,536 | |||
Less: Fees waived and expense offset arrangement(s) |
(585,944 | ) | ||
Net expenses |
99,378,592 | |||
Net investment income |
180,139,165 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain (loss) from: |
||||
Investment securities (includes net gains from securities sold to affiliates of $495,804) |
607,472,419 | |||
Foreign currencies |
23,674 | |||
Foreign currency contracts |
(2,438,507 | ) | ||
Futures contracts |
5,576,895 | |||
Option contracts written |
288,511 | |||
610,922,992 | ||||
Change in net unrealized appreciation (depreciation) of: |
||||
Investment securities |
980,332,001 | |||
Foreign currencies |
(3,856 | ) | ||
Foreign currency contracts |
5,263,077 | |||
Futures contracts |
967,266 | |||
986,558,488 | ||||
Net realized and unrealized gain |
1,597,481,480 | |||
Net increase in net assets resulting from operations |
$ | 1,777,620,645 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 Invesco Equity and Income Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income |
$ | 180,139,165 | $ | 209,123,341 | ||||
Net realized gain |
610,922,992 | 106,070,128 | ||||||
Change in net unrealized appreciation |
986,558,488 | 934,736,730 | ||||||
Net increase in net assets resulting from operations |
1,777,620,645 | 1,249,930,199 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(177,192,280 | ) | (152,150,003 | ) | ||||
Class B |
(9,850,781 | ) | (16,509,929 | ) | ||||
Class C |
(16,986,784 | ) | (14,510,005 | ) | ||||
Class R |
(3,445,076 | ) | (3,178,686 | ) | ||||
Class Y |
(10,171,497 | ) | (8,610,039 | ) | ||||
Class R5 |
(5,604,640 | ) | (4,674,921 | ) | ||||
Class R6 |
(1,344,016 | ) | | |||||
Total distributions from net investment income |
(224,595,074 | ) | (199,633,583 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
(291,238,977 | ) | (802,662,360 | ) | ||||
Class B |
(266,029,232 | ) | (358,776,295 | ) | ||||
Class C |
(40,820,681 | ) | (175,219,330 | ) | ||||
Class R |
(8,690,407 | ) | (23,670,724 | ) | ||||
Class Y |
9,342,497 | (47,889,519 | ) | |||||
Class R5 |
(29,202,753 | ) | 59,177,309 | |||||
Class R6 |
29,344,576 | | ||||||
Net increase (decrease) in net assets resulting from share transactions |
(597,294,977 | ) | (1,349,040,919 | ) | ||||
Net increase (decrease) in net assets |
955,730,594 | (298,744,303 | ) | |||||
Net assets: |
||||||||
Beginning of year |
10,601,580,792 | 10,900,325,095 | ||||||
End of year (includes undistributed net investment income of $55,604,360 and $53,000,204, respectively) |
$ | 11,557,311,386 | $ | 10,601,580,792 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Equity and Income Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to seek the highest possible income consistent with safety of principal. Long-term growth of capital is an important secondary investment objective.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6. On September 24, 2012, Institutional Class shares were renamed Class R5 shares and the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
22 Invesco Equity and Income Fund
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
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 (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer |
23 Invesco Equity and Income Fund
derives 50% or more of its total revenues and the country that has the primary market for the issuers 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, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the 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. Prior to June 1, 2010, incremental transfer agency fees which were unique to each class of shares were charged to the operations of such class. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
J. | Foreign Currency Contracts The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to lock in the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
K. | Futures Contracts The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Funds basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) |
24 Invesco Equity and Income Fund
on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchanges clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
L. | Call Options Written The Fund may write covered call options. A covered call option gives the purchaser of such option the right to buy, and the writer (the Fund) the obligation to sell, the underlying security at the stated exercise price during the option period. Written call options are recorded as a liability in the Statement of Assets and Liabilities. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized gains and losses on these contracts are included in the Statement of Operations. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. |
M. | Collateral To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Funds practice to replace such collateral no later than the next business day. |
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $150 million |
0.50% | |||
Next $100 million |
0.45% | |||
Next $100 million |
0.40% | |||
Over $350 million |
0.35% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.50%, 2.25%, 2.25%, 1.75%, 1.25%, 1.25% and 1.25% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $569,348.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the Plans) for Class A shares, Class B shares, Class C shares and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% each of Class B and Class C average daily net assets and up to 0.50% of Class R average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
25 Invesco Equity and Income Fund
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $1,843,457 in front-end sales commissions from the sale of Class A shares and $6,858, $376,011 and $22,214 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the year ended August 31, 2013, the Fund incurred $43,912 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 8,313,413,493 | $ | 33,588,000 | $ | | $ | 8,347,001,493 | ||||||||
U.S. Treasury Securities |
| 758,626,088 | | 758,626,088 | ||||||||||||
Corporate Debt Securities |
| 2,273,788,508 | | 2,273,788,508 | ||||||||||||
U.S. Government Sponsored Securities |
| 123,387,139 | | 123,387,139 | ||||||||||||
Asset-Backed Securities |
| 1,319 | | 1,319 | ||||||||||||
Municipal Obligations |
| 11,668,354 | | 11,668,354 | ||||||||||||
Foreign Government Debt Securities |
| 21,231,520 | | 21,231,520 | ||||||||||||
$ | 8,313,413,493 | $ | 3,222,290,928 | $ | | $ | 11,535,704,421 | |||||||||
Foreign Currency Contracts* |
| 1,610,577 | | 1,610,577 | ||||||||||||
Futures* |
(132,057 | ) | | | (132,057 | ) | ||||||||||
Total Investments |
$ | 8,313,281,436 | $ | 3,223,901,505 | $ | | $ | 11,537,182,941 |
* | Unrealized appreciation (depreciation). |
NOTE 4Derivative Investments
Value of Derivative Investments at Period-End
The table below summarizes the value of the Funds derivative investments, detailed by primary risk exposure, held as of August 31, 2013:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Currency risk |
||||||||
Foreign currency contracts(a) |
$ | 2,044,332 | $ | (433,755 | ) | |||
Interest rate risk |
||||||||
Futures contracts(b) |
| (132,057 | ) | |||||
Total |
$ | 2,044,332 | $ | (565,812 | ) |
(a) | Values are disclosed on the Statement of Assets and Liabilities under the caption Foreign currency contracts outstanding. |
(b) | Includes cumulative appreciation (depreciation) of futures contracts. Only current days variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
26 Invesco Equity and Income Fund
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||||||||||
Futures* | Foreign Currency Contracts* |
Options* | ||||||||||
Realized Gain (Loss) |
||||||||||||
Currency risk |
$ | | $ | (2,438,507 | ) | $ | | |||||
Equity risk |
| | 288,511 | |||||||||
Interest rate risk |
5,576,895 | | | |||||||||
Change in Unrealized Appreciation |
||||||||||||
Currency risk |
| 5,263,077 | | |||||||||
Interest rate risk |
967,266 | | | |||||||||
Total |
$ | 6,544,161 | $ | 2,824,570 | $ | 288,511 |
* | The average notional value of futures contracts, foreign currency contracts and option contracts written outstanding during the period was $287,637,319, $297,293,467 and $8,138,650, respectively. |
Open Foreign Currency Contracts | ||||||||||||||||||||||||||
Settlement |
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
Deliver | Receive | |||||||||||||||||||||||||
09/27/13 |
State Street |
CAD | 50,103,466 | USD | 47,647,250 | $ | 47,533,338 | $ | 113,912 | |||||||||||||||||
09/27/13 |
Bank of New York |
CAD | 55,378,357 | USD | 52,681,587 | 52,537,647 | 143,940 | |||||||||||||||||||
09/27/13 |
Bank of New York |
CHF | 33,689,820 | USD | 36,713,948 | 36,215,924 | 498,024 | |||||||||||||||||||
09/27/13 |
State Street |
CHF | 40,173,270 | USD | 43,751,961 | 43,185,511 | 566,450 | |||||||||||||||||||
09/27/13 |
Bank of New York |
EUR | 24,898,278 | USD | 33,331,698 | 32,909,677 | 422,021 | |||||||||||||||||||
09/27/13 |
State Street |
GBP | 62,034,224 | USD | 96,410,799 | 96,110,814 | 299,985 | |||||||||||||||||||
09/27/13 |
State Street |
ILS | 189,265,918 | USD | 51,789,826 | 52,223,581 | (433,755 | ) | ||||||||||||||||||
$ | 1,610,577 |
Currency Abbreviations:
Open Futures Contracts | ||||||||||||||||
Short Contracts | Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||
U.S. Treasury 5 Year Notes |
841 | December-2013 | $ | (100,650,618 | ) | $ | (100,321 | ) | ||||||||
U.S. Treasury 10 Year Notes |
648 | December-2013 | (80,534,250 | ) | (31,736 | ) | ||||||||||
Total |
$ | (132,057 | ) |
Transactions During the Period | ||||||||
Call Option Contracts | ||||||||
Number of Contracts |
Premiums Received |
|||||||
Beginning of period |
| $ | | |||||
Written |
17,554 | 1,234,099 | ||||||
Closed |
(2,814 | ) | (342,794 | ) | ||||
Expired |
(14,740 | ) | (891,305 | ) | ||||
End of period |
| $ | |
NOTE 5Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended August 31, 2013, the Fund engaged in securities purchases of $8,058,423 and securities sales of $1,801,148, which resulted in net realized gains of $495,804.
27 Invesco Equity and Income Fund
NOTE 6Expense Offset Arrangement(s)
The expense offset arrangements are comprised of (1) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (2) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended August 31, 2013, the Fund received credits from these arrangements, which resulted in the reduction of the Funds total expenses of $16,596.
NOTE 7Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 8Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 9Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 224,595,074 | $ | 199,633,583 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 102,086,238 | ||
Undistributed long-term gain |
455,743,294 | |||
Net unrealized appreciation investments |
1,965,221,779 | |||
Net unrealized appreciation other investments |
658 | |||
Temporary book/tax differences |
(7,039,123 | ) | ||
Capital loss carryforward |
(50,999,909 | ) | ||
Shares of beneficial interest |
9,092,298,449 | |||
Total net assets |
$ | 11,557,311,386 |
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 difference is attributable primarily to wash sales, book to tax accretion and amortization differences and contingent payment debt instruments.
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 and deferred straddle losses.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
28 Invesco Equity and Income Fund
The Fund utilized $47,193,704 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2016 |
$ | 40,907,811 | $ | | $ | 40,907,811 | ||||||
August 31, 2017 |
10,092,098 | | 10,092,098 | |||||||||
$ | 50,999,909 | $ | | $ | 50,999,909 |
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of May 23, 2011, the date of reorganization of Invesco Balanced Fund and Invesco Basic Balanced Fund into the Fund, are realized on securities held in each fund at such date of reorganization, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. |
NOTE 10Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $2,600,016,031 and $3,016,172,227, respectively. During the same period, purchases and sales of U.S. Treasury obligations were $180,027,479 and $292,779,288, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities |
$ | 2,073,985,344 | ||
Aggregate unrealized (depreciation) of investment securities |
(108,763,565 | ) | ||
Net unrealized appreciation of investment securities |
$ | 1,965,221,779 |
Cost of investments for tax purposes is $9,570,482,642.
NOTE 11Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of bond premiums and contingent payment debt instruments, on August 31, 2013, undistributed net investment income was increased by $47,060,065, undistributed net realized gain was decreased by $46,777,314 and shares of beneficial interest was decreased by $282,751. This reclassification had no effect on the net assets of the Fund.
29 Invesco Equity and Income Fund
NOTE 12Share Information
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
87,700,842 | $ | 873,364,044 | 76,632,228 | $ | 653,647,850 | ||||||||||
Class B |
823,802 | 8,051,441 | 1,051,815 | 8,808,659 | ||||||||||||
Class C |
12,109,400 | 121,759,085 | 4,887,236 | 41,102,265 | ||||||||||||
Class R |
4,574,200 | 45,460,476 | 5,932,415 | 50,391,223 | ||||||||||||
Class Y |
16,892,433 | 170,702,836 | 14,695,711 | 126,331,806 | ||||||||||||
Class R5 |
6,739,690 | 64,982,296 | 12,294,259 | 102,222,163 | ||||||||||||
Class R6(b) |
10,147,759 | 98,261,438 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
17,150,441 | 163,264,966 | 16,520,442 | 139,372,643 | ||||||||||||
Class B |
995,825 | 9,235,728 | 1,873,608 | 15,474,345 | ||||||||||||
Class C |
1,579,331 | 14,763,683 | 1,539,047 | 12,778,414 | ||||||||||||
Class R |
352,640 | 3,369,248 | 375,128 | 3,178,004 | ||||||||||||
Class Y |
997,253 | 9,485,943 | 968,129 | 8,164,860 | ||||||||||||
Class R5 |
540,105 | 5,162,156 | 552,439 | 4,674,451 | ||||||||||||
Class R6 |
138,720 | 1,344,016 | | | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
17,617,079 | 173,428,532 | 24,192,716 | 206,655,020 | ||||||||||||
Class B |
(17,961,899 | ) | (173,428,532 | ) | (24,426,071 | ) | (206,655,020 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(154,007,991 | ) | (1,501,296,519 | ) | (211,560,965 | ) | (1,802,337,873 | ) | ||||||||
Class B |
(11,491,060 | ) | (109,887,869 | ) | (21,248,100 | ) | (176,404,279 | ) | ||||||||
Class C |
(18,523,803 | ) | (177,343,449 | ) | (27,306,094 | ) | (229,100,009 | ) | ||||||||
Class R |
(5,914,742 | ) | (57,520,131 | ) | (8,960,324 | ) | (77,239,951 | ) | ||||||||
Class Y |
(17,512,155 | ) | (170,846,282 | ) | (21,766,458 | ) | (182,386,185 | ) | ||||||||
Class R5 |
(10,465,023 | ) | (99,347,205 | ) | (5,547,204 | ) | (47,719,305 | ) | ||||||||
Class R6 |
(6,654,596 | ) | (70,260,878 | ) | | | ||||||||||
Net increase (decrease) in share activity |
(64,171,749 | ) | $ | (597,294,977 | ) | (159,300,043 | ) | $ | (1,349,040,919 | ) |
(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. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
30 Invesco Equity and Income Fund
NOTE 13Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(b) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 9.05 | $ | 0.17 | $ | 1.42 | $ | 1.59 | $ | (0.21 | ) | $ | | $ | (0.21 | ) | $ | 10.43 | 17.80 | %(c) | $ | 8,752,700 | 0.78 | %(d) | 0.79 | %(d) | 1.74 | %(d) | 26 | % | ||||||||||||||||||||||||||
Year ended 08/31/12 |
8.19 | 0.17 | 0.85 | 1.02 | (0.16 | ) | | (0.16 | ) | 9.05 | 12.67 | (c) | 7,878,694 | 0.80 | 0.81 | 2.05 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.53 | 0.15 | 0.66 | 0.81 | (0.15 | ) | | (0.15 | ) | 8.19 | 10.78 | (c) | 7,908,623 | 0.81 | 0.81 | 1.74 | 22 | |||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
7.79 | 0.10 | (0.28 | ) | (0.18 | ) | (0.08 | ) | | (0.08 | ) | 7.53 | (2.40 | )(c) | 7,560,462 | 0.78 | (e) | 0.78 | (e) | 1.89 | (e) | 24 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
6.45 | 0.15 | 1.34 | 1.49 | (0.15 | ) | | (0.15 | ) | 7.79 | 23.51 | (f) | 8,395,716 | 0.82 | 0.82 | 2.15 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
8.84 | 0.20 | (2.36 | ) | (2.16 | ) | (0.22 | ) | (0.01 | ) | (0.23 | ) | 6.45 | (24.78 | )(f) | 8,214,093 | 0.79 | 0.79 | 2.59 | 56 | ||||||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.87 | 0.09 | 1.39 | 1.48 | (0.13 | ) | | (0.13 | ) | 10.22 | 16.90 | (c) | 570,146 | 1.53 | (d) | 1.54 | (d) | 0.99 | (d) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.04 | 0.15 | 0.83 | 0.98 | (0.15 | ) | | (0.15 | ) | 8.87 | 12.36 | (c) | 739,631 | 1.02 | 1.56 | 1.83 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.39 | 0.14 | 0.65 | 0.79 | (0.14 | ) | | (0.14 | ) | 8.04 | 10.69 | (c)(g) | 1,014,527 | 0.84 | (g) | 0.98 | (g) | 1.71 | (g) | 22 | ||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
7.64 | 0.09 | (0.27 | ) | (0.18 | ) | (0.07 | ) | | (0.07 | ) | 7.39 | (2.40 | )(c)(g) | 1,278,734 | 0.91 | (e)(g) | 0.91 | (e)(g) | 1.76 | (e)(g) | 24 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
6.33 | 0.14 | 1.32 | 1.46 | (0.15 | ) | | (0.15 | ) | 7.64 | 23.48 | (h)(i) | 1,594,135 | 0.82 | (i) | 0.82 | (i) | 2.16 | (i) | 78 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
8.68 | 0.20 | (2.32 | ) | (2.12 | ) | (0.22 | ) | (0.01 | ) | (0.23 | ) | 6.33 | (24.78 | )(h)(i) | 1,693,758 | 0.79 | (i) | 0.79 | (i) | 2.59 | (i) | 56 | |||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.91 | 0.10 | 1.40 | 1.50 | (0.14 | ) | | (0.14 | ) | 10.27 | 16.95 | (c) | 1,284,225 | 1.53 | (d) | 1.54 | (d) | 0.99 | (d) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.07 | 0.11 | 0.83 | 0.94 | (0.10 | ) | | (0.10 | ) | 8.91 | 11.77 | (c)(j) | 1,157,325 | 1.54 | (j) | 1.54 | (j) | 1.31 | (j) | 21 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.42 | 0.09 | 0.65 | 0.74 | (0.09 | ) | | (0.09 | ) | 8.07 | 9.95 | (c)(j) | 1,216,936 | 1.54 | (j) | 1.54 | (j) | 1.01 | (j) | 22 | ||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
7.68 | 0.06 | (0.27 | ) | (0.21 | ) | (0.05 | ) | | (0.05 | ) | 7.42 | (2.81 | )(c)(j) | 1,211,089 | 1.52 | (e)(j) | 1.52 | (e)(j) | 1.15 | (e)(j) | 24 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
6.36 | 0.09 | 1.33 | 1.42 | (0.10 | ) | | (0.10 | ) | 7.68 | 22.63 | (i)(k) | 1,375,516 | 1.56 | (i) | 1.56 | (i) | 1.40 | (i) | 78 | ||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
8.72 | 0.14 | (2.32 | ) | (2.18 | ) | (0.17 | ) | (0.01 | ) | (0.18 | ) | 6.36 | (25.33 | )(i)(k) | 1,340,367 | 1.50 | (i) | 1.50 | (i) | 1.88 | (i) | 56 | |||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
9.08 | 0.15 | 1.43 | 1.58 | (0.19 | ) | | (0.19 | ) | 10.47 | 17.57 | (c) | 193,610 | 1.03 | (d) | 1.04 | (d) | 1.49 | (d) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.23 | 0.15 | 0.85 | 1.00 | (0.15 | ) | | (0.15 | ) | 9.08 | 12.23 | (c) | 176,940 | 1.05 | 1.06 | 1.80 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.57 | 0.13 | 0.66 | 0.79 | (0.13 | ) | | (0.13 | ) | 8.23 | 10.45 | (c) | 182,135 | 1.06 | 1.06 | 1.49 | 22 | |||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
7.83 | 0.09 | (0.28 | ) | (0.19 | ) | (0.07 | ) | | (0.07 | ) | 7.57 | (2.51 | )(c) | 172,143 | 1.03 | (e) | 1.03 | (e) | 1.64 | (e) | 24 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
6.48 | 0.13 | 1.35 | 1.48 | (0.13 | ) | | (0.13 | ) | 7.83 | 23.25 | (l) | 169,713 | 1.07 | 1.07 | 1.88 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
8.87 | 0.18 | (2.36 | ) | (2.18 | ) | (0.20 | ) | (0.01 | ) | (0.21 | ) | 6.48 | (24.89 | )(l) | 148,399 | 1.04 | 1.04 | 2.35 | 56 | ||||||||||||||||||||||||||||||||||||
Class Y(m) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
9.05 | 0.20 | 1.41 | 1.61 | (0.23 | ) | | (0.23 | ) | 10.43 | 18.10 | (c) | 477,207 | 0.53 | (d) | 0.54 | (d) | 1.99 | (d) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.20 | 0.20 | 0.84 | 1.04 | (0.19 | ) | | (0.19 | ) | 9.05 | 12.83 | (c) | 410,600 | 0.55 | 0.56 | 2.30 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.54 | 0.17 | 0.67 | 0.84 | (0.18 | ) | | (0.18 | ) | 8.20 | 11.04 | (c) | 422,009 | 0.56 | 0.56 | 1.99 | 22 | |||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10 |
7.79 | 0.11 | (0.28 | ) | (0.17 | ) | (0.08 | ) | | (0.08 | ) | 7.54 | (2.15 | )(c) | 414,203 | 0.53 | (e) | 0.53 | (e) | 2.15 | (e) | 24 | ||||||||||||||||||||||||||||||||||
Year ended 12/31/09 |
6.45 | 0.16 | 1.35 | 1.51 | (0.17 | ) | | (0.17 | ) | 7.79 | 23.82 | (n) | 530,010 | 0.57 | 0.57 | 2.34 | 78 | |||||||||||||||||||||||||||||||||||||||
Year ended 12/31/08 |
8.84 | 0.22 | (2.36 | ) | (2.14 | ) | (0.24 | ) | (0.01 | ) | (0.25 | ) | 6.45 | (24.60 | )(n) | 358,154 | 0.54 | 0.54 | 2.85 | 56 | ||||||||||||||||||||||||||||||||||||
Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
9.05 | 0.20 | 1.42 | 1.62 | (0.24 | ) | | (0.24 | ) | 10.43 | 18.17 | (c) | 241,540 | 0.47 | (d) | 0.48 | (d) | 2.05 | (d) | 26 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.20 | 0.21 | 0.84 | 1.05 | (0.20 | ) | | (0.20 | ) | 9.05 | 12.96 | (c) | 238,392 | 0.44 | 0.44 | 2.41 | 21 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.54 | 0.19 | 0.65 | 0.84 | (0.18 | ) | | (0.18 | ) | 8.20 | 11.16 | (c) | 156,096 | 0.39 | 0.39 | 2.16 | 22 | |||||||||||||||||||||||||||||||||||||||
Eight months ended 08/31/10(o) |
7.59 | 0.03 | (0.04 | ) | (0.01 | ) | (0.04 | ) | | (0.04 | ) | 7.54 | (0.13 | )(c) | 63,598 | 0.45 | (e) | 0.45 | (e) | 1.79 | (e) | 24 | ||||||||||||||||||||||||||||||||||
Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(o) |
9.27 | 0.21 | 1.14 | 1.35 | (0.19 | ) | | (0.19 | ) | 10.43 | 14.81 | (c) | 37,884 | 0.37 | (d)(e) | 0.38 | (d)(e) | 2.15 | (d)(e) | 26 |
(a) | Calculated using average shares outstanding. |
(b) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended August 31, 2011 the portfolio turnover calculation excludes the value of securities purchased of $602,192,170 and sold of $70,835,642 in the effort to realign the Funds portfolio holdings after the reorganization of Invesco Balanced Fund and Invesco Basic Balanced into the Fund. |
(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) | Ratios are based on average daily net assets (000s omitted) of $8,298,275, $668,384, $1,203,066, $182,068, $424,384, $224,911 and $61,545 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Annualized. |
(f) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(g) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.28% and 0.38% for the year ended August 31, 2011 and eight months ended August 31, 2010, respectively. |
(h) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(i) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of less than 1%. |
(j) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.99%, 0.97% and 0.99% for the years ended August 31, 2012, August 31, 2011 and the eight months ended August 31, 2010, respectively. |
(k) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(l) | Assumes reinvestment of all distributions for the period. These returns include combined Rule 12b-1 fees and service fees of up to 0.50% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption on Fund shares. |
(m) | On June 1, 2010, Class I shares of Van Kampen Equity and Income Fund were reorganized into Class Y shares. |
(n) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption on Fund shares. |
(o) | Commencement date of June 1, 2010 and September 24, 2012 for Class R5 and Class R6 shares, respectively. |
31 Invesco Equity and Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Equity and Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Equity and Income Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 three years in the period then ended and the eight month period ended August 31, 2010, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the periods ended December 31, 2009 and prior were audited by another independent registered public accounting firm whose report dated February 19, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
32 Invesco Equity and Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,078.30 | $ | 4.14 | $ | 1,021.22 | $ | 4.02 | 0.79 | % | ||||||||||||
B | 1,000.00 | 1,073.50 | 8.05 | 1,017.44 | 7.83 | 1.54 | ||||||||||||||||||
C | 1,000.00 | 1,074.30 | 8.05 | 1,017.44 | 7.83 | 1.54 | ||||||||||||||||||
R | 1,000.00 | 1,076.60 | 5.44 | 1,019.96 | 5.30 | 1.04 | ||||||||||||||||||
Y | 1,000.00 | 1,079.60 | 2.83 | 1,022.48 | 2.75 | 0.54 | ||||||||||||||||||
R5 | 1,000.00 | 1,079.90 | 2.52 | 1,022.79 | 2.45 | 0.48 | ||||||||||||||||||
R6 | 1,000.00 | 1,079.40 | 1.99 | 1,023.29 | 1.94 | 0.38 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
33 Invesco Equity and Income Fund
Approval of Investment Advisory and Sub-Advisory Contracts
34 Invesco Equity and Income Fund
35 Invesco Equity and Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
74.78 | % | ||
Corporate Dividends Received Deduction* |
67.86 | % | ||
U.S. Treasury Obligations* |
0.00 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
36 Invesco Equity and Income Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Equity and Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Equity and Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Equity and Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Equity and Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
||
SEC file numbers: 811-09913 and 333-36074 VK-EQI-AR-1 Invesco Distributors, Inc. |
| ||||
Annual Report to Shareholders
|
August 31, 2013
| |||
| ||||
Invesco Floating Rate Fund
Nasdaq: A: AFRAX n C: AFRCX n R: AFRRX n Y: AFRYX n R5: AFRIX n R6: AFRFX |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail |
its extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 Source: Reuters
2 Invesco Floating Rate Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent |
Trustees on the Board. Additionally, we meet with independent legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Floating Rate Fund
Managements Discussion of Fund Performance
4 Invesco Floating Rate Fund
5 Invesco Floating Rate Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
continued from page 8
6 Invesco Floating Rate Fund
7 Invesco Floating Rate Fund
Invesco Floating Rate Funds investment objective is total return, comprised of current income and capital appreciation.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Floating Rate Fund
Schedule of Investments
August 31, 2013
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Variable Rate Senior Loan Interests90.80%(a)(b) |
| |||||||||||||||
Aerospace & Defense2.09% | ||||||||||||||||
Atlantic Aviation FBO Inc., Term Loan |
3.25 | % | 06/01/20 | $ | 2,118 | $ | 2,107,749 | |||||||||
Aveos Fleet Performance Inc. (Canada), PIK Second Lien Term Loan(c)(d)(e) |
0.00 | % | 03/12/15 | 667 | 260,029 | |||||||||||
Booz Allen Hamilton Inc., Term Loan B |
3.75 | % | 07/31/19 | 6,559 | 6,581,246 | |||||||||||
CAMP International Holding Company, First Lien Term Loan |
5.25 | % | 05/31/19 | 2,678 | 2,709,991 | |||||||||||
DAE Aviation Holdings, Inc., |
|
|||||||||||||||
Term Loan B-1 |
6.25 | % | 10/29/18 | 3,200 | 3,240,068 | |||||||||||
Term Loan B-2 |
6.25 | % | 11/02/18 | 1,451 | 1,468,831 | |||||||||||
IAP Worldwide Services, First Lien Term Loan |
10.00 | % | 12/31/15 | 3,985 | 2,191,666 | |||||||||||
Landmark U.S. Holdings LLC, |
|
|||||||||||||||
First Lien Term Loan |
5.75 | % | 10/25/19 | 2,255 | 2,274,780 | |||||||||||
Canadian Term Loan |
5.75 | % | 10/25/19 | 191 | 192,778 | |||||||||||
LMI Aerospace, Inc., Term Loan |
4.75 | % | 12/28/18 | 1,897 | 1,888,302 | |||||||||||
PRV Aerospace, LLC, Term Loan |
6.50 | % | 05/09/18 | 1,925 | 1,939,867 | |||||||||||
Sequa Corp., Term Loan |
5.25 | % | 06/19/17 | 2,859 | 2,880,228 | |||||||||||
Transdigm Inc., Term Loan C |
3.75 | % | 02/28/20 | 16,101 | 16,124,899 | |||||||||||
43,860,434 | ||||||||||||||||
Air Transport1.56% | ||||||||||||||||
American Airlines, Inc., Term Loan B |
4.75 | % | 06/27/19 | 8,742 | 8,659,868 | |||||||||||
Delta Air Lines, Inc., |
|
|||||||||||||||
Revolver Loan(f) |
| 10/18/17 | 1,145 | 1,058,993 | ||||||||||||
Revolver Loan(g) |
0.00 | % | 04/20/16 | 7,785 | 7,395,779 | |||||||||||
Revolver Term Loan B-1 |
4.00 | % | 10/18/18 | 5,213 | 5,238,977 | |||||||||||
United Continental Holdings, Inc., Term Loan B |
4.00 | % | 04/01/19 | 1,846 | 1,853,436 | |||||||||||
US Airways, Inc., Term Loan B-2 |
3.50 | % | 11/23/16 | 8,698 | 8,696,360 | |||||||||||
32,903,413 | ||||||||||||||||
Automotive2.98% | ||||||||||||||||
Affinia Group Inc., Term Loan B-2 |
4.75 | % | 04/27/20 | 1,715 | 1,719,171 | |||||||||||
August U.S. Holding Company, Inc., |
|
|||||||||||||||
First Lien Term Loan B-1 (Acquired 05/03/12-06/24/13; Cost $1,300,125) |
5.00 | % | 04/27/18 | 1,303 | 1,304,443 | |||||||||||
Second Lien Term Loan |
10.50 | % | 04/29/19 | 256 | 259,059 | |||||||||||
Second Lien Term Loan |
10.50 | % | 04/29/19 | 84 | 84,824 | |||||||||||
Term Loan B-1 (Acquired 05/03/12-06/24/13; Cost $1,642,845) |
5.00 | % | 04/27/18 | 1,644 | 1,645,847 | |||||||||||
Autoparts Holdings Ltd., First Lien Term Loan |
6.50 | % | 07/28/17 | 1,815 | 1,751,642 | |||||||||||
BBB Industries, LLC, Term Loan |
5.50 | % | 03/27/19 | 2,607 | 2,616,580 | |||||||||||
Federal-Mogul Corp., |
|
|||||||||||||||
Term Loan B |
2.13 | % | 12/29/14 | 4,770 | 4,663,275 | |||||||||||
Term Loan C |
2.13 | % | 12/28/15 | 1,109 | 1,084,215 | |||||||||||
Goodyear Tire & Rubber Co., Second Lien Term Loan |
4.75 | % | 04/30/19 | 2,569 | 2,588,968 | |||||||||||
Hertz Corp. (The), |
|
|||||||||||||||
LOC (Acquired 03/14/11; Cost $542,587) |
3.75 | % | 03/09/18 | 552 | 550,210 | |||||||||||
Term Loan B-1 |
3.75 | % | 03/12/18 | 908 | 911,037 | |||||||||||
Term Loan B-2 |
3.00 | % | 03/11/18 | 905 | 907,473 | |||||||||||
KAR Auction Services, Inc., Term Loan |
3.75 | % | 05/19/17 | 6,053 | 6,092,398 | |||||||||||
Key Safety Systems, Inc., Term Loan |
4.75 | % | 05/09/18 | 3,921 | 3,966,964 | |||||||||||
Keystone Automotive Operations, Inc., First Lien Term Loan |
7.00 | % | 08/15/19 | 2,225 | 2,235,706 | |||||||||||
Metaldyne, LLC, Term Loan |
5.00 | % | 12/18/18 | 3,059 | 3,088,341 | |||||||||||
Pinafore, LLC, Term Loan B-2 |
3.75 | % | 09/29/16 | 44 | 44,338 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Automotive(continued) | ||||||||||||||||
Schaeffler AG (Germany), Term Loan C |
4.25 | % | 01/27/17 | $ | 8,294 | $ | 8,330,380 | |||||||||
TI Group Automotive Systems, L.L.C., Term Loan |
5.50 | % | 03/27/19 | 7,823 | 7,862,566 | |||||||||||
Tower Automotive Holdings USA, LLC, Term Loan |
4.75 | % | 04/23/20 | 6,937 | 6,984,421 | |||||||||||
Transtar Holding Company, |
||||||||||||||||
First Lien Term Loan |
5.50 | % | 10/09/18 | 3,345 | 3,375,680 | |||||||||||
Second Lien Term Loan |
9.75 | % | 10/09/19 | 524 | 534,811 | |||||||||||
62,602,349 | ||||||||||||||||
Beverage and Tobacco0.26% | ||||||||||||||||
DS Waters of America, Inc., Term Loan B |
5.25 | % | 08/30/20 | 2,368 | 2,343,986 | |||||||||||
North American Breweries Holdings, LLC, Term Loan |
7.50 | % | 12/11/18 | 3,151 | 3,182,612 | |||||||||||
5,526,598 | ||||||||||||||||
Building & Development2.65% | ||||||||||||||||
ABC Supply Co., Inc., Term Loan B |
3.50 | % | 04/16/20 | 4,700 | 4,683,867 | |||||||||||
Building Materials Holding Corp., PIK Second Lien Term Loan(e) |
8.00 | % | 01/05/15 | 5,782 | 5,695,427 | |||||||||||
Capital Automotive L.P., |
||||||||||||||||
Second Lien Term Loan |
6.00 | % | 04/30/20 | 2,668 | 2,741,610 | |||||||||||
Term Loan B-1 |
4.00 | % | 04/10/19 | 7,190 | 7,238,037 | |||||||||||
CBRE Services, Inc., Term Loan B |
2.94 | % | 03/29/21 | 1,348 | 1,350,040 | |||||||||||
CPG International Inc., Term Loan |
5.75 | % | 09/18/19 | 436 | 440,573 | |||||||||||
Custom Building Products, Inc., Term Loan |
6.00 | % | 12/12/19 | 3,490 | 3,500,986 | |||||||||||
HD Supply Inc., Term Loan |
4.50 | % | 10/12/17 | 3,966 | 3,986,662 | |||||||||||
Lake at Las Vegas Joint Venture, LLC, |
||||||||||||||||
PIK Exit Revolver Loan (Acquired 08/09/12; Cost $10,794)(e)(g) |
0.00 | % | 02/28/17 | 11 | 4,524 | |||||||||||
PIK Exit Revolver Loan (Acquired 05/15/12,01/29/13; Cost $133,222)(e) |
4.64 | % | 02/28/17 | 138 | 55,838 | |||||||||||
Nortek, Inc., Term Loan |
5.25 | % | 04/26/17 | 456 | 458,678 | |||||||||||
Re/Max International, Inc., Term Loan |
5.25 | % | 07/31/20 | 4,185 | 4,187,718 | |||||||||||
Realogy Corp., |
||||||||||||||||
Synthetic LOC |
4.45 | % | 10/10/16 | 1 | 638 | |||||||||||
Term Loan B |
4.50 | % | 03/05/20 | 19,968 | 20,142,840 | |||||||||||
United Subcontractors, Inc., PIK Term Loan (Acquired 02/15/06-06/28/13; Cost $1,383,345)(e) |
4.28 | % | 06/30/15 | 127 | 123,415 | |||||||||||
WireCo WorldGroup Inc., Term Loan |
6.00 | % | 02/15/17 | 1,158 | 1,163,485 | |||||||||||
55,774,338 | ||||||||||||||||
Business Equipment & Services5.89% | ||||||||||||||||
Advantage Sales & Marketing Inc., |
||||||||||||||||
First Lien Term Loan |
4.25 | % | 12/18/17 | 1,448 | 1,457,667 | |||||||||||
Second Lien Term Loan |
8.25 | % | 06/18/18 | 273 | 277,832 | |||||||||||
Asurion Corp., |
||||||||||||||||
Incremental Term Loan B-1 |
4.50 | % | 05/24/19 | 15,201 | 15,059,356 | |||||||||||
Incremental Term Loan B-2 |
3.50 | % | 07/08/20 | 21,806 | 20,953,555 | |||||||||||
Audio Visual Services Group, Inc., First Lien Term Loan (Acquired 11/09/12-01/14/13; Cost $2,647,865) |
6.75 | % | 11/09/18 | 2,688 | 2,715,079 | |||||||||||
Brock Holdings III, Inc., First Lien Term Loan |
6.01 | % | 03/16/17 | 232 | 233,228 | |||||||||||
Ceridian Corp., Term Loan |
4.43 | % | 05/09/17 | 715 | 716,335 | |||||||||||
Crossmark Holdings, Inc., |
||||||||||||||||
First Lien Term Loan |
4.50 | % | 12/20/19 | 2,850 | 2,843,243 | |||||||||||
Second Lien Term Loan |
8.75 | % | 12/21/20 | 576 | 577,872 | |||||||||||
Duff & Phelps Corp., Term Loan |
4.50 | % | 04/23/20 | 2,179 | 2,184,682 | |||||||||||
DynCorp International Inc., Term Loan |
6.25 | % | 07/07/16 | 391 | 395,127 | |||||||||||
Emdeon Inc., Term Loan B-2 |
3.75 | % | 11/02/18 | 1,651 | 1,658,306 | |||||||||||
Epiq Systems, Inc., Term Loan |
4.75 | % | 08/27/20 | 4,039 | 4,035,573 | |||||||||||
Expert Global Solutions, Inc., First Lien Term Loan B |
8.50 | % | 04/03/18 | 5,617 | 5,736,066 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Business Equipment & Services(continued) | ||||||||||||||||
First Data Corp., |
||||||||||||||||
Term Loan |
4.18 | % | 03/24/17 | $ | 2,790 | $ | 2,771,405 | |||||||||
Term Loan |
4.18 | % | 03/23/18 | 13,356 | 13,256,464 | |||||||||||
Term Loan |
4.18 | % | 09/24/18 | 570 | 564,787 | |||||||||||
FS Funding A/S (Denmark), Term Loan B12 |
3.75 | % | 04/30/18 | 1,307 | 1,310,515 | |||||||||||
Garda World Security Corp., Term Loan B |
4.50 | % | 11/13/19 | 863 | 873,054 | |||||||||||
Genesys Telecom Holdings, U.S., Inc., Term Loan |
4.00 | % | 02/07/20 | 801 | 803,094 | |||||||||||
Helios Holding, Inc., First Lien Term Loan |
6.50 | % | 07/13/18 | 1,998 | 2,009,315 | |||||||||||
ION Trading Technologies S.a.r.l. (Luxembourg), First Lien Term Loan |
4.50 | % | 05/22/20 | 3,207 | 3,214,948 | |||||||||||
Koosharem LLC, |
||||||||||||||||
PIK First Lien Term Loan(e) |
10.25 | % | 06/30/14 | 741 | 677,584 | |||||||||||
PIK Second Lien Term Loan(c)(e) |
0.00 | % | 12/31/14 | 362 | 45,287 | |||||||||||
Kronos Inc., |
||||||||||||||||
First Lien Term Loan |
4.50 | % | 10/30/19 | 6,155 | 6,185,730 | |||||||||||
Second Lien Term Loan |
9.75 | % | 04/30/20 | 1,273 | 1,321,080 | |||||||||||
Lonestar Intermediate Super Holdings, LLC, Term Loan |
11.00 | % | 09/02/19 | 2,788 | 2,920,844 | |||||||||||
Nuance Communications, Inc., Term Loan C |
2.94 | % | 08/07/19 | 4,899 | 4,891,384 | |||||||||||
SourceHOV LLC, |
||||||||||||||||
First Lien Term Loan B |
5.25 | % | 04/30/18 | 1,494 | 1,506,861 | |||||||||||
Second Lien Term Loan |
8.75 | % | 04/30/19 | 355 | 360,173 | |||||||||||
SunGard Data Systems Inc., |
||||||||||||||||
Term Loan C |
3.94 | % | 02/28/17 | 843 | 846,854 | |||||||||||
Term Loan D |
4.50 | % | 01/31/20 | 1,068 | 1,080,273 | |||||||||||
Term Loan E |
4.00 | % | 03/09/20 | 9,297 | 9,383,938 | |||||||||||
Symphony IRI Group, Inc., Term Loan |
4.50 | % | 12/01/17 | 908 | 911,690 | |||||||||||
TNS Inc., |
||||||||||||||||
First Lien Term Loan |
5.00 | % | 02/14/20 | 1,275 | 1,287,438 | |||||||||||
Second Lien Term Loan |
9.00 | % | 08/14/20 | 98 | 98,973 | |||||||||||
Trans Union LLC, Term Loan |
4.25 | % | 02/10/19 | 756 | 762,801 | |||||||||||
Valleycrest Companies LLC, Term Loan |
5.50 | % | 06/13/19 | 1,310 | 1,312,354 | |||||||||||
VNU, Inc., Term Loan E |
2.94 | % | 05/02/16 | 3,378 | 3,398,013 | |||||||||||
Wash MultiFamily Laundry Systems, LLC, Term Loan |
5.25 | % | 02/21/19 | 1,601 | 1,609,043 | |||||||||||
West Corp., Revolver Loan(g) |
0.00 | % | 01/15/16 | 1,748 | 1,642,952 | |||||||||||
123,890,775 | ||||||||||||||||
Cable & Satellite Television4.52% | ||||||||||||||||
Atlantic Broadband Finance, LLC, Term Loan B |
3.25 | % | 12/02/19 | 971 | 964,826 | |||||||||||
Cequel Communications, LLC, Term Loan |
3.50 | % | 02/14/19 | 5,223 | 5,241,473 | |||||||||||
Charter Communications Operating LLC, Term Loan E |
3.00 | % | 07/01/20 | 3,414 | 3,386,161 | |||||||||||
CSC Holdings, LLC, Term Loan B |
2.68 | % | 04/17/20 | 14,851 | 14,705,084 | |||||||||||
Kabel Deutschland GmbH (Germany), Term Loan F1 |
3.25 | % | 02/01/19 | 4,674 | 4,678,489 | |||||||||||
MCC Iowa, |
||||||||||||||||
Term Loan D-1 |
1.90 | % | 01/30/15 | 1,940 | 1,940,588 | |||||||||||
Term Loan D-2 |
1.90 | % | 01/30/15 | 268 | 268,397 | |||||||||||
Term Loan G |
4.00 | % | 01/20/20 | 1,000 | 1,004,525 | |||||||||||
Term Loan H |
3.25 | % | 01/29/21 | 3,310 | 3,283,028 | |||||||||||
Media Holdco, LP, Term Loan |
7.25 | % | 07/24/18 | 2,339 | 2,350,242 | |||||||||||
Mediacom Illinois LLC, Term Loan E |
4.50 | % | 10/23/17 | 1,953 | 1,957,826 | |||||||||||
Quebecor Media Inc. (Canada), Term Loan B-1 |
3.25 | % | 08/17/20 | 5,540 | 5,543,295 | |||||||||||
Telecommunications Management, LLC, Term Loan |
5.00 | % | 04/30/20 | 2,697 | 2,702,794 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Cable & Satellite Television(continued) | ||||||||||||||||
UPC Financing Partnership, |
||||||||||||||||
Term Loan AF |
4.00 | % | 01/29/21 | $ | 2,004 | $ | 2,015,998 | |||||||||
Term Loan AH |
3.25 | % | 06/30/21 | 7,930 | 7,915,851 | |||||||||||
Virgin Media Investment Holdings Ltd. (United Kingdom), Term Loan B |
3.50 | % | 06/08/20 | 13,631 | 13,596,497 | |||||||||||
WaveDivision Holdings, LLC, Term Loan |
4.00 | % | 10/15/19 | 3,171 | 3,181,922 | |||||||||||
WideOpenWest Finance, LLC, |
||||||||||||||||
Term Loan B |
4.75 | % | 04/01/19 | 8,069 | 8,138,505 | |||||||||||
Term Loan B-1 |
4.25 | % | 07/17/17 | 4,871 | 4,903,898 | |||||||||||
Yankee Cable Acquisition, LLC, Term Loan |
5.25 | % | 03/02/20 | 7,166 | 7,199,956 | |||||||||||
94,979,355 | ||||||||||||||||
Chemicals & Plastics4.30% | ||||||||||||||||
AI Chem & Cy S.C.A., |
||||||||||||||||
Second Lien Term Loan |
8.25 | % | 04/03/20 | 338 | 348,600 | |||||||||||
Term Loan B-1 |
4.50 | % | 10/03/19 | 2,812 | 2,818,711 | |||||||||||
Term Loan B-2 |
4.50 | % | 10/03/19 | 1,459 | 1,462,494 | |||||||||||
Arysta LifeScience SPC, LLC, |
|
|||||||||||||||
First Lien Term Loan |
4.50 | % | 05/29/20 | 9,014 | 9,032,377 | |||||||||||
Second Lien Term Loan |
8.25 | % | 11/30/20 | 1,038 | 1,039,858 | |||||||||||
Ascend Performance Materials Operations LLC, Term Loan B |
6.75 | % | 04/10/18 | 4,445 | 4,278,499 | |||||||||||
Aster Zweite Beteiligungs GMBH, (Germany) |
|
|||||||||||||||
Term Loan B5 |
6.65 | % | 12/30/16 | 721 | 708,558 | |||||||||||
Term Loan C5 |
6.65 | % | 12/30/16 | 738 | 725,516 | |||||||||||
DuPont Performance Coatings, Inc., Term Loan B |
4.75 | % | 02/03/20 | 14,455 | 14,583,142 | |||||||||||
Emerald Performance Materials, LLC, First Lien Term Loan (Acquired 05/15/12; Cost $1,161,304) |
6.75 | % | 05/18/18 | 1,168 | 1,179,763 | |||||||||||
HII Holding Corp., First Lien Term Loan |
4.00 | % | 12/20/19 | 5,611 | 5,615,706 | |||||||||||
Huntsman International LLC, Term Loan |
2.71 | % | 04/19/17 | 1,307 | 1,310,093 | |||||||||||
Ineos Holdings Ltd., Term Loan |
4.00 | % | 05/04/18 | 17,306 | 17,199,272 | |||||||||||
MacDermid, Inc., |
|
|||||||||||||||
First Lien Term Loan B |
4.00 | % | 06/08/20 | 2,897 | 2,906,437 | |||||||||||
Second Lien Term Loan B |
7.75 | % | 12/07/20 | 409 | 415,509 | |||||||||||
Nusil Technology LLC, Term Loan |
5.25 | % | 04/07/17 | 320 | 315,090 | |||||||||||
OMNOVA Solutions, Inc., Term Loan B-1 |
4.25 | % | 05/31/18 | 3,717 | 3,747,543 | |||||||||||
Oxea Finance LLC, |
|
|||||||||||||||
First Lien Term Loan B-2 |
4.25 | % | 01/15/20 | 4,621 | 4,627,212 | |||||||||||
Second Lien Term Loan |
8.25 | % | 07/15/20 | 1,557 | 1,560,106 | |||||||||||
Phillips Plastics Corp., Term Loan |
4.75 | % | 02/13/17 | 739 | 740,860 | |||||||||||
PQ Corp., Term Loan |
4.50 | % | 08/07/17 | 7,896 | 7,952,390 | |||||||||||
Taminco Global Chemical Corp., Term Loan B-2 |
4.25 | % | 02/15/19 | 2,267 | 2,288,609 | |||||||||||
Tata Chemicals North America Inc., Term Loan |
3.75 | % | 08/07/20 | 1,639 | 1,641,592 | |||||||||||
Univar Inc., Term Loan B |
5.00 | % | 06/30/17 | 3,988 | 3,901,636 | |||||||||||
90,399,573 | ||||||||||||||||
Clothing & Textiles0.53% | ||||||||||||||||
Calceus Acquisition, Inc., Term Loan |
5.75 | % | 01/31/20 | 1,956 | 1,976,760 | |||||||||||
PVH Corp., Term Loan B |
3.25 | % | 02/13/20 | 8,530 | 8,575,093 | |||||||||||
Wolverine World Wide, Inc., Term Loan B |
4.16 | % | 07/31/19 | 627 | 632,119 | |||||||||||
11,183,972 | ||||||||||||||||
Conglomerates1.79% | ||||||||||||||||
CeramTec Acquisition Corp., Term Loan B-1(f) |
| 08/31/20 | 2,931 | 2,939,651 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Conglomerates(continued) | ||||||||||||||||
Jarden Corp., |
|
|||||||||||||||
Term Loan A1 |
2.18 | % | 03/31/16 | $ | 6,424 | $ | 6,464,042 | |||||||||
Term Loan B |
2.68 | % | 03/30/18 | 2,932 | 2,965,331 | |||||||||||
MX Holdings US, Inc., Term Loan B-1 |
3.68 | % | 08/16/20 | 3,385 | 3,404,106 | |||||||||||
Rexnord LLC/ RBS Global, Inc., Term Loan B |
4.00 | % | 08/20/20 | 10,446 | 10,354,151 | |||||||||||
RGIS Services, LLC, Term Loan C |
5.50 | % | 10/18/17 | 1,289 | 1,286,161 | |||||||||||
Spectrum Brands, Inc., |
|
|||||||||||||||
Term Loan |
4.58 | % | 12/17/19 | 3,757 | 3,790,794 | |||||||||||
Term Loan A |
3.00 | % | 08/11/17 | 5,928 | 5,898,459 | |||||||||||
Term Loan C |
3.50 | % | 08/13/19 | 644 | 640,530 | |||||||||||
37,743,225 | ||||||||||||||||
Containers & Glass Products2.62% | ||||||||||||||||
Berlin Packaging, LLC, |
|
|||||||||||||||
First Lien Term Loan |
4.75 | % | 04/02/19 | 4,343 | 4,359,544 | |||||||||||
Second Lien Term Loan |
8.75 | % | 04/02/20 | 845 | 851,285 | |||||||||||
Berry Plastics Group, Inc., Term Loan D |
3.50 | % | 02/07/20 | 14,746 | 14,659,179 | |||||||||||
BWAY Holding Company, Term Loan |
4.50 | % | 08/07/17 | 3,408 | 3,439,267 | |||||||||||
Caraustar Industries, Inc., Term Loan |
7.50 | % | 05/01/19 | 4,459 | 4,553,819 | |||||||||||
Consolidated Container Company LLC, Term Loan |
5.00 | % | 07/03/19 | 1,378 | 1,391,637 | |||||||||||
Exopack, LLC, Term Loan B |
5.00 | % | 05/31/17 | 2,775 | 2,805,944 | |||||||||||
Hoffmaster Group, Inc., First Lien Term Loan |
6.50 | % | 01/03/18 | 4,305 | 4,273,045 | |||||||||||
Pact Group (USA), Inc., Term Loan |
3.75 | % | 05/29/20 | 5,597 | 5,548,274 | |||||||||||
Pertus Sechzehnte GmbH, (Germany) |
||||||||||||||||
Term Loan B2A |
4.56 | % | 12/14/16 | 500 | 499,500 | |||||||||||
Term Loan C2A |
4.81 | % | 06/14/17 | 500 | 499,500 | |||||||||||
Ranpak Corp., |
||||||||||||||||
First Lien Term Loan |
4.50 | % | 04/23/19 | 578 | 581,133 | |||||||||||
Second Lien Term Loan (Acquired 04/10/13; Cost $643,639) |
8.50 | % | 04/23/20 | 650 | 667,727 | |||||||||||
Reynolds Group Holdings Inc., |
||||||||||||||||
Revolver Term Loan(g) |
0.00 | % | 11/05/14 | 3,987 | 3,982,165 | |||||||||||
Term Loan |
4.75 | % | 09/28/18 | 1,636 | 1,649,672 | |||||||||||
TricorBraun Inc., Term Loan |
4.00 | % | 05/03/18 | 1,997 | 2,002,354 | |||||||||||
WNA Holdings, Inc., |
||||||||||||||||
Second Lien Term Loan (Acquired 06/03/13; Cost $635,914) |
8.50 | % | 12/07/20 | 642 | 648,675 | |||||||||||
Term Loan |
4.50 | % | 06/05/20 | 956 | 961,222 | |||||||||||
Term Loan |
4.50 | % | 06/05/20 | 1,761 | 1,769,522 | |||||||||||
55,143,464 | ||||||||||||||||
Cosmetics & Toiletries0.49% | ||||||||||||||||
Nice-Pak Products, Inc., Term Loan |
7.26 | % | 06/18/14 | 534 | 520,842 | |||||||||||
Revlon Consumer Products Corp., |
||||||||||||||||
Term Loan |
4.00 | % | 11/20/17 | 3,297 | 3,308,169 | |||||||||||
Term Loan(f) |
| 08/19/19 | 6,433 | 6,442,912 | ||||||||||||
10,271,923 | ||||||||||||||||
Drugs1.61% | ||||||||||||||||
Grifols, Inc., Term Loan B |
4.25 | % | 06/01/17 | 4,288 | 4,324,487 | |||||||||||
Harlan Laboratories, Inc., Term Loan |
3.77 | % | 07/11/14 | 2,249 | 1,915,615 | |||||||||||
IMS Health Incorporated, Term Loan B-1 |
3.75 | % | 09/01/17 | 4,350 | 4,364,308 | |||||||||||
Medpace Intermediateco, Inc., Term Loan B (Acquired 06/21/11-04/12/13; Cost $2,494,070) |
5.25 | % | 06/16/17 | 2,526 | 2,532,181 | |||||||||||
Pharmaceutical Product Development, Inc., Term Loan |
4.25 | % | 12/05/18 | 661 | 662,819 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Drugs(continued) | ||||||||||||||||
Quintiles Transnational Corp., Term Loan B-2 |
4.00 | % | 06/08/18 | $ | 1,517 | $ | 1,525,596 | |||||||||
RPI Finance Trust, Term Loan |
3.50 | % | 05/09/18 | 688 | 693,120 | |||||||||||
Valeant Pharmaceuticals International, Inc., Term Loan C-1 |
4.38 | % | 12/11/19 | 11,201 | 11,258,830 | |||||||||||
Warner Chilcott Company, LLC, |
||||||||||||||||
Term Loan B-1 |
4.25 | % | 03/15/18 | 1,011 | 1,014,382 | |||||||||||
Term Loan B-1 |
4.25 | % | 03/15/18 | 2,321 | 2,330,176 | |||||||||||
Term Loan B-3 |
4.25 | % | 03/15/18 | 1,829 | 1,836,220 | |||||||||||
Term Loan B-4 |
3.18 | % | 08/20/17 | 1,156 | 1,158,655 | |||||||||||
Term Loan B-5 |
3.18 | % | 08/20/17 | 231 | 231,731 | |||||||||||
33,848,120 | ||||||||||||||||
Ecological Services & Equipment0.83% | ||||||||||||||||
ADS Waste Holdings, Inc., Term Loan B |
4.25 | % | 10/09/19 | 4,422 | 4,440,828 | |||||||||||
Sensus USA, Inc., First Lien Term Loan |
4.75 | % | 05/09/17 | 1,244 | 1,232,371 | |||||||||||
Servicemaster Company, The, |
||||||||||||||||
Synthetic LOC |
4.55 | % | 01/31/17 | 3,750 | 3,581,250 | |||||||||||
Term Loan B |
4.44 | % | 01/31/17 | 2,990 | 2,918,235 | |||||||||||
Term Loan C |
4.25 | % | 01/31/17 | 4,448 | 4,331,123 | |||||||||||
WCA Waste Corp., Term Loan |
4.00 | % | 03/23/18 | 948 | 950,368 | |||||||||||
17,454,175 | ||||||||||||||||
Electronics & Electrical4.37% | ||||||||||||||||
Aeroflex Incorporated, Term Loan B-1 |
4.50 | % | 11/11/19 | 5,996 | 6,054,088 | |||||||||||
Blackboard Inc., |
||||||||||||||||
Second Lien Term Loan |
11.50 | % | 04/04/19 | 1,095 | 1,114,446 | |||||||||||
Term Loan B-2 |
6.25 | % | 10/04/18 | 11,792 | 11,875,444 | |||||||||||
Blue Coat Systems, Inc., Term Loan |
4.50 | % | 05/31/19 | 1,949 | 1,955,404 | |||||||||||
Dealer Computer Services, Inc., Term Loan B |
2.18 | % | 04/21/16 | 779 | 783,929 | |||||||||||
DEI Sales, Inc., Term Loan |
5.75 | % | 07/13/17 | 2,141 | 2,139,174 | |||||||||||
Deltek, Inc., First Lien Term Loan |
5.00 | % | 10/10/18 | 9,530 | 9,558,527 | |||||||||||
DG FastChannel, Inc., Term Loan |
7.25 | % | 07/26/18 | 4,501 | 4,467,232 | |||||||||||
Freescale Semiconductor, Inc., Term Loan B-4 |
5.00 | % | 02/28/20 | 12,644 | 12,725,374 | |||||||||||
Infor (US), Inc., |
||||||||||||||||
Term Loan B-2 |
5.25 | % | 04/05/18 | 1,770 | 1,784,411 | |||||||||||
Term Loan B-3 |
3.75 | % | 06/03/20 | 8,370 | 8,330,264 | |||||||||||
Microsemi Corp., Term Loan |
3.75 | % | 02/19/20 | 856 | 861,373 | |||||||||||
Mirion Technologies, Inc., Term Loan |
5.75 | % | 03/30/18 | 2,781 | 2,780,757 | |||||||||||
Riverbed Technology, Inc., Term Loan |
4.00 | % | 12/18/19 | 1,767 | 1,785,145 | |||||||||||
RP Crown Parent, LLC, |
||||||||||||||||
First Lien Term Loan |
6.75 | % | 12/21/18 | 3,563 | 3,606,454 | |||||||||||
Second Lien Term Loan |
11.25 | % | 12/20/19 | 602 | 617,040 | |||||||||||
Ship Luxco 3 S.a.r.l., (Luxembourg) |
||||||||||||||||
Term Loan B2A-II |
5.25 | % | 11/29/19 | 986 | 992,697 | |||||||||||
Term Loan C2 |
4.75 | % | 11/29/19 | 2,915 | 2,932,528 | |||||||||||
Sophia, L.P., Term Loan B |
4.50 | % | 07/19/18 | 6,723 | 6,763,508 | |||||||||||
SS&C Technologies, Inc., |
||||||||||||||||
Term Loan B-1 |
3.50 | % | 06/07/19 | 3,409 | 3,412,989 | |||||||||||
Term Loan B-2 |
3.50 | % | 06/07/19 | 353 | 353,068 | |||||||||||
SSI Investments II Ltd., Term Loan |
5.00 | % | 05/26/17 | 3,425 | 3,463,671 | |||||||||||
StoneRiver Group, L.P., First Lien Term Loan |
4.50 | % | 11/29/19 | 771 | 771,667 | |||||||||||
Verint Systems Inc., Term Loan |
4.00 | % | 09/06/19 | 2,829 | 2,844,468 | |||||||||||
91,973,658 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Equipment Leasing0.13% | ||||||||||||||||
Flying Fortress Inc., Term Loan |
3.50 | % | 06/30/17 | $ | 2,738 | $ | 2,745,031 | |||||||||
Financial Intermediaries2.31% | ||||||||||||||||
Bankruptcy Management Solutions, Inc., Term Loan B |
7.00 | % | 06/27/18 | 23 | 21,062 | |||||||||||
Blackstone Perpetual BidCo B.V. (Netherlands), Term Loan B22 |
4.76 | % | 02/07/20 | 1,340 | 1,334,619 | |||||||||||
GEO Group, Inc., Term Loan |
3.25 | % | 04/03/20 | 502 | 504,898 | |||||||||||
iPayment Inc., Term Loan |
6.75 | % | 05/08/17 | 3,978 | 3,878,445 | |||||||||||
LPL Holdings, Inc., Term Loan B |
3.25 | % | 03/29/19 | 1,468 | 1,462,467 | |||||||||||
MIP Delaware, LLC, Term Loan B-1 |
4.00 | % | 03/09/20 | 1,362 | 1,374,066 | |||||||||||
MoneyGram International, Inc., Term Loan |
4.25 | % | 03/27/20 | 8,137 | 8,185,507 | |||||||||||
Nuveen Investments, Inc., First Lien Term Loan B |
4.18 | % | 05/15/17 | 22,682 | 22,620,478 | |||||||||||
RJO Holdings Corp., Term Loan |
6.94 | % | 12/10/15 | 1,642 | 1,428,250 | |||||||||||
TransFirst Holdings, Inc., |
||||||||||||||||
First Lien Term Loan B-1 |
4.75 | % | 12/27/17 | 5,095 | 5,112,083 | |||||||||||
Second Lien Term Loan |
11.00 | % | 06/27/18 | 2,574 | 2,626,928 | |||||||||||
48,548,803 | ||||||||||||||||
Food & Drug Retailers0.88% | ||||||||||||||||
Pantry Inc., The, Term Loan |
4.75 | % | 08/02/19 | 2,273 | 2,305,357 | |||||||||||
Rite Aid Corp., |
||||||||||||||||
Second Lien Term Loan 1 |
5.75 | % | 08/21/20 | 1,353 | 1,391,968 | |||||||||||
Term Loan 6 |
4.00 | % | 02/21/20 | 4,154 | 4,169,465 | |||||||||||
Roundys Supermarkets, Inc., Term Loan B |
5.75 | % | 02/13/19 | 2,847 | 2,804,769 | |||||||||||
Sprouts Farmers Markets Holdings, LLC, Term Loan |
4.00 | % | 04/23/20 | 1,344 | 1,349,967 | |||||||||||
SuperValu Inc., Term Loan |
5.00 | % | 03/21/19 | 6,403 | 6,436,136 | |||||||||||
18,457,662 | ||||||||||||||||
Food Products3.50% | ||||||||||||||||
AdvancePierre Foods, Inc., |
||||||||||||||||
First Lien Term Loan |
5.75 | % | 07/10/17 | 5,924 | 5,992,458 | |||||||||||
Second Lien Term Loan |
9.50 | % | 10/10/17 | 524 | 534,813 | |||||||||||
Candy Intermediate Holdings, Inc., Term Loan |
7.50 | % | 06/18/18 | 2,846 | 2,735,771 | |||||||||||
CSM Bakery Supplies LLC, Term Loan |
4.75 | % | 07/03/20 | 5,881 | 5,844,200 | |||||||||||
Del Monte Corp., Term Loan |
4.00 | % | 03/08/18 | 6,320 | 6,331,641 | |||||||||||
Dole Food Company, Inc., Term Loan B |
3.75 | % | 04/01/20 | 13,490 | 13,497,187 | |||||||||||
H.J. Heinz Company, |
||||||||||||||||
Revolver Term Loan(f) |
| 06/07/18 | 10,581 | 10,558,223 | ||||||||||||
Term Loan B-2 |
3.50 | % | 06/05/20 | 10,721 | 10,803,085 | |||||||||||
JBS USA, LLC, Term Loan |
3.75 | % | 05/25/18 | 7,857 | 7,881,549 | |||||||||||
New HB Acquisition, LLC, Term Loan B |
6.75 | % | 04/09/20 | 2,412 | 2,477,849 | |||||||||||
Pinnacle Foods Finance LLC, Term Loan G |
3.25 | % | 04/29/20 | 6,922 | 6,871,100 | |||||||||||
QCE LLC, Term Loan |
9.00 | % | 01/24/17 | 11 | 4,210 | |||||||||||
73,532,086 | ||||||||||||||||
Food Service3.31% | ||||||||||||||||
Aramark Corp., |
||||||||||||||||
LOC 3 Term Loan |
3.68 | % | 07/26/16 | 82 | 82,598 | |||||||||||
Term Loan B |
3.78 | % | 07/26/16 | 2,379 | 2,391,396 | |||||||||||
Term Loan C |
3.78 | % | 07/26/16 | 8,724 | 8,770,666 | |||||||||||
Term Loan D |
4.00 | % | 09/09/19 | 5,414 | 5,444,148 | |||||||||||
Burger King Corp., Term Loan B |
3.75 | % | 09/27/19 | 3,516 | 3,543,453 | |||||||||||
Dunkin Brands, Inc., Term Loan B-3 |
3.75 | % | 02/14/20 | 692 | 693,389 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Food Service(continued) | ||||||||||||||||
Focus Brands Inc., First Lien Term Loan |
4.27 | % | 02/21/18 | $ | 2,761 | $ | 2,773,300 | |||||||||
Landrys, Inc., Term Loan B |
4.75 | % | 04/24/18 | 5,912 | 5,964,104 | |||||||||||
OSI Restaurant Partners, LLC, Term Loan |
3.50 | % | 10/25/19 | 2,132 | 2,132,281 | |||||||||||
Restaurant Holding Company, LLC, Term Loan |
9.00 | % | 02/17/17 | 3,066 | 3,084,667 | |||||||||||
Seminole Hard Rock Entertainment, Inc., Term Loan |
3.50 | % | 05/14/20 | 1,177 | 1,177,591 | |||||||||||
US Foods, Inc., Term Loan |
4.50 | % | 03/29/19 | 10,434 | 10,464,589 | |||||||||||
Weight Watchers International, Inc., |
||||||||||||||||
Term Loan B-1 |
2.94 | % | 04/02/16 | 2,429 | 2,423,000 | |||||||||||
Term Loan B-2 |
3.75 | % | 04/02/20 | 19,654 | 19,387,011 | |||||||||||
Wendys International, Inc., Term Loan B |
3.25 | % | 05/15/19 | 1,365 | 1,364,554 | |||||||||||
69,696,747 | ||||||||||||||||
Forest Products0.17% | ||||||||||||||||
Xerium Technologies, Inc., Term Loan |
6.25 | % | 05/17/19 | 3,526 | 3,551,019 | |||||||||||
Healthcare6.56% | ||||||||||||||||
Alere Inc., |
||||||||||||||||
Incremental Term Loan B-1 |
4.25 | % | 06/30/17 | 1,139 | 1,149,211 | |||||||||||
Incremental Term Loan B-2 |
4.25 | % | 06/30/17 | 513 | 517,691 | |||||||||||
Term Loan B |
4.25 | % | 06/30/17 | 1,733 | 1,748,028 | |||||||||||
AMN Healthcare, Inc., Loan B |
3.75 | % | 04/05/18 | 858 | 864,215 | |||||||||||
Apria Healthcare Group Inc., Term Loan |
6.75 | % | 04/05/20 | 13,820 | 13,949,617 | |||||||||||
ATI Holdings, Inc., Term Loan |
5.75 | % | 12/20/19 | 1,445 | 1,461,655 | |||||||||||
Biomet, Inc., Term Loan B-1 |
3.96 | % | 07/25/17 | 9,877 | 9,920,362 | |||||||||||
Carestream Health, Inc., First Lien Term Loan |
5.00 | % | 06/07/19 | 12,484 | 12,609,092 | |||||||||||
Community Health Systems, Inc., Term Loan |
3.76 | % | 01/25/17 | 1,239 | 1,245,473 | |||||||||||
DaVita Inc., |
||||||||||||||||
Term Loan A-3 |
2.69 | % | 11/01/17 | 4,875 | 4,878,047 | |||||||||||
Term Loan B |
4.50 | % | 10/20/16 | 4,917 | 4,962,334 | |||||||||||
DJO Finance LLC, Term Loan B |
4.75 | % | 09/15/17 | 11,837 | 11,938,545 | |||||||||||
Drumm Investors LLC, Term Loan |
5.00 | % | 05/04/18 | 3,361 | 3,218,761 | |||||||||||
Fresenius US Finance I Inc., Term Loan B |
2.25 | % | 08/07/19 | 11,283 | 11,306,245 | |||||||||||
Genoa Healthcare Group, LLC, |
||||||||||||||||
First Lien Term Loan |
7.25 | % | 08/08/14 | 47 | 45,159 | |||||||||||
PIK Second Lien Term Loan(e) |
14.00 | % | 02/10/15 | 774 | 655,947 | |||||||||||
HCA, Inc., |
||||||||||||||||
Term Loan B-4 |
2.93 | % | 05/01/18 | 4,274 | 4,278,340 | |||||||||||
Term Loan B-5 |
3.03 | % | 03/31/17 | 10,083 | 10,096,530 | |||||||||||
HCR Healthcare, LLC, Term Loan |
5.00 | % | 04/06/18 | 547 | 539,861 | |||||||||||
Health Management Associates, Inc., Term Loan B |
3.50 | % | 11/16/18 | 3,659 | 3,670,059 | |||||||||||
Hologic, Inc., Term Loan B |
3.75 | % | 08/01/19 | 1,864 | 1,875,707 | |||||||||||
Kindred Healthcare, Inc., Term Loan B-1 |
4.25 | % | 06/01/18 | 9,419 | 9,410,595 | |||||||||||
Kinetic Concepts, Inc., Term Loan D-1 |
4.50 | % | 05/04/18 | 14,591 | 14,645,583 | |||||||||||
Sage Products Holdings III, LLC, First Lien Term Loan |
4.25 | % | 12/13/19 | 1,247 | 1,253,932 | |||||||||||
Surgical Care Affiliates, LLC, Term Loan C |
4.25 | % | 06/29/18 | 2,118 | 2,126,363 | |||||||||||
TriZetto Group, Inc., |
||||||||||||||||
Second Lien Term Loan |
8.50 | % | 03/28/19 | 1,968 | 1,800,882 | |||||||||||
Term Loan |
4.75 | % | 05/02/18 | 5,797 | 5,449,613 | |||||||||||
Universal Health Services, Inc., Term Loan B-1 |
2.43 | % | 11/15/16 | 500 | 503,125 | |||||||||||
Western Dental Services, Inc., Term Loan |
8.25 | % | 11/01/18 | 1,886 | 1,903,399 | |||||||||||
138,024,371 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Home Furnishings0.50% | ||||||||||||||||
Serta Simmons Holdings, LLC, Term Loan |
5.00 | % | 10/01/19 | $ | 4,623 | $ | 4,647,943 | |||||||||
Tempur-Pedic International Inc., Term Loan B |
3.50 | % | 03/18/20 | 4,801 | 4,768,918 | |||||||||||
Yankee Candle Company, Inc., The, Term Loan |
5.25 | % | 04/02/19 | 1,016 | 1,026,118 | |||||||||||
10,442,979 | ||||||||||||||||
Industrial Equipment2.61% | ||||||||||||||||
Accudyne Industries LLC, Term Loan |
4.00 | % | 12/13/19 | 5,843 | 5,805,796 | |||||||||||
Alliance Laundry Systems LLC, Second Lien Term Loan |
9.50 | % | 12/10/19 | 535 | 541,055 | |||||||||||
Apex Tool Group, LLC, Term Loan |
4.50 | % | 01/31/20 | 5,773 | 5,801,910 | |||||||||||
Doncasters US Finance LLC, Term Loan B |
5.50 | % | 04/09/20 | 6,641 | 6,711,945 | |||||||||||
Gardner Denver, Inc., Term Loan |
4.25 | % | 07/30/20 | 5,056 | 5,038,440 | |||||||||||
Generac Power System, Inc., Term Loan B |
3.50 | % | 05/29/20 | 1,887 | 1,882,649 | |||||||||||
Grede LLC, Term Loan B |
4.50 | % | 05/02/18 | 3,117 | 3,128,268 | |||||||||||
Husky Injection Molding Systems Ltd., Term Loan |
4.25 | % | 06/29/18 | 5,293 | 5,309,916 | |||||||||||
Manitowoc Company, Inc., Term Loan B |
4.25 | % | 11/13/17 | 380 | 382,614 | |||||||||||
MEI, Inc., Term Loan |
5.00 | % | 08/21/20 | 2,826 | 2,832,912 | |||||||||||
Milacron LLC, Term Loan |
4.25 | % | 03/30/20 | 3,165 | 3,175,120 | |||||||||||
QS0001 Corp., First Lien Term Loan |
5.00 | % | 11/09/18 | 4,056 | 4,107,059 | |||||||||||
Tank Holding Corp., Term Loan |
4.25 | % | 07/09/19 | 2,805 | 2,798,382 | |||||||||||
Terex Corp., Term Loan |
4.50 | % | 04/28/17 | 1,463 | 1,484,044 | |||||||||||
Unifrax Holding Co., Term Loan |
4.25 | % | 11/28/18 | 543 | 545,844 | |||||||||||
Wesco Distribution, Inc., Term Loan B-1 |
4.50 | % | 12/12/19 | 5,329 | 5,372,759 | |||||||||||
54,918,713 | ||||||||||||||||
Insurance0.32% | ||||||||||||||||
Compass Investors Inc., Term Loan |
5.00 | % | 12/27/19 | 939 | 944,321 | |||||||||||
Cooper Gay Swett & Crawford Ltd., |
||||||||||||||||
First Lien Term Loan |
5.00 | % | 04/16/20 | 1,950 | 1,964,189 | |||||||||||
Second Lien Term Loan |
8.25 | % | 10/16/20 | 1,300 | 1,321,644 | |||||||||||
HUB International Holdings, Inc., Term Loan |
3.68 | % | 06/13/17 | 998 | 999,016 | |||||||||||
Sedgwick CMS Holdings, Inc., First Lien Term Loan B |
4.25 | % | 06/12/18 | 1,457 | 1,460,721 | |||||||||||
6,689,891 | ||||||||||||||||
Leisure Goods, Activities & Movies3.80% | ||||||||||||||||
24 Hour Fitness Worldwide, Inc., Term Loan B |
5.25 | % | 04/22/16 | 4,789 | 4,839,024 | |||||||||||
Alpha Topco Ltd. (United Kingdom), Term Loan B |
4.50 | % | 04/30/19 | 22,110 | 22,303,638 | |||||||||||
AMC Entertainment Inc., Term Loan |
3.50 | % | 04/30/20 | 2,943 | 2,948,167 | |||||||||||
Bright Horizons Family Solutions, Inc., Term Loan B |
4.00 | % | 01/30/20 | 3,569 | 3,581,057 | |||||||||||
Cedar Fair, L.P., Term Loan |
3.25 | % | 03/06/20 | 4,173 | 4,190,324 | |||||||||||
Equinox Holdings Inc., First Lien Term Loan |
4.50 | % | 01/31/20 | 2,088 | 2,100,919 | |||||||||||
Fender Musical Instruments Corp., Term Loan |
5.75 | % | 04/03/19 | 590 | 593,721 | |||||||||||
Great Wolf Resorts, Inc., Term Loan B |
4.50 | % | 08/06/20 | 5,627 | 5,631,061 | |||||||||||
IMG Worldwide, Inc., Term Loan B |
4.50 | % | 06/16/16 | 4,776 | 4,780,014 | |||||||||||
Kasima, LLC, Term Loan |
3.25 | % | 05/17/21 | 3,448 | 3,450,109 | |||||||||||
Live Nation Entertainment, Inc., Term Loan B-1 |
3.50 | % | 08/16/20 | 3,982 | 3,999,033 | |||||||||||
Otter Products, LLC, Term Loan |
5.25 | % | 04/29/19 | 1,149 | 1,155,047 | |||||||||||
Sabre Inc., |
||||||||||||||||
Term Loan B |
5.25 | % | 02/19/19 | 4,708 | 4,762,283 | |||||||||||
Term Loan C |
4.00 | % | 02/19/18 | 2,670 | 2,685,570 | |||||||||||
Seaworld Parks & Entertainment, Inc., Term Loan B-2 |
3.00 | % | 05/14/20 | 2,341 | 2,326,300 | |||||||||||
Six Flags Theme Parks Inc., Term Loan B |
4.00 | % | 12/20/18 | 585 | 591,908 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Leisure Goods, Activities & Movies(continued) | ||||||||||||||||
SRAM, LLC, First Lien Term Loan |
4.02 | % | 04/10/20 | $ | 1,230 | $ | 1,223,571 | |||||||||
Topps Company, Inc., (The), Term Loan |
2.94 | % | 10/13/14 | 1,542 | 1,534,415 | |||||||||||
US FinCo LLC, Term Loan B |
4.00 | % | 05/29/20 | 2,530 | 2,530,479 | |||||||||||
WMG Acquisition Corp., Term Loan B |
3.75 | % | 07/01/20 | 669 | 669,018 | |||||||||||
Zuffa, LLC, Term Loan |
4.50 | % | 02/25/20 | 4,013 | 4,027,749 | |||||||||||
79,923,407 | ||||||||||||||||
Lodging & Casinos3.90% | ||||||||||||||||
Bally Technologies, Inc., Term Loan B(f) |
| 08/31/20 | 10,446 | 10,448,840 | ||||||||||||
Boyd Acquisition Sub, LLC, Term Loan B |
4.25 | % | 11/20/17 | 155 | 155,654 | |||||||||||
Boyd Gaming Corp., Term Loan B |
4.00 | % | 08/14/20 | 3,493 | 3,506,660 | |||||||||||
Cannery Casino Resorts, LLC, |
||||||||||||||||
First Lien Term Loan |
6.00 | % | 10/02/18 | 2,716 | 2,718,325 | |||||||||||
Second Lien Term Loan |
10.00 | % | 10/02/19 | 515 | 483,689 | |||||||||||
Centaur Acquisition, LLC, First Lien Term Loan |
5.25 | % | 02/20/19 | 2,398 | 2,420,876 | |||||||||||
Four Seasons Holdings Inc., (Canada) |
||||||||||||||||
First Lien Term Loan |
4.25 | % | 06/27/20 | 3,299 | 3,332,343 | |||||||||||
Second Lien Term Loan |
6.25 | % | 12/28/20 | 2,066 | 2,107,004 | |||||||||||
Harrahs Operating Company, Inc., |
||||||||||||||||
Term Loan B-5 |
4.43 | % | 01/26/18 | 7,113 | 6,288,349 | |||||||||||
Term Loan B-6 |
5.43 | % | 01/26/18 | 5,981 | 5,393,015 | |||||||||||
HLT Owned Mezz III-C LLC, Term Loan |
3.68 | % | 11/12/15 | 14,996 | 14,925,282 | |||||||||||
Las Vegas Sands, LLC/Venetian Casino Resort, LLC, Term Loan B |
2.69 | % | 11/23/16 | 1,337 | 1,337,042 | |||||||||||
MGM Resorts International, Term Loan B |
3.50 | % | 12/20/19 | 6,096 | 6,091,820 | |||||||||||
Pinnacle Entertainment, Inc., |
||||||||||||||||
Term Loan B-1 |
3.75 | % | 08/15/16 | 2,376 | 2,387,636 | |||||||||||
Term Loan B-2 |
3.75 | % | 08/13/20 | 3,725 | 3,746,022 | |||||||||||
Scientific Games Corp., Term Loan B-1 |
3.19 | % | 06/30/15 | 244 | 241,973 | |||||||||||
Seminole Tribe of Florida, Term Loan |
3.00 | % | 04/29/20 | 4,913 | 4,908,816 | |||||||||||
Station Casinos LLC, Term Loan B |
5.00 | % | 03/01/20 | 831 | 839,161 | |||||||||||
Tropicana Entertainment Inc., Term Loan |
7.50 | % | 03/16/18 | 1,635 | 1,654,973 | |||||||||||
Twin River Management Group, Inc., Term Loan |
5.25 | % | 11/09/18 | 6,583 | 6,656,705 | |||||||||||
Yonkers Racing Corp., |
||||||||||||||||
First Lien Term Loan |
4.25 | % | 08/20/19 | 2,077 | 2,069,709 | |||||||||||
Second Lien Term Loan |
8.75 | % | 08/20/20 | 392 | 390,002 | |||||||||||
82,103,896 | ||||||||||||||||
Nonferrous Metals & Minerals1.31% | ||||||||||||||||
Alpha Natural Resources, Inc., Term Loan B |
3.50 | % | 05/22/20 | 5,434 | 5,222,759 | |||||||||||
Arch Coal, Inc., Term Loan |
5.75 | % | 05/16/18 | 10,538 | 10,256,197 | |||||||||||
Noranda Aluminum Acquisition Corp., Term Loan B |
5.75 | % | 02/28/19 | 3,409 | 3,247,497 | |||||||||||
Novelis Inc., Term Loan |
3.75 | % | 03/10/17 | 3,101 | 3,107,198 | |||||||||||
Walter Energy, Inc., Term Loan B |
6.75 | % | 04/02/18 | 6,050 | 5,789,567 | |||||||||||
27,623,218 | ||||||||||||||||
Oil & Gas5.20% | ||||||||||||||||
Atlas Energy, L.P., Term Loan |
6.50 | % | 07/30/19 | 3,363 | 3,407,507 | |||||||||||
Bronco Midstream Funding, LLC, Term Loan |
5.00 | % | 08/17/20 | 5,237 | 5,236,989 | |||||||||||
Buffalo Gulf Coast Terminals LLC, Term Loan |
5.25 | % | 10/31/17 | 4,634 | 4,680,745 | |||||||||||
Chesapeake Energy Corp., Term Loan |
5.75 | % | 12/01/17 | 9,045 | 9,246,644 | |||||||||||
CITGO Petroleum Corp., Term Loan B |
8.00 | % | 06/24/15 | 735 | 743,158 | |||||||||||
Crestwood Holdings LLC, Term Loan B-1 |
7.00 | % | 06/19/19 | 1,304 | 1,327,168 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Oil & Gas(continued) | ||||||||||||||||
Drillships Financing Holding Inc., |
||||||||||||||||
Term Loan B-1 |
6.00 | % | 03/31/21 | $ | 12,825 | $ | 12,905,126 | |||||||||
Term Loan B-2 |
5.50 | % | 07/15/16 | 4,443 | 4,487,234 | |||||||||||
EMG Utica, LLC, Term Loan |
4.75 | % | 03/27/20 | 2,761 | 2,771,751 | |||||||||||
Energy Transfer Equity, L.P., Term Loan |
3.75 | % | 03/24/17 | 1,125 | 1,133,792 | |||||||||||
Exco Resources, Inc., Term Loan |
5.00 | % | 08/19/19 | 5,741 | 5,705,283 | |||||||||||
Glenn Pool Oil & Gas Trust I, Term Loan (Acquired 06/08/11; Cost $977,057) |
4.50 | % | 05/02/16 | 977 | 981,942 | |||||||||||
HGIM Corp., Term Loan B |
5.50 | % | 06/18/20 | 3,215 | 3,234,661 | |||||||||||
Kinder Morgan, Inc., Term Loan A |
4.19 | % | 05/24/15 | 18,062 | 18,231,631 | |||||||||||
NGPL PipeCo LLC, Term Loan |
6.75 | % | 09/15/17 | 6,434 | 6,095,888 | |||||||||||
Obsidian Natural Gas Trust (United Kingdom), Term Loan (Acquired 05/05/11; Cost $1,094,366) |
7.00 | % | 11/02/15 | 1,076 | 1,081,098 | |||||||||||
Pacific Drilling S.A. (Luxembourg), Term Loan |
4.50 | % | 06/04/18 | 3,583 | 3,607,466 | |||||||||||
Ruby Western Pipeline Holdings, LLC, Term Loan |
3.50 | % | 03/27/20 | 1,879 | 1,876,824 | |||||||||||
Samson Investment Company, Second Lien Term Loan |
6.00 | % | 09/25/18 | 5,262 | 5,301,151 | |||||||||||
Saxon Enterprises LLC, Term Loan |
5.50 | % | 02/15/19 | 2,435 | 2,443,702 | |||||||||||
Tallgrass Operations, LLC, Term Loan |
5.25 | % | 11/13/18 | 3,536 | 3,585,552 | |||||||||||
Tervita Corp. (Canada), Term Loan |
6.25 | % | 05/15/18 | 7,042 | 6,992,960 | |||||||||||
WildHorse Resources, LLC, Term Loan |
7.50 | % | 12/13/18 | 4,225 | 4,204,042 | |||||||||||
109,282,314 | ||||||||||||||||
Publishing2.66% | ||||||||||||||||
Affiliated Media, Inc., Term Loan |
8.50 | % | 03/19/14 | 470 | 469,903 | |||||||||||
Cenveo Corp., Term Loan B |
6.25 | % | 02/13/17 | 8,041 | 8,111,408 | |||||||||||
Endurance Business Media, Inc., Term Loan (Acquired 07/26/06; Cost $81,170) |
6.50 | % | 12/15/14 | 62 | 27,917 | |||||||||||
Getty Images, Inc., |
||||||||||||||||
Revolver Loan(f) |
| 10/18/17 | 1,478 | 1,380,638 | ||||||||||||
Term Loan |
4.75 | % | 10/18/19 | 7,513 | 7,253,323 | |||||||||||
Harland Clarke Holdings Corp., Term Loan B-2 |
5.43 | % | 06/30/17 | 370 | 365,035 | |||||||||||
Interactive Data Corp., Term Loan B |
3.75 | % | 02/11/18 | 898 | 897,709 | |||||||||||
Lamar Media Corp., Term Loan B |
4.00 | % | 12/30/16 | 9 | 9,039 | |||||||||||
Media General, Inc., |
||||||||||||||||
Term Loan B(g) |
0.00 | % | 07/31/20 | 4,759 | 4,776,466 | |||||||||||
Term Loan B(f) |
| 07/31/20 | 2,075 | 2,082,354 | ||||||||||||
MediMedia USA, Inc., First Lien Term Loan |
8.00 | % | 11/20/18 | 3,948 | 3,908,995 | |||||||||||
Merrill Communications LLC, Term Loan |
7.31 | % | 03/08/18 | 4,984 | 5,040,446 | |||||||||||
MTL Publishing LLC, Term Loan B-1 |
4.25 | % | 06/29/18 | 4,635 | 4,663,750 | |||||||||||
Multi Packaging Solutions, Inc., Term Loan |
4.25 | % | 08/21/20 | 2,268 | 2,267,921 | |||||||||||
Newsday, LLC, Term Loan |
3.68 | % | 10/12/16 | 4,819 | 4,825,418 | |||||||||||
ProQuest LLC, Term Loan |
6.00 | % | 04/13/18 | 1,792 | 1,807,071 | |||||||||||
Southern Graphics Inc., Term Loan |
5.00 | % | 10/17/19 | 3,353 | 3,369,427 | |||||||||||
Tribune Company, Term Loan B |
4.00 | % | 12/31/19 | 4,613 | 4,634,472 | |||||||||||
55,891,292 | ||||||||||||||||
Radio & Television3.90% | ||||||||||||||||
Barrington Broadcasting LLC, Term Loan 2 |
7.50 | % | 06/14/17 | 253 | 252,933 | |||||||||||
Clear Channel Communications, Inc., |
||||||||||||||||
Term Loan B |
3.83 | % | 01/29/16 | 7,031 | 6,579,260 | |||||||||||
Term Loan D |
6.93 | % | 01/30/19 | 35,133 | 32,338,878 | |||||||||||
Entravision Communications Corp., Term Loan B |
3.50 | % | 05/29/20 | 7,501 | 7,451,761 | |||||||||||
FoxCo Acquisition Sub, LLC, Term Loan |
5.50 | % | 07/14/17 | 2,578 | 2,594,494 | |||||||||||
Gray Television, Inc., Term Loan |
4.75 | % | 10/15/19 | 2,224 | 2,245,329 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
19 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Radio & Television(continued) | ||||||||||||||||
Lin Television Corp., Term Loan B |
4.00 | % | 12/21/18 | $ | 691 | $ | 695,706 | |||||||||
Local TV Finance, LLC, Term Loan B-2 |
4.19 | % | 05/07/15 | 1,172 | 1,175,069 | |||||||||||
Mission Broadcasting, Inc., Term Loan B |
4.25 | % | 12/03/19 | 138 | 139,194 | |||||||||||
NEP/NCP HoldCo, Inc., |
||||||||||||||||
First Lien Term Loan |
4.75 | % | 01/22/20 | 2,486 | 2,500,225 | |||||||||||
Second Lien Term Loan |
9.50 | % | 07/22/20 | 132 | 135,729 | |||||||||||
Nexstar Broadcasting, Inc., Term Loan B |
4.25 | % | 12/03/19 | 326 | 329,246 | |||||||||||
Nine Entertainment Corp., Term Loan B |
3.50 | % | 02/05/20 | 4,589 | 4,569,752 | |||||||||||
Raycom TV Broadcasting, LLC, Term Loan B |
4.25 | % | 05/31/17 | 2,092 | 2,107,252 | |||||||||||
Sinclair Television Group, Inc., Term Loan B |
3.00 | % | 04/09/20 | 2,041 | 2,042,456 | |||||||||||
TWCC Holding Corp., |
||||||||||||||||
Second Lien Term Loan |
7.00 | % | 06/26/20 | 2,023 | 2,083,554 | |||||||||||
Term Loan |
3.50 | % | 02/13/17 | 1,994 | 2,005,876 | |||||||||||
Univision Communications Inc., |
||||||||||||||||
First Lien Term Loan |
4.50 | % | 03/02/20 | 7,491 | 7,478,140 | |||||||||||
Term Loan |
4.00 | % | 03/02/20 | 2,048 | 2,034,212 | |||||||||||
Term Loan |
4.50 | % | 03/02/20 | 3,194 | 3,192,835 | |||||||||||
81,951,901 | ||||||||||||||||
Retailers (except Food & Drug)3.16% | ||||||||||||||||
Academy, Ltd., Term Loan |
4.50 | % | 08/03/18 | 2,276 | 2,291,593 | |||||||||||
CDW LLC, Term Loan |
3.50 | % | 04/29/20 | 14,581 | 14,450,075 | |||||||||||
Collective Brands, Inc., Term Loan |
7.25 | % | 10/09/19 | 4,092 | 4,170,824 | |||||||||||
Davids Bridal, Inc., |
||||||||||||||||
Term Loan(g) |
0.00 | % | 10/11/17 | 1,573 | 1,478,320 | |||||||||||
Term Loan |
5.00 | % | 10/11/19 | 1,223 | 1,233,520 | |||||||||||
Guitar Center, Inc., Term Loan |
6.28 | % | 04/10/17 | 5,364 | 5,290,396 | |||||||||||
Michaels Stores, Inc., Term Loan B |
3.75 | % | 01/28/20 | 9,245 | 9,292,268 | |||||||||||
National Vision, Inc., Term Loan |
7.00 | % | 08/02/18 | 2,760 | 2,781,198 | |||||||||||
Neiman Marcus Group, Inc., Term Loan |
4.00 | % | 05/16/18 | 1,871 | 1,873,440 | |||||||||||
OSP Group, Inc., First Lien Term Loan |
5.50 | % | 02/05/20 | 4,147 | 4,167,993 | |||||||||||
Pep BoysManny, Moe & Jack, Term Loan |
5.00 | % | 10/11/18 | 1,478 | 1,488,572 | |||||||||||
Savers Inc., Term Loan |
5.00 | % | 07/09/19 | 4,915 | 4,955,036 | |||||||||||
Spin Holdco Inc., First Lien Term Loan |
4.25 | % | 11/14/19 | 5,086 | 5,106,750 | |||||||||||
Toys R US-Delaware, Inc., |
||||||||||||||||
Term Loan |
6.00 | % | 09/01/16 | 1,018 | 1,003,750 | |||||||||||
Term Loan |
6.00 | % | 08/21/19 | 4,511 | 4,465,970 | |||||||||||
Term Loan B-2(f) |
| 05/25/18 | 112 | 109,021 | ||||||||||||
Term Loan B-3 |
5.25 | % | 05/25/18 | 404 | 390,945 | |||||||||||
Wilton Brands LLC, Term Loan B |
7.50 | % | 08/30/18 | 1,976 | 1,963,798 | |||||||||||
66,513,469 | ||||||||||||||||
Steel0.63% | ||||||||||||||||
Ameriforge Group Inc., |
||||||||||||||||
First Lien Term Loan |
5.00 | % | 12/19/19 | 4,347 | 4,363,222 | |||||||||||
Second Lien Term Loan |
8.75 | % | 12/18/20 | 429 | 434,986 | |||||||||||
JFB Firth Rixson Inc., Term Loan |
4.25 | % | 06/30/17 | 670 | 671,266 | |||||||||||
JMC Steel Group Inc., Term Loan |
4.75 | % | 04/03/17 | 1,087 | 1,089,021 | |||||||||||
Tube City IMS Corp., Term Loan |
4.75 | % | 03/20/19 | 3,872 | 3,881,368 | |||||||||||
Waupaca Foundry, Inc., Term Loan |
4.50 | % | 06/29/17 | 2,856 | 2,860,565 | |||||||||||
13,300,428 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
20 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Surface Transport0.95% | ||||||||||||||||
American Petroleum Tankers Parent LLC, Term Loan |
4.75 | % | 10/02/19 | $ | 2,258 | $ | 2,271,917 | |||||||||
Avis Budget Car Rental, LLC, Term Loan B |
3.00 | % | 03/15/19 | 609 | 609,860 | |||||||||||
Ceva Group PLC, (United Kingdom) |
||||||||||||||||
Term Loan B |
0.18 | % | 08/31/16 | 216 | 205,423 | |||||||||||
Term Loan B |
5.27 | % | 08/31/16 | 1,260 | 1,199,391 | |||||||||||
JHCI Acquisition, Inc., First Lien Term Loan |
7.00 | % | 07/11/19 | 2,868 | 2,851,047 | |||||||||||
Kenan Advantage Group, Inc., Term Loan |
3.75 | % | 06/10/16 | 781 | 787,601 | |||||||||||
Navios Partners Finance (US) Inc., Term Loan |
5.25 | % | 06/27/18 | 4,262 | 4,346,827 | |||||||||||
Swift Transportation Co., LLC, |
||||||||||||||||
Term Loan B-1 |
2.93 | % | 12/21/16 | 804 | 809,582 | |||||||||||
Term Loan B-2 |
4.00 | % | 12/21/17 | 1,075 | 1,083,137 | |||||||||||
U.S. Shipping Corp, Term Loan |
9.00 | % | 04/30/18 | 5,603 | 5,728,723 | |||||||||||
19,893,508 | ||||||||||||||||
Telecommunications5.95% | ||||||||||||||||
Arris Group, Inc., Term Loan B |
3.50 | % | 04/17/20 | 4,307 | 4,263,699 | |||||||||||
Avaya Inc., |
||||||||||||||||
Term Loan B-3 |
4.76 | % | 10/26/17 | 17,883 | 15,976,690 | |||||||||||
Term Loan B-5 |
8.00 | % | 03/30/18 | 5,484 | 5,201,299 | |||||||||||
Cellular South, Inc., Term Loan B |
3.25 | % | 05/22/20 | 2,593 | 2,594,499 | |||||||||||
Consolidated Communications, Inc., |
||||||||||||||||
Incremental Term Loan 3 |
5.25 | % | 12/31/18 | 7,146 | 7,239,051 | |||||||||||
Term Loan 2 |
4.19 | % | 12/31/17 | 995 | 1,003,969 | |||||||||||
Cricket Communications, Inc., |
||||||||||||||||
Term Loan |
4.75 | % | 10/10/19 | 2,581 | 2,591,807 | |||||||||||
Term Loan C |
4.75 | % | 03/09/20 | 5,184 | 5,213,193 | |||||||||||
Crown Castle Operating Co., Term Loan B |
3.25 | % | 01/31/19 | 11,959 | 11,875,168 | |||||||||||
Fairpoint Communications, Inc., Term Loan |
7.50 | % | 02/14/19 | 8,142 | 8,147,326 | |||||||||||
Global Tel*Link Corp., First Lien Term Loan |
5.00 | % | 05/22/20 | 3,725 | 3,664,403 | |||||||||||
Hargray Communications Group, Inc., Term Loan |
4.75 | % | 06/25/19 | 2,435 | 2,430,631 | |||||||||||
Intelsat Jackson Holdings S.A., Term Loan B-1 |
4.25 | % | 04/02/18 | 10,802 | 10,902,393 | |||||||||||
Level 3 Communications, Inc., |
||||||||||||||||
Term Loan B |
4.00 | % | 01/15/20 | 10,974 | 10,994,455 | |||||||||||
Term Loan B-II |
4.75 | % | 08/01/19 | 8,263 | 8,276,064 | |||||||||||
Term Loan B-III |
4.00 | % | 08/01/19 | 428 | 428,878 | |||||||||||
LTS Buyer LLC, |
||||||||||||||||
First Lien Term Loan B |
4.50 | % | 04/13/20 | 3,087 | 3,111,141 | |||||||||||
Second Lien Term Loan |
8.00 | % | 04/12/21 | 130 | 130,783 | |||||||||||
NTELOS Inc., Term Loan B |
5.75 | % | 11/08/19 | 4,370 | 4,364,200 | |||||||||||
Syniverse Holdings, Inc., |
||||||||||||||||
Term Loan |
4.00 | % | 04/23/19 | 6,111 | 6,151,294 | |||||||||||
Term Loan |
5.00 | % | 04/23/19 | 3,443 | 3,462,562 | |||||||||||
Telesat LLC, Term Loan B-2 |
3.50 | % | 03/28/19 | 1,279 | 1,283,141 | |||||||||||
Time Warner Telecom Holdings Inc., Term Loan B |
2.69 | % | 04/17/20 | 1,545 | 1,549,113 | |||||||||||
U.S. TelePacific Corp., Term Loan |
5.75 | % | 02/23/17 | 2,273 | 2,274,347 | |||||||||||
Windstream Corp., Term Loan B-4 |
3.50 | % | 01/23/20 | 2,080 | 2,084,798 | |||||||||||
125,214,904 | ||||||||||||||||
Utilities2.56% | ||||||||||||||||
AES Corp., The, Term Loan |
3.75 | % | 06/01/18 | 1,004 | 1,012,086 | |||||||||||
Calpine Construction Finance Company, L.P., |
||||||||||||||||
Term Loan B-1 |
3.00 | % | 05/04/20 | 7,145 | 7,081,286 | |||||||||||
Term Loan B-2 |
3.25 | % | 01/31/22 | 2,323 | 2,309,516 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
21 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Utilities(continued) | ||||||||||||||||
Calpine Corp., |
||||||||||||||||
Term Loan(f) |
| 04/02/18 | $ | 790 | $ | 793,223 | ||||||||||
Term Loan |
4.00 | % | 10/09/19 | 7,834 | 7,870,069 | |||||||||||
Dynegy Inc., Term Loan B-2 |
4.00 | % | 04/23/20 | 4,228 | 4,222,906 | |||||||||||
EquiPower Resources Holdings, LLC, |
||||||||||||||||
First Lien Term Loan B |
4.25 | % | 12/21/18 | 6,088 | 6,088,428 | |||||||||||
First Lien Term Loan C |
4.25 | % | 12/31/19 | 2,648 | 2,641,306 | |||||||||||
LSP Madison Funding, LLC, Term Loan |
5.50 | % | 06/28/19 | 965 | 973,990 | |||||||||||
NRG Energy Inc., Term Loan |
2.75 | % | 07/02/18 | 5,828 | 5,799,883 | |||||||||||
NSG Holdings LLC, Term Loan |
4.75 | % | 12/11/19 | 608 | 613,850 | |||||||||||
Sapphire Power Finance LLC, Term Loan B (Acquired 07/02/13; Cost $3,128,586) |
6.00 | % | 07/10/18 | 3,160 | 3,163,670 | |||||||||||
Texas Competitive Electric Holdings, |
||||||||||||||||
Term Loan |
3.71 | % | 10/10/14 | 8,006 | 5,468,641 | |||||||||||
Term Loan |
4.71 | % | 10/10/17 | 5,010 | 3,398,751 | |||||||||||
USIC Holding, Inc., First Lien Term Loan |
4.75 | % | 07/10/20 | 2,381 | 2,390,616 | |||||||||||
53,828,221 | ||||||||||||||||
Total Variable Rate Senior Loan Interests |
1,909,689,232 | |||||||||||||||
Bonds and Notes3.49% |
| |||||||||||||||
Air Transport0.23% | ||||||||||||||||
Air Lease Corp. |
5.63 | % | 04/01/17 | 3,956 | 4,248,744 | |||||||||||
United Airlines, Inc.(h) |
6.75 | % | 09/15/15 | 460 | 478,400 | |||||||||||
4,727,144 | ||||||||||||||||
Automotive0.20% | ||||||||||||||||
Gestamp Funding Luxembourg S.A. (Luxembourg)(h) |
5.63 | % | 05/31/20 | 1,747 | 1,694,590 | |||||||||||
Goodyear Tire & Rubber Co. |
6.50 | % | 03/01/21 | 1,418 | 1,435,725 | |||||||||||
Schaeffler AG (Germany)(h) |
4.75 | % | 05/15/21 | 1,042 | 988,333 | |||||||||||
4,118,648 | ||||||||||||||||
Business Equipment & Services0.16% | ||||||||||||||||
First Data Corp.(h) |
6.75 | % | 11/01/20 | 3,207 | 3,279,158 | |||||||||||
Cable & Satellite Television0.07% | ||||||||||||||||
Lynx II Corp. (United Kingdom)(h) |
5.38 | % | 04/15/21 | 200 | 196,500 | |||||||||||
UPC Broadband Holdings, B.V. (Netherlands)(h) |
7.25 | % | 11/15/21 | 1,074 | 1,159,920 | |||||||||||
UPC Broadband Holdings, B.V. (Netherlands)(h) |
6.88 | % | 01/15/22 | 173 | 182,193 | |||||||||||
1,538,613 | ||||||||||||||||
Chemicals & Plastics0.29% | ||||||||||||||||
Hexion Specialty Chemicals, Inc.(h) |
6.63 | % | 04/15/20 | 5,355 | 5,314,838 | |||||||||||
Ineos Holdings Ltd.(h) |
6.13 | % | 08/15/18 | 200 | 194,000 | |||||||||||
Ineos Holdings Ltd.(h) |
8.38 | % | 02/15/19 | 241 | 265,100 | |||||||||||
Ineos Holdings Ltd.(h) |
7.50 | % | 05/01/20 | 157 | 167,990 | |||||||||||
Taminco Global Chemical Corp.(h) |
9.75 | % | 03/31/20 | 226 | 255,380 | |||||||||||
6,197,308 | ||||||||||||||||
Containers & Glass Products0.63% | ||||||||||||||||
Ardagh Glass Finance (Ireland)(h) |
7.00 | % | 11/15/20 | 858 | 836,550 | |||||||||||
Reynolds Group Holdings Inc. |
7.88 | % | 08/15/19 | 1,854 | 2,048,670 | |||||||||||
Reynolds Group Holdings Inc. |
9.88 | % | 08/15/19 | 1,879 | 2,005,832 | |||||||||||
Reynolds Group Holdings Inc. |
5.75 | % | 10/15/20 | 8,318 | 8,276,410 | |||||||||||
13,167,462 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
22 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Food Products0.02% | ||||||||||||||||
Chiquita Brands LLC(h) |
7.88 | % | 02/01/21 | $ | 422 | $ | 444,155 | |||||||||
Forest Products0.08% | ||||||||||||||||
Verso Paper Holdings LLC |
11.75 | % | 01/15/19 | 1,626 | 1,670,715 | |||||||||||
Healthcare0.40% | ||||||||||||||||
Accellent Inc. |
8.38 | % | 02/01/17 | 2,878 | 2,985,925 | |||||||||||
Biomet, Inc. |
6.50 | % | 08/01/20 | 469 | 483,070 | |||||||||||
Community Health Systems, Inc. |
5.13 | % | 08/15/18 | 940 | 965,850 | |||||||||||
DJO Finance LLC |
8.75 | % | 03/15/18 | 1,386 | 1,507,275 | |||||||||||
Kindred Healthcare, Inc. |
8.25 | % | 06/01/19 | 542 | 571,810 | |||||||||||
Kinetic Concepts, Inc. |
10.50 | % | 11/01/18 | 1,764 | 1,947,015 | |||||||||||
8,460,945 | ||||||||||||||||
Lodging & Casinos0.05% | ||||||||||||||||
Harrahs Operating Company, Inc. |
8.50 | % | 02/15/20 | 360 | 340,200 | |||||||||||
Harrahs Operating Company, Inc. |
9.00 | % | 02/15/20 | 791 | 763,315 | |||||||||||
1,103,515 | ||||||||||||||||
Nonferrous Metals & Minerals0.05% | ||||||||||||||||
TiZir Ltd. (United Kingdom) |
9.00 | % | 09/28/17 | 1,000 | 1,028,750 | |||||||||||
Oil & Gas0.25% | ||||||||||||||||
NGPL PipeCo LLC(h) |
9.63 | % | 06/01/19 | 472 | 486,927 | |||||||||||
Pacific Drilling S.A. (Luxembourg)(h) |
5.38 | % | 06/01/20 | 2,798 | 2,702,698 | |||||||||||
Tervita Corp. (Canada)(h) |
8.00 | % | 11/15/18 | 1,949 | 1,953,872 | |||||||||||
Western Refining, Inc. |
6.25 | % | 04/01/21 | 190 | 188,100 | |||||||||||
5,331,597 | ||||||||||||||||
Publishing0.05% | ||||||||||||||||
Merrill Communications, LLC |
10.00 | % | 03/08/23 | 1,010 | 964,927 | |||||||||||
Radio & Television0.28% | ||||||||||||||||
Univision Communications Inc.(h) |
6.88 | % | 05/15/19 | 1,000 | 1,057,500 | |||||||||||
Univision Communications Inc.(h) |
6.75 | % | 09/15/22 | 4,645 | 4,854,025 | |||||||||||
5,911,525 | ||||||||||||||||
Retailers (except Food & Drug)0.06% | ||||||||||||||||
Claires Stores Inc.(h) |
9.00 | % | 03/15/19 | 1,202 | 1,334,220 | |||||||||||
Telecommunications0.40% | ||||||||||||||||
Goodman Networks Inc.(h) |
12.13 | % | 07/01/18 | 2,154 | 2,304,780 | |||||||||||
Goodman Networks Inc.(h) |
13.13 | % | 07/01/18 | 2,600 | 2,769,000 | |||||||||||
Wind Telecomunicazioni S.p.A. (Italy)(h) |
6.50 | % | 04/30/20 | 256 | 257,280 | |||||||||||
Wind Telecomunicazioni S.p.A. (Italy)(h) |
7.25 | % | 02/15/18 | 1,612 | 1,660,360 | |||||||||||
Windstream Corp. |
7.50 | % | 06/01/22 | 1,484 | 1,476,580 | |||||||||||
Windstream Corp. |
6.38 | % | 08/01/23 | 17 | 15,470 | |||||||||||
8,483,470 | ||||||||||||||||
Utilities0.27% | ||||||||||||||||
Calpine Corp.(h) |
7.88 | % | 01/15/23 | | 277 | |||||||||||
Calpine Corp.(h) |
7.50 | % | 02/15/21 | 3,185 | 3,383,738 | |||||||||||
NRG Energy Inc. |
7.63 | % | 05/15/19 | 1,366 | 1,458,205 | |||||||||||
NRG Energy Inc. |
6.63 | % | 03/15/23 | 880 | 877,800 | |||||||||||
5,720,020 | ||||||||||||||||
Total Bonds and Notes |
73,482,172 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
23 Invesco Floating Rate Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Structured Products2.29% |
| |||||||||||||||
Apidos Cinco CDO (Cayman Islands)(h)(i) |
4.51 | % | 05/14/20 | $ | 345 | $ | 320,357 | |||||||||
Apidos CLO II (Cayman Islands)(h)(i) |
5.01 | % | 12/21/18 | 919 | 881,565 | |||||||||||
Apidos CLO IX (Cayman Islands)(h)(i) |
6.77 | % | 07/15/23 | 3,083 | 3,066,443 | |||||||||||
Apidos CLO X (Cayman Islands)(h)(i) |
6.52 | % | 10/30/22 | 1,367 | 1,336,338 | |||||||||||
Apidos CLO X (Cayman Islands)(i) |
6.52 | % | 10/30/22 | 1,750 | 1,710,748 | |||||||||||
Apidos CLO XI(h)(i) |
5.52 | % | 01/17/23 | 2,070 | 1,938,246 | |||||||||||
Apidos Quattro CDO (Cayman Islands)(h)(i) |
3.87 | % | 01/20/19 | 408 | 372,528 | |||||||||||
Ares XI CLO, Ltd.(h)(i) |
3.27 | % | 10/11/21 | 724 | 687,803 | |||||||||||
Atrium IV CDO Corp(h) |
9.18 | % | 06/08/19 | 205 | 208,040 | |||||||||||
Atrium X CDO(h)(i) |
4.78 | % | 07/16/25 | 3,742 | 3,333,354 | |||||||||||
Babson CLO Ltd.(i) |
3.52 | % | 01/18/21 | 1,034 | 924,010 | |||||||||||
Carlyle Global Market Strategies (Cayman Islands)(i) |
6.14 | % | 10/14/24 | 2,258 | 2,168,357 | |||||||||||
Columbus Nova CLO Ltd.(h)(i) |
3.86 | % | 05/16/19 | 429 | 382,899 | |||||||||||
Columbus Nova CLO Ltd.(h)(i) |
3.86 | % | 05/16/19 | 1,093 | 975,544 | |||||||||||
Flagship CLO VI(h)(i) |
5.02 | % | 06/10/21 | 3,254 | 3,057,438 | |||||||||||
Flagship CLO VI(h)(i) |
5.02 | % | 06/10/21 | 987 | 927,152 | |||||||||||
Four Corners CLO II, Ltd.(h)(i) |
2.11 | % | 01/26/20 | 310 | 288,576 | |||||||||||
Four Corners CLO II, Ltd.(h)(i) |
2.11 | % | 01/26/20 | 103 | 95,882 | |||||||||||
Gramercy Park CLO(h)(i) |
5.78 | % | 07/17/23 | 1,336 | 1,275,157 | |||||||||||
Halcyon Loan Investors CLO II, Ltd. (Cayman Islands)(h)(i) |
3.86 | % | 04/24/21 | 917 | 818,220 | |||||||||||
ING IM CLO 2012-3, Ltd.(h)(i) |
6.13 | % | 10/15/22 | 1,243 | 1,221,751 | |||||||||||
ING IM CLO 2012-4, Ltd.(h)(i) |
6.03 | % | 10/15/23 | 1,861 | 1,818,492 | |||||||||||
ING IM CLO 2013-1(h)(i) |
6.04 | % | 04/15/24 | 4,808 | 4,491,208 | |||||||||||
ING Investment Management CLO III, Ltd.(h)(i) |
3.77 | % | 12/13/20 | 1,188 | 1,068,711 | |||||||||||
ING Investment Management CLO IV, Ltd. (Cayman Islands)(h)(i) |
4.51 | % | 06/14/22 | 293 | 269,020 | |||||||||||
KKR Financial CLO 2012-1(h)(i) |
5.77 | % | 12/15/24 | 2,100 | 1,979,474 | |||||||||||
KKR Financial CLO 2013-1(i) |
4.75 | % | 07/15/25 | 2,461 | 2,217,107 | |||||||||||
Madison Park Funding IV Ltd.(h)(i) |
3.87 | % | 03/22/21 | 1,344 | 1,243,399 | |||||||||||
Octagon Investment Partners XVII Ltd. (Cayman Islands) |
4.87 | % | 10/25/25 | 980 | 880,152 | |||||||||||
Pacifica CDO VI, Ltd.(h)(i) |
4.01 | % | 08/15/21 | 565 | 502,309 | |||||||||||
Sierra CLO II Ltd.(i) |
3.77 | % | 01/22/21 | 733 | 629,287 | |||||||||||
Silverado CLO 2006-II Ltd.(h)(i) |
4.02 | % | 10/16/20 | 886 | 794,610 | |||||||||||
Slater Mill Loan Fund, LP(h)(i) |
5.76 | % | 08/17/22 | 1,108 | 1,058,009 | |||||||||||
Symphony CLO IX, Ltd.(h)(i) |
5.27 | % | 04/16/22 | 1,901 | 1,766,424 | |||||||||||
Symphony CLO VIII, Ltd.(h)(i) |
6.02 | % | 01/09/23 | 1,035 | 1,002,262 | |||||||||||
Symphony CLO XI(h)(i) |
5.52 | % | 01/17/25 | 2,640 | 2,471,977 | |||||||||||
Total Structured Products |
48,182,849 | |||||||||||||||
Shares | ||||||||||||||||
Common Stocks & Other Equity Interests0.36% |
| |||||||||||||||
Aerospace & Defense0.00% | ||||||||||||||||
ACTS Aero Technical Support & Services, Inc.(h)(j) |
122,977 | 1,230 | ||||||||||||||
Automotive0.01% | ||||||||||||||||
Dayco Products, LLC(h)(j) |
856 | 33,598 | ||||||||||||||
Dayco Products, LLC(h)(j) |
3,261 | 127,994 | ||||||||||||||
161,592 | ||||||||||||||||
Building & Development0.12% | ||||||||||||||||
Lake at Las Vegas Joint Venture, LLC, Class A (Acquired 04/28/10-07/15/10; Cost $664,569)(h)(j) |
518 | 0 | ||||||||||||||
Lake at Las Vegas Joint Venture, LLC, Class B (Acquired 06/30/10; Cost $3,408,940)(h)(j) |
4 | 0 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
24 Invesco Floating Rate Fund
Shares | Value | |||||||||||
Building & Development(continued) | ||||||||||||
Lake at Las Vegas Joint Venture, LLC, Class C, Wts. expiring 07/15/15, (Acquired 06/30/10; Cost $0)(h)(j) |
17 | $ | 0 | |||||||||
Lake at Las Vegas Joint Venture, LLC, Class D, Wts. expiring 07/15/15, (Acquired 06/30/10; Cost $0)(h)(j) |
24 | 0 | ||||||||||
Lake at Las Vegas Joint Venture, LLC, Class E, Wts. expiring 07/15/15, (Acquired 06/30/10; Cost $0)(h)(j) |
27 | 0 | ||||||||||
Lake at Las Vegas Joint Venture, LLC, Class F, Wts. expiring 07/15/15, (Acquired 06/30/10; Cost $0)(h)(j) |
30 | 0 | ||||||||||
Lake at Las Vegas Joint Venture, LLC, Class G, Wts. expiring 07/15/15, (Acquired 06/30/10; Cost $0)(h)(j) |
34 | 0 | ||||||||||
Stile Acquisition Corp. (Canada)(h)(j) |
53,093 | 2,601,557 | ||||||||||
United Subcontractors, Inc.(h)(j) |
4,840 | 4,840 | ||||||||||
2,606,397 | ||||||||||||
Cable & Satellite Television0.14% | ||||||||||||
Ion Media Networks, Inc.(h)(j) |
4,471 | 2,816,730 | ||||||||||
Chemicals & Plastics0.01% | ||||||||||||
Metokote Corp., Wts. expiring 11/22/23 (Acquired 12/05/11; Cost $0)(h)(j) |
61 | 106,598 | ||||||||||
Financial Intermediaries0.00% | ||||||||||||
Bankruptcy Management Solutions, Inc. (Acquired 06/27/13; Cost $15,075)(h)(k) |
335 | 15,079 | ||||||||||
Bankruptcy Management Solutions, Inc., Class A, Wts. expiring 06/27/18, (Acquired 06/27/13; Cost $0)(h)(k) |
19 | 0 | ||||||||||
Bankruptcy Management Solutions, Inc., Class B, Wts. expiring 06/27/18, (Acquired 06/27/13; Cost $0)(h)(k) |
21 | 0 | ||||||||||
Bankruptcy Management Solutions, Inc., Class C, Wts. expiring 06/27/18, (Acquired 06/27/13; Cost $0)(h)(k) |
31 | 0 | ||||||||||
15,079 | ||||||||||||
Forest Products0.00% | ||||||||||||
Xerium Technologies, Inc.(j) |
1,766 | 19,073 | ||||||||||
Leisure Goods, Activities & Movies0.00% | ||||||||||||
AMF Bowling Centers, Inc.(j) |
1,665 | 8,130 | ||||||||||
Lodging & Casinos0.02% | ||||||||||||
Twin River Worldwide Holdings, Inc., Class A(h)(j) |
18,663 | 443,246 | ||||||||||
Publishing0.04% | ||||||||||||
Endurance Business Media, Inc., Class A(h)(j) |
124 | 0 | ||||||||||
F&W Publications, Inc.(h)(k) |
288 | 36 | ||||||||||
F&W Publications, Inc., Wts. expiring 12/09/17(h)(k) |
559 | 70 | ||||||||||
Merrill Communications LLC, Class A(j) |
133,776 | 300,996 | ||||||||||
Tribune Co., Class A(k) |
9,050 | 539,380 | ||||||||||
840,482 | ||||||||||||
Surface Transport0.00% | ||||||||||||
U.S. Shipping Corp. (Acquired 09/28/07-09/30/09; Cost $87,805)(h)(j) |
87,805 | 43,929 | ||||||||||
U.S. Shipping Corp. (Acquired 09/07/28,09/30/09; Cost $0)(h)(j) |
6,189 | 0 | ||||||||||
43,929 | ||||||||||||
Telecommunications0.02% | ||||||||||||
FairPoint Communications, Inc.(j) |
44,928 | 419,628 | ||||||||||
Utilities0.00% | ||||||||||||
Bicent Power, LLC-Series A, Wts. expiring 08/21/22, (Acquired 08/21/12; Cost $0)(h)(j) |
101 | 0 | ||||||||||
Bicent Power, LLC-Series B, Wts. expiring 08/21/22, (Acquired 08/21/12; Cost $0)(h)(j) |
164 | 0 | ||||||||||
0 | ||||||||||||
Total Common Stocks & Other Equity Interests |
7,482,114 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
25 Invesco Floating Rate Fund
Shares | Value | |||||||||||
Preferred Stock0.00% | ||||||||||||
Building & Development0.00% | ||||||||||||
United Subcontractors, Inc.(k) |
5 | $ | 42,596 | |||||||||
Money Market Funds10.54% |
| |||||||||||
Liquid Assets PortfolioInstitutional Class(l) |
110,798,271 | 110,798,271 | ||||||||||
Premier PortfolioInstitutional Class(l) |
110,798,271 | 110,798,271 | ||||||||||
Total Money Market Funds |
221,596,542 | |||||||||||
TOTAL INVESTMENTS107.48% (Cost $2,263,846,252) |
|
2,260,475,505 | ||||||||||
OTHER ASSETS LESS LIABILITIES(7.48)% |
|
(157,261,079 | ) | |||||||||
NET ASSETS100.00% |
|
$ | 2,103,214,426 |
Investment Abbreviations:
CDO | Collateralized Debt Obligation | |
CLO | Collateralized Loan Obligation | |
LOC | Letter of Credit | |
PIK | Payment in Kind | |
Wts. | Warrants |
Notes to Schedule of Investments:
(a) | Variable rate senior loan interests are, at present, not readily marketable, not registered under the Securities Act of 1933, as amended (the 1933 Act) and may be subject to contractual and legal restrictions on sale. Senior secured corporate loans and senior secured debt securities in the Funds portfolio generally have variable rates which adjust to a base, such as the London Inter-Bank Offered Rate (LIBOR), on set dates, typically every 30 days but not greater than one year; and/or have interest rates that float at a margin above a widely recognized base lending rate such as the Prime Rate of a designated U.S. bank. |
(b) | Variable rate senior loan interests often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the senior secured floating rate interests will have an expected average life of three to five years. |
(c) | Defaulted security. Currently, the issuer is in default with respect to principal and interest payments. The aggregate value of these securities at August 31, 2013 was $305,316, which represented less than 1% of the Funds Net Assets. |
(d) | The borrower has filed for protection in federal bankruptcy court. |
(e) | All or a portion of this security is Payment-in-Kind. |
(f) | This floating rate interest will settle after August 31, 2013, at which time the interest rate will be determined. |
(g) | All or a portion of this holding is subject to unfunded loan commitments. Interest rate will be determined at the time of funding. See Note 1M and Note 7. |
(h) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the 1933 Act). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2013 was $84,069,879, which represented 4.00% of the Funds Net Assets. |
(i) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2013. |
(j) | Non-income producing securities acquired through the restructuring of senior loans. |
(k) | Non-income producing security acquired as part of a bankruptcy restructuring. |
(l) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
26 Invesco Floating Rate Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
27 Invesco Floating Rate Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Interest |
$ | 65,242,814 | ||
Dividends |
1,145,376 | |||
Dividends from affiliated money market funds |
112,485 | |||
Other income |
5,473,556 | |||
Total investment income |
71,974,231 | |||
Expenses: |
||||
Advisory fees |
8,189,146 | |||
Administrative services fees |
329,019 | |||
Custodian fees |
602,154 | |||
Distribution fees: |
||||
Class A |
1,565,144 | |||
Class C |
2,542,936 | |||
Class R |
12,120 | |||
Interest, facilities and maintenance fees |
240,310 | |||
Transfer agent fees A, C, R & Y |
1,082,486 | |||
Transfer agent fees R5 |
10,442 | |||
Transfer agent fees R6 |
1,395 | |||
Trustees and officers fees and benefits |
58,097 | |||
Other |
525,585 | |||
Total expenses |
15,158,834 | |||
Less: Fees waived and expense offset arrangement(s) |
(167,318 | ) | ||
Net expenses |
14,991,516 | |||
Net investment income |
56,982,715 | |||
Realized and unrealized gain: |
||||
Net realized gain from investment securities |
14,606,234 | |||
Change in net unrealized appreciation of investment securities |
3,528,753 | |||
Net realized and unrealized gain |
18,134,987 | |||
Net increase in net assets resulting from operations |
$ | 75,117,702 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
28 Invesco Floating Rate Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income |
$ | 56,982,715 | $ | 40,368,760 | ||||
Net realized gain |
14,606,234 | 6,889,134 | ||||||
Change in net unrealized appreciation |
3,528,753 | 39,591,498 | ||||||
Net increase in net assets resulting from operations |
75,117,702 | 86,849,392 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(27,865,428 | ) | (19,919,096 | ) | ||||
Class C |
(13,389,847 | ) | (11,021,656 | ) | ||||
Class R |
(102,164 | ) | (71,261 | ) | ||||
Class Y |
(13,386,252 | ) | (6,619,187 | ) | ||||
Class R5 |
(770,560 | ) | (2,766,115 | ) | ||||
Class R6 |
(2,424,391 | ) | | |||||
Total distributions to shareholders from net investment income |
(57,938,642 | ) | (40,397,315 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
500,918,627 | (25,517,343 | ) | |||||
Class C |
255,350,771 | (23,017,848 | ) | |||||
Class R |
1,748,631 | 204,697 | ||||||
Class Y |
382,712,276 | 33,082,924 | ||||||
Class R5 |
(49,516,697 | ) | 6,259,440 | |||||
Class R6 |
62,452,814 | | ||||||
Net increase (decrease) in net assets resulting from share transactions |
1,153,666,422 | (8,988,130 | ) | |||||
Net increase in net assets |
1,170,845,482 | 37,463,947 | ||||||
Net assets: |
||||||||
Beginning of year |
932,368,944 | 894,904,997 | ||||||
End of year (includes undistributed net investment income of $(321,456) and $352,951, respectively) |
$ | 2,103,214,426 | $ | 932,368,944 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
29 Invesco Floating Rate Fund
Statement of Cash Flows
For the year ended August 31, 2013
Cash provided by (used in) operating activities: |
||||
Net increase in net assets resulting from operations |
$ | 75,117,702 | ||
Adjustments to reconcile net increase in net assets to net cash provided by (used in) operating activities: |
| |||
Purchases of investments |
(2,153,716,155 | ) | ||
Proceeds from sales of investments |
1,212,736,287 | |||
Amortization of loan fees |
938,739 | |||
Increase in receivables and other assets |
(4,243,081 | ) | ||
Accretion of discounts on investment securities |
(5,596,860 | ) | ||
Increase in accrued expenses and other payables |
667,703 | |||
Net realized gain from investment securities |
(14,606,234 | ) | ||
Net change in unrealized appreciation on investment securities |
(3,528,753 | ) | ||
Net cash provided by (used in) operating activities |
(892,230,652 | ) | ||
Cash provided by financing activities: |
||||
Dividends paid to shareholders |
(14,564,292 | ) | ||
Decrease in payable for amount due custodian |
(777,324 | ) | ||
Proceeds from shares of beneficial interest sold |
1,576,141,987 | |||
Disbursements from shares of beneficial interest reacquired |
(484,662,092 | ) | ||
Net cash provided by financing activities |
1,076,138,279 | |||
Net increase in cash and cash equivalents |
183,907,627 | |||
Cash and cash equivalents at beginning of period |
46,899,636 | |||
Cash and cash equivalents at end of period |
$ | 230,807,263 | ||
Non-cash financing activities: |
||||
Value of shares of beneficial interest issued in reinvestment of dividends paid to shareholders |
$ | 43,000,737 | ||
Supplemental disclosure of cash flow information: |
||||
Cash paid during the period for interest, facilities and maintenance fees |
$ | 341,621 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Floating Rate Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is total return, comprised of current income and capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. On September 24, 2012, Institutional Class shares were renamed Class R5 shares and the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Variable rate senior loan interests are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. |
Securities, including restricted securities, are valued according to the following policy. A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market (but not securities reported on the NASDAQ Stock Exchange) are valued based on the prices furnished by independent pricing services, in which case the securities may be considered fair valued, or by market makers. Each security reported on the NASDAQ Stock Exchange is valued at the NASDAQ Official Closing Price (NOCP) as of the close of the customary trading session on the valuation date or absent a NOCP, at the closing bid price.
30 Invesco Floating Rate Fund
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 (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations 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) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers 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 the settlement date. Facility fees received may be amortized over the life of the loan. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers 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. |
31 Invesco Floating Rate Fund
D. | Distributions Distributions from income are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the 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. | Interest, Facilities and Maintenance Fees Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining floating rate note obligations, if any. |
H. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
I. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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. |
J. | Other Risks The Fund may invest all or substantially of its assets in senior secured floating rate loans, senior secured debt securities or other securities rated below investment grade. These securities are generally considered to have speculative characteristics and are subject to greater risk of loss of principal and interest than higher rated securities. The value of lower quality debt securities and floating rate loans can be more volatile due to increased sensitivity to adverse issuer, political, regulatory, market or economic developments. |
The Fund invests in Corporate Loans from U.S. or non-U.S. companies (the Borrowers). The investment of the Fund in a Corporate Loan may take the form of participation interests or assignments. If the Fund purchases a participation interest from a syndicate of lenders (Lenders) or one of the participants in the syndicate (Participant), one or more of which administers the loan on behalf of all the Lenders (the Agent Bank), the Fund would be required to rely on the Lender that sold the participation interest not only for the enforcement of the Funds rights against the Borrower but also for the receipt and processing of payments due to the Fund under the Corporate Loans. As such, the Fund is subject to the credit risk of the Borrower and the Participant. Lenders and Participants interposed between the Fund and a Borrower, together with Agent Banks, are referred to as Intermediate Participants.
K. | Bank Loan Risk Disclosures Although the resale, or secondary market for floating rate loans has grown substantially over the past decade, both in overall size and number of market participants, there is no organized exchange or board of trade on which floating rate loans are traded. Instead, the secondary market for floating rate loans is a private, unregulated interdealer or interbank resale market. Such a market may therefore be subject to irregular trading activity, wide bid/ask spreads, and extended trade settlement periods. Similar to other asset classes, bank loan funds may be exposed to counterparty credit risk, or the risk than an entity with which the Fund has unsettled or open transactions may fail to or be unable to perform on its commitments. The Fund manages counterparty credit risk by entering into transactions only with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties. |
L. | Cash and Cash Equivalents For the purposes of the Statement of Cash Flows the Fund defines Cash and Cash Equivalents as cash (including foreign currency), money market funds and other investments held in lieu of cash and excludes investments made with cash collateral received. |
M. | Securities Purchased on a When-Issued and Delayed Delivery Basis The Fund may purchase and sell interests in Corporate Loans and Corporate Debt Securities and other portfolio securities on a when-issued and delayed delivery basis, with payment and delivery scheduled for a future date. No income accrues to the Fund on such interests or securities in connection with such transactions prior to the date the Fund actually takes delivery of such interests or securities. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of acquiring such securities, they may sell such securities prior to the settlement date. |
32 Invesco Floating Rate Fund
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||||
First $500 million | 0 | .65% | ||||
Next $4.5 billion | 0 | .60% | ||||
Next $5 billion | 0 | .575% | ||||
Over $10 billion |
0 | .55% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.50%, 2.00%, 1.75%, 1.25%, 1.25% and 1.25% of average daily net assets. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $166,666.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
Also, Invesco has entered into service agreements whereby State Street Bank and Trust Company (SSB) serves as the custodian, fund accountant and provides certain administrative services to the Fund.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (IDI) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Funds Class A, Class C and Class R shares (collectively, the Plans). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Funds average daily net assets of Class A shares, 0.75% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (FINRA) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended August 31, 2013, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $454,497 in front-end sales commissions from the sale of Class A shares and $49,406 and $34,955 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the
33 Invesco Floating Rate Fund
securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 225,184,345 | $ | 3,728,709 | $ | 208,198 | $ | 229,121,252 | ||||||||
Variable Rate Senior Loan Interests |
| 1,851,818,947 | 57,870,285 | 1,909,689,232 | ||||||||||||
Bonds and Notes |
| 73,482,172 | | 73,482,172 | ||||||||||||
Structured Products |
| 48,182,849 | | 48,182,849 | ||||||||||||
Total Investments |
$ | 225,184,345 | $ | 1,977,212,677 | $ | 58,078,483 | $ | 2,260,475,505 |
A reconciliation of Level 3 investments is presented when the Fund had a significant amount of Level 3 investments at the beginning and/or end of the reporting period in relation to net assets.
The following is a reconciliation of the fair valuations using significant unobservable inputs (Level 3) during the year ended August 31, 2013:
Beginning Balance, as of August 31, 2012 |
Purchases | Sales | Accrued discounts/ premiums |
Net realized gain |
Net change in unrealized appreciation |
Transfers into Level 3 |
Transfers out of Level 3 |
Ending Balance, as of August 31, 2013 |
||||||||||||||||||||||||||||
Variable Rate Senior Loan Interests |
$ | | $ | 48,433,729 | $ | (4,228,759 | ) | $ | 62,752 | $ | 23,027 | $ | 577,056 | $ | 13,002,480 | $ | | $ | 57,870,285 | |||||||||||||||||
Equity |
102,506 | 15,075 | | | | 89,382 | 1,235 | | 208,198 | |||||||||||||||||||||||||||
Total |
$ | 102,506 | $ | 48,448,804 | $ | (4,228,759 | ) | $ | 62,752 | $ | 23,027 | $ | 666,438 | $ | 13,003,715 | $ | | $ | 58,078,483 |
The Variable Rate Senior Loan Interests determined to be level 3 at the end of the reporting period were valued utilizing quotes from a third-party vendor pricing service. Investments in Variable Rate Senior Loan Interests were transferred from Level 2 to Level 3 due to third-party vendor quotations utilizing single market quotes and was assumed to have occurred at the end of the reporting period. A significant change in third-party pricing information could result in a significantly lower or higher value in Level 3 investments.
NOTE 4Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $652.
NOTE 5Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6Borrowings
Effective July 24, 2013, the Board of Trustees of the Fund approved a revolving line of credit agreement with SSB in which the Fund may borrow up to the lesser of (1) $300,000,000 or (2) the limits set by its prospectus for borrowings. This agreement has been renewed and will expire on July 24, 2014. Prior to July 24, 2013, the revolving line of credit was $150,000,000.
Additionally, the Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
34 Invesco Floating Rate Fund
NOTE 7Unfunded Loan Commitments
The Fund invests in participations, assignments, or acts as a party to the primary lending syndicate of a Senior Loan interest to corporations, partnerships, and other entities. When the Fund purchases a participation of a Senior Loan interest, the Fund typically enters into a contractual agreement with the lender or other third party selling the participation, but not with the borrower directly. As such, the Fund assumes the credit risk of the borrower, selling participant or other persons interpositioned between the Fund and the borrower.
At the year ended August 31, 2013, the following sets forth the selling participants with respect to interest in Senior Loans purchased by the Fund on a participation basis.
Selling Participant | Principal Amount |
Value | ||||||
Goldman Sachs Lending Partners LLC |
$ | 1,572,681 | $ | 1,478,320 |
As of August 31, 2013, the Fund had unfunded loan commitments, which could be extended at the option of the borrower, pursuant to the following loan agreements with the following borrowers:
Borrower | Principal Amount |
Value | ||||||||
Davids Bridal, Inc. |
Revolver Loan | $ | 1,572,681 | $ | 1,478,320 | |||||
Delta Air Lines, Inc. |
Revolver Loan | 7,785,030 | 7,395,779 | |||||||
Lake at Las Vegas Joint Venture, LLC |
Revolver Loan | 10,794 | 4,524 | |||||||
Media General, Inc. |
Term Loan | 4,758,668 | 4,776,466 | |||||||
Reynolds Group Holdings, Inc. |
Revolver Loan | 3,986,510 | 3,982,165 | |||||||
West Corp. |
Revolver Loan | 1,747,822 | 1,642,952 | |||||||
$ | 19,861,505 | $ | 19,280,206 |
NOTE 8Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 57,938,642 | $ | 40,397,315 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 740,864 | ||
Net unrealized appreciation (depreciation) investments |
(5,708,604 | ) | ||
Net unrealized appreciation (depreciation) investments matured |
(157,217 | ) | ||
Temporary book/tax differences |
(124,364 | ) | ||
Capital loss carryforward |
(6,039,554 | ) | ||
Shares of beneficial interest |
2,114,503,301 | |||
Total net assets |
$ | 2,103,214,426 |
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) difference is attributable primarily to wash sales, book to tax accretion and amortization differences.
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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
35 Invesco Floating Rate Fund
The Fund utilized $13,715,292 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2017 |
$ | 6,039,554 | $ | | $ | 6,039,554 |
* | 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 9Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $2,346,963,715 and $1,241,340,398, 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 |
$ | 17,045,761 | ||
Aggregate unrealized (depreciation) of investment securities |
(22,754,365 | ) | ||
Net unrealized appreciation (depreciation) of investment securities |
$ | (5,708,604 | ) | |
Cost of investments for tax purposes is $2,266,184,109. |
NOTE 10Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of the sale of bonds with amortization, on August 31, 2013, undistributed net investment income was increased by $281,520 and undistributed net realized gain (loss) was decreased by $281,520. This reclassification had no effect on the net assets of the Fund.
NOTE 11Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
85,809,233 | $ | 681,689,852 | 22,275,912 | $ | 170,426,665 | ||||||||||
Class C |
39,732,283 | 314,470,469 | 5,871,052 | 44,618,527 | ||||||||||||
Class R |
282,129 | 2,247,568 | 86,374 | 660,015 | ||||||||||||
Class Y |
65,890,315 | 522,776,943 | 12,131,084 | 92,783,961 | ||||||||||||
Class R5 |
1,652,090 | 13,075,361 | 1,687,281 | 12,812,506 | ||||||||||||
Class R6(b) |
7,948,789 | 62,499,889 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
2,577,561 | 20,453,288 | 1,902,814 | 14,507,416 | ||||||||||||
Class C |
1,263,362 | 9,972,285 | 1,032,010 | 7,833,248 | ||||||||||||
Class R |
12,477 | 99,053 | 8,616 | 65,877 | ||||||||||||
Class Y |
1,196,684 | 9,480,543 | 509,053 | 3,887,695 | ||||||||||||
Class R5 |
72,079 | 571,177 | 357,609 | 2,728,198 | ||||||||||||
Class R6 |
305,796 | 2,424,391 | | | ||||||||||||
Reacquired:(c) |
||||||||||||||||
Class A |
(25,392,869 | ) | (201,224,513 | ) | (27,781,004 | ) | (210,451,424 | ) | ||||||||
Class C |
(8,754,185 | ) | (69,091,983 | ) | (10,015,718 | ) | (75,469,623 | ) | ||||||||
Class R |
(75,449 | ) | (597,990 | ) | (68,852 | ) | (521,195 | ) | ||||||||
Class Y |
(18,876,729 | ) | (149,545,210 | ) | (8,435,063 | ) | (63,588,732 | ) | ||||||||
Class R5 |
(8,025,950 | ) | (63,163,235 | ) | (1,232,413 | ) | (9,281,264 | ) | ||||||||
Class R6 |
(311,797 | ) | (2,471,466 | ) | | | ||||||||||
Net increase (decrease) in share activity |
145,305,819 | $ | 1,153,666,422 | (1,671,245 | ) | $ | (8,988,130 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 69% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
(c) | Net of redemption fees of $21,733 allocated among the classes based on relative net assets of each class for the year ended August 31, 2012. |
36 Invesco Floating Rate Fund
NOTE 12Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset
value, end of period(b) |
Total return(c) |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(d) |
|||||||||||||||||||||||||||||||||||||
Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 7.77 | $ | 0.35 | $ | 0.17 | $ | 0.52 | $ | (0.36 | ) | $ | 7.93 | 6.83 | % | $ | 957,442 | 1.08 | %(e)(f) | 1.09 | %(e)(f) | 4.36 | %(e) | 97 | % | |||||||||||||||||||||||
Year ended 08/31/12 |
7.36 | 0.37 | 0.41 | 0.78 | (0.37 | ) | 7.77 | 10.75 | 448,142 | 1.11 | (f) | 1.11 | (f) | 4.80 | 82 | |||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.47 | 0.35 | (0.11 | ) | 0.24 | (0.35 | ) | 7.36 | 3.07 | 450,750 | 0.99 | (f) | 1.00 | (f) | 4.53 | 152 | ||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
7.09 | 0.40 | 0.39 | (g) | 0.79 | (0.41 | ) | 7.47 | 11.28 | (g) | 359,476 | 1.12 | (f) | 1.14 | (f) | 5.34 | 106 | |||||||||||||||||||||||||||||||
Year ended 08/31/09 |
7.99 | 0.41 | (0.89 | ) | (0.48 | ) | (0.42 | ) | 7.09 | (4.97 | ) | 218,448 | 1.24 | (f) | 1.25 | (f) | 6.50 | 52 | ||||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
7.73 | 0.31 | 0.18 | 0.49 | (0.32 | ) | 7.90 | 6.45 | 518,948 | 1.58 | (e)(f) | 1.59 | (e)(f) | 3.86 | (e) | 97 | ||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.32 | 0.33 | 0.41 | 0.74 | (0.33 | ) | 7.73 | 10.24 | 258,800 | 1.61 | (f) | 1.61 | (f) | 4.30 | 82 | |||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.44 | 0.31 | (0.12 | ) | 0.19 | (0.31 | ) | 7.32 | 2.41 | 267,796 | 1.49 | (f) | 1.50 | (f) | 4.03 | 152 | ||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
7.06 | 0.36 | 0.39 | (g) | 0.75 | (0.37 | ) | 7.44 | 10.75 | (g) | 189,966 | 1.62 | (f) | 1.64 | (f) | 4.84 | 106 | |||||||||||||||||||||||||||||||
Year ended 08/31/09 |
7.97 | 0.38 | (0.90 | ) | (0.52 | ) | (0.39 | ) | 7.06 | (5.61 | ) | 103,975 | 1.74 | (f) | 1.75 | (f) | 6.00 | 52 | ||||||||||||||||||||||||||||||
Class R |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
7.79 | 0.33 | 0.17 | 0.50 | (0.34 | ) | 7.95 | 6.57 | 3,559 | 1.33 | (e)(f) | 1.34 | (e)(f) | 4.11 | (e) | 97 | ||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.37 | 0.35 | 0.42 | 0.77 | (0.35 | ) | 7.79 | 10.61 | 1,779 | 1.36 | (f) | 1.36 | (f) | 4.55 | 82 | |||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.49 | 0.33 | (0.12 | ) | 0.21 | (0.33 | ) | 7.37 | 2.68 | 1,491 | 1.24 | (f) | 1.25 | (f) | 4.28 | 152 | ||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
7.10 | 0.39 | 0.39 | (g) | 0.78 | (0.39 | ) | 7.49 | 11.15 | (g) | 1,080 | 1.37 | (f) | 1.39 | (f) | 5.09 | 106 | |||||||||||||||||||||||||||||||
Year ended 08/31/09 |
8.00 | 0.40 | (0.89 | ) | (0.49 | ) | (0.41 | ) | 7.10 | (5.19 | ) | 427 | 1.49 | (f) | 1.50 | (f) | 6.25 | 52 | ||||||||||||||||||||||||||||||
Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
7.76 | 0.37 | 0.17 | 0.54 | (0.38 | ) | 7.92 | 7.10 | 550,974 | 0.83 | (e)(f) | 0.84 | (e)(f) | 4.61 | (e) | 97 | ||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.34 | 0.38 | 0.42 | 0.80 | (0.38 | ) | 7.76 | 11.19 | 165,609 | 0.86 | (f) | 0.86 | (f) | 5.05 | 82 | |||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.46 | 0.37 | (0.12 | ) | 0.25 | (0.37 | ) | 7.34 | 3.19 | 125,900 | 0.74 | (f) | 0.75 | (f) | 4.78 | 152 | ||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
7.07 | 0.42 | 0.39 | (g) | 0.81 | (0.42 | ) | 7.46 | 11.72 | (g) | 93,479 | 0.87 | (f) | 0.89 | (f) | 5.59 | 106 | |||||||||||||||||||||||||||||||
Year ended 08/31/09(h) |
7.29 | 0.41 | (0.24 | ) | 0.17 | (0.39 | ) | 7.07 | 3.48 | 20,176 | 1.00 | (f)(i) | 1.00 | (f)(i) | 6.74 | (i) | 52 | |||||||||||||||||||||||||||||||
Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
7.77 | 0.37 | 0.18 | 0.55 | (0.38 | ) | 7.94 | 7.26 | 9,260 | 0.81 | (e)(f) | 0.82 | (e)(f) | 4.63 | e) | 97 | ||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.36 | 0.39 | 0.41 | 0.80 | (0.39 | ) | 7.77 | 11.13 | 58,039 | 0.77 | (f) | 0.77 | (f) | 5.14 | 82 | |||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.47 | 0.38 | (0.12 | ) | 0.26 | (0.37 | ) | 7.36 | 3.40 | 48,967 | 0.68 | (f) | 0.69 | (f) | 4.84 | 152 | ||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
7.09 | 0.42 | 0.39 | (g) | 0.81 | (0.43 | ) | 7.47 | 11.65 | (g) | 37,580 | 0.79 | (f) | 0.81 | (f) | 5.67 | 106 | |||||||||||||||||||||||||||||||
Year ended 08/31/09 |
7.99 | 0.44 | (0.89 | ) | (0.45 | ) | (0.45 | ) | 7.09 | (4.62 | ) | 38,720 | 0.88 | (f) | 0.89 | (f) | 6.86 | 52 | ||||||||||||||||||||||||||||||
Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(h) |
7.84 | 0.35 | 0.11 | 0.46 | (0.36 | ) | 7.94 | 6.01 | 63,032 | 0.76 | (e)(f)(i) | 0.77 | (e)(f)(i) | 4.68 | (e)(i) | 97 |
(a) | Calculated using average shares outstanding. |
(b) | For the fiscal years ended August 31, 2012 and prior, amounts include redemption fees added to shares of beneficial interest which were less than $0.005 per share. |
(c) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(d) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(e) | Ratios are based on average daily net assets (000s omitted) of $626,058, $339,058, $2,424, $290,403, $15,404 and $53,196 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(f) | Ratio includes line of credit expense of 0.02%, 0.03%, 0.01%, 0.02% and 0.02% for the years ended August 31, 2013, August 31, 2012, August 31, 2011, August 31, 2010, and August 31, 2009, respectively. |
(g) | Includes the impact of the valuation policy on Corporate Loans effective January 1, 2010. Had the policy change not occurred, Net gains on securities (both realized and unrealized) per share would have been $0.33, $0.33, $0.33, $0.33 and $0.33 for Class A, Class C, Class R, Class Y and Class R5 shares, respectively, and total returns would have been lower. |
(h) | Commencement date of October 3, 2008 and September 24, 2012 for Class Y and Class R6, respectively. |
(i) | Annualized. |
37 Invesco Floating Rate Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Floating Rate Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations, of changes in net assets, of cash flows and the financial highlights present fairly, in all material respects, the financial position of Invesco Floating Rate Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, its cash flows for the year then ended and the financial highlights for each of the five years in the period then ended, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 29, 2013
Houston, Texas
38 Invesco Floating Rate Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period 2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,021.40 | $ | 5.45 | $ | 1,019.81 | $ | 5.45 | 1.07 | % | ||||||||||||
C | 1,000.00 | 1,018.80 | 7.99 | 1,017.29 | 7.98 | 1.57 | ||||||||||||||||||
R | 1,000.00 | 1,020.10 | 6.72 | 1,018.55 | 6.72 | 1.32 | ||||||||||||||||||
Y | 1,000.00 | 1,022.70 | 4.18 | 1,021.07 | 4.18 | 0.82 | ||||||||||||||||||
R5 | 1,000.00 | 1,022.70 | 4.28 | 1,020.97 | 4.28 | 0.84 | ||||||||||||||||||
R6 | 1,000.00 | 1,023.10 | 3.77 | 1,021.48 | 3.77 | 0.74 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
39 Invesco Floating Rate Fund
Approval of Investment Advisory and Sub-Advisory Contracts
40 Invesco Floating Rate Fund
41 Invesco Floating Rate Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
1.96 | % | ||
Corporate Dividends Received Deduction* |
1.95 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
42 Invesco Floating Rate Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Floating Rate Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Floating Rate Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Floating Rate Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Floating Rate Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
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SEC file numbers: 811-09913 and 333-36074 FLR-AR-1 Invesco Distributors, Inc. |
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Annual Report to Shareholders | August 31, 2013 | |||
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Invesco Global Real Estate Income Fund | ||||
Nasdaq: A: ASRAX ¡ B: SARBX ¡ C: ASRCX ¡ Y: ASRYX ¡ R5: ASRIX ¡ R6: ASRFX |
Letters to Shareholders
Phillip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US |
Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 Invesco Global Real Estate Income Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent legal counsel and |
review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Global Real Estate Income Fund
Managements Discussion of Fund Performance
4 Invesco Global Real Estate Income Fund
5 Invesco Global Real Estate Income Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
6 Invesco Global Real Estate Income Fund
7 Invesco Global Real Estate Income Fund
Invesco Global Real Estate Income Funds investment objective is current income and, secondarily, capital appreciation.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Global Real Estate Income Fund
9 Invesco Global Real Estate Income Fund
Schedule of Investments
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Global Real Estate Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Global Real Estate Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Global Real Estate Income Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Global Real Estate Income Fund
Investment Abbreviations:
AUD | Australian Dollar | |
Conv. | Convertible | |
Ctfs. | Certificates | |
GBP | British Pound | |
Gtd. | Guaranteed | |
Pfd. | Preferred | |
REIT | Real Estate Investment Trust | |
PLUS | Perpetual Listed Unsecured Securities | |
Sr. | Senior | |
Sub. | Subordinated | |
Unsec. | Unsecured |
Notes to Schedule of Investments:
(a) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the 1933 Act). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at August 31, 2013 was $62,999,913, which represented 6.17% of the Fund's Net Assets. |
(b) | Interest or dividend rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2013. |
(c) | Foreign denominated security. Principal amount is denominated in currency indicated. |
(d) | Perpetual bond with no specified maturity date. |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Global Real Estate Income Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Global Real Estate Income Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $1,928,407) |
$ | 35,962,663 | ||
Dividends from affiliated money market funds |
38,709 | |||
Interest (net of foreign withholding taxes of $ 14,800) |
9,209,460 | |||
Total investment income |
45,210,832 | |||
Expenses: |
||||
Advisory fees |
6,353,758 | |||
Administrative services fees |
222,509 | |||
Custodian fees |
178,571 | |||
Distribution fees: |
||||
Class A |
1,303,587 | |||
Class B |
18,790 | |||
Class C |
811,110 | |||
Transfer Agent Fees A, B, C and Y |
1,399,254 | |||
Transfer agent fees R5 |
27,353 | |||
Transfer agent fees R6 |
680 | |||
Trustees and officers fees and benefits |
46,322 | |||
Other |
531,176 | |||
Total expenses |
10,893,110 | |||
Less: Fees waived and expense offset arrangement(s) |
(58,380 | ) | ||
Net expenses |
10,834,730 | |||
Net investment income |
34,376,102 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain from: |
||||
Investment securities |
20,306,651 | |||
Foreign currencies |
114,176 | |||
20,420,827 | ||||
Change in net unrealized appreciation (depreciation) of: |
||||
Investment securities |
(78,715,545 | ) | ||
Foreign currencies |
(34,886 | ) | ||
Foreign currency contracts |
(86 | ) | ||
(78,750,517 | ) | |||
Net realized and unrealized gain (loss) |
(58,329,690 | ) | ||
Net increase (decrease) in net assets resulting from operations |
$ | (23,953,588 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco Global Real Estate Income Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
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Net investment income |
$ | 34,376,102 | $ | 17,796,301 | ||||
Net realized gain |
20,420,827 | 5,140,914 | ||||||
Change in net unrealized appreciation (depreciation) |
(78,750,517 | ) | 23,779,964 | |||||
Net increase (decrease) in net assets resulting from operations |
(23,953,588 | ) | 46,717,179 | |||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(25,666,681 | ) | (10,974,958 | ) | ||||
Class B |
(85,901 | ) | (66,882 | ) | ||||
Class C |
(3,226,317 | ) | (1,252,416 | ) | ||||
Class Y |
(11,045,614 | ) | (2,665,994 | ) | ||||
Class R5 |
(1,588,351 | ) | (1,805,834 | ) | ||||
Class R6 |
(305,539 | ) | | |||||
Total distributions from net investment income |
(41,918,403 | ) | (16,766,084 | ) | ||||
Share transactionsnet: |
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Class A |
336,455,070 | 96,606,755 | ||||||
Class B |
313,925 | (276,855 | ) | |||||
Class C |
72,059,586 | 15,641,770 | ||||||
Class Y |
173,687,611 | 82,201,168 | ||||||
Class R5 |
(5,198,420 | ) | (7,962,465 | ) | ||||
Class R6 |
(509,175 | ) | | |||||
Net increase in net assets resulting from share transactions |
576,808,597 | 186,210,373 | ||||||
Net increase in net assets |
510,936,606 | 216,161,468 | ||||||
Net assets: |
||||||||
Beginning of year |
509,460,454 | 293,298,986 | ||||||
End of year (includes undistributed net investment income of $3,702,802 and $3,560,721, respectively) |
$ | 1,020,397,060 | $ | 509,460,454 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Global Real Estate Income Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is current income and, secondarily, capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class Y, Class R5 and Class R6. On September 24, 2012, Institutional Class shares were renamed Class R5 shares and the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on
17 Invesco Global Real Estate Income Fund
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 (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices will be used to value debt obligations and corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Paydown gains and losses on mortgage and asset-backed securities are recorded as adjustments to interest income. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available timely from the REIT, the recharacterization will be based on available information which may include the previous years allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital in the Statement of Changes in Net Assets. These recharacterizations are reflected in the accompanying financial statements.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers 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, |
18 Invesco Global Real Estate Income Fund
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, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
J. | Foreign Currency Contracts The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to lock in the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
K. | Other Risks The Funds 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 Funds investments may tend to rise and fall more rapidly. |
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. Property values may fall due to increasing vacancies or declining rents resulting from economic, legal, cultural or technological developments.
19 Invesco Global Real Estate Income Fund
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $250 million |
0.75% | |||
Next $250 million |
0.74% | |||
Next $500 million |
0.73% | |||
Next $1.5 billion |
0.72% | |||
Next $2.5 billion |
0.71% | |||
Next $2.5 billion |
0.70% | |||
Next $2.5 billion |
0.69% | |||
Over $10 billion |
0.68% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursemnt (excluding certain items discussed below) of Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 1.75%, 1.75% and 1.75% of average daily net assets. In determining the Adviser's obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursemnt to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $57,127.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trust's Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (IDI) to serve as the distributor for the Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Funds Class A, Class B and Class C shares (collectively, the Plans). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Funds average daily net assets of Class A shares and 1.00% of the average daily net assets of Class B and Class C shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (FINRA) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the year ended August 31, 2013, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $602,366 in front-end sales commissions from the sale of Class A shares and $85, $1,635 and $13,921 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the
20 Invesco Global Real Estate Income Fund
securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
During the year ended August 31, 2013, there were transfers from Level 1 to Level 2 of $47,431,739 and from Level 2 to Level 1 of $28,692,392, due to foreign fair value adjustments, additionally, there were transfers from Level 2 to Level 1 of $4,137,143, due to securities trading on an exchange.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Australia |
$ | 5,291,065 | $ | 57,287,736 | $ | | $ | 62,578,801 | ||||||||
Brazil |
| 6,020,426 | | 6,020,426 | ||||||||||||
Canada |
47,315,081 | | | 47,315,081 | ||||||||||||
China |
| 18,773,995 | | 18,773,995 | ||||||||||||
France |
9,482,986 | 15,275,653 | | 24,758,639 | ||||||||||||
Germany |
7,091,345 | | | 7,091,345 | ||||||||||||
Hong Kong |
2,643,114 | 15,027,582 | | 17,670,696 | ||||||||||||
Ireland |
| 4,443,662 | | 4,443,662 | ||||||||||||
Japan |
11,407,775 | 65,664,263 | | 77,072,038 | ||||||||||||
New Zealand |
2,215,532 | | | 2,215,532 | ||||||||||||
Singapore |
| 39,834,158 | | 39,834,158 | ||||||||||||
South Africa |
6,650,992 | 3,140,617 | | 9,791,609 | ||||||||||||
Sweden |
2,082,597 | | | 2,082,597 | ||||||||||||
United Kingdom |
43,583,846 | 26,393,306 | | 69,977,152 | ||||||||||||
United States |
473,225,273 | 148,974,255 | | 622,199,528 | ||||||||||||
Total Investments |
$ | 610,989,606 | $ | 400,835,653 | $ | | $ | 1,011,825,259 |
NOTE 4Derivative Investments
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||
Foreign Currency Contracts |
||||
Change in Unrealized Appreciation (Depreciation) |
||||
Currency risk |
$ | (86 | ) |
NOTE 5Expense Offset Arrangement(s)
The expense offset arrangements are comprised of (1) transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions and (2) custodian credits which result from periodic overnight cash balances at the custodian. For the year ended August 31, 2013, the Fund received credits from these arrangements, which resulted in the reduction of the Funds total expenses of $1,253.
NOTE 6Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
21 Invesco Global Real Estate Income Fund
NOTE 7Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 41,918,403 | $ | 16,766,084 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 11,020,876 | ||
Undistributed long-term gain |
11,976,125 | |||
Net unrealized appreciation (depreciation) investments |
(52,898,488 | ) | ||
Net unrealized appreciation (depreciation) other investments |
(15,352 | ) | ||
Temporary book/tax differences |
(109,910 | ) | ||
Shares of beneficial interest |
1,050,423,809 | |||
Total net assets |
$ | 1,020,397,060 |
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) difference is attributable primarily to wash sales and passive foreign investments.
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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $180,408 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund does not have a capital loss carryforward as of August 31, 2013.
NOTE 9Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $1,073,933,225 and $511,351,215, 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 |
$ | 21,920,282 | ||
Aggregate unrealized (depreciation) of investment securities |
(74,818,770 | ) | ||
Net unrealized appreciation (depreciation) of investment securities |
$ | (52,898,488 | ) |
Cost of investments for tax purposes is $1,064,723,747.
NOTE 10Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of foreign currency transactions and passive foreign investment companies, on August 31, 2013, undistributed net investment income was increased by $7,684,382, undistributed net realized gain was decreased by $7,575,089 and shares of beneficial interest was decreased by $109,293. This reclassification had no effect on the net assets of the Fund.
22 Invesco Global Real Estate Income Fund
NOTE 11Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
51,782,661 | $ | 473,071,246 | 18,683,381 | $ | 159,199,288 | ||||||||||
Class B |
92,521 | 840,179 | 46,872 | 393,823 | ||||||||||||
Class C |
9,354,648 | 86,167,442 | 2,369,846 | 20,158,359 | ||||||||||||
Class Y |
28,585,952 | 260,842,380 | 11,969,982 | 101,722,029 | ||||||||||||
Class R5 |
1,792,319 | 16,207,911 | 2,439,672 | 20,294,421 | ||||||||||||
Class R6(b) |
1,058,633 | 9,542,340 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
2,262,975 | 20,143,201 | 943,687 | 7,809,770 | ||||||||||||
Class B |
8,184 | 72,954 | 6,776 | 55,840 | ||||||||||||
Class C |
310,380 | 2,758,916 | 123,735 | 1,024,338 | ||||||||||||
Class Y |
1,013,301 | 9,002,041 | 246,272 | 2,050,366 | ||||||||||||
Class R5 |
165,684 | 1,478,806 | 198,667 | 1,639,410 | ||||||||||||
Class R6 |
34,061 | 305,436 | | | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
34,937 | 321,041 | 34,166 | 290,854 | ||||||||||||
Class B |
(34,993 | ) | (321,041 | ) | (34,221 | ) | (290,854 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(17,336,317 | ) | (157,080,418 | ) | (8,381,414 | ) | (70,693,157 | ) | ||||||||
Class B |
(30,996 | ) | (278,167 | ) | (51,839 | ) | (435,664 | ) | ||||||||
Class C |
(1,869,410 | ) | (16,866,772 | ) | (658,315 | ) | (5,540,927 | ) | ||||||||
Class Y |
(10,617,706 | ) | (96,156,810 | ) | (2,540,668 | ) | (21,571,227 | ) | ||||||||
Class R5 |
(2,548,470 | ) | (22,885,137 | ) | (3,552,032 | ) | (29,896,296 | ) | ||||||||
Class R6 |
(1,085,640 | ) | (10,356,951 | ) | | | ||||||||||
Net increase in share activity |
62,972,724 | $ | 576,808,597 | 21,844,567 | $ | 186,210,373 |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 63% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
23 Invesco Global Real Estate Income Fund
NOTE 12Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||
Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 8.97 | $ | 0.36 | $ | (0.31 | ) | $ | 0.05 | $ | (0.50 | ) | $ | 8.52 | 0.43 | % | $ | 615,876 | 1.26 | %(d) | 1.27 | %(d) | 4.00 | %(d) | 63 | % | ||||||||||||||||||||||
Year ended 08/31/12 |
8.39 | 0.41 | 0.57 | 0.98 | (0.40 | ) | 8.97 | (e) | 12.19 | 318,464 | 1.31 | 1.31 | 4.82 | 49 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.77 | 0.32 | 0.61 | 0.93 | (0.31 | ) | 8.39 | 12.11 | 203,100 | 1.30 | 1.30 | 3.83 | 101 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.62 | 0.28 | 1.14 | 1.42 | (0.27 | ) | 7.77 | 21.85 | 147,568 | 1.37 | 1.38 | 3.93 | 77 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
8.38 | 0.27 | (1.75 | ) | (1.48 | ) | (0.28 | ) | 6.62 | (17.12 | ) | 94,979 | 1.73 | 1.74 | 4.83 | 59 | ||||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.95 | 0.29 | (0.30 | ) | (0.01 | ) | (0.43 | ) | 8.51 | (0.23 | ) | 1,822 | 2.01 | (d) | 2.02 | (d) | 3.25 | (d) | 63 | |||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.36 | 0.34 | 0.59 | 0.93 | (0.34 | ) | 8.95 | (e) | 11.49 | 1,606 | 2.06 | 2.06 | 4.07 | 49 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.75 | 0.26 | 0.59 | 0.85 | (0.24 | ) | 8.36 | 11.15 | 1,772 | 2.05 | 2.05 | 3.08 | 101 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.60 | 0.23 | 1.14 | 1.37 | (0.22 | ) | 7.75 | 21.02 | 1,676 | 2.12 | 2.13 | 3.18 | 77 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
8.37 | 0.23 | (1.77 | ) | (1.54 | ) | (0.23 | ) | 6.60 | (17.91 | ) | 680 | 2.48 | 2.49 | 4.08 | 59 | ||||||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.95 | 0.29 | (0.30 | ) | (0.01 | ) | (0.43 | ) | 8.51 | (0.23 | ) | 108,878 | 2.01 | (d) | 2.02 | (d) | 3.25 | (d) | 63 | |||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.36 | 0.34 | 0.59 | 0.93 | (0.34 | ) | 8.95 | (e) | 11.49 | 44,790 | 2.06 | 2.06 | 4.07 | 49 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.75 | 0.26 | 0.59 | 0.85 | (0.24 | ) | 8.36 | 11.15 | 26,511 | 2.05 | 2.05 | 3.08 | 101 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.60 | 0.23 | 1.14 | 1.37 | (0.22 | ) | 7.75 | 21.02 | 16,692 | 2.12 | 2.13 | 3.18 | 77 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
8.38 | 0.23 | (1.78 | ) | (1.55 | ) | (0.23 | ) | 6.60 | (18.00 | ) | 4,296 | 2.48 | 2.49 | 4.08 | 59 | ||||||||||||||||||||||||||||||||
Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.95 | 0.39 | (0.32 | ) | 0.07 | (0.52 | ) | 8.50 | 0.68 | 270,196 | 1.01 | (d) | 1.02 | (d) | 4.25 | (d) | 63 | |||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.36 | 0.43 | 0.58 | 1.01 | (0.42 | ) | 8.95 | (e) | 12.62 | 114,525 | 1.06 | 1.06 | 5.07 | 49 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.75 | 0.34 | 0.60 | 0.94 | (0.33 | ) | 8.36 | 12.28 | 26,139 | 1.05 | 1.05 | 4.08 | 101 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.60 | 0.31 | 1.13 | 1.44 | (0.29 | ) | 7.75 | 22.21 | 22,047 | 1.12 | 1.13 | 4.18 | 77 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09(f) |
7.15 | 0.26 | (0.63 | ) | (0.37 | ) | (0.18 | ) | 6.60 | (4.23 | ) | 2,755 | 1.53 | (g) | 1.53 | (g) | 5.03 | (g) | 59 | |||||||||||||||||||||||||||||
Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.96 | 0.39 | (0.30 | ) | 0.09 | (0.53 | ) | 8.52 | 0.85 | 23,565 | 0.94 | (d) | 0.95 | (d) | 4.32 | (d) | 63 | |||||||||||||||||||||||||||||||
Year ended 08/31/12 |
8.38 | 0.44 | 0.57 | 1.01 | (0.43 | ) | 8.96 | (e) | 12.63 | 30,076 | 0.98 | 0.98 | 5.15 | 49 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
7.76 | 0.35 | 0.61 | 0.96 | (0.34 | ) | 8.38 | 12.52 | 35,777 | 0.96 | 0.96 | 4.17 | 101 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.62 | 0.32 | 1.13 | 1.45 | (0.31 | ) | 7.76 | 22.27 | 37,711 | 0.92 | 0.93 | 4.38 | 77 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
8.39 | 0.31 | (1.77 | ) | (1.46 | ) | (0.31 | ) | 6.62 | (16.75 | ) | 33,753 | 1.11 | 1.12 | 5.45 | 59 | ||||||||||||||||||||||||||||||||
Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(f) |
8.98 | 0.38 | (0.41 | ) | (0.03 | ) | (0.43 | ) | 8.52 | (0.49 | ) | 60 | 0.86 | (d)(g) | 0.87 | (d)(g) | 4.40 | (d)(g) | 63 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are based on average daily net assets (000s omitted) of $521,435, $1,879, $81,111, $223,189, $27,348 and $5,488 for Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. |
(f) | Commencement date of October 3, 2008 for Class Y shares and September 24, 2012 for Class R6 shares. |
(g) | Annualized. |
24 Invesco Global Real Estate Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust) and Shareholders of Invesco Global Real Estate Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Global Real Estate Income Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust) hereafter referred to as the Fund) at August 31, 2013 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 five years in the period then ended, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
25 Invesco Global Real Estate Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 940.10 | $ | 6.16 | $ | 1,018.85 | $ | 6.41 | 1.26 | % | ||||||||||||
B | 1,000.00 | 937.40 | 9.82 | 1,015.07 | 10.21 | 2.01 | ||||||||||||||||||
C | 1,000.00 | 936.30 | 9.81 | 1,015.07 | 10.21 | 2.01 | ||||||||||||||||||
Y | 1,000.00 | 941.10 | 4.94 | 1,020.11 | 5.14 | 1.01 | ||||||||||||||||||
R5 | 1,000.00 | 942.70 | 4.55 | 1,020.52 | 4.74 | 0.93 | ||||||||||||||||||
R6 | 1,000.00 | 943.10 | 4.07 | 1,021.02 | 4.23 | 0.83 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
26 Invesco Global Real Estate Income Fund
Approval of Investment Advisory and Sub-Advisory Contracts
27 Invesco Global Real Estate Income Fund
28 Invesco Global Real Estate Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
0.25 | % | ||
Corporate Dividends Received Deduction* |
0.00 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
29 Invesco Global Real Estate Income Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Global Real Estate Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Global Real Estate Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Global Real Estate Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Global Real Estate Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov. Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
| |
SEC file numbers: 811-09913 and 333-36074 GREI-AR-1 Invesco Distributors, Inc. |
Letters to Shareholders
|
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily accommodative monetary policies together with uncertainty about | |
who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter. Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change. Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you. |
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 | Invesco Growth and Income Fund |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent | ||
legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. |
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 | Invesco Growth and Income Fund |
Managements Discussion of Fund Performance
5 | Invesco Growth and Income Fund |
5 | Invesco Growth and Income Fund |
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
6 | Invesco Growth and Income Fund |
7 | Invesco Growth and Income Fund |
Invesco Growth and Income Funds investment objective is to seek income and long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 | Invesco Growth and Income Fund |
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Growth and Income Fund
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 & Poors. |
(b) | Non-income producing security. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Growth and Income Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Growth and Income Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $1,098,948) |
$ | 164,653,401 | ||
Dividends from affiliated money market funds |
469,510 | |||
Total investment income |
165,122,911 | |||
Expenses: |
||||
Advisory fees |
26,869,282 | |||
Administrative services fees |
706,779 | |||
Custodian fees |
199,607 | |||
Distribution fees: |
||||
Class A |
11,277,889 | |||
Class B |
287,654 | |||
Class C |
2,714,672 | |||
Class R |
800,153 | |||
Transfer agent fees A, B, C, R and Y |
12,588,307 | |||
Transfer agent fees R5 |
659,947 | |||
Transfer agent fees R6 |
6,827 | |||
Trustees and officers fees and benefits |
259,817 | |||
Other |
970,469 | |||
Total expenses |
57,341,403 | |||
Less: Fees waived and expense offset arrangement(s) |
(661,539 | ) | ||
Net expenses |
56,679,864 | |||
Net investment income |
108,443,047 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain (loss) from: |
||||
Investment securities (includes net gains from securities sold to affiliates of $555,165 and net gains from a redemption-in-kind of $32,433,272) |
350,816,899 | |||
Foreign currencies |
(1,997 | ) | ||
Foreign currency contracts |
(2,410,724 | ) | ||
Option contracts written |
1,183,509 | |||
349,587,687 | ||||
Change in net unrealized appreciation of: |
||||
Investment securities |
1,107,519,556 | |||
Foreign currencies |
1,138 | |||
Foreign currency contracts |
5,255,384 | |||
1,112,776,078 | ||||
Net realized and unrealized gain |
1,462,363,765 | |||
Net increase in net assets resulting from operations |
$ | 1,570,806,812 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Growth and Income Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
||||||||
Net investment income |
$ | 108,443,047 | $ | 118,111,860 | ||||
Net realized gain |
349,587,687 | 118,506,049 | ||||||
Change in net unrealized appreciation |
1,112,776,078 | 759,000,887 | ||||||
Net increase in net assets resulting from operations |
1,570,806,812 | 995,618,796 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(67,443,335 | ) | (59,605,705 | ) | ||||
Class B |
(1,795,917 | ) | (2,152,331 | ) | ||||
Class C |
(2,104,718 | ) | (1,777,886 | ) | ||||
Class R |
(1,994,383 | ) | (1,802,136 | ) | ||||
Class Y |
(28,763,044 | ) | (25,675,865 | ) | ||||
Class R5 |
(11,863,944 | ) | (8,285,467 | ) | ||||
Class R6 |
(2,246,832 | ) | | |||||
Total distributions from net investment income |
(116,212,173 | ) | (99,299,390 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
(374,596,526 | ) | (444,348,164 | ) | ||||
Class B |
(45,861,702 | ) | (67,147,189 | ) | ||||
Class C |
(17,556,960 | ) | (36,595,581 | ) | ||||
Class R |
(7,843,983 | ) | (19,883,547 | ) | ||||
Class Y |
(1,106,001 | ) | (243,908,937 | ) | ||||
Class R5 |
(101,402,342 | ) | 329,867,182 | |||||
Class R6 |
308,180,509 | | ||||||
Net increase (decrease) in net assets resulting from share transactions |
(240,187,005 | ) | (482,016,236 | ) | ||||
Net increase in net assets |
1,214,407,634 | 414,303,170 | ||||||
Net assets: |
||||||||
Beginning of year |
6,995,335,267 | 6,581,032,097 | ||||||
End of year (includes undistributed net investment income of $32,190,683 and $39,825,760, respectively) |
$ | 8,209,742,901 | $ | 6,995,335,267 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Growth and Income Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to seek income and 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, Class R5 and Class R6. On September 24, 2012, Institutional Class shares were renamed Class R5 shares and the Fund began offering Class R6 shares. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices
13 Invesco Growth and Income Fund
furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers 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, if any, are declared and paid quarterly and are recorded on the ex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
14 Invesco Growth and Income Fund
E. | Federal Income Taxes The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (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 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 Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the 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. Prior to June 1, 2010, incremental transfer agency fees which were unique to each class of shares were charged to the operations of such class. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
J. | Foreign Currency Contracts The Fund may enter into foreign currency contracts to manage or minimize currency or exchange rate risk. The Fund may also enter into foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to lock in the U.S. dollar price of that security. A foreign currency contract is an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The use of foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with foreign currency contracts include failure of the counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities. |
K. | Call Options Written The Fund may write covered call options. A covered call option gives the purchaser of such option the right to buy, and the writer (the Fund) the obligation to sell, the underlying security at the stated exercise price during the option period. Written call options are recorded as a liability in the Statement of Assets and Liabilities. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized gains and losses on these contracts are included in the Statement of Operations. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. |
15 Invesco Growth and Income Fund
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $150 million |
0.50% | |||
Next $100 million |
0.45% | |||
Next $100 million |
0.40% | |||
Over $350 million |
0.35% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 1.75% and 1.75% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $656,070.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the Plans) for Class A, Class B, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% each of Class B and Class C average daily net assets and up to 0.50% of Class R average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $434,308 in front-end sales commissions from the sale of Class A shares and $440, $76,537 and $4,805 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the year ended August 31, 2013, the Fund incurred $43,120 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the
16 Invesco Growth and Income Fund
securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 8,211,249,515 | $ | | $ | | $ | 8,211,249,515 | ||||||||
Foreign Currency Contracts* |
| 1,634,238 | | 1,634,238 | ||||||||||||
Total Investments |
$ | 8,211,249,515 | $ | 1,634,238 | $ | | $ | 8,212,883,753 |
* | Unrealized appreciation. |
NOTE 4Derivative Investments
Value of Derivative Investments at Period-End
The table below summarizes the value of the Funds derivative investments, detailed by primary risk exposure, held as of August 31, 2013:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Currency Risk |
||||||||
Foreign Currency Contracts(a) |
$ | 2,074,605 | $ | (440,367 | ) |
(a) | Values are disclosed on the Statement of Assets and Liabilities under the caption Foreign currency contracts outstanding. |
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||||||
Foreign Currency Contracts* |
Options* | |||||||
Realized Gain (Loss) |
||||||||
Currency risk |
$ | (2,410,724 | ) | $ | | |||
Equity risk |
| 1,183,509 | ||||||
Change in Unrealized Appreciation |
||||||||
Currency risk |
5,255,384 | | ||||||
Total |
$ | 2,844,660 | $ | 1,183,509 |
* | The average notional value of foreign currency contracts and option contracts outstanding during the period was $300,125,315 and $13,889,917, respectively. |
Open Foreign Currency Contracts at Period End | ||||||||||||||||||||||||||
Settlement
|
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
Deliver | Receive | |||||||||||||||||||||||||
09/27/13 |
Bank of New York Mellon (The) |
CAD | 57,351,805 | USD | 54,558,933 | $ | 54,409,863 | $ | 149,070 | |||||||||||||||||
09/27/13 |
State Street Bank & Trust Co. |
CAD | 51,888,940 | USD | 49,345,195 | 49,227,224 | 117,971 | |||||||||||||||||||
09/27/13 |
Bank of New York Mellon (The) |
CHF | 34,075,828 | USD | 37,134,605 | 36,630,875 | 503,730 | |||||||||||||||||||
09/27/13 |
State Street Bank & Trust Co. |
CHF | 40,633,541 | USD | 44,253,234 | 43,680,294 | 572,940 | |||||||||||||||||||
09/27/13 |
Bank of New York Mellon (The) |
EUR | 25,284,122 | USD | 33,848,233 | 33,419,672 | 428,561 | |||||||||||||||||||
09/27/13 |
State Street Bank & Trust Co. |
GBP | 62,519,726 | USD | 97,165,345 | 96,863,012 | 302,333 | |||||||||||||||||||
09/27/13 |
State Street Bank & Trust Co. |
ILS | 192,150,799 | USD | 52,579,230 | 53,019,597 | (440,367 | ) | ||||||||||||||||||
Total open foreign currency contracts |
$ | 1,634,238 |
Currency Abbreviations:
17 Invesco Growth and Income Fund
Transactions During the Period | ||||||||
Call Option Contracts | ||||||||
Number of Contracts |
Premiums Received |
|||||||
Beginning of period |
| $ | | |||||
Written |
17,545 | 1,239,739 | ||||||
Closed |
(2,915 | ) | (355,097 | ) | ||||
Expired |
(14,630 | ) | (884,642 | ) | ||||
End of period |
| $ | |
NOTE 5Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended August 31, 2013, the Fund engaged in securities purchases of $9,267,000 and securities sales of $1,830,371, which resulted in net realized gains of $555,165.
NOTE 6Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $5,469.
NOTE 7Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 8Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 9Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 116,212,173 | $ | 99,299,390 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 32,702,969 | ||
Undistributed long-term gain |
78,191,768 | |||
Net unrealized appreciation investments |
1,934,942,936 | |||
Net unrealized appreciation other investments |
1,139 | |||
Temporary book/tax differences |
(512,286 | ) | ||
Capital loss carryforward |
(3,545,948 | ) | ||
Shares of beneficial interest |
6,167,962,323 | |||
Total net assets |
$ | 8,209,742,901 |
18 Invesco Growth and Income Fund
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 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 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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $198,421,128 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2016 |
$ | 3,545,948 | $ | | $ | 3,545,948 |
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of May 23, 2011, the date of reorganization of Invesco Fundamental Value Fund and Invesco Large Cap Relative Value Fund into the Fund, are realized on securities held in each fund at such date of reorganization, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. |
On November 30, 2012, 6,703,303 Class R5 shares, valued at $139,629,805, were redeemed by a significant shareholder and settled through a redemption-in-kind transaction, which resulted in a realized gain of $32,433,272 to the Fund for book purposes. From a Federal income tax perspective, the realized gains were not recognized.
NOTE 10Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $2,215,967,458 and $2,085,623,055, respectively. Cost of investments on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
Unrealized Appreciation (Depreciation) of Investment Securities on a Tax Basis | ||||
Aggregate unrealized appreciation of investment securities |
$ | 1,977,300,793 | ||
Aggregate unrealized (depreciation) of investment securities |
(42,357,857 | ) | ||
Net unrealized appreciation of investment securities |
$ | 1,934,942,936 |
Cost of investments for tax purposes is $6,276,306,579.
NOTE 11Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of a redemption-in-kind transaction, on August 31, 2013, undistributed net investment income was increased by $134,049, undistributed net realized gain was decreased by $32,496,968 and shares of beneficial interest was increased by $32,362,919. This reclassification had no effect on the net assets of the Fund.
19 Invesco Growth and Income Fund
NOTE 12Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
21,889,645 | $ | 507,265,364 | 39,465,171 | $ | 726,104,891 | ||||||||||
Class B |
80,985 | 1,873,907 | 85,550 | 1,608,658 | ||||||||||||
Class C |
893,335 | 20,882,198 | 780,206 | 14,906,715 | ||||||||||||
Class R |
1,604,065 | 37,088,413 | 2,320,089 | 43,705,629 | ||||||||||||
Class Y |
16,183,091 | 373,292,940 | 23,801,882 | 455,243,761 | ||||||||||||
Class R5 |
11,429,384 | 261,754,743 | 21,780,068 | 422,884,733 | ||||||||||||
Class R6(b) |
14,418,821 | 332,177,637 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
2,888,899 | 63,304,665 | 2,974,507 | 56,098,194 | ||||||||||||
Class B |
78,113 | 1,692,792 | 107,992 | 2,014,736 | ||||||||||||
Class C |
87,511 | 1,872,237 | 85,105 | 1,588,011 | ||||||||||||
Class R |
91,211 | 1,994,223 | 95,400 | 1,800,651 | ||||||||||||
Class Y |
1,250,788 | 27,518,735 | 1,308,768 | 24,683,678 | ||||||||||||
Class R5 |
539,320 | 11,863,653 | 432,771 | 8,285,259 | ||||||||||||
Class R6 |
97,673 | 2,246,832 | | | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
1,358,676 | 30,970,994 | 2,221,123 | 41,945,772 | ||||||||||||
Class B |
(1,368,129 | ) | (30,970,994 | ) | (2,219,631 | ) | (41,945,772 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(43,134,152 | ) | (976,137,549 | ) | (66,777,435 | ) | (1,268,497,021 | ) | ||||||||
Class B |
(822,250 | ) | (18,457,407 | ) | (1,513,340 | ) | (28,824,811 | ) | ||||||||
Class C |
(1,805,148 | ) | (40,311,395 | ) | (2,806,866 | ) | (53,090,307 | ) | ||||||||
Class R |
(2,054,646 | ) | (46,926,619 | ) | (3,393,141 | ) | (65,389,827 | ) | ||||||||
Class Y |
(17,592,305 | ) | (401,917,676 | ) | (37,428,967 | ) | (723,836,376 | ) | ||||||||
Class R5 |
(17,151,492 | ) | (375,020,738 | ) | (5,265,183 | ) | (101,302,810 | ) | ||||||||
Class R6 |
(1,080,798 | ) | (26,243,960 | ) | | | ||||||||||
Net increase (decrease) in share activity |
(12,117,403 | ) | $ | (240,187,005 | ) | (23,945,931 | ) | $ | (482,016,236 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as, securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
20 Invesco Growth and Income Fund
NOTE 13Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(b) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 20.48 | $ | 0.31 | $ | 4.47 | $ | 4.78 | $ | (0.34 | ) | $ | | $ | (0.34 | ) | $ | 24.92 | 23.57 | %(c) | $ | 4,766,860 | 0.81 | %(d) | 0.82 | %(d) | 1.37 | %(d) | 29 | % | ||||||||||||||||||||||||||
Year ended 08/31/12 |
18.01 | 0.32 | 2.42 | 2.74 | (0.27 | ) | | (0.27 | ) | 20.48 | 15.33 | (c) | 4,266,135 | 0.83 | 0.84 | 1.66 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.06 | 0.24 | 1.91 | 2.15 | (0.20 | ) | | (0.20 | ) | 18.01 | 13.37 | (c) | 4,149,537 | 0.83 | 0.84 | 1.23 | 23 | |||||||||||||||||||||||||||||||||||||||
Nine months ended 08/31/10 |
17.19 | 0.18 | (1.13 | ) | (0.95 | ) | (0.18 | ) | | (0.18 | ) | 16.06 | (5.60 | )(c) | 4,122,779 | 0.74 | (e) | 0.74 | (e) | 1.36 | (e) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 11/30/09 |
13.87 | 0.23 | 3.34 | 3.57 | (0.25 | ) | | (0.25 | ) | 17.19 | 26.24 | (f) | 4,496,159 | 0.88 | 0.88 | 1.58 | 51 | |||||||||||||||||||||||||||||||||||||||
Year ended 11/30/08 |
22.72 | 0.33 | (7.86 | ) | (7.53 | ) | (0.37 | ) | (0.95 | ) | (1.32 | ) | 13.87 | (35.05 | )(f) | 4,416,052 | 0.79 | 0.79 | 1.78 | 42 | ||||||||||||||||||||||||||||||||||||
Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
20.34 | 0.31 | 4.44 | 4.75 | (0.34 | ) | | (0.34 | ) | 24.75 | 23.57 | (c)(g) | 101,723 | 0.81 | (d)(g) | 0.82 | (d)(g) | 1.37 | (d)(g) | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
17.88 | 0.31 | 2.41 | 2.72 | (0.26 | ) | | (0.26 | ) | 20.34 | 15.37 | (c)(g) | 124,930 | 0.81 | (g) | 0.82 | (g) | 1.68 | (g) | 25 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
15.93 | 0.23 | 1.90 | 2.13 | (0.18 | ) | | (0.18 | ) | 17.88 | 13.36 | (c)(g) | 173,129 | 0.83 | (g) | 0.84 | (g) | 1.23 | (g) | 23 | ||||||||||||||||||||||||||||||||||||
Nine months ended 08/31/10 |
17.05 | 0.16 | (1.12 | ) | (0.96 | ) | (0.16 | ) | | (0.16 | ) | 15.93 | (5.69 | )(c)(g) | 231,193 | 0.89 | (e)(g) | 0.89 | (e)(g) | 1.21 | (e)(g) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 11/30/09 |
13.76 | 0.22 | 3.32 | 3.54 | (0.25 | ) | | (0.25 | ) | 17.05 | 26.32 | (h)(i) | 320,577 | 0.89 | (i) | 0.89 | (i) | 1.59 | (i) | 51 | ||||||||||||||||||||||||||||||||||||
Year ended 11/30/08 |
22.57 | 0.32 | (7.81 | ) | (7.49 | ) | (0.37 | ) | (0.95 | ) | (1.32 | ) | 13.76 | (35.09 | )(h)(i) | 365,277 | 0.84 | (i) | 0.84 | (i) | 1.72 | (i) | 42 | |||||||||||||||||||||||||||||||||
Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
20.29 | 0.14 | 4.42 | 4.56 | (0.17 | ) | | (0.17 | ) | 24.68 | 22.63 | (c) | 289,458 | 1.56 | (d) | 1.57 | (d) | 0.62 | (d) | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
17.84 | 0.18 | 2.40 | 2.58 | (0.13 | ) | | (0.13 | ) | 20.29 | 14.53 | (c)(j) | 254,679 | 1.55 | (j) | 1.56 | (j) | 0.94 | (j) | 25 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
15.91 | 0.09 | 1.90 | 1.99 | (0.06 | ) | | (0.06 | ) | 17.84 | 12.52 | (c)(j) | 258,606 | 1.57 | (j) | 1.58 | (j) | 0.49 | (j) | 23 | ||||||||||||||||||||||||||||||||||||
Nine months ended 08/31/10 |
17.03 | 0.08 | (1.12 | ) | (1.04 | ) | (0.08 | ) | | (0.08 | ) | 15.91 | (6.13 | )(c) | 269,051 | 1.49 | (e) | 1.49 | (e) | 0.61 | (e) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 11/30/09 |
13.74 | 0.12 | 3.32 | 3.44 | (0.15 | ) | | (0.15 | ) | 17.03 | 25.36 | (i)(k) | 316,283 | 1.62 | (i) | 1.62 | (i) | 0.84 | (i) | 51 | ||||||||||||||||||||||||||||||||||||
Year ended 11/30/08 |
22.53 | 0.20 | (7.81 | ) | (7.61 | ) | (0.23 | ) | (0.95 | ) | (1.18 | ) | 13.74 | (35.54 | )(i)(k) | 301,306 | 1.51 | (i) | 1.51 | (i) | 1.06 | (i) | 42 | |||||||||||||||||||||||||||||||||
Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
20.49 | 0.25 | 4.47 | 4.72 | (0.28 | ) | | (0.28 | ) | 24.93 | 23.26 | (c) | 170,691 | 1.06 | (d) | 1.07 | (d) | 1.12 | (d) | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
18.02 | 0.27 | 2.42 | 2.69 | (0.22 | ) | | (0.22 | ) | 20.49 | 15.03 | (c) | 147,659 | 1.08 | 1.09 | 1.41 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.07 | 0.19 | 1.92 | 2.11 | (0.16 | ) | | (0.16 | ) | 18.02 | 13.08 | (c) | 147,453 | 1.08 | 1.09 | 0.98 | 23 | |||||||||||||||||||||||||||||||||||||||
Nine months ended 08/31/10 |
17.19 | 0.14 | (1.11 | ) | (0.97 | ) | (0.15 | ) | | (0.15 | ) | 16.07 | (5.72 | )(c) | 122,188 | 0.99 | (e) | 0.99 | (e) | 1.11 | (e) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 11/30/09 |
13.87 | 0.18 | 3.35 | 3.53 | (0.21 | ) | | (0.21 | ) | 17.19 | 26.00 | (l) | 107,371 | 1.13 | 1.13 | 1.29 | 51 | |||||||||||||||||||||||||||||||||||||||
Year ended 11/30/08 |
22.73 | 0.29 | (7.88 | ) | (7.59 | ) | (0.32 | ) | (0.95 | ) | (1.27 | ) | 13.87 | (35.25 | )(l) | 78,522 | 1.04 | 1.04 | 1.53 | 42 | ||||||||||||||||||||||||||||||||||||
Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
20.50 | 0.37 | 4.47 | 4.84 | (0.40 | ) | | (0.40 | ) | 24.94 | 23.86 | (c) | 1,826,646 | 0.56 | (d) | 0.57 | (d) | 1.62 | (d) | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
18.03 | 0.36 | 2.42 | 2.78 | (0.31 | ) | | (0.31 | ) | 20.50 | 15.60 | (c) | 1,504,586 | 0.58 | 0.59 | 1.91 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.08 | 0.28 | 1.92 | 2.20 | (0.25 | ) | | (0.25 | ) | 18.03 | 13.64 | (c) | 1,544,968 | 0.58 | 0.59 | 1.48 | 23 | |||||||||||||||||||||||||||||||||||||||
Nine months ended 08/31/10 |
17.21 | 0.21 | (1.13 | ) | (0.92 | ) | (0.21 | ) | | (0.21 | ) | 16.08 | (5.41 | )(c) | 1,206,652 | 0.49 | (e) | 0.49 | (e) | 1.61 | (e) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 11/30/09 |
13.88 | 0.26 | 3.35 | 3.61 | (0.28 | ) | | (0.28 | ) | 17.21 | 26.60 | (m) | 1,095,692 | 0.63 | 0.63 | 1.81 | 51 | |||||||||||||||||||||||||||||||||||||||
Year ended 11/30/08 |
22.74 | 0.38 | (7.87 | ) | (7.49 | ) | (0.42 | ) | (0.95 | ) | (1.37 | ) | 13.88 | (34.90 | )(m) | 844,058 | 0.54 | 0.54 | 2.04 | 42 | ||||||||||||||||||||||||||||||||||||
Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
20.53 | 0.39 | 4.47 | 4.86 | (0.42 | ) | | (0.42 | ) | 24.97 | 23.96 | (c) | 718,816 | 0.47 | (d) | 0.48 | (d) | 1.71 | (d) | 29 | ||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
18.05 | 0.39 | 2.43 | 2.82 | (0.34 | ) | | (0.34 | ) | 20.53 | 15.80 | (c) | 697,346 | 0.46 | 0.47 | 2.03 | 25 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.08 | 0.32 | 1.92 | 2.24 | (0.27 | ) | | (0.27 | ) | 18.05 | 13.87 | (c) | 307,338 | 0.39 | 0.40 | 1.67 | 23 | |||||||||||||||||||||||||||||||||||||||
Nine months ended 08/31/10(n) |
16.48 | 0.05 | (0.39 | ) | (0.34 | ) | (0.06 | ) | | (0.06 | ) | 16.08 | (2.05 | )(c) | 41,861 | 0.45 | (e) | 0.45 | (e) | 1.31 | (e) | 23 | ||||||||||||||||||||||||||||||||||
Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(n) |
21.23 | 0.43 | 3.66 | 4.09 | (0.35 | ) | | (0.35 | ) | 24.97 | 19.45 | (c) | 335,549 | 0.38 | (d)(e) | 0.39 | (d)(e) | 1.80 | (d)(e) | 29 |
(a) | Calculated using average shares outstanding. |
(b) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the year ended August 31, 2011, the portfolio calculation excludes the value of securities purchased of $138,016,999 and sold of $13,000,923 in the effort to realign the Funds portfolio holdings after the reorganization of Invesco Fundamental Value Fund & Invesco Large Cap Relative Value Fund into the Fund. |
(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) | Ratios are based on average daily net assets (000s omitted) of $4,514,767, $115,062, $271,467, $160,031, $1,672,014, $660,133 and $188,180 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Annualized. |
(f) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(g) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.25%, 0.23%, 0.25% and 0.40% for the years ended August 31, 2013, 2012 and 2011 and the nine months ended August 31, 2010, respectively. |
(h) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(i) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of less than 1%. |
(j) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.97% and 0.99% for the years ended August 31, 2012 and 2011, respectively. |
(k) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(l) | Assumes reinvestment of all distributions for the period. These returns include combined Rule 12b-1 fees and service fees of up to 0.50% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption on Fund shares. |
(m) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption on Fund shares. |
(n) | Commencement date of June 1, 2010 and September 24, 2012 for Class R5 and Class R6 shares, respectively. |
21 Invesco Growth and Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Growth and Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Growth and Income Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 three years in the period then ended and the nine month period ended August 31, 2010, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the periods ended November 30, 2009 and prior were audited by another independent registered public accounting firm whose report dated January 22, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
22 Invesco Growth and Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,104.60 | $ | 4.19 | $ | 1,021.22 | $ | 4.02 | 0.79 | % | ||||||||||||
B | 1,000.00 | 1,104.90 | 4.19 | 1,021.22 | 4.02 | 0.79 | ||||||||||||||||||
C | 1,000.00 | 1,100.60 | 8.15 | 1,017.44 | 7.83 | 1.54 | ||||||||||||||||||
R | 1,000.00 | 1,103.70 | 5.51 | 1,019.96 | 5.30 | 1.04 | ||||||||||||||||||
Y | 1,000.00 | 1,105.90 | 2.87 | 1,022.48 | 2.75 | 0.54 | ||||||||||||||||||
R5 | 1,000.00 | 1,106.70 | 2.44 | 1,022.89 | 2.35 | 0.46 | ||||||||||||||||||
R6 | 1,000.00 | 1,106.70 | 1.96 | 1,023.34 | 1.89 | 0.37 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
23 Invesco Growth and Income Fund
Approval of Investment Advisory and Sub-Advisory Contracts
24 Invesco Growth and Income Fund
25 Invesco Growth and Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
100 | % | ||
Corporate Dividends Received Deduction* |
100 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
26 Invesco Growth and Income Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Growth and Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Growth and Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Growth and Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Growth and Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-09913 and 333-36074 VK-GRI-AR-1 Invesco Distributors, Inc.
| ||||
Annual Report to Shareholders
|
August 31, 2013
| |||
| ||||
Invesco Low Volatility Equity Yield Fund Effective July 31, 2013, Invesco U.S. Quantitative Core Fund was renamed Invesco Low Volatility Equity Yield Fund.
Nasdaq: A: SCAUX n B: SBCUX n C: SCCUX n R: SCRUX n Y: SCAYX Investor: SCNUX n R5: SCIUX |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its |
extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 Source: Reuters
2 Invesco Low Volatility Equity Yield Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent |
Trustees on the Board. Additionally, we meet with independent legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Low Volatility Equity Yield Fund
Managements Discussion of Fund Performance
4 Invesco Low Volatility Equity Yield Fund
5 Invesco Low Volatility Equity Yield Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es) since Inception
Fund and index data from 3/31/06
6 Invesco Low Volatility Equity Yield Fund
7 Invesco Low Volatility Equity Yield Fund
Invesco Low Volatility Equity Yield Funds investment objective is income and long-term growth of capital.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Low Volatility Equity Yield Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Low Volatility Equity Yield Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Low Volatility Equity Yield Fund
Investment Abbreviations:
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 & Poors. |
(b) | Non-income producing security. |
(c) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1I and Note 4. |
(d) | Security traded on a discount basis. The interest rate shown represents the discount rate at the time of purchase by the Fund. |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Low Volatility Equity Yield Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Low Volatility Equity Yield Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $7,489) |
$ | 8,351,648 | ||
Dividends from affiliated money market funds |
6,162 | |||
Total investment income |
8,357,810 | |||
Expenses: |
||||
Advisory fees |
1,991,383 | |||
Administrative services fees |
107,155 | |||
Custodian fees |
11,423 | |||
Distribution fees: |
||||
Class A |
499,131 | |||
Class B |
151,915 | |||
Class C |
390,540 | |||
Class R |
2,517 | |||
Investor Class |
162,030 | |||
Transfer agent fees A, B, C, R, Y and Investor |
746,403 | |||
Transfer agent fees R5 |
6,825 | |||
Trustees and officers fees and benefits |
33,978 | |||
Other |
201,870 | |||
Total expenses |
4,305,170 | |||
Less: Fees waived and expense offset arrangement(s) |
(11,086 | ) | ||
Net expenses |
4,294,084 | |||
Net investment income |
4,063,726 | |||
Realized and unrealized gain from: |
||||
Net realized gain from: |
||||
Investment securities |
78,767,869 | |||
Futures contracts |
1,330,149 | |||
80,098,018 | ||||
Change in net unrealized appreciation (depreciation) of: |
||||
Investment securities |
(32,699,060 | ) | ||
Futures contracts |
(643,052 | ) | ||
(33,342,112 | ) | |||
Net realized and unrealized gain |
46,755,906 | |||
Net increase in net assets resulting from operations |
$ | 50,819,632 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Low Volatility Equity Yield Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
|
|||||||
Net investment income |
$ | 4,063,726 | $ | 3,268,668 | ||||
Net realized gain |
80,098,018 | 3,600,280 | ||||||
Change in net unrealized appreciation (depreciation) |
(33,342,112 | ) | 49,879,997 | |||||
Net increase in net assets resulting from operations |
50,819,632 | 56,748,945 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(2,404,575 | ) | (930,525 | ) | ||||
Class B |
(47,545 | ) | (41,450 | ) | ||||
Class C |
(119,396 | ) | (95,868 | ) | ||||
Class R |
(8,911 | ) | (5,087 | ) | ||||
Class Y |
(68,486 | ) | (21,355 | ) | ||||
Investor Class |
(773,952 | ) | (288,346 | ) | ||||
Class R5 |
(185,733 | ) | (71,711 | ) | ||||
Total distributions from net investment income |
(3,608,598 | ) | (1,454,342 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
(27,233,949 | ) | (37,945,442 | ) | ||||
Class B |
(5,795,678 | ) | (6,796,360 | ) | ||||
Class C |
(9,320,625 | ) | (14,199,052 | ) | ||||
Class R |
(905,829 | ) | (405,549 | ) | ||||
Class Y |
(690,831 | ) | (216,655 | ) | ||||
Investor Class |
(8,125,971 | ) | (10,855,010 | ) | ||||
Class R5 |
(33,993 | ) | (2,297,972 | ) | ||||
Net increase (decrease) in net assets resulting from share transactions |
(52,106,876 | ) | (72,716,040 | ) | ||||
Net increase (decrease) in net assets |
(4,895,842 | ) | (17,421,437 | ) | ||||
Net assets: |
||||||||
Beginning of year |
336,913,775 | 354,335,212 | ||||||
End of year (includes undistributed net investment income of $3,558,026 and $3,055,760, respectively) |
$ | 332,017,933 | $ | 336,913,775 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Low Volatility Equity Yield Fund, formerly Invesco U.S. Quantitative Core Fund, (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is income and 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 Class R5. On September 24, 2012, Institutional Class shares were renamed Class R5 shares. 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 waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class R, Class Y, Investor Class and Class R5 shares are sold at net asset value. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular
14 Invesco Low Volatility Equity Yield Fund
day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers 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. |
15 Invesco Low Volatility Equity Yield Fund
D. | Distributions Distributions from income and net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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 Class R5 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Futures Contracts The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Funds basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchanges clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
J. | Collateral To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Funds practice to replace such collateral no later than the next business day. |
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||||
First $250 million |
0 | .60% | ||||
Next $250 million |
0 | .575% | ||||
Next $500 million |
0 | .55% | ||||
Next $1.5 billion |
0 | .525% | ||||
Next $2.5 billion |
0 | .50% | ||||
Next $2.5 billion |
0 | .475% | ||||
Next $2.5 billion |
0 | .45% | ||||
Over $10 billion |
0 | .425% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or reimbursement (excluding certain items discussed below) of Class A, Class B,
16 Invesco Low Volatility Equity Yield Fund
Class C, Class R, Class Y, Investor Class and Class R5 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 2.00% and 1.75% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $8,740.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (IDI) to serve as the distributor for the Class A, Class B, Class C, Class R, Class Y, Investor Class and Class R5 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Funds Class A, Class B, Class C, Class R and Investor Class shares (collectively, the Plans). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Funds 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 August 31, 2013, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $11,188 in front-end sales commissions from the sale of Class A shares and $16,443 and $607 from Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 330,911,660 | $ | | $ | | $ | 330,911,660 | ||||||||
U.S. Treasury Securities |
| 750,000 | | 750,000 | ||||||||||||
$ | 330,911,660 | $ | 750,000 | $ | | $ | 331,661,660 | |||||||||
Futures* |
(157,756 | ) | | | (157,756 | ) | ||||||||||
Total Investments |
$ | 330,753,904 | $ | 750,000 | $ | | $ | 331,503,904 |
* | Unrealized appreciation (depreciation). |
17 Invesco Low Volatility Equity Yield Fund
NOTE 4Derivative Investments
Value of Derivative Investments at Period-End
The table below summarizes the value of the Funds derivative investments, detailed by primary risk exposure, held as of August 31, 2013:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Market risk |
||||||||
Futures contracts(a) |
$ | | $ | (157,756 | ) |
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current days variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||
Futures* | ||||
Realized Gain |
||||
Market risk |
$ | 1,330,149 | ||
Change in Unrealized Appreciation (Depreciation) |
||||
Market risk |
(643,052 | ) | ||
Total |
$ | 687,097 |
* | The average notional value of futures contracts outstanding during the period was $7,357,005. |
Open Futures Contracts | ||||||||||||||||
Long Contracts | Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||
E- Mini S&P 500 Index |
88 | September-2013 | $ | 7,177,720 | $ | (157,756 | ) |
NOTE 5Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $2,346.
NOTE 6Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
18 Invesco Low Volatility Equity Yield Fund
NOTE 8Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 3,608,598 | $ | 1,454,342 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 3,781,176 | ||
Undistributed long-term gain |
5,332,154 | |||
Net unrealized appreciation investments |
29,316,432 | |||
Temporary book/tax differences |
(223,170 | ) | ||
Capital loss carryforward |
(67,411,608 | ) | ||
Shares of beneficial interest |
361,222,949 | |||
Total net assets |
$ | 332,017,933 |
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 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 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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $70,759,225 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2016 |
$ | 33,513,732 | $ | | $ | 33,513,732 | ||||||
August 31, 2018 |
33,897,876 | | 33,897,876 | |||||||||
$ | 67,411,608 | $ | | $ | 67,411,608 |
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. To the extent that unrealized gains as of May 23, 2011, the date of reorganization of Invesco Select Equity Fund and Invesco Van Kampen Premium Income Fund into the Fund, are realized on securities held in each fund at such date of reorganization, the capital loss carryforward may be further limited for up to five years from the date of the reorganization. |
NOTE 9Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $347,904,198 and $399,668,058, 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 |
$ | 37,726,922 | ||
Aggregate unrealized (depreciation) of investment securities |
(8,410,490 | ) | ||
Net unrealized appreciation of investment securities |
$ | 29,316,432 |
Cost of investments for tax purposes is $302,345,228.
NOTE 10Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of litigation and capital loss carryforward, on August 31, 2013, undistributed net investment income was increased by $47,138, undistributed net realized gain (loss) was increased by $952,330 and shares of beneficial interest was decreased by $999,468. This reclassification had no effect on the net assets of the Fund.
19 Invesco Low Volatility Equity Yield Fund
NOTE 11Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
791,263 | $ | 7,509,498 | 1,233,552 | $ | 9,581,190 | ||||||||||
Class B |
27,394 | 256,786 | 52,399 | 404,485 | ||||||||||||
Class C |
224,308 | 2,102,551 | 262,766 | 2,049,034 | ||||||||||||
Class R |
47,129 | 407,001 | 10,411 | 82,193 | ||||||||||||
Class Y |
124,611 | 1,160,536 | 105,238 | 852,079 | ||||||||||||
Investor Class |
598,412 | 5,620,041 | 887,672 | 7,116,364 | ||||||||||||
Class R5 |
251,033 | 2,499,070 | 126,149 | 971,236 | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
248,581 | 2,142,768 | 110,291 | 819,460 | ||||||||||||
Class B |
4,655 | 39,806 | 4,705 | 34,581 | ||||||||||||
Class C |
10,631 | 90,790 | 9,743 | 71,514 | ||||||||||||
Class R |
1,023 | 8,795 | 494 | 3,648 | ||||||||||||
Class Y |
6,167 | 53,284 | 2,083 | 15,520 | ||||||||||||
Investor Class |
87,128 | 753,658 | 37,687 | 280,770 | ||||||||||||
Class R5 |
21,468 | 185,483 | 9,615 | 71,634 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
218,167 | 2,029,866 | 344,576 | 2,719,115 | ||||||||||||
Class B |
(220,775 | ) | (2,029,866 | ) | (348,922 | ) | (2,719,115 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(4,206,505 | ) | (38,916,081 | ) | (6,568,951 | ) | (51,065,207 | ) | ||||||||
Class B |
(444,734 | ) | (4,062,404 | ) | (582,251 | ) | (4,516,311 | ) | ||||||||
Class C |
(1,269,208 | ) | (11,513,966 | ) | (2,142,291 | ) | (16,319,600 | ) | ||||||||
Class R |
(151,067 | ) | (1,321,625 | ) | (65,832 | ) | (491,390 | ) | ||||||||
Class Y |
(203,050 | ) | (1,904,651 | ) | (138,938 | ) | (1,084,254 | ) | ||||||||
Investor Class |
(1,540,011 | ) | (14,499,670 | ) | (2,317,894 | ) | (18,252,144 | ) | ||||||||
Class R5 |
(285,481 | ) | (2,718,546 | ) | (407,522 | ) | (3,340,842 | ) | ||||||||
Net increase (decrease) in share activity |
(5,658,861 | ) | $ | (52,106,876 | ) | (9,375,220 | ) | $ | (72,716,040 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 18% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
20 Invesco Low Volatility Equity Yield Fund
NOTE 12Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 8.66 | $ | 0.12 | $ | 1.31 | $ | 1.43 | $ | (0.11 | ) | $ | | $ | (0.11 | ) | $ | 9.98 | 16.71 | % | $ | 199,636 | 1.18 | %(d) | 1.18 | %(d) | 1.31 | %(d) | 107 | % | ||||||||||||||||||||||||||
Year ended 08/31/12 |
7.34 | 0.09 | 1.27 | 1.36 | (0.04 | ) | | (0.04 | ) | 8.66 | 18.54 | 198,831 | 1.03 | 1.23 | 1.10 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.29 | 0.07 | 1.06 | 1.13 | (0.08 | ) | | (0.08 | ) | 7.34 | 18.00 | 204,311 | 1.00 | 1.22 | 0.90 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.47 | 0.06 | (0.12 | ) | (0.06 | ) | (0.12 | ) | | (0.12 | ) | 6.29 | (1.07 | ) | 1,265 | 1.00 | 1.31 | 0.93 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
9.89 | 0.11 | (2.16 | ) | (2.05 | ) | (0.07 | ) | (1.30 | ) | (1.37 | ) | 6.47 | (18.66 | ) | 1,618 | 0.66 | 1.29 | 1.85 | 77 | ||||||||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.53 | 0.05 | 1.29 | 1.34 | (0.03 | ) | | (0.03 | ) | 9.84 | 15.72 | 13,288 | 1.93 | (d) | 1.93 | (d) | 0.56 | (d) | 107 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.26 | 0.03 | 1.26 | 1.29 | (0.02 | ) | | (0.02 | ) | 8.53 | 17.75 | 16,913 | 1.78 | 1.98 | 0.35 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.22 | 0.01 | 1.06 | 1.07 | (0.03 | ) | | (0.03 | ) | 7.26 | 17.15 | 20,750 | 1.75 | 1.97 | 0.15 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.37 | 0.01 | (0.13 | ) | (0.12 | ) | (0.03 | ) | | (0.03 | ) | 6.22 | (1.85 | ) | 173 | 1.75 | 2.06 | 0.18 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
9.79 | 0.06 | (2.13 | ) | (2.07 | ) | (0.05 | ) | (1.30 | ) | (1.35 | ) | 6.37 | (19.10 | ) | 211 | 1.41 | 2.04 | 1.10 | 77 | ||||||||||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.51 | 0.05 | 1.29 | 1.34 | (0.03 | ) | | (0.03 | ) | 9.82 | 15.75 | 37,335 | 1.93 | (d) | 1.93 | (d) | 0.56 | (d) | 107 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.25 | 0.03 | 1.25 | 1.28 | (0.02 | ) | | (0.02 | ) | 8.51 | 17.64 | 41,148 | 1.78 | 1.98 | 0.35 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.22 | 0.01 | 1.05 | 1.06 | (0.03 | ) | | (0.03 | ) | 7.25 | 16.99 | 48,592 | 1.75 | 1.97 | 0.15 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.37 | 0.01 | (0.13 | ) | (0.12 | ) | (0.03 | ) | | (0.03 | ) | 6.22 | (1.85 | ) | 219 | 1.75 | 2.06 | 0.18 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
9.79 | 0.06 | (2.13 | ) | (2.07 | ) | (0.05 | ) | (1.30 | ) | (1.35 | ) | 6.37 | (19.10 | ) | 254 | 1.41 | 2.04 | 1.10 | 77 | ||||||||||||||||||||||||||||||||||||
Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.61 | 0.10 | 1.30 | 1.40 | (0.08 | ) | | (0.08 | ) | 9.93 | 16.37 | 200 | 1.43 | (d) | 1.43 | (d) | 1.06 | (d) | 107 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.31 | 0.07 | 1.26 | 1.33 | (0.03 | ) | | (0.03 | ) | 8.61 | 18.24 | 1,059 | 1.28 | 1.48 | 0.85 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.27 | 0.05 | 1.06 | 1.11 | (0.07 | ) | | (0.07 | ) | 7.31 | 17.68 | 1,300 | 1.25 | 1.47 | 0.65 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.45 | 0.05 | (0.12 | ) | (0.07 | ) | (0.11 | ) | | (0.11 | ) | 6.27 | (1.30 | ) | 1,335 | 1.25 | 1.56 | 0.68 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
9.86 | 0.10 | (2.15 | ) | (2.05 | ) | (0.06 | ) | (1.30 | ) | (1.36 | ) | 6.45 | (18.70 | ) | 77 | 0.91 | 1.54 | 1.60 | 77 | ||||||||||||||||||||||||||||||||||||
Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.71 | 0.15 | 1.30 | 1.45 | (0.14 | ) | | (0.14 | ) | 10.02 | 16.90 | 4,189 | 0.93 | (d) | 0.93 | (d) | 1.56 | (d) | 107 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.37 | 0.11 | 1.27 | 1.38 | (0.04 | ) | | (0.04 | ) | 8.71 | 18.89 | 4,269 | 0.78 | 0.98 | 1.35 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.32 | 0.09 | 1.06 | 1.15 | (0.10 | ) | | (0.10 | ) | 7.37 | 18.24 | 3,846 | 0.75 | 0.97 | 1.15 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.50 | 0.08 | (0.13 | ) | (0.05 | ) | (0.13 | ) | | (0.13 | ) | 6.32 | (0.85 | ) | 142 | 0.75 | 1.06 | 1.18 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09(e) |
8.29 | 0.12 | (0.54 | ) | (0.42 | ) | (0.07 | ) | (1.30 | ) | (1.37 | ) | 6.50 | (2.50 | ) | 211 | 0.43 | (f) | 1.07 | (f) | 2.08 | (f) | 77 | |||||||||||||||||||||||||||||||||
Investor Class |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.69 | 0.12 | 1.31 | 1.43 | (0.11 | ) | | (0.11 | ) | 10.01 | 16.65 | 64,369 | 1.18 | (d) | 1.18 | (d) | 1.31 | (d) | 107 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.36 | 0.09 | 1.28 | 1.37 | (0.04 | ) | | (0.04 | ) | 8.69 | 18.63 | 63,296 | 1.03 | 1.23 | 1.10 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.32 | 0.07 | 1.05 | 1.12 | (0.08 | ) | | (0.08 | ) | 7.36 | 17.76 | 63,890 | 1.00 | 1.22 | 0.90 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.50 | 0.06 | (0.12 | ) | (0.06 | ) | (0.12 | ) | | (0.12 | ) | 6.32 | (1.07 | ) | 69,635 | 1.00 | 1.31 | 0.93 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
9.90 | 0.12 | (2.15 | ) | (2.03 | ) | (0.07 | ) | (1.30 | ) | (1.37 | ) | 6.50 | (18.43 | ) | 88,674 | 0.66 | 1.29 | 1.85 | 77 | ||||||||||||||||||||||||||||||||||||
Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
8.71 | 0.16 | 1.31 | 1.47 | (0.15 | ) | | (0.15 | ) | 10.03 | 17.12 | 13,000 | 0.76 | (d) | 0.76 | (d) | 1.73 | (d) | 107 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
7.37 | 0.11 | 1.28 | 1.39 | (0.05 | ) | | (0.05 | ) | 8.71 | 18.90 | 11,397 | 0.76 | 0.77 | 1.37 | 45 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
6.32 | 0.09 | 1.06 | 1.15 | (0.10 | ) | | (0.10 | ) | 7.37 | 18.24 | 11,645 | 0.74 | 0.77 | 1.18 | 125 | ||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
6.50 | 0.08 | (0.12 | ) | (0.04 | ) | (0.14 | ) | | (0.14 | ) | 6.32 | (0.83 | ) | 11,793 | 0.75 | 0.91 | 1.18 | 71 | |||||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
9.91 | 0.13 | (2.16 | ) | (2.03 | ) | (0.08 | ) | (1.30 | ) | (1.38 | ) | 6.50 | (18.32 | ) | 22,128 | 0.41 | 0.89 | 2.10 | 77 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. For the period ended August 31, 2011, the portfolio turnover calculation excludes the value of securities purchased of $286,080,448 and sold of $155,521,831 in the effort to realign the Funds portfolio holdings after the reorganization of Invesco Select Equity Fund and Invesco Van Kampen Equity Premium Income Fund into the Fund. |
(d) | Ratios are based on average daily net assets (000s omitted) of $199,653, $15,192, $39,054, $503, $4,329, $64,812 and $11,915 for Class A, Class B, Class C, Class R, Class Y, Investor Class, and Class R5 shares, respectively. |
(e) | Commencement date of October 03, 2008 for Class Y shares. |
(f) | Annualized. |
21 Invesco Low Volatility Equity Yield Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Low Volatility Equity Yield 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 Invesco Low Volatility Equity Yield Fund (formerly known as Invesco U.S. Quantitative Core Fund; one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 five years in the period then ended, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
22 Invesco Low Volatility Equity Yield 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, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 1,094.30 | $ | 6.18 | $ | 1,019.31 | $ | 5.96 | 1.17 | % | ||||||||||||
B | 1,000.00 | 1,089.70 | 10.11 | 1,015.53 | 9.75 | 1.92 | ||||||||||||||||||
C | 1,000.00 | 1,088.70 | 10.11 | 1,015.53 | 9.75 | 1.92 | ||||||||||||||||||
R | 1,000.00 | 1,092.40 | 7.49 | 1,018.05 | 7.22 | 1.42 | ||||||||||||||||||
Y | 1,000.00 | 1,095.10 | 4.86 | 1,020.57 | 4.69 | 0.92 | ||||||||||||||||||
Investor | 1,000.00 | 1,094.00 | 6.18 | 1,019.31 | 5.96 | 1.17 | ||||||||||||||||||
R5 | 1,000.00 | 1,096.20 | 4.02 | 1,021.37 | 3.87 | 0.76 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
23 Invesco Low Volatility Equity Yield Fund
Approval of Investment Advisory and Sub-Advisory Contracts
24 Invesco Low Volatility Equity Yield Fund
25 Invesco Low Volatility Equity Yield Fund
Tax Information
Form 1099-DIV, Form 1042-S and other year-end tax information provide shareholders with actual calendar year amounts that should be included in their tax returns. Shareholders should consult their tax advisors.
The following distribution information is being provided as required by the Internal Revenue Code or to meet a specific states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
100 | % | ||
Corporate Dividends Received Deduction* |
100 | % | ||
U.S. Treasury Obligations* |
0 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
26 Invesco Low Volatility Equity Yield Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Low Volatility Equity Yield Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Low Volatility Equity Yield Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Low Volatility Equity Yield Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Low Volatility Equity Yield Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
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SEC file numbers: 811-09913 and 333-36074 LVEY-AR-1 Invesco Distributors, Inc. |
Letters to Shareholders
|
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily accommodative monetary policies together with uncertainty about who will |
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next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter. Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change. Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you. |
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
¢ | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
¢ | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
¢ | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 Invesco Pennsylvania Tax Free Income Fund
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent legal counsel and review |
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performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field. |
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Pennsylvania Tax Free Income Fund
Managements Discussion of Fund Performance
4 Invesco Pennsylvania Tax Free Income Fund
5 Invesco Pennsylvania Tax Free Income Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
1 | Source(s): Barclays via FactSet Research Systems Inc. |
2 | Source: Lipper Inc. |
continued from page 8
6 Invesco Pennsylvania Tax Free Income Fund
7 Invesco Pennsylvania Tax Free Income Fund
Invesco Pennsylvania Tax Free Income Funds investment objective is to provide only Pennsylvania investors with a high level of current income exempt from federal and Pennsylvania state income taxes and, where possible under local law, local income and personal property taxes, through investment in a varied portfolio of medium- and lower-grade municipal securities.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Pennsylvania Tax Free Income Fund
Schedule of Investments
August 31, 2013
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Municipal Obligations102.67% |
||||||||||||||||
Pennsylvania93.16% | ||||||||||||||||
Allegheny (County of) Higher Education Building Authority (Chatham University); Series 2012 A, University RB |
5.00 | % | 09/01/35 | $ | 1,000 | $ | 930,610 | |||||||||
Allegheny (County of) Higher Education Building Authority (Duquesne University); |
||||||||||||||||
Series 1998, Ref. University RB (INSAMBAC)(a) |
5.50 | % | 03/01/20 | 1,750 | 2,027,655 | |||||||||||
Series 2011 A, University RB |
5.50 | % | 03/01/31 | 550 | 579,326 | |||||||||||
Allegheny (County of) Higher Education Building Authority (Robert Morris University); Series 2008 A, University RB |
6.00 | % | 10/15/38 | 1,000 | 1,000,790 | |||||||||||
Allegheny (County of) Hospital Development Authority (Ohio Valley General Hospital); Series 2005 A, RB |
5.00 | % | 04/01/25 | 1,600 | 1,392,464 | |||||||||||
Allegheny (County of) Hospital Development Authority (University of Pittsburgh Medical Center); Series 2009, RB |
5.63 | % | 08/15/39 | 1,250 | 1,298,075 | |||||||||||
Allegheny (County of) Industrial Development Authority (Residential Resources, Inc.); Series 2006, Lease RB |
5.10 | % | 09/01/26 | 980 | 907,411 | |||||||||||
Allegheny (County of) Redevelopment Authority (Pittsburgh Mills); Series 2004, Tax Allocation RB |
5.60 | % | 07/01/23 | 1,220 | 1,169,175 | |||||||||||
Allegheny (County of) Residential Finance Authority; Series 2006 TT, Single Family Mortgage RB (CEPGNMA)(b) |
5.00 | % | 05/01/35 | 905 | 896,665 | |||||||||||
Allegheny (County of); Series 2008 C 61, Unlimited Tax GO Bonds (INSAGC)(a) |
5.00 | % | 12/01/33 | 500 | 503,635 | |||||||||||
Allegheny Valley Joint School District; Series 2004 A, Unlimited Tax GO Bonds (INSNATL)(a) |
5.00 | % | 11/01/28 | 1,500 | 1,543,830 | |||||||||||
Beaver (County of) Industrial Development Authority (FirstEnergy Generation); Series 2008 A, Ref. RB |
2.15 | % | 03/01/17 | 700 | 681,380 | |||||||||||
Beaver (County of) Industrial Development Authority; Series 2008 A, Ref. PCR(c) |
2.70 | % | 04/02/18 | 230 | 223,972 | |||||||||||
Beaver (County of); Series 2009, Unlimited Tax GO Notes (INSAGM)(a) |
5.55 | % | 11/15/31 | 1,390 | 1,505,898 | |||||||||||
Berks (County of) Industrial Development Authority (One Douglassville); Series 2007 A, Ref. RB(b) |
6.13 | % | 11/01/34 | 460 | 399,910 | |||||||||||
Berks (County of) Municipal Authority (Albright College); Series 2004, RB |
5.50 | % | 10/01/18 | 1,895 | 1,898,847 | |||||||||||
Berks (County of) Municipal Authority (Reading Hospital Medical Center); Series 2012 A, RB |
5.00 | % | 11/01/40 | 1,000 | 945,990 | |||||||||||
Bethlehem Area School District; Series 2010, Unlimited Tax GO Bonds (INSAGM)(a) |
5.25 | % | 01/15/26 | 1,000 | 1,055,680 | |||||||||||
Bucks (County of) Industrial Development Authority (Lutheran Community Telford Center); Series 2007, RB |
5.75 | % | 01/01/37 | 2,000 | 1,812,020 | |||||||||||
Central Bradford Progress Authority (Guthrie Healthcare System); Series 2011, RB |
5.38 | % | 12/01/41 | 1,100 | 1,099,109 | |||||||||||
Centre (County of) Hospital Authority (Mt. Nittany Medical Center); |
||||||||||||||||
Series 2009, RB(c)(d) |
6.13 | % | 11/15/14 | 1,000 | 1,071,090 | |||||||||||
Series 2011, RB |
6.25 | % | 11/15/41 | 500 | 519,600 | |||||||||||
Chartiers Valley Industrial & Commercial Development Authority (Asbury Health Center); |
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Series 2006, Ref. First Mortgage RB |
5.25 | % | 12/01/15 | 500 | 511,625 | |||||||||||
Series 2006, Ref. First Mortgage RB |
5.75 | % | 12/01/22 | 900 | 907,866 | |||||||||||
Chester (County of) Industrial Development Authority (University Student Housing, LLC at West Chester University of Pennsylvania); Series 2013, Student Housing RB |
5.00 | % | 08/01/45 | 250 | 210,610 | |||||||||||
Clairton (City of) Municipal Authority; Series 2012 B, RB |
5.00 | % | 12/01/42 | 1,000 | 902,140 | |||||||||||
Cumberland (County of) Municipal Authority (Asbury Pennsylvania Obligated Group); Series 2010, RB |
6.00 | % | 01/01/40 | 870 | 873,550 | |||||||||||
Cumberland (County of) Municipal Authority (Association of Independent Colleges & Universities of Pennsylvania Financing Program-Dickinson College); Series 2009, RB |
5.00 | % | 11/01/39 | 750 | 758,677 | |||||||||||
Cumberland (County of) Municipal Authority (Diakon Lutheran Ministries); Series 2007, RB |
5.00 | % | 01/01/36 | 1,000 | 947,140 | |||||||||||
Cumberland (County of) Municipal Authority (Messiah Village); Series 2008 A, RB |
5.63 | % | 07/01/28 | 1,000 | 1,025,620 | |||||||||||
Dauphin (County of) General Authority (Pinnacle Health System); Series 2009 A, Health System RB |
6.00 | % | 06/01/36 | 2,215 | 2,318,153 | |||||||||||
Dauphin (County of) General Authority (Riverfront Office); Series 1998, Office & Parking RB |
6.00 | % | 01/01/25 | 1,055 | 1,055,538 | |||||||||||
Delaware (County of) Authority (Cabrini College); Series 1999, College RB (INSRadian)(a) |
5.75 | % | 07/01/23 | 220 | 220,136 | |||||||||||
Delaware (County of) Authority (Neumann College); Series 2008, College RB |
6.25 | % | 10/01/38 | 175 | 168,667 | |||||||||||
Delaware (County of) Industrial Development Authority (Aqua Pennsylvania, Inc.); Series 2005 A, Water Facilities RB (INSNATL)(a)(b) |
5.00 | % | 11/01/38 | 1,500 | 1,462,155 | |||||||||||
Delaware River Port Authority (Port District); |
||||||||||||||||
Series 2012, Ref. RB |
5.00 | % | 01/01/25 | 540 | 547,204 | |||||||||||
Series 2012, Ref. RB |
5.00 | % | 01/01/27 | 535 | 524,760 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Pennsylvania Tax Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Pennsylvania(continued) | ||||||||||||||||
Delaware River Port Authority; Series 2010 D, RB |
5.00 | % | 01/01/40 | $ | 1,000 | $ | 1,009,120 | |||||||||
Delaware Valley Regional Financial Authority; |
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Series 2002, RB |
5.75 | % | 07/01/17 | 3,535 | 3,958,246 | |||||||||||
Series 2002, RB |
5.75 | % | 07/01/32 | 1,000 | 1,003,340 | |||||||||||
Doylestown (City of) Hospital Authority; Series 2013 A, RB (INSAGM)(a) |
5.00 | % | 07/01/24 | 1,000 | 1,031,310 | |||||||||||
East Hempfield (Township of) Industrial Development Authority (Student Services Inc. Student Housing); |
||||||||||||||||
Series 2013, RB |
5.00 | % | 07/01/35 | 500 | 462,430 | |||||||||||
Series 2013, RB |
5.00 | % | 07/01/45 | 750 | 667,215 | |||||||||||
Erie (City of) Higher Education Building Authority (Mercyhurst College); |
||||||||||||||||
Series 2004 B, Ref. College RB |
5.00 | % | 03/15/23 | 1,000 | 1,004,870 | |||||||||||
Series 2008, College RB |
5.50 | % | 03/15/38 | 500 | 499,985 | |||||||||||
Franklin (County of) Industrial Development Authority (Chambersburg Hospital); Series 2010, RB |
5.38 | % | 07/01/42 | 1,000 | 975,590 | |||||||||||
Geisinger Authority (Geisinger Health System Foundation); |
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Series 2011 A1, Health System RB |
5.13 | % | 06/01/41 | 500 | 498,855 | |||||||||||
Series 2011 B, VRD RB(e) |
0.03 | % | 06/01/41 | 2,290 | 2,290,000 | |||||||||||
Series 2011 C, VRD Health System RB(e) |
0.03 | % | 06/01/41 | 1,500 | 1,500,000 | |||||||||||
Lancaster (County of) Hospital Authority (Brethren Village); Series 2008 A, RB |
6.50 | % | 07/01/40 | 350 | 350,196 | |||||||||||
Lancaster (County of) Hospital Authority (Lancaster General Hospital); Series 2012, Health System RB |
5.00 | % | 07/01/42 | 1,000 | 967,320 | |||||||||||
Lancaster (County of) Hospital Authority (Masonic Homes); Series 2008 D, VRD RB (LOCJPMorgan Chase Bank, N.A.)(e)(f) |
0.06 | % | 07/01/34 | 700 | 700,000 | |||||||||||
Lehigh (County of) (Lehigh Valley Health Network); Series 2012, General Purpose Hospital RB |
4.00 | % | 07/01/43 | 1,000 | 753,400 | |||||||||||
Lehigh (County of) Authority; Series 2013 A, Water & Sewer RB |
5.00 | % | 12/01/38 | 930 | 900,128 | |||||||||||
Lehigh (County of) General Purpose Authority (Bible Fellowship Church Homes, Inc.); Series 2013, RB |
5.25 | % | 07/01/42 | 825 | 666,410 | |||||||||||
Lehigh (County of) General Purpose Authority (KidsPeace Obligated Group); Series 1998, RB(g) |
6.00 | % | 11/01/23 | 1,760 | 673,200 | |||||||||||
Lycoming (County of) Authority (Pennsylvania College of Technology); Series 2011, RB |
5.00 | % | 07/01/30 | 750 | 753,810 | |||||||||||
Lycoming (County of) Authority (Susquehanna Health System); Series 2009 A, Heath System RB |
5.75 | % | 07/01/39 | 1,250 | 1,263,137 | |||||||||||
Monroe (County of) Hospital Authority (Pocono Medical Center); |
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Series 2003, RB(c)(d) |
6.00 | % | 01/01/14 | 1,000 | 1,019,420 | |||||||||||
Series 2007, RB |
5.13 | % | 01/01/37 | 1,500 | 1,427,385 | |||||||||||
Montgomery (County of) Higher Education & Health Authority (Abington Memorial Hospital Obligated Group); Series 2012, RB |
5.00 | % | 06/01/31 | 1,400 | 1,401,372 | |||||||||||
Montgomery (County of) Industrial Development Authority (ACTS Retirement-Life Communities, Inc.); |
||||||||||||||||
Series 2009 A-1, RB |
6.25 | % | 11/15/29 | 1,000 | 1,041,830 | |||||||||||
Series 2012, Ref. RB |
5.00 | % | 11/15/28 | 900 | 848,205 | |||||||||||
Montgomery (County of) Industrial Development Authority (Philadelphia Presbytery Homes, Inc.); Series 2010, RB |
6.63 | % | 12/01/30 | 1,500 | 1,596,765 | |||||||||||
Montgomery (County of) Industrial Development Authority (Whitemarsh Community); Series 2008, Mortgage RB |
7.00 | % | 02/01/36 | 500 | 507,520 | |||||||||||
Montgomery (County of) Industrial Development Authority (Whitemarsh Continuing Care); Series 2005, Mortgage RB |
6.13 | % | 02/01/28 | 1,100 | 1,074,755 | |||||||||||
Northampton (County of) General Purpose Authority (Lehigh University); Series 2009, Higher Education RB |
5.50 | % | 11/15/33 | 1,000 | 1,048,240 | |||||||||||
Northampton (County of) General Purpose Authority (St. Lukes Hospital); |
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Series 2008 A, Hospital RB |
5.50 | % | 08/15/35 | 1,000 | 988,050 | |||||||||||
Series 2010 C, Hospital RB(c) |
4.50 | % | 08/15/16 | 1,000 | 1,072,250 | |||||||||||
Northampton (County of) Industrial Development Authority (Morningstar Senior Living, Inc.); Series 2012, RB |
5.00 | % | 07/01/32 | 535 | 487,444 | |||||||||||
Pennsylvania (State of) Economic Development Financing Agency (Forum Place); Series 2012, Governmental Lease RB |
5.00 | % | 03/01/34 | 500 | 497,460 | |||||||||||
Pennsylvania (State of) Economic Development Financing Authority (Allegheny Energy Supply Co.); Series 2009, RB |
7.00 | % | 07/15/39 | 1,830 | 1,849,215 | |||||||||||
Pennsylvania (State of) Economic Development Financing Authority (Amtrak); Series 2012 A, Ref. Exempt Facilities RB(b) |
5.00 | % | 11/01/41 | 1,200 | 1,120,980 | |||||||||||
Pennsylvania (State of) Economic Development Financing Authority (Philadelphia Biosolids Facility); Series 2009, Sewage Sludge Disposal RB |
6.25 | % | 01/01/32 | 1,000 | 998,270 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Pennsylvania Tax Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Pennsylvania(continued) | ||||||||||||||||
Pennsylvania (State of) Economic Development Financing Authority (Shippingport); Series 2006 A, Exempt Facilities RB(c) |
2.55 | % | 12/03/18 | $ | 1,500 | $ | 1,463,430 | |||||||||
Pennsylvania (State of) Economic Development Financing Authority (Waste Management, Inc.); Series 2005 A, Solid Waste Disposal RB(b) |
5.10 | % | 10/01/27 | 1,300 | 1,283,243 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (AICUP Financing Program-Del Valley College); Series 2012, RB |
5.00 | % | 11/01/42 | 535 | 463,658 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (Edinboro University Foundation); |
||||||||||||||||
Series 2008, RB |
5.88 | % | 07/01/38 | 750 | 712,875 | |||||||||||
Series 2010, RB |
6.00 | % | 07/01/43 | 500 | 478,585 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (La Salle University); Series 2012, RB |
5.00 | % | 05/01/42 | 1,180 | 1,056,289 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (Shippensburg University Student Services); Series 2012, RB |
5.00 | % | 10/01/35 | 1,300 | 1,172,847 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (St. Josephs University); |
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Series 2010 A, RB |
5.00 | % | 11/01/34 | 500 | 489,735 | |||||||||||
Series 2010 A, RB |
5.00 | % | 11/01/40 | 500 | 480,580 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (Temple University); First Series 2012, RB |
5.00 | % | 04/01/42 | 1,170 | 1,168,175 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (Trustees of the University of Pennsylvania); Series 2005 C, RB(h) |
5.00 | % | 07/15/38 | 4,700 | 4,710,998 | |||||||||||
Pennsylvania (State of) Higher Educational Facilities Authority (University Properties, Inc.); Series 2010, Student Housing RB |
5.00 | % | 07/01/42 | 1,000 | 888,510 | |||||||||||
Pennsylvania (State of) Turnpike Commission; |
||||||||||||||||
Series 2008 B-1, Sub. RB |
5.50 | % | 06/01/33 | 1,000 | 1,026,750 | |||||||||||
Series 2009 C, Sub. Conv. CAB RB (INSAGM)(a)(i) |
6.25 | % | 06/01/33 | 2,000 | 1,868,780 | |||||||||||
Series 2009 E, Sub. Conv. CAB RB(i) |
6.38 | % | 12/01/38 | 1,435 | 1,244,403 | |||||||||||
Series 2010 A 1, Motor License Fund Special RB |
5.00 | % | 12/01/38 | 500 | 496,415 | |||||||||||
Series 2010 A-2, Motor License Fund Special Conv. CAB RB(i) |
5.50 | % | 12/01/34 | 1,000 | 903,330 | |||||||||||
Series 2010 B 2, Conv. CAB RB(i) |
5.00 | % | 12/01/30 | 625 | 545,263 | |||||||||||
Series 2010 B 2, Conv. CAB RB(i) |
5.13 | % | 12/01/35 | 500 | 423,170 | |||||||||||
Philadelphia (City of) Hospitals & Higher Education Facilities Authority (Childrens Hospital of Philadelphia); Series 2011, RB |
5.00 | % | 07/01/41 | 570 | 558,212 | |||||||||||
Philadelphia (City of) Hospitals & Higher Education Facilities Authority (Jefferson Health System); Series 2010 B, RB |
5.00 | % | 05/15/40 | 1,500 | 1,440,105 | |||||||||||
Philadelphia (City of) Industrial Development Authority (Architecture & Design Charter High School); Series 2013, RB |
6.13 | % | 03/15/43 | 585 | 498,420 | |||||||||||
Philadelphia (City of) Industrial Development Authority (Discovery Charter School); Series 2012, RB |
6.25 | % | 04/01/42 | 1,000 | 1,006,150 | |||||||||||
Philadelphia (City of) Industrial Development Authority (Independence Charter School); Series 2007 A, RB |
5.50 | % | 09/15/37 | 1,235 | 1,105,029 | |||||||||||
Philadelphia (City of) Industrial Development Authority (MaST Charter School); Series 2010, RB |
6.00 | % | 08/01/35 | 700 | 715,036 | |||||||||||
Philadelphia (City of) Industrial Development Authority (New Foundations Charter School); Series 2012, RB |
6.63 | % | 12/15/41 | 750 | 753,382 | |||||||||||
Philadelphia (City of) Industrial Development Authority (Performing Arts Charter School); Series 2013, RB(j) |
6.50 | % | 06/15/33 | 945 | 921,290 | |||||||||||
Philadelphia (City of) Industrial Development Authority (Please Touch Museum); Series 2006, RB |
5.25 | % | 09/01/31 | 1,250 | 1,014,862 | |||||||||||
Philadelphia (City of) Industrial Development Authority; Series 1990, Commercial Development RB(b) |
7.75 | % | 12/01/17 | 2,505 | 2,506,378 | |||||||||||
Philadelphia (City of); |
||||||||||||||||
Ninth Series 2010, Gas Works RB |
5.25 | % | 08/01/40 | 1,500 | 1,417,425 | |||||||||||
Series 2005 A, Airport RB (INSNATL)(a)(b) |
5.00 | % | 06/15/25 | 1,000 | 1,035,300 | |||||||||||
Series 2009 A, Ref. Unlimited Tax GO Bonds (INSAGC)(a) |
5.50 | % | 08/01/24 | 1,000 | 1,075,700 | |||||||||||
Series 2010 C, Water & Wastewater RB (INSAGM)(a) |
5.00 | % | 08/01/35 | 1,250 | 1,258,662 | |||||||||||
Series 2011, Unlimited Tax GO Bonds |
6.00 | % | 08/01/36 | 500 | 531,020 | |||||||||||
Philadelphia School District; Series 2008 E, Limited Tax GO Bonds (INSBHAC)(a) |
5.13 | % | 09/01/23 | 1,500 | 1,662,345 | |||||||||||
Pittsburgh (City of) & Allegheny (County of) Sports & Exhibition Authority (Regional Asset District); Series 2010, Ref. Sales Tax RB (INSAGM)(a) |
5.00 | % | 02/01/31 | 1,000 | 1,016,330 | |||||||||||
Radnor Township School District; |
||||||||||||||||
Series 2005 B, Unlimited Tax GO Bonds(c)(d) |
5.00 | % | 08/15/15 | 130 | 141,567 | |||||||||||
Series 2005 B, Unlimited Tax GO Bonds(c)(d) |
5.00 | % | 08/15/15 | 435 | 473,706 | |||||||||||
Series 2005 B, Unlimited Tax GO Bonds (INSAGM)(a) |
5.00 | % | 02/15/35 | 435 | 437,480 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Pennsylvania Tax Free Income Fund
Interest Rate |
Maturity Date |
Principal Amount (000) |
Value | |||||||||||||
Pennsylvania(continued) | ||||||||||||||||
State Public School Building Authority (Harrisburg School District); Series 2009 A, RB (INSAGC)(a) |
5.00 | % | 11/15/33 | $ | 1,000 | $ | 1,004,850 | |||||||||
Susquehanna Area Regional Airport Authority; Series 2012 A, Airport System RB(b) |
5.00 | % | 01/01/27 | 750 | 750,503 | |||||||||||
Union (County of) Hospital Authority (Evangelical Community Hospital); Series 2011, Ref. & Improvement RB |
7.00 | % | 08/01/41 | 1,000 | 1,104,310 | |||||||||||
Washington (County of) Industrial Development Authority (Washington Jefferson College); Series 2010, College RB |
5.25 | % | 11/01/30 | 500 | 510,105 | |||||||||||
Washington (County of) Redevelopment Authority (Victory Centre Tanger Outlet Development); Series 2006 A, Tax Allocation RB(c) |
5.45 | % | 07/01/17 | 1,425 | 1,326,903 | |||||||||||
Westmoreland (County of) Industrial Development Authority (Redstone Presbyterian Senior Care Obligated Group); |
||||||||||||||||
Series 2005 A, Retirement Community RB |
5.75 | % | 01/01/26 | 2,500 | 2,474,775 | |||||||||||
Series 2005 A, Retirement Community RB |
5.88 | % | 01/01/32 | 900 | 864,801 | |||||||||||
Westmoreland (County of) Municipal Authority; Series 2013, RB |
5.00 | % | 08/15/31 | 750 | 752,318 | |||||||||||
Wilkes-Barre (City of) Finance Authority (University of Scranton); Series 2010, RB |
5.00 | % | 11/01/40 | 850 | 848,682 | |||||||||||
124,887,378 | ||||||||||||||||
Puerto Rico5.66% | ||||||||||||||||
Puerto Rico (Commonwealth of) Electric Power Authority; |
||||||||||||||||
Series 2008 WW, RB |
5.50 | % | 07/01/21 | 1,000 | 915,140 | |||||||||||
Series 2008 WW, RB |
5.25 | % | 07/01/33 | 1,500 | 1,097,730 | |||||||||||
Series 2010 XX, RB |
5.75 | % | 07/01/36 | 1,000 | 768,940 | |||||||||||
Puerto Rico (Commonwealth of) Industrial Tourist Educational, Medical & Environmental Control Facilities Financing Authority (Ana G. Mendez University System); Series 2012, Ref. RB |
5.13 | % | 04/01/32 | 500 | 381,930 | |||||||||||
Puerto Rico (Commonwealth of) Infrastructure Financing Authority; Series 2005 C, Ref. Special Tax RB (INSAMBAC)(a) |
5.50 | % | 07/01/27 | 600 | 480,696 | |||||||||||
Puerto Rico Sales Tax Financing Corp.; |
||||||||||||||||
First Subseries 2010, Conv. CAB RB(i) |
6.25 | % | 08/01/33 | 1,065 | 686,265 | |||||||||||
First Subseries 2010 A, CAB RB(k) |
0.00 | % | 08/01/34 | 3,500 | 790,545 | |||||||||||
First Subseries 2010 A, CAB RB(k) |
0.00 | % | 08/01/35 | 5,000 | 1,042,950 | |||||||||||
First Subseries 2010 A, RB |
5.38 | % | 08/01/39 | 470 | 381,109 | |||||||||||
Series 2011 C, RB |
5.00 | % | 08/01/40 | 1,250 | 1,043,387 | |||||||||||
7,588,692 | ||||||||||||||||
Guam2.88% | ||||||||||||||||
Guam (Territory of) (Section 30); Series 2009 A, Limited Obligation RB |
5.75 | % | 12/01/34 | 1,250 | 1,278,163 | |||||||||||
Guam (Territory of) Power Authority; |
||||||||||||||||
Series 2010 A, RB |
5.50 | % | 10/01/40 | 410 | 397,630 | |||||||||||
Series 2012 A, Ref. RB |
5.00 | % | 10/01/34 | 520 | 489,616 | |||||||||||
Guam (Territory of) Waterworks Authority; Series 2010, Water & Wastewater System RB |
5.63 | % | 07/01/40 | 1,000 | 943,850 | |||||||||||
Guam (Territory of); Series 2011 A, Business Privilege Tax RB |
5.13 | % | 01/01/42 | 785 | 747,242 | |||||||||||
3,856,501 | ||||||||||||||||
Virgin Islands0.97% | ||||||||||||||||
Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan NoteDiageo); Series 2009 A, Sub. RB |
6.63 | % | 10/01/29 | 750 | 816,308 | |||||||||||
Virgin Islands (Government of) Public Finance Authority (Matching Fund Loan Note); Series 2010 A, Sr. Lien RB |
5.00 | % | 10/01/29 | 500 | 483,350 | |||||||||||
1,299,658 | ||||||||||||||||
TOTAL INVESTMENTS(l)102.67% (Cost $141,293,916) |
137,632,229 | |||||||||||||||
FLOATING RATE NOTE OBLIGATIONS(2.34%) |
||||||||||||||||
Note with an interest and fee rate of 0.59% at 08/31/13 and contractual maturity of collateral of 07/15/38 (See Note 1K)(m) |
(3,135,000 | ) | ||||||||||||||
OTHER ASSETS LESS LIABILITIES(0.33%) |
(443,476 | ) | ||||||||||||||
NET ASSETS100.00% |
$ | 134,053,753 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Pennsylvania Tax Free Income Fund
Investment Abbreviations:
AGC | Assured Guaranty Corp. | |
AGM | Assured Guaranty Municipal Corp. | |
AMBAC | American Municipal Bond Assurance Corp. | |
BHAC | Berkshire Hathaway Assurance Corp. | |
CAB | Capital Appreciation Bonds | |
CEP | Credit Enhancement Provider | |
Conv. | Convertible | |
GNMA | Government National Mortgage Association | |
GO | General Obligation | |
INS | Insurer | |
LOC | Letter of Credit | |
NATL | National Public Finance Guarantee Corp. | |
PCR | Pollution Control Revenue Bonds | |
Radian | Radian Asset Assurance, Inc. | |
RB | Revenue Bonds | |
Ref. | Refunding | |
Sr. | Senior | |
Sub. | Subordinated | |
VRD | Variable Rate Demand |
Notes to Schedule of Investments:
(a) | Principal and/or interest payments are secured by the bond insurance company listed. |
(b) | Security subject to the alternative minimum tax. |
(c) | Security has an irrevocable call by the issuer or mandatory put by the holder. Maturity date reflects such call or put. |
(d) | Advance refunded; secured by an escrow fund of U.S. Government obligations or other highly rated collateral. |
(e) | Demand security payable upon demand by the Fund at specified time intervals no greater than thirteen months. Interest rate is redetermined periodically. Rate shown is the rate in effect on August 31, 2013. |
(f) | Principal and interest payments are fully enhanced by a letter of credit from the bank listed or a predecessor bank, branch or subsidiary. |
(g) | Defaulted security. Currently, the issuer is partially or fully in default with respect to interest payments. The value of this security at August 31, 2013 represented less than 1% of the Funds Net Assets. |
(h) | Underlying security related to Dealer Trusts entered into by the Fund. See Note 1K. |
(i) | Convertible CAB. The interest rate shown represents the coupon rate at which the bond will accrue at a specified future date. |
(j) | Security purchased or received in transaction exempt from registration under the Securities Act of 1933, as amended (the 1933 Act). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The value of this security at August 31, 2013 represented less than 1% of the Funds Net Assets. |
(k) | Zero coupon bond issued at a discount. |
(l) | This table provides a listing of those entities that have either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuers obligations but may be called upon to satisfy the issuers obligations. |
Entity | Percentage | |||
Assured Guaranty Municipal Corp. |
5.9 | % |
(m) | Floating rate note obligations related to securities held. The interest rates shown reflect the rates in effect at August 31, 2013. At August 31, 2013, the Funds investments with a value of $4,710,998 are held by Dealer Trusts and serve as collateral for the $3,135,000 in the floating rate note obligations outstanding at that date. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Pennsylvania Tax Free Income Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco Pennsylvania Tax Free Income Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Interest |
$ | 7,144,010 | ||
Expenses: |
||||
Advisory fees |
901,954 | |||
Administrative services fees |
50,000 | |||
Custodian fees |
4,971 | |||
Distribution fees: |
||||
Class A |
334,190 | |||
Class B |
5,459 | |||
Class C |
120,251 | |||
Interest, facilities and maintenance fees |
25,984 | |||
Transfer agent fees |
66,782 | |||
Trustees and officers fees and benefits |
28,167 | |||
Other |
94,067 | |||
Total expenses |
1,631,825 | |||
Less: Expense offset arrangement(s) |
(194 | ) | ||
Net expenses |
1,631,631 | |||
Net investment income |
5,512,379 | |||
Realized and unrealized gain (loss) from: |
||||
Net realized gain (loss) from investment securities |
(50,752 | ) | ||
Change in net unrealized appreciation (depreciation) of investment securities |
(14,712,745 | ) | ||
Net realized and unrealized gain (loss) |
(14,763,497 | ) | ||
Net increase (decrease) in net assets resulting from operations |
$ | (9,251,118 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco Pennsylvania Tax Free Income Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
||||||||
Net investment income |
$ | 5,512,379 | $ | 6,008,281 | ||||
Net realized gain (loss) |
(50,752 | ) | 165,985 | |||||
Change in net unrealized appreciation (depreciation) |
(14,712,745 | ) | 10,524,187 | |||||
Net increase (decrease) in net assets resulting from operations |
(9,251,118 | ) | 16,698,453 | |||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(5,070,822 | ) | (5,457,376 | ) | ||||
Class B |
(82,884 | ) | (112,050 | ) | ||||
Class C |
(363,194 | ) | (345,706 | ) | ||||
Class Y |
(89,080 | ) | (22,316 | ) | ||||
Total distributions from net investment income |
(5,605,980 | ) | (5,937,448 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
(5,082,518 | ) | (2,966,173 | ) | ||||
Class B |
(517,802 | ) | (836,452 | ) | ||||
Class C |
1,080,821 | 593,058 | ||||||
Class Y |
1,535,814 | 1,088,270 | ||||||
Net increase (decrease) in net assets resulting from share transactions |
(2,983,685 | ) | (2,121,297 | ) | ||||
Net increase (decrease) in net assets |
(17,840,783 | ) | 8,639,708 | |||||
Net assets: |
||||||||
Beginning of year |
151,894,536 | 143,254,828 | ||||||
End of year (includes undistributed net investment income of $275,396 and $368,687, respectively) |
$ | 134,053,753 | $ | 151,894,536 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Pennsylvania Tax Free Income Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to provide only Pennsylvania investors with a high level of current income exempt from federal and Pennsylvania state income taxes and, where possible under local law, local income and personal property taxes, through investment in a varied portfolio of medium- and lower-grade municipal securities.
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
Securities are fair valued using an evaluated quote provided by an independent pricing service approved by the Board of Trustees. 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 (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Securities for which market quotations either are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts officers following procedures approved by the Board of Trustees. Some of the factors which may be
16 Invesco Pennsylvania Tax Free Income Fund
considered in determining fair value are fundamental analytical data relating to the investment; the nature and duration of any restrictions on transferability or disposition; trading in similar securities by the same issuer or comparable companies; relevant political, economic or issuer specific news; and other relevant factors under the circumstances.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. Bond premiums and discounts are amortized and/or accreted for financial reporting purposes. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates realized and unrealized capital gains and losses to a class based on the relative net assets of each class. The Fund allocates income to a class based on the relative value of the settled shares of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income are declared daily and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (the Internal Revenue Code), necessary to qualify as a regulated investment company and to distribute substantially all of the Funds taxable and tax-exempt 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. |
In addition, the Fund intends to invest in such municipal securities to allow it to qualify to pay shareholders exempt-interest dividends, as defined in the Internal Revenue Code.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. Prior to June 1, 2010, incremental transfer agency fees which were unique to each class of shares were charged to the operations of such class. |
G. | Interest, Facilities and Maintenance Fees Interest, Facilities and Maintenance Fees include interest and related borrowing costs such as commitment fees and other expenses associated with lines of credit and interest and administrative expenses related to establishing and maintaining floating rate note obligations, if any. |
H. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
I. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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. |
J. | Other Risks The value of, payment of interest on, repayment of principal for and the 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 in which the issuers are located. |
Since many municipal securities are issued to finance similar projects, especially those relating to education, health care, transportation and utilities, conditions in those sectors can affect the overall municipal securities market and a Funds investments in municipal securities.
There is some risk that a portion or all of the interest received from certain tax-free municipal securities could become taxable as a result of determinations by the Internal Revenue Service.
17 Invesco Pennsylvania Tax Free Income Fund
K. | Floating Rate Note Obligations The Fund invests in inverse floating rate securities, such as Residual Interest Bonds (RIBs) or Tender Option Bonds (TOBs) for investment purposes and to enhance the yield of the Fund. Inverse floating rate investments tend to underperform the market for fixed rate bonds in a rising interest rate environment, but tend to outperform the market for fixed rate bonds when interest rates decline or remain relatively stable. Such transactions may be purchased in the secondary market without first owning the underlying bond or by the sale of fixed rate bonds by the Fund to special purpose trusts established by a broker dealer (Dealer Trusts) in exchange for cash and residual interests in the Dealer Trusts assets and cash flows, which are in the form of inverse floating rate securities. The Dealer Trusts finance the purchases of the fixed rate bonds by issuing floating rate notes to third parties and allowing the Fund to retain residual interests in the bonds. The floating rate notes issued by the Dealer Trusts have interest rates that reset weekly and the floating rate note holders have the option to tender their notes to the Dealer Trusts for redemption at par at each reset date. The residual interests held by the Fund (inverse floating rate investments) include the right of the Fund (1) to cause the holders of the floating rate notes to tender their notes at par at the next interest rate reset date, and (2) to transfer the municipal bond from the Dealer Trusts to the Fund, thereby collapsing the Dealer Trusts. |
TOBs are presently classified as private placement securities. Private placement securities are subject to restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the 1933 Act), or are otherwise not readily marketable. As a result of the absence of a public trading market for these securities, they may be less liquid than publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized from these sales could be less than those originally paid by the Fund or less than what may be considered the fair value of such securities.
The Fund accounts for the transfer of bonds to the Dealer Trusts as secured borrowings, with the securities transferred remaining in the Funds investment assets, and the related floating rate notes reflected as Fund liabilities under the caption Floating rate note obligations on the Statement of Assets and Liabilities. The Fund records the interest income from the fixed rate bonds under the caption Interest and records the expenses related to floating rate obligations and any administrative expenses of the Dealer Trusts as a component of Interest, facilities and maintenance fees on the Statement of Operations.
The Fund generally invests in inverse floating rate securities that include embedded leverage, thus exposing the Fund to greater risks and increased costs. The primary risks associated with inverse floating rate securities are varying degrees of liquidity and the changes in the value of such securities in response to changes in market rates of interest to a greater extent than the value of an equal principal amount of a fixed rate security having similar credit quality, redemption provisions and maturity which may cause the Funds net asset value to be more volatile than if it had not invested in inverse floating rate securities. In certain instances, the short-term floating rate interests created by the special purpose trust may not be able to be sold to third parties or, in the case of holders tendering (or putting) such interests for repayment of principal, may not be able to be remarketed to third parties. In such cases, the special purpose trust holding the long-term fixed rate bonds may be collapsed. In the case of RIBs or TOBs created by the contribution of long-term fixed income bonds by the Fund, the Fund will then be required to repay the principal amount of the tendered securities. During times of market volatility, illiquidity or uncertainty, the Fund could be required to sell other portfolio holdings at a disadvantageous time to raise cash to meet that obligation.
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $500 million |
0.60% | |||
Over $500 million |
0.50% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 1.50%, 2.25%, 2.25% and 1.25% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest, facilities and maintenance fees; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
18 Invesco Pennsylvania Tax Free Income Fund
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the Plans) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $13,864 in front-end sales commissions from the sale of Class A shares and $1,466 and $82 from Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds 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. |
As of August 31, 2013, all of the securities in this Fund were valued based on Level 2 inputs (see the Schedule of Investments for security categories). 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.
NOTE 4Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $194.
NOTE 5Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6Cash Balances and Borrowings
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company (SSB), the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
Inverse floating rate obligations resulting from the transfer of bonds to Dealer Trusts are accounted for as secured borrowings. The average floating rate notes outstanding and average annual interest and fee rate related to inverse floating rate note obligations during the year ended August 31, 2013 were $3,135,000 and 0.83%, respectively.
19 Invesco Pennsylvania Tax Free Income Fund
NOTE 7Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Tax-exempt income |
$ | 5,605,980 | $ | 5,937,448 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 37,491 | ||
Net unrealized appreciation (depreciation) investments |
(3,472,231 | ) | ||
Temporary book/tax differences |
(21,774 | ) | ||
Post-October deferrals |
(439,674 | ) | ||
Capital loss carryforward |
(6,650,032 | ) | ||
Shares of beneficial interest |
144,599,973 | |||
Total net assets |
$ | 134,053,753 |
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) difference is attributable primarily to TOBs and book to tax accretion and amortization differences.
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 Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $388,920 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2017 |
$ | 5,564,499 | $ | | $ | 5,564,499 | ||||||
August 31, 2018 |
1,085,533 | | 1,085,533 | |||||||||
$ | 6,650,032 | $ | | $ | 6,650,032 |
* | 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 8Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $25,528,486 and $29,429,290, 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 |
$ | 3,579,626 | ||
Aggregate unrealized (depreciation) of investment securities |
(7,051,857 | ) | ||
Net unrealized appreciation (depreciation) of investment securities |
$ | (3,472,231 | ) |
Cost of investments for tax purposes is $141,104,460.
NOTE 9Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of taxable income, on August 31, 2013, undistributed net investment income was increased by $310 and shares of beneficial interest was decreased by $310. This reclassification had no effect on the net assets of the Fund.
20 Invesco Pennsylvania Tax Free Income Fund
NOTE 10Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
450,184 | $ | 7,639,044 | 367,448 | $ | 6,090,660 | ||||||||||
Class B |
5,503 | 93,969 | 4,343 | 70,764 | ||||||||||||
Class C |
184,917 | 3,140,149 | 56,273 | 928,944 | ||||||||||||
Class Y |
101,607 | 1,723,234 | 64,277 | 1,080,787 | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
180,058 | 3,021,259 | 199,465 | 3,302,287 | ||||||||||||
Class B |
2,552 | 43,042 | 3,625 | 60,091 | ||||||||||||
Class C |
14,232 | 238,987 | 13,417 | 222,487 | ||||||||||||
Class Y |
2,657 | 44,358 | 733 | 12,371 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
22,964 | 390,112 | 31,384 | 516,897 | ||||||||||||
Class B |
(22,918 | ) | (390,112 | ) | (32,316 | ) | (516,897 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(964,811 | ) | (16,132,933 | ) | (779,352 | ) | (12,876,017 | ) | ||||||||
Class B |
(15,957 | ) | (264,701 | ) | (26,501 | ) | (450,410 | ) | ||||||||
Class C |
(141,067 | ) | (2,298,315 | ) | (33,582 | ) | (558,373 | ) | ||||||||
Class Y |
(13,921 | ) | (231,778 | ) | (289 | ) | (4,888 | ) | ||||||||
Net increase (decrease) in share activity |
(194,000 | ) | $ | (2,983,685 | ) | (131,075 | ) | $ | (2,121,297 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 45% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
21 Invesco Pennsylvania Tax Free Income Fund
NOTE 11Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Distributions from net realized gains |
Total distributions |
Net asset value, end of period |
Total return |
Net assets, end of period (000s omitted) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed |
Supplemental ratio: Ratio of expenses to average net assets (excluding interest, facilities and maintenance fees)(b) |
Ratio of net investment income to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 17.05 | $ | 0.63 | $ | (1.65 | ) | $ | (1.02 | ) | $ | (0.64 | ) | $ | | $ | (0.64 | ) | $ | 15.39 | (6.24 | )%(d) | $ | 118,936 | 1.03 | %(e) | 1.01 | %(e) | 3.72 | %(e) | 17 | % | ||||||||||||||||||||||||
Year ended 08/31/12 |
15.85 | 0.68 | 1.19 | 1.87 | (0.67 | ) | | (0.67 | ) | 17.05 | 12.04 | (d) | 137,146 | 1.03 | 1.01 | 4.13 | 11 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.29 | 0.70 | (0.47 | ) | 0.23 | (0.67 | ) | | (0.67 | ) | 15.85 | 1.58 | (d) | 130,344 | 1.02 | 1.00 | 4.47 | 13 | ||||||||||||||||||||||||||||||||||||||
Period ended 08/31/10 |
15.93 | 0.66 | 0.38 | 1.04 | (0.68 | ) | | (0.68 | ) | 16.29 | 6.74 | (d) | 141,406 | 1.14 | (f) | 1.10 | (f) | 4.54 | (f) | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 |
14.76 | 0.73 | 1.18 | 1.91 | (0.74 | ) | | (0.74 | ) | 15.93 | 13.60 | (g) | 141,191 | 1.21 | 1.13 | 5.05 | 17 | |||||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 |
16.84 | 0.72 | (2.03 | ) | (1.31 | ) | (0.73 | ) | (0.04 | ) | (0.77 | ) | 14.76 | (8.02 | )(g) | 137,435 | 1.32 | 1.06 | 4.43 | 25 | ||||||||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
17.09 | 0.63 | (1.66 | ) | (1.03 | ) | (0.64 | ) | | (0.64 | ) | 15.42 | (6.28 | )(d)(h) | 1,717 | 1.03 | (e)(h) | 1.01 | (e)(h) | 3.72 | (e)(h) | 17 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
15.86 | 0.71 | 1.19 | 1.90 | (0.67 | ) | | (0.67 | ) | 17.09 | 12.22 | (d) | 2,430 | 0.86 | 0.84 | 4.30 | 11 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.23 | 0.70 | (0.45 | ) | 0.25 | (0.62 | ) | | (0.62 | ) | 15.86 | 1.68 | (d)(h) | 3,062 | 1.02 | (h) | 1.00 | (h) | 4.47 | (h) | 13 | |||||||||||||||||||||||||||||||||||
Period ended 08/31/10 |
15.89 | 0.59 | 0.38 | 0.97 | (0.63 | ) | | (0.63 | ) | 16.23 | 6.27 | (d)(h) | 4,682 | 1.64 | (f)(h) | 1.60 | (f)(h) | 4.05 | (f)(h) | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 |
14.72 | 0.68 | 1.18 | 1.86 | (0.69 | ) | | (0.69 | ) | 15.89 | 13.21 | (i)(j) | 5,364 | 1.57 | (j) | 1.49 | (j) | 4.70 | (j) | 17 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 |
16.78 | 0.63 | (2.01 | ) | (1.38 | ) | (0.64 | ) | (0.04 | ) | (0.68 | ) | 14.72 | (8.46 | )(i)(j) | 6,161 | 1.81 | (j) | 1.55 | (j) | 3.94 | (j) | 25 | |||||||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
17.08 | 0.50 | (1.66 | ) | (1.16 | ) | (0.51 | ) | | (0.51 | ) | 15.41 | (7.00 | )(d) | 10,838 | 1.78 | (e) | 1.76 | (e) | 2.97 | (e) | 17 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
15.88 | 0.56 | 1.19 | 1.75 | (0.55 | ) | | (0.55 | ) | 17.08 | 11.19 | (d) | 11,020 | 1.78 | 1.76 | 3.38 | 11 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.31 | 0.58 | (0.45 | ) | 0.13 | (0.56 | ) | | (0.56 | ) | 15.88 | 0.89 | (d) | 9,670 | 1.77 | 1.75 | 3.72 | 13 | ||||||||||||||||||||||||||||||||||||||
Period ended 08/31/10 |
15.95 | 0.55 | 0.38 | 0.93 | (0.57 | ) | | (0.57 | ) | 16.31 | 6.01 | (d) | 11,083 | 1.89 | (f) | 1.85 | (f) | 3.79 | (f) | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 09/30/09 |
14.78 | 0.62 | 1.18 | 1.80 | (0.63 | ) | | (0.63 | ) | 15.95 | 12.74 | (k) | 6,776 | 1.96 | 1.89 | 4.28 | 17 | |||||||||||||||||||||||||||||||||||||||
Year ended 09/30/08 |
16.86 | 0.59 | (2.02 | ) | (1.43 | ) | (0.61 | ) | (0.04 | ) | (0.65 | ) | 14.78 | (8.71 | )(k) | 4,546 | 2.07 | 1.81 | 3.68 | 25 | ||||||||||||||||||||||||||||||||||||
Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
17.06 | 0.67 | (1.65 | ) | (0.98 | ) | (0.68 | ) | | (0.68 | ) | 15.40 | (6.00 | )(d) | 2,562 | 0.78 | (e) | 0.76 | (e) | 3.97 | (e) | 17 | ||||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
15.86 | 0.73 | 1.18 | 1.91 | (0.71 | ) | | (0.71 | ) | 17.06 | 12.31 | (d) | 1,298 | 0.78 | 0.76 | 4.38 | 11 | |||||||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
16.30 | 0.74 | (0.47 | ) | 0.27 | (0.71 | ) | | (0.71 | ) | 15.86 | 1.84 | (d) | 179 | 0.77 | 0.75 | 4.72 | 13 | ||||||||||||||||||||||||||||||||||||||
Period ended 08/31/10(l) |
15.94 | 0.19 | 0.36 | 0.55 | (0.19 | ) | | (0.19 | ) | 16.30 | 3.49 | (d) | 167 | 0.85 | (f) | 0.81 | (f) | 4.75 | (f) | 15 |
(a) | Calculated using average shares outstanding. |
(b) | For the years ended September 30, 2010 and prior, ratio does not exclude facilities and maintenance fees. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(e) | Ratios are based on average daily net assets (000s omitted) of $133,890, $2,184, $12,025 and $2,227 for Class A, Class B, Class C and Class Y shares, respectively. |
(f) | Annualized. |
(g) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 4.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(h) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.25%, 0.25% and 0.74% for the years ended August 31, 2013 and August 31, 2011 and the period ended August 31, 2010, respectively. |
(i) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(j) | The Total return, Ratio of expenses to average net assets and Ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of less than 1%. |
(k) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(l) | Commencement date of June 1, 2010. |
22 Invesco Pennsylvania Tax Free Income Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Pennsylvania Tax Free Income Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Invesco Pennsylvania Tax Free Income Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 three years in the period then ended and the eleven month period ended August 31, 2010, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the periods ended September 30, 2009 and prior were audited by another independent registered public accounting firm whose report dated November 20, 2009 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
23 Invesco Pennsylvania Tax Free Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A | $ | 1,000.00 | $ | 915.60 | $ | 5.02 | $ | 1,019.96 | $ | 5.30 | 1.04 | % | ||||||||||||
B | 1,000.00 | 915.80 | 5.02 | 1,019.96 | 5.30 | 1.04 | ||||||||||||||||||
C | 1,000.00 | 912.20 | 8.63 | 1,016.18 | 9.10 | 1.79 | ||||||||||||||||||
Y | 1,000.00 | 916.80 | 3.82 | 1,021.22 | 4.02 | 0.79 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
24 Invesco Pennsylvania Tax Free Income Fund
Approval of Investment Advisory and Sub-Advisory Contracts
25 Invesco Pennsylvania Tax Free Income Fund
26 Invesco Pennsylvania Tax Free Income Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
0 | % | ||
Corporate Dividends Received Deduction* |
0 | % | ||
Tax-Exempt Interest Dividends* |
100 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
27 Invesco Pennsylvania Tax Free Income Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Pennsylvania Tax Free Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Pennsylvania Tax Free Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Pennsylvania Tax Free Income Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Pennsylvania Tax Free Income Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
||
SEC file numbers: 811-09913 and 333-36074 VK-PTFI-AR-1 Invesco Distributors, Inc. |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its extraordinarily |
accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 | Source: Reuters |
2 Invesco S&P 500 Index Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, |
we meet with independent legal counsel and review performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco S&P 500 Index Fund
Managements Discussion of Fund Performance
4 Invesco S&P 500 Index Fund
5 Invesco S&P 500 Index Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
continued from page 8
6 Invesco S&P 500 Index Fund
7 Invesco S&P 500 Index Fund
Invesco S&P 500 Index Funds investment objective is to provide investment results that, before expenses, correspond to the total return (i.e., the combination of capital changes and income) of the Standard & Poors 500 Composite Stock Price Index (S&P 500 Index).
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco S&P 500 Index Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
14 Invesco S&P 500 Index Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
15 Invesco S&P 500 Index Fund
Investment Abbreviations:
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 & Poors. |
(b) | Non-income producing security. |
(c) | The Funds Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. See Note 4. |
(d) | All or a portion of the value was pledged as collateral to cover margin requirements for open futures contracts. See Note 1I and Note 5. |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
16 Invesco S&P 500 Index Fund
Statement of Assets and Liabilities
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
17 Invesco S&P 500 Index Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $7,359) |
$ | 12,622,220 | ||
Dividends from affiliates |
18,508 | |||
Total investment income |
12,640,728 | |||
Expenses: |
||||
Advisory fees |
672,470 | |||
Administrative services fees |
143,890 | |||
Custodian fees |
31,555 | |||
Distribution fees: |
||||
Class A |
1,094,363 | |||
Class B |
152,384 | |||
Class C |
847,338 | |||
Transfer agent fees |
824,922 | |||
Trustees and officers fees and benefits |
40,582 | |||
Other |
352,223 | |||
Total expenses |
4,159,727 | |||
Less: Fees waived and expense offset arrangement(s) |
(7,185 | ) | ||
Net expenses |
4,152,542 | |||
Net investment income |
8,488,186 | |||
Realized and unrealized gain from: |
||||
Net realized gain from: |
||||
Investment securities |
1,594,690 | |||
Futures contracts |
1,430,315 | |||
3,025,005 | ||||
Change in net unrealized appreciation (depreciation) of: |
||||
Investment securities |
79,781,728 | |||
Futures contracts |
(216,585 | ) | ||
79,565,143 | ||||
Net realized and unrealized gain |
82,590,148 | |||
Net increase in net assets resulting from operations |
$ | 91,078,334 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
18 Invesco S&P 500 Index Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
| |||||||
Net investment income |
$ | 8,488,186 | $ | 7,062,081 | ||||
Net realized gain |
3,025,005 | (39,568 | ) | |||||
Change in net unrealized appreciation |
79,565,143 | 71,983,694 | ||||||
Net increase in net assets resulting from operations |
91,078,334 | 79,006,207 | ||||||
Distributions to shareholders from net investment income: |
||||||||
Class A |
(7,761,631 | ) | (6,590,989 | ) | ||||
Class B |
(194,940 | ) | (193,068 | ) | ||||
Class C |
(920,398 | ) | (511,460 | ) | ||||
Class Y |
(330,633 | ) | (356,716 | ) | ||||
Total distributions from net investment income |
(9,207,602 | ) | (7,652,233 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
(8,062,305 | ) | (13,332,452 | ) | ||||
Class B |
(11,116,271 | ) | (22,284,272 | ) | ||||
Class C |
611,425 | (331,841 | ) | |||||
Class Y |
5,284,880 | (4,421,941 | ) | |||||
Net increase (decrease) in net assets resulting from share transactions |
(13,282,271 | ) | (40,370,506 | ) | ||||
Net increase in net assets |
68,588,461 | 30,983,468 | ||||||
Net assets: |
||||||||
Beginning of year |
523,997,470 | 493,014,002 | ||||||
End of year (includes undistributed net investment income of $5,590,262 and $6,283,512, respectively) |
$ | 592,585,931 | $ | 523,997,470 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco S&P 500 Index Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to provide investment results that, before expenses, correspond to the total return (i.e., the combination of capital changes and income) of the Standard & Poors® 500 Composite Stock Price Index (S&P 500 Index).
The Fund currently consists of four different classes of shares: Class A, Class B, Class C and Class Y. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. For purposes of determining net asset value per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (NYSE).
19 Invesco S&P 500 Index Fund
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income and net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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.
20 Invesco S&P 500 Index Fund
F. | Expenses Fees provided for under the Rule 12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Futures Contracts The Fund may enter into futures contracts to manage exposure to interest rate, equity and market price movements and/or currency risks. A futures contract is an agreement between two parties to purchase or sell a specified underlying security, currency or commodity (or delivery of a cash settlement price, in the case of an index future) for a fixed price at a future date. The Fund currently invests only in exchange-traded futures and they are standardized as to maturity date and underlying financial instrument. Initial margin deposits required upon entering into futures contracts are satisfied by the segregation of specific securities or cash as collateral at the futures commission merchant (broker). During the period the futures contracts are open, changes in the value of the contracts are recognized as unrealized gains or losses by recalculating the value of the contracts on a daily basis. Subsequent or variation margin payments are received or made depending upon whether unrealized gains or losses are incurred. These amounts are reflected as receivables or payables on the Statement of Assets and Liabilities. When the contracts are closed or expire, the Fund recognizes a realized gain or loss equal to the difference between the proceeds from, or cost of, the closing transaction and the Funds basis in the contract. The net realized gain (loss) and the change in unrealized gain (loss) on futures contracts held during the period is included on the Statement of Operations. The primary risks associated with futures contracts are market risk and the absence of a liquid secondary market. If the Fund were unable to liquidate a futures contract and/or enter into an offsetting closing transaction, the Fund would continue to be subject to market risk with respect to the value of the contracts and continue to be required to maintain the margin deposits on the futures contracts. Futures contracts have minimal counterparty risk since the exchanges clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default. Risks may exceed amounts recognized in the Statement of Assets and Liabilities. |
J. | Collateral To the extent the Fund has designated or segregated a security as collateral and that security is subsequently sold, it is the Funds practice to replace such collateral no later than the next business day. |
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $2 billion |
0.12% | |||
Over $2 billion |
0.10% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses and/or reimbursement (excluding certain items discussed below) of Class A, Class B, Class C and Class Y shares to 2.00%, 2.75%, 2.75% and 1.75% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the net annual fund operating expenses and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Adviser did not waive fees and/or reimburse expenses during the period under this expense limitation.
Further, the Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $6,724.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or
21 Invesco S&P 500 Index Fund
networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the Plan) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A up to 0.25% of the average daily net assets of Class A shares; (2) Class B up to 1.00% of the average daily net assets of Class B shares; and (3) Class C up to 1.00% of the average daily net assets of Class C shares.
In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by IDI, but not yet reimbursed to IDI, may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares.
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $40,188 in front-end sales commissions from the sale of Class A shares and $19, $6,018 and $4,651 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of August 31, 2013. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity Securities |
$ | 592,074,661 | $ | | $ | | $ | 592,074,661 | ||||||||
Futures* |
(81,857 | ) | | (81,857 | ) | |||||||||||
Total Investments |
$ | 591,992,804 | $ | | $ | | $ | 591,992,804 |
* | Unrealized appreciation (depreciation). |
NOTE 4Investments in Affiliates
The Funds Adviser is a subsidiary of Invesco Ltd. and therefore, Invesco Ltd. is considered to be affiliated with the Fund. The following is a summary of the transactions in and earnings from investments in Invesco Ltd. for the year ended August 31, 2013.
Value 08/31/12 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation (Depreciation) |
Realized Gain (Loss) |
Value 08/31/13 |
Dividend Income |
||||||||||||||||||||||
Invesco Ltd. |
$ | 432,184 | $ | 18,842 | $ | (25,561 | ) | $ | 119,443 | $ | (219 | ) | $ | 544,689 | $ | 14,320 |
NOTE 5Derivative Investments
Value of Derivative Investments at Period-End
The table below summarizes the value of the Funds derivative investments, detailed by primary risk exposure, held as of August 31, 2013:
Value | ||||||||
Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
Equity risk |
||||||||
Futures contracts(a) |
$ | | $ | (81,857 | ) |
(a) | Includes cumulative appreciation (depreciation) of futures contracts. Only current days variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
22 Invesco S&P 500 Index Fund
Effect of Derivative Investments for the year ended August 31, 2013
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Location of Gain (Loss) on Statement of Operations |
||||
Futures* | ||||
Realized Gain |
||||
Equity risk |
$ | 1,430,315 | ||
Change in Unrealized Appreciation (Depreciation) |
||||
Equity risk |
$ | (216,585 | ) | |
Total |
$ | 1,213,730 |
* | The average notional value of futures contracts outstanding was $5,995,280. |
Open Futures Contracts | ||||||||||||||||
Long Contracts | Number of Contracts |
Expiration Month |
Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||
E-Mini S&P 500 |
88 | September-2013 | $ | 7,177,720 | $ | (81,857 | ) |
NOTE 6Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $461.
NOTE 7Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 8Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 9Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | 9,207,602 | $ | 7,652,233 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 5,611,751 | ||
Net unrealized appreciation investments |
226,634,414 | |||
Temporary book/tax differences |
(48,580 | ) | ||
Capital loss carryforward |
(56,058,757 | ) | ||
Shares of beneficial interest |
416,447,103 | |||
Total net assets |
$ | 592,585,931 |
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 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 Funds temporary book/tax differences are the result of the trustee deferral of compensation and retirement plan benefits.
23 Invesco S&P 500 Index Fund
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund utilized $4,003,442 of capital loss carryforward in the current period to offset net realized capital gain for federal income tax purposes. The Fund has a capital loss carryforward as of August 31, 2013, which expires as follows:
Capital Loss Carryforward* | ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
August 31, 2017 |
$ | 12,322,416 | $ | | $ | 12,322,416 | ||||||
August 31, 2018 |
19,847,353 | | 19,847,353 | |||||||||
August 31, 2019 |
10,267,726 | | 10,267,726 | |||||||||
Not subject to expiration |
| 13,621,262 | 13,621,262 | |||||||||
$ | 42,437,495 | $ | 13,621,262 | $ | 56,058,757 |
* | 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 10Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $30,071,307 and $42,930,463, 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 |
$ | 240,608,903 | ||
Aggregate unrealized (depreciation) of investment securities |
(13,974,489 | ) | ||
Net unrealized appreciation of investment securities |
$ | 226,634,414 |
Cost of investments for tax purposes is $365,440,247.
NOTE 11Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of fair funds settlements and REIT distributions, on August 31, 2013, undistributed net investment income was increased by $26,166, undistributed net realized gain (loss) was decreased by $24,704 and shares of beneficial interest was decreased by $1,462. This reclassification had no effect on the net assets of the Fund.
24 Invesco S&P 500 Index Fund
NOTE 12Share Information
Summary of Share Activity | ||||||||||||||||
For the years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
3,609,161 | $ | 59,967,499 | 2,763,738 | $ | 39,469,371 | ||||||||||
Class B |
48,627 | 807,977 | 72,106 | 1,005,514 | ||||||||||||
Class C |
879,159 | 14,382,285 | 750,901 | 10,524,251 | ||||||||||||
Class Y |
745,535 | 12,266,779 | 636,341 | 9,308,878 | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
466,707 | 7,079,950 | 445,622 | 5,998,079 | ||||||||||||
Class B |
11,362 | 169,870 | 12,814 | 169,909 | ||||||||||||
Class C |
56,433 | 834,081 | 34,865 | 457,088 | ||||||||||||
Class Y |
20,998 | 321,482 | 26,089 | 354,294 | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
604,257 | 9,883,567 | 1,243,061 | 17,748,051 | ||||||||||||
Class B |
(615,612 | ) | (9,883,567 | ) | (1,267,736 | ) | (17,748,051 | ) | ||||||||
Reacquired: |
||||||||||||||||
Class A |
(5,154,351 | ) | (84,993,321 | ) | (5,446,685 | ) | (76,547,953 | ) | ||||||||
Class B |
(137,855 | ) | (2,210,551 | ) | (415,442 | ) | (5,711,644 | ) | ||||||||
Class C |
(904,350 | ) | (14,604,941 | ) | (831,615 | ) | (11,313,180 | ) | ||||||||
Class Y |
(445,668 | ) | (7,303,381 | ) | (977,353 | ) | (14,085,113 | ) | ||||||||
Net increase (decrease) in share activity |
(815,597 | ) | $ | (13,282,271 | ) | (2,953,294 | ) | $ | (40,370,506 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 65% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Trust has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
25 Invesco S&P 500 Index Fund
NOTE 13Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Dividends from net investment income |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000s omitted)(c) |
Ratio of expenses to average net assets with fee waivers and/or expenses absorbed(d) |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed(d) |
Ratio of net investment income to average net assets(d) |
Portfolio turnover(e) |
|||||||||||||||||||||||||||||||||||||
Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 15.26 | $ | 0.27 | $ | 2.43 | $ | 2.70 | $ | (0.29 | ) | $ | 17.67 | 18.04 | % | $ | 467,234 | 0.62 | %(f) | 0.62 | %(f) | 1.64 | %(f) | 6 | % | |||||||||||||||||||||||
Year ended 08/31/12 |
13.25 | 0.22 | 2.03 | 2.25 | (0.24 | ) | 15.26 | 17.26 | 410,772 | 0.65 | 0.67 | 1.55 | 3 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.36 | 0.19 | 1.85 | 2.04 | (0.15 | ) | 13.25 | 17.94 | 369,597 | 0.61 | 0.61 | 1.42 | 4 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
11.09 | 0.18 | 0.33 | 0.51 | (0.24 | ) | 11.36 | 4.44 | 335,583 | 0.60 | 0.69 | 1.47 | 7 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
13.94 | 0.21 | (2.83 | ) | (2.62 | ) | (0.23 | ) | 11.09 | (18.43 | ) | 349 | 0.59 | 0.74 | 2.11 | (g) | 7 | |||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
14.96 | 0.14 | 2.40 | 2.54 | (0.18 | ) | 17.32 | 17.14 | 11,045 | 1.37 | (f) | 1.37 | (f) | 0.89 | (f) | 6 | ||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
12.92 | 0.11 | 2.01 | 2.12 | (0.08 | ) | 14.96 | 16.47 | 19,912 | 1.40 | 1.42 | 0.80 | 3 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.10 | 0.09 | 1.80 | 1.89 | (0.07 | ) | 12.92 | 17.02 | 37,840 | 1.36 | 1.36 | 0.67 | 4 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.83 | 0.08 | 0.33 | 0.41 | (0.14 | ) | 11.10 | 3.68 | 64,102 | 1.35 | 1.44 | 0.72 | 7 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
13.54 | 0.13 | (2.73 | ) | (2.60 | ) | (0.11 | ) | 10.83 | (19.06 | ) | 110 | 1.34 | 1.49 | 1.36 | (h) | 7 | |||||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
14.79 | 0.14 | 2.37 | 2.51 | (0.18 | ) | 17.12 | 17.14 | (i) | 91,761 | 1.36 | (f)(i) | 1.36 | (f)(i) | 0.90 | (f)(i) | 6 | |||||||||||||||||||||||||||||||
Year ended 08/31/12 |
12.79 | 0.11 | 1.99 | 2.10 | (0.10 | ) | 14.79 | 16.50 | 78,797 | 1.40 | 1.42 | 0.80 | 3 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
10.99 | 0.10 | 1.77 | 1.87 | (0.07 | ) | 12.79 | 17.01 | (i) | 68,753 | 1.27 | (i) | 1.27 | (i) | 0.76 | (i) | 4 | |||||||||||||||||||||||||||||||
Year ended 08/31/10 |
10.74 | 0.08 | 0.33 | 0.41 | (0.16 | ) | 10.99 | 3.71 | 66,933 | 1.35 | 1.44 | 0.72 | 7 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
13.46 | 0.13 | (2.72 | ) | (2.59 | ) | (0.13 | ) | 10.74 | (19.01 | ) | 74 | 1.34 | 1.49 | 1.36 | (j) | 7 | |||||||||||||||||||||||||||||||
Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
15.43 | 0.32 | 2.45 | 2.77 | (0.33 | ) | 17.87 | 18.33 | 22,546 | 0.37 | (f) | 0.37 | (f) | 1.89 | (f) | 6 | ||||||||||||||||||||||||||||||||
Year ended 08/31/12 |
13.40 | 0.26 | 2.06 | 2.32 | (0.29 | ) | 15.43 | 17.64 | 14,518 | 0.40 | 0.42 | 1.80 | 3 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/11 |
11.48 | 0.23 | 1.86 | 2.09 | (0.17 | ) | 13.40 | 18.21 | 16,824 | 0.36 | 0.36 | 1.67 | 4 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/10 |
11.20 | 0.21 | 0.33 | 0.54 | (0.26 | ) | 11.48 | 4.72 | 23,168 | 0.35 | 0.44 | 1.72 | 7 | |||||||||||||||||||||||||||||||||||
Year ended 08/31/09 |
14.09 | 0.25 | (2.87 | ) | (2.62 | ) | (0.27 | ) | 11.20 | (18.22 | ) | 23 | 0.34 | 0.49 | 2.36 | (k) | 7 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Not annualized for periods less than one year, if applicable. |
(c) | Net assets, end of period, for the year ended August 31, 2009 are stated in millions. |
(d) | The ratios reflect the rebate of certain Fund expenses in connection with investments in a Morgan Stanley affiliate during the period. The effect of the rebate on the ratios was 0.00% for the year ended 2009. The rebate was less than 0.005% for the year ended 2009. |
(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 (000s) of $441,785, 15,238, 85,050 and 18,318 for Class A, Class B, Class C and Class Y shares, respectively. |
(g) | Ratio of net investment income (loss) to average net assets without fee waivers and/or expense reimbursements was 1.96% for the year ended August 31, 2009. |
(h) | Ratio of net investment income (loss) to average net assets without fee waivers and/or expense reimbursements was 1.21% for the year ended August 31, 2009. |
(i) | The total return, ratio of expenses to average net assets and ratio of net investment income to average net assets reflect actual 12b-1 fees of 0.99% and 0.91% for the years ended August 31, 2013 and August 31, 2012, respectively. |
(j) | Ratio of net investment income (loss) to average net assets without fee waivers and/or expense reimbursements was 1.21% for the year ended August 31, 2009. |
(k) | Ratio of net investment income (loss) to average net assets without fee waivers and/or expense reimbursements was 2.21% for the year ended August 31, 2009. |
26 Invesco S&P 500 Index Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco S&P 500 Index 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 Invesco S&P 500 Index Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 four years in the period then ended, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the period ended August 31, 2009 were audited by another independent registered public accounting firm whose report dated October 27, 2009 expressed an unqualified opinion on such financial statement.
PRICEWATERHOUSECOOPERS LLP
October 25, 2013
Houston, Texas
27 Invesco S&P 500 Index 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, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class | Beginning Account Value (03/01/13) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A |
$ | 1,000.00 | $ | 1,086.10 | $ | 3.15 | $ | 1,022.18 | $ | 3.06 | 0.60 | % | ||||||||||||
B |
1,000.00 | 1,082.50 | 7.09 | 1,018.40 | 6.87 | 1.35 | ||||||||||||||||||
C |
1,000.00 | 1,082.20 | 7.09 | 1,018.40 | 6.87 | 1.35 | ||||||||||||||||||
Y |
1,000.00 | 1,087.60 | 1.84 | 1,023.44 | 1.79 | 0.35 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
28 Invesco S&P 500 Index Fund
Approval of Investment Advisory and Sub-Advisory Contracts
29 Invesco S&P 500 Index Fund
30 Invesco S&P 500 Index Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Qualified Dividend Income* |
100 | % | ||
Corporate Dividends Received Deduction* |
100 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
31 Invesco S&P 500 Index Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco S&P 500 Index Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco S&P 500 Index Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco S&P 500 Index Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco S&P 500 Index Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
||
SEC file numbers: 811-09913 and 333-36074 MS-SPI-AR-1 Invesco Distributors, Inc. |
| ||||
Annual Report to Shareholders
|
August 31, 2013
| |||
| ||||
Invesco Small Cap Discovery Fund
Nasdaq: A: VASCX n B: VBSCX n C: VCSCX n Y: VISCX n R5: VESCX n R6: VFSCX |
Letters to Shareholders
Philip Taylor |
Dear Shareholders: Enclosed in this annual report, youll find information about your Fund and the factors that affected its performance during the reporting period. Inside, youll also find a discussion from your portfolio managers about how they managed your Fund, as well as performance data for your Fund, a complete list of your Funds investments as of the close of the reporting period and other important information. I hope you find this report of interest. During the reporting period covered by this report, major US equity indexes made multiyear or even all-time highs.1 Economic data were generally positive; housing and consumer spending data were particularly encouraging. Nonetheless, economic uncertainty and concern about continuing political and budget gridlock in Washington persisted. The US Federal Reserves deliberate vagueness about when, and to what degree, it might begin to curtail its |
extraordinarily accommodative monetary policies together with uncertainty about who will next lead the central bank affected fixed income and equity markets alike. Most developed, non-US stock markets remained positive for the first half of 2013, despite a difficult second quarter.
Periods of market volatility and economic uncertainty can weaken the will of even the most resolute investor. Thats why Invesco believes its often helpful to work with a skilled and trusted financial adviser who can emphasize the importance of adhering to an investment plan designed to achieve long-term goals rather than being sidetracked by short-term uncertainty that can result in inaction. A financial adviser who is familiar with your individual financial situation, investment goals and risk tolerance can be an invaluable partner as you work toward your financial goals. He or she can provide insight and perspective when markets are volatile; encouragement and reassurance when times are uncertain; and advice and guidance when your financial situation or investment goals change.
Our website, invesco.com/us, is another source of timely insight and information for investors. On the website, youll find fund-specific as well as more general information from many of Invescos investment professionals. Youll find in-depth articles, video clips and audio commentaries and, of course, you also can access information about your Invesco account whenever its convenient for you.
What we mean by Intentional Investing
At Invesco, all of our people and all of our resources are dedicated to helping investors achieve their financial objectives. Its a philosophy we call Intentional Investing, and it guides the way we:
n | Manage investments - Our dedicated investment professionals search the world for the best opportunities, and each investment team follows a clear, disciplined process to build portfolios and mitigate risk. |
n | Provide choices - We offer multiple investment strategies, allowing you and your financial adviser to build a portfolio thats purpose-built for your needs. |
n | Connect with you - Were committed to giving you the expert insights you need to make informed investing decisions, and we are well-equipped to provide high-quality support for investors and advisers. |
At Invesco, we believe in putting investors first. Thats why investment management is all we do. Our sole focus on managing your money allows you and your financial adviser to build a portfolio of Invesco funds appropriate for your investment needs and goals today and when your circumstances change.
Have questions?
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs for many years to come. Thank you for investing with us.
Sincerely,
Philip Taylor
Senior Managing Director, Invesco Ltd.
1 Source: Reuters
2 Invesco Small Cap Discovery Fund
Bruce Crockett |
Dear Fellow Shareholders: The Invesco Funds Board has worked on a variety of issues over the last several months, and Id like to take this opportunity to discuss two that affect you and our fellow fund shareholders. The first issue on which your Board has been working is our annual review of the funds advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This annual review, which is required by the Investment Company Act of 1940, focuses on the nature and quality of the services Invesco provides as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. Each year, we spend months reviewing detailed information that we request from Invesco that allows us to evaluate its services and fees. We also use information from many independent sources, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees on the Board. Additionally, we meet with independent legal counsel and review |
performance and fee data prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
Im pleased to report that the Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco Advisers and its affiliates would serve the best interests of each fund and its shareholders.
The second area of focus to highlight is the Boards efforts to ensure that we provide a lineup of funds that allow financial advisers to build portfolios that meet shareholders changing financial needs and goals. Today, more and more investors are reaching, or approaching, retirement. But interest rates remain low, making it difficult for many investors to generate the income they need, or will soon need, in their retirement years.
The members of your Board think about these things, too, and weve worked with Invesco Advisers to provide more income-generating options in the Invesco Funds lineup to help shareholders potentially meet their income needs. Your Board recently approved changes to three existing equity mutual funds, increasing their focus on generating income while also seeking to provide long-term growth of capital.
As a result of these changes, the funds and their respective management teams now have more flexibility to invest in the types of securities that could meet investors growing need for income generation, and in some cases, also help investors diversify their sources of income. These equity funds complement an array of fixed-income, asset allocation and alternative investment options in the Invesco Funds lineup designed to accommodate a variety of risk tolerances.
Be assured that your Board will continue working on behalf of fund shareholders, keeping your needs and interests uppermost in our minds.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,
Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
3 Invesco Small Cap Discovery Fund
Managements Discussion of Fund Performance
4 Invesco Small Cap Discovery Fund
5 Invesco Small Cap Discovery Fund
Your Funds Long-Term Performance
Results of a $10,000 Investment Oldest Share Class(es)
Fund and index data from 8/31/03
continued from page 8
6 Invesco Small Cap Discovery Fund
7 Invesco Small Cap Discovery Fund
Invesco Small Cap Discovery Funds investment objective is to seek capital appreciation.
n | Unless otherwise stated, information presented in this report is as of August 31, 2013, and is based on total net assets. |
n | Unless otherwise noted, all data provided by Invesco. |
n | To access your Funds reports/prospectus, visit invesco.com/fundreports. |
8 Invesco Small Cap Discovery Fund
Schedule of Investments(a)
August 31, 2013
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Small Cap Discovery Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Small Cap Discovery Fund
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 & Poors. |
(b) | Non-income producing security. |
(c) | All or a portion of this security was out on loan at August 31, 2013. |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. |
(e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrowers return of the securities loaned. See Note 1I. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Small Cap Discovery Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Small Cap Discovery Fund
Statement of Operations
For the year ended August 31, 2013
Investment income: |
| |||
Dividends (net of foreign withholding taxes of $46,694) |
$ | 4,861,833 | ||
Dividends from affiliated money market funds (includes securities lending income of $124,927) |
183,310 | |||
Total investment income |
5,045,143 | |||
Expenses: |
||||
Advisory fees |
6,592,670 | |||
Administrative services fees |
218,879 | |||
Custodian fees |
30,488 | |||
Distribution fees: |
||||
Class A |
1,411,002 | |||
Class B |
32,345 | |||
Class C |
497,251 | |||
Transfer agent fees A, B, C and Y |
1,881,616 | |||
Transfer agent fees R5 |
6,212 | |||
Transfer agent fees R6 |
363 | |||
Trustees and officers fees and benefits |
50,952 | |||
Other |
288,501 | |||
Total expenses |
11,010,279 | |||
Less: Fees waived and expense offset arrangement(s) |
(81,826 | ) | ||
Net expenses |
10,928,453 | |||
Net investment income (loss) |
(5,883,310 | ) | ||
Realized and unrealized gain from: |
||||
Net realized gain from investment securities |
129,642,296 | |||
Change in net unrealized appreciation of investment securities |
67,156,020 | |||
Net realized and unrealized gain |
196,798,316 | |||
Net increase in net assets resulting from operations |
$ | 190,915,006 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
13 Invesco Small Cap Discovery Fund
Statement of Changes in Net Assets
For the years ended August 31, 2013 and 2012
2013 | 2012 | |||||||
Operations: |
||||||||
Net investment income (loss) |
$ | (5,883,310 | ) | $ | (7,991,062 | ) | ||
Net realized gain |
129,642,296 | 69,161,444 | ||||||
Change in net unrealized appreciation |
67,156,020 | 87,063,026 | ||||||
Net increase in net assets resulting from operations |
190,915,006 | 148,233,408 | ||||||
Distributions to shareholders from net realized gains: |
||||||||
Class A |
(58,971,398 | ) | (81,968,055 | ) | ||||
Class B |
(1,402,434 | ) | (1,718,916 | ) | ||||
Class C |
(5,257,156 | ) | (5,413,962 | ) | ||||
Class Y |
(19,373,899 | ) | (21,572,101 | ) | ||||
Class R5 |
(981 | ) | | |||||
Class R6 |
(981 | ) | | |||||
Total distributions from net realized gains |
(85,006,849 | ) | (110,673,034 | ) | ||||
Share transactionsnet: |
||||||||
Class A |
(135,546,440 | ) | (242,910,836 | ) | ||||
Class B |
(2,685,853 | ) | (3,476,255 | ) | ||||
Class C |
(469,868 | ) | (3,443,087 | ) | ||||
Class Y |
(68,806,533 | ) | (34,627,450 | ) | ||||
Class R5 |
43,871,511 | | ||||||
Class R6 |
64,674,752 | | ||||||
Net increase (decrease) in net assets resulting from share transactions |
(98,962,431 | ) | (284,457,628 | ) | ||||
Net increase in net assets |
6,945,726 | (246,897,254 | ) | |||||
Net assets: |
||||||||
Beginning of year |
875,679,831 | 1,122,577,085 | ||||||
End of year (includes undistributed net investment income (loss) of $(5,110,520) and $(5,015,678), respectively) |
$ | 882,625,557 | $ | 875,679,831 |
Notes to Financial Statements
August 31, 2013
NOTE 1Significant Accounting Policies
Invesco Small Cap Discovery Fund (the Fund) is a series portfolio of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end series management investment company consisting of twelve separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Funds investment objective is to seek capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class Y, Class R5 and Class R6. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (CDSC). Class C shares are sold with a CDSC. Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares may continue to reinvest dividends and capital gains distributions in Class B shares until they convert to Class A shares. Also, shareholders in Class B shares will be able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they convert to Class A shares. Generally, Class B shares will automatically convert to Class A shares on or about the month-end, which is at least eight years after the date of purchase. Redemption of Class B shares prior to the conversion date will be subject to a CDSC.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible bonds) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and ask prices from the exchange on which they are principally traded. Options not listed on
14 Invesco Small Cap Discovery Fund
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 (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) prices 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 the Adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trusts 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 securitys fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuers assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Funds net asset value and, accordingly, they reduce the Funds total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuers securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions Distributions from income and net realized capital gain, if any, are generally declared and paid annually and recorded on the 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 of 1986, as amended (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 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. |
15 Invesco Small Cap Discovery Fund
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the 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. Prior to June 1, 2010, incremental transfer agency fees which were unique to each class of shares were charged to the operations of such class. |
G. | Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications Under the Trusts organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Funds servicing agreements, that contain a variety of indemnification clauses. The Funds 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 Funds 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 Funds policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan is shown as a footnote on the Statement of Assets and Liabilities, if any. |
NOTE 2Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the Adviser or Invesco). Under the terms of the investment advisory agreement, the Fund pays an advisory fee to the Adviser based on the annual rate of the Funds average daily net assets as follows:
Average Daily Net Assets | Rate | |||
First $500 million |
0.80% | |||
Next $500 million |
0.75% | |||
Over $1.0 billion |
0.70% |
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers) the Adviser, not the Fund, may pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Sub-Adviser(s).
The Adviser has contractually agreed, through June 30, 2014, to waive advisory fees and/or reimburse expenses to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.75%, 1.75%, 1.75% and 1.75% of average daily net assets, respectively. In determining the Advisers obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause total annual fund operating expenses after fee waiver and/or reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless the Board of the Trustees and Invesco mutually agree to amend or continue the fee waiver agreement, it will terminate on June 30, 2014. The Advisor did not waive fees and/or reimburse expenses during the period under this expense limitation.
The Adviser has contractually agreed, through at least June 30, 2014, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the year ended August 31, 2013, the Adviser waived advisory fees of $80,663.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the year ended August 31, 2013, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
16 Invesco Small Cap Discovery Fund
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (IIS) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting are charged back to the Fund, subject to certain limitations approved by the Trusts Board of Trustees. For the year ended August 31, 2013, the expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (IDI). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the Plans) for Class A shares, Class B shares and Class C shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% each of Class B and Class C average daily net assets.
With respect to Class B and Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class B and Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the year ended August 31, 2013, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the sales charges) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the year ended August 31, 2013, IDI advised the Fund that IDI retained $82,871 in front-end sales commissions from the sale of Class A shares and $2,060, $12,339 and $1,540 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the year ended August 31, 2013, the Fund incurred $28,430 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investments assigned level:
Level 1 | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Funds 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. |
As of August 31, 2013, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). 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.
NOTE 4Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for the year ended August 31, 2013, the Fund engaged in securities purchases of $1,866,077.
NOTE 5Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the year ended August 31, 2013, the Fund received credits from this arrangement, which resulted in the reduction of the Funds total expenses of $1,163.
17 Invesco Small Cap Discovery Fund
NOTE 6Trustees and Officers Fees and Benefits
Trustees and Officers Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees and Officers Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees are eligible to participate in a retirement plan that provides for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees and Officers Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8Distributions to Shareholders and Tax Components of Net Assets
Tax Character of Distributions to Shareholders Paid During the Years Ended August 31, 2013 and 2012:
2013 | 2012 | |||||||
Ordinary income |
$ | | $ | 38,183,752 | ||||
Long-term capital gain |
85,006,849 | 72,489,282 | ||||||
Total distributions |
$ | 85,006,849 | $ | 110,673,034 |
Tax Components of Net Assets at Period-End:
2013 | ||||
Undistributed ordinary income |
$ | 26,321,532 | ||
Undistributed long-term gain |
76,763,091 | |||
Net unrealized appreciation investments |
218,011,813 | |||
Temporary book/tax differences |
(88,574 | ) | ||
Late-Year ordinary loss deferral |
(5,021,944 | ) | ||
Shares of beneficial interest |
566,639,639 | |||
Total net assets |
$ | 882,625,557 |
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 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 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 Trust to utilize. The Regulated Investment Company Modernization Act of 2010 eliminated the eight-year carryover period for capital losses that arise in taxable years beginning after its enactment date of December 22, 2010. Consequently, these capital losses can be carried forward for an unlimited period. However, capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Additionally, post-enactment capital loss carryovers will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforward in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund does not have a capital loss carryforward as of August 31, 2013.
NOTE 9Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the year ended August 31, 2013 was $555,020,841 and $724,789,704, 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 |
$ | 228,600,335 | ||
Aggregate unrealized (depreciation) of investment securities |
(10,588,522 | ) | ||
Net unrealized appreciation of investment securities |
$ | 218,011,813 |
Cost of investments for tax purposes is $698,084,764.
18 Invesco Small Cap Discovery Fund
NOTE 10Reclassification of Permanent Differences
Primarily as a result of differing book/tax treatment of net operating losses, on August 31, 2013, undistributed net investment income (loss) was increased by $5,788,468, undistributed net realized gain was decreased by $5,788,087 and shares of beneficial interest was decreased by $381. This reclassification had no effect on the net assets of the Fund.
NOTE 11Share Information
Summary of Share Activity | ||||||||||||||||
Years ended August 31, | ||||||||||||||||
2013(a) | 2012 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Sold: |
||||||||||||||||
Class A |
10,723,043 | $ | 120,331,339 | 16,280,879 | $ | 168,906,300 | ||||||||||
Class B |
30,854 | 327,642 | 46,729 | 457,333 | ||||||||||||
Class C |
681,254 | 6,809,246 | 430,727 | 4,106,013 | ||||||||||||
Class Y |
4,691,321 | 53,193,049 | 3,911,388 | 41,480,313 | ||||||||||||
Class R5(b) |
3,527,315 | 44,000,899 | | | ||||||||||||
Class R6(b) |
5,622,923 | 66,633,393 | | | ||||||||||||
Issued as reinvestment of dividends: |
||||||||||||||||
Class A |
5,757,455 | 56,653,360 | 8,188,781 | 79,758,723 | ||||||||||||
Class B |
145,907 | 1,323,375 | 175,506 | 1,588,333 | ||||||||||||
Class C |
566,705 | 4,975,669 | 584,164 | 5,175,695 | ||||||||||||
Class Y |
1,902,498 | 19,139,132 | 2,008,021 | 19,899,485 | ||||||||||||
Class R5 |
| | | | ||||||||||||
Class R6 |
| | | | ||||||||||||
Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
Class A |
203,114 | 2,258,894 | 244,402 | 2,557,325 | ||||||||||||
Class B |
(219,824 | ) | (2,258,894 | ) | (258,474 | ) | (2,557,325 | ) | ||||||||
Reacquired:(b) |
||||||||||||||||
Class A |
(28,300,197 | ) | (314,790,033 | ) | (46,520,534 | ) | (494,133,184 | ) | ||||||||
Class B |
(204,268 | ) | (2,077,976 | ) | (309,907 | ) | (2,964,596 | ) | ||||||||
Class C |
(1,238,776 | ) | (12,254,783 | ) | (1,344,251 | ) | (12,724,795 | ) | ||||||||
Class Y |
(12,205,730 | ) | (141,138,714 | ) | (9,048,357 | ) | (96,007,248 | ) | ||||||||
Class R5 |
(10,478 | ) | (129,388 | ) | | | ||||||||||
Class R6 |
(159,432 | ) | (1,958,641 | ) | | | ||||||||||
Net increase (decrease) in share activity |
(8,486,316 | ) | $ | (98,962,431 | ) | (25,610,926 | ) | $ | (284,457,628 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 36% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Commencement date of September 24, 2012. |
(c) | Net of redemption fees of $12,135 for the year ended August 31, 2012. |
19 Invesco Small Cap Discovery Fund
NOTE 12Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period |
Net investment income (loss)(a) |
Net gains (losses) on securities (both realized and unrealized) |
Total from investment operations |
Distributions from net realized gains |
Net asset value, end of period |
Total return |
Net assets, end of period (000s omitted) |
Ratio of with fee waivers |
Ratio of expenses to average net assets without fee waivers and/or expenses absorbed |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover(b) |
|||||||||||||||||||||||||||||||||||||
Class A |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
$ | 10.85 | $ | (0.08 | ) | $ | 2.56 | $ | 2.48 | $ | (1.13 | ) | $ | 12.20 | 25.31 | %(c) | $ | 540,979 | 1.32 | %(d) | 1.33 | %(d) | (0.72 | )%(d) | 70 | % | ||||||||||||||||||||||
Year ended 08/31/12 |
10.56 | (0.08 | ) | 1.47 | 1.39 | (1.10 | ) | 10.85 | (e) | 14.33 | (c) | 607,073 | 1.38 | 1.43 | (0.80 | ) | 78 | |||||||||||||||||||||||||||||||
Year ended 08/31/11 |
8.74 | (0.11 | ) | 1.93 | 1.82 | | 10.56 | (e) | 20.82 | (c) | 820,988 | 1.38 | 1.42 | (1.01 | ) | 114 | ||||||||||||||||||||||||||||||||
Five months ended 08/31/10 |
9.62 | (0.04 | ) | (0.84 | ) | (0.88 | ) | | 8.74 | (e) | (9.15 | )(c) | 691,456 | 1.34 | (f) | 1.34 | (f) | (1.04 | )(f) | 63 | ||||||||||||||||||||||||||||
Year ended 03/31/10 |
6.93 | (0.09 | ) | 2.78 | 2.69 | | 9.62 | (e) | 38.82 | (g) | 748,998 | 1.39 | 1.39 | (1.04 | ) | 234 | ||||||||||||||||||||||||||||||||
Year ended 03/31/09 |
10.15 | (0.09 | ) | (3.13 | ) | (3.22 | ) | | 6.93 | (e) | (31.72 | )(g) | 402,611 | 1.40 | 1.40 | (1.00 | ) | 219 | ||||||||||||||||||||||||||||||
Class B |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
10.09 | (0.07 | ) | 2.36 | 2.29 | (1.13 | ) | 11.25 | 25.34 | (c)(h) | 12,554 | 1.32 | (d)(h) | 1.33 | (d)(h) | (0.72 | )(d)(h) | 70 | ||||||||||||||||||||||||||||||
Year ended 08/31/12 |
9.89 | (0.08 | ) | 1.38 | 1.30 | (1.10 | ) | 10.09 | (e) | 14.40 | (c)(h) | 13,754 | 1.38 | (h) | 1.43 | (h) | (0.80 | )(h) | 78 | |||||||||||||||||||||||||||||
Year ended 08/31/11 |
8.18 | (0.11 | ) | 1.82 | 1.71 | | 9.89 | (e) | 20.90 | (c)(h) | 16,910 | 1.40 | (h) | 1.44 | (h) | (1.03 | )(h) | 114 | ||||||||||||||||||||||||||||||
Five months ended 08/31/10 |
9.03 | (0.05 | ) | (0.80 | ) | (0.85 | ) | | 8.18 | (e) | (9.41 | )(c)(h) | 19,249 | 1.63 | (f)(h) | 1.63 | (f)(h) | (1.33 | )(f)(h) | 63 | ||||||||||||||||||||||||||||
Year ended 03/31/10 |
6.51 | (0.09 | ) | 2.61 | 2.52 | | 9.03 | (e) | 38.71 | (i)(j) | 23,169 | 1.53 | (j) | 1.53 | (j) | (1.19 | )(j) | 234 | ||||||||||||||||||||||||||||||
Year ended 03/31/09 |
9.59 | (0.14 | ) | (2.94 | ) | (3.08 | ) | | 6.51 | (e) | (32.12 | )(i)(j) | 22,044 | 2.04 | (j) | 2.04 | (j) | (1.65 | )(j) | 219 | ||||||||||||||||||||||||||||
Class C |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
9.82 | (0.15 | ) | 2.29 | 2.14 | (1.13 | ) | 10.83 | 24.43 | (c) | 53,560 | 2.07 | (d) | 2.08 | (d) | (1.47 | )(d) | 70 | ||||||||||||||||||||||||||||||
Year ended 08/31/12 |
9.73 | (0.15 | ) | 1.34 | 1.19 | (1.10 | ) | 9.82 | (e) | 13.43 | (c) | 48,486 | 2.13 | 2.18 | (1.55 | ) | 78 | |||||||||||||||||||||||||||||||
Year ended 08/31/11 |
8.10 | (0.17 | ) | 1.80 | 1.63 | | 9.73 | (e) | 20.12 | (c)(k) | 51,212 | 2.06 | (k) | 2.10 | (k) | (1.69 | )(k) | 114 | ||||||||||||||||||||||||||||||
Five months ended 08/31/10 |
8.95 | (0.07 | ) | (0.78 | ) | (0.85 | ) | | 8.10 | (e) | (9.50 | )(c) | 53,673 | 2.09 | (f) | 2.09 | (f) | (1.79 | )(f) | 63 | ||||||||||||||||||||||||||||
Year ended 03/31/10 |
6.50 | (0.14 | ) | 2.59 | 2.45 | | 8.95 | (e) | 37.69 | (l) | 62,523 | 2.14 | 2.14 | (1.79 | ) | 234 | ||||||||||||||||||||||||||||||||
Year ended 03/31/09 |
9.58 | (0.14 | ) | (2.94 | ) | (3.08 | ) | | 6.50 | (e) | (32.15 | )(l) | 39,064 | 2.14 | 2.14 | (1.75 | ) | 219 | ||||||||||||||||||||||||||||||
Class Y(m) |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13 |
11.06 | (0.05 | ) | 2.62 | 2.57 | (1.13 | ) | 12.50 | 25.67 | (c) | 163,072 | 1.07 | (d) | 1.08 | (d) | (0.47 | )(d) | 70 | ||||||||||||||||||||||||||||||
Year ended 08/31/12 |
10.72 | (0.06 | ) | 1.50 | 1.44 | (1.10 | ) | 11.06 | (e) | 14.60 | (c) | 206,367 | 1.13 | 1.18 | (0.55 | ) | 78 | |||||||||||||||||||||||||||||||
Year ended 08/31/11 |
8.84 | (0.09 | ) | 1.97 | 1.88 | | 10.72 | (e) | 21.27 | (c) | 233,467 | 1.13 | 1.17 | (0.76 | ) | 114 | ||||||||||||||||||||||||||||||||
Five months ended 08/31/10 |
9.73 | (0.03 | ) | (0.86 | ) | (0.89 | ) | | 8.84 | (e) | (9.15 | )(c) | 199,603 | 1.09 | (f) | 1.09 | (f) | (0.80 | )(f) | 63 | ||||||||||||||||||||||||||||
Year ended 03/31/10 |
6.99 | (0.06 | ) | 2.80 | 2.74 | | 9.73 | (e) | 39.20 | (n) | 267,593 | 1.14 | 1.14 | (0.76 | ) | 234 | ||||||||||||||||||||||||||||||||
Year ended 03/31/09 |
10.20 | (0.07 | ) | (3.14 | ) | (3.21 | ) | | 6.99 | (e) | (31.47 | )(n) | 91,594 | 1.15 | 1.15 | (0.75 | ) | 219 | ||||||||||||||||||||||||||||||
Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(o) |
11.48 | (0.04 | ) | 2.21 | 2.17 | (1.13 | ) | 12.52 | 21.25 | (c) | 44,037 | 0.93 | (d)(f) | 0.94 | (d)(f) | (0.33 | )(d)(f) | 70 | ||||||||||||||||||||||||||||||
Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 08/31/13(o) |
11.48 | (0.03 | ) | 2.20 | 2.17 | (1.13 | ) | 12.52 | 21.25 | (c) | 68,425 | 0.83 | (d)(f) | 0.84 | (d)(f) | (0.23 | )(d)(f) | 70 |
(a) | Calculated using average shares outstanding. |
(b) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(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) | Ratios are based on average daily net assets (000s) of $564,401, $12,938, $49,725, $195,926, $6,623 and $17,604 for Class A, Class B, Class C, Class Y, Class R5 and Class R6, respectively. |
(e) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. |
(f) | Annualized. |
(g) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions made within eighteen months of purchase. If the sales charges were included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(h) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.25%, 0.25%, 0.27% and 0.54% for the years ended August 31, 2013, August 31, 2012, August 31, 2011 and the five months ended August 31, 2010, respectively. |
(i) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 5%, charged on certain redemptions made within one year of purchase and declining to 0% after the fifth year. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(j) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of less than 1%. |
(k) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual 12b-1 fees of 0.93% for the year ended August 31, 2011. |
(l) | Assumes reinvestment of all distributions for the period and does not include payment of the maximum CDSC of 1%, charged on certain redemptions made within one year of purchase. If the sales charge was included, total returns would be lower. These returns include combined Rule 12b-1 fees and service fees of up to 1% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
(m) | On June 1, 2010, the Funds former Class I shares were reorganized into Class Y shares. |
(n) | Assumes reinvestment of all distributions for the period. These returns do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption on Fund shares. |
(o) | Commencement date of September 24, 2012 for Class R5 and Class R6 shares. |
20 Invesco Small Cap Discovery Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of AIM Counselor Series Trust (Invesco Counselor Series Trust)
and Shareholders of Invesco Small Cap Discovery 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 Invesco Small Cap Discovery Fund (one of the funds constituting AIM Counselor Series Trust (Invesco Counselor Series Trust), hereafter referred to as the Fund) at August 31, 2013, 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 three years in the period then ended and the five month period ended August 31, 2010, 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 August 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights of the Fund for the periods ended March 31, 2010 and prior were audited by another independent registered public accounting firm whose report dated May 18, 2010 expressed an unqualified opinion on those financial statements.
PRICEWATERHOUSECOOPERS LLP
October 29, 2013
Houston, Texas
21 Invesco Small Cap Discovery 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, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period March 1, 2013 through August 31, 2013.
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 Funds actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Funds 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 or contingent deferred sales charges on redemptions, 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.
Class |
Beginning |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
Ending Account Value (08/31/13)1 |
Expenses Paid During Period2 |
Ending Account Value (08/31/13) |
Expenses Paid During Period2 |
|||||||||||||||||||||
A |
$ | 1,000.00 | $ | 1,137.00 | $ | 6.84 | $ | 1,018.80 | $ | 6.46 | 1.27 | % | ||||||||||||
B |
1,000.00 | 1,137.50 | 6.84 | 1,018.80 | 6.46 | 1.27 | ||||||||||||||||||
C |
1,000.00 | 1,132.90 | 10.86 | 1,015.02 | 10.26 | 2.02 | ||||||||||||||||||
Y |
1,000.00 | 1,138.40 | 5.50 | 1,020.06 | 5.19 | 1.02 | ||||||||||||||||||
R5 |
1,000.00 | 1,132.90 | 5.00 | 1,020.52 | 4.74 | 0.93 | ||||||||||||||||||
R6 |
1,000.00 | 1,139.20 | 4.48 | 1,021.02 | 4.23 | 0.83 |
1 | The actual ending account value is based on the actual total return of the Fund for the period March 1, 2013 through August 31, 2013, after actual expenses and will differ from the hypothetical ending account value which is based on the Funds expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Funds annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
22 Invesco Small Cap Discovery Fund
Approval of Investment Advisory and Sub-Advisory Contracts
23 Invesco Small Cap Discovery Fund
24 Invesco Small Cap Discovery Fund
Tax Information
Form 1099-DIV, Form 1042-S and other yearend 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 states requirement.
The Fund designates the following amounts or, if subsequently determined to be different, the maximum amount allowable for its fiscal year ended August 31, 2013:
Federal and State Income Tax |
||||
Long-Term Capital Gain Distributions |
$ | 85,006,849 | ||
Qualified Dividend Income* |
0.00 | % | ||
Corporate Dividends Received Deduction* |
0.00 | % |
* | The above percentages are based on ordinary income dividends paid to shareholders during the Funds fiscal year. |
25 Invesco Small Cap Discovery Fund
Trustees and Officers
The address of each trustee and officer is AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Trust), 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173. 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 Trusts 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 Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Interested Persons | ||||||||
Martin L. Flanagan1 1960 Trustee | 2007 | Executive Director, Chief Executive Officer and President, Invesco Ltd. (ultimate parent of Invesco and a global investment management firm); Advisor to the Board, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Trustee, The Invesco Funds; Vice Chair, Investment Company Institute; and Member of Executive Board, SMU Cox School of Business
Formerly: Chairman and Chief Executive Officer, Invesco Advisers, Inc. (registered investment adviser); Director, Chairman, Chief Executive Officer and President, IVZ Inc. (holding company), INVESCO Group Services, Inc. (service provider) and Invesco North American Holdings, Inc. (holding company); Director, Chief Executive Officer and President, Invesco Holding Company Limited (parent of Invesco and a global investment management firm); Director, Invesco Ltd.; Chairman, Investment Company Institute and President, Co-Chief Executive Officer, Co-President, Chief Operating Officer and Chief Financial Officer, Franklin Resources, Inc. (global investment management organization) |
117 | None | ||||
Philip A.
Taylor2 1954 Trustee, President and Principal Executive Officer |
2006 | Head of North American Retail and Senior Managing Director, Invesco Ltd.; Director, Co-Chairman, Co-President and Co-Chief Executive Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Director, Chairman, Chief Executive Officer and President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) (financial services holding company); Director and President, INVESCO Funds Group, Inc. (registered investment adviser and registered transfer agent); Director and Chairman, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) (registered transfer agent) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.) (registered broker dealer); Director, President and Chairman, Invesco Inc. (holding company) and Invesco Canada Holdings Inc. (holding company); Chief Executive Officer, Invesco Corporate Class Inc. (corporate mutual fund company) and Invesco Canada Fund Inc. (corporate mutual fund company); Director, Chairman and Chief Executive Officer, Invesco Canada Ltd. (formerly known as Invesco Trimark Ltd./Invesco Trimark Ltèe) (registered investment adviser and registered transfer agent); Trustee, President and Principal Executive Officer, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); Trustee and Executive Vice President, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only); Director, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Director, Chief Executive Officer and President, Van Kampen Exchange Corp.
Formerly: Director and Chairman, Van Kampen Investor Services Inc.: Director, Chief Executive Officer and President, 1371 Preferred Inc. (holding company); and Van Kampen Investments Inc.; Director and President, AIM GP Canada Inc. (general partner for limited partnerships); and Van Kampen Advisors, Inc.; Director and Chief Executive Officer, Invesco Trimark Dealer Inc. (registered broker dealer); Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) (registered broker dealer); Manager, Invesco PowerShares Capital Management LLC; Director, Chief Executive Officer and President, Invesco Advisers, Inc.; Director, Chairman, Chief Executive Officer and President, Invesco Aim Capital Management, Inc.; President, Invesco Trimark Dealer Inc. and Invesco Trimark Ltd./Invesco Trimark Ltèe; Director and President, AIM Trimark Corporate Class Inc. and AIM Trimark Canada Fund Inc.; Senior Managing Director, Invesco Holding Company Limited; Trustee and Executive Vice President, Tax-Free Investments Trust; Director and Chairman, Fund Management Company (former registered broker dealer); President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only); President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund Inc. |
117 | None | ||||
Wayne W. Whalen3 1939 Trustee |
2010 | Of Counsel, and prior to 2010, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, legal counsel to certain funds in the Fund Complex
|
130 | Director of the Mutual Fund Directors Forum, a nonprofit membership organization for investment directors; Chairman and Director of the Abraham Lincoln Presidential Library Foundation; and Director of the Stevenson Center for Democracy |
1 | Mr. Flanagan is considered an interested person of the Trust because he is an officer of the adviser to the Trust, and an officer and a director of Invesco Ltd., ultimate parent of the adviser to the Trust. |
2 | Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the adviser to, and a director of the principal underwriter of, the Trust. |
3 | Mr. Whalen is considered an interested person (within the meaning of Section 2(a)(19) of the 1940 Act) of certain Funds in the Invesco Fund Complex because he and his firm currently provide legal services as legal counsel to such Funds. |
T-1 Invesco Small Cap Discovery Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees | ||||||||
Bruce L. Crockett 1944 Trustee and Chair |
2003 | Chairman, Crockett Technologies Associates (technology consulting company)
Formerly: Director, Captaris (unified messaging provider); Director, President and Chief Executive Officer COMSAT Corporation; and Chairman, Board of Governors of INTELSAT (international communications company) |
117 | ACE Limited (insurance company); Investment Company Institute | ||||
David C. Arch 1945 Trustee |
2010 | Chairman and Chief Executive Officer of Blistex Inc., (consumer health care products manufacturer)
Formerly: Member of the Heartland Alliance Advisory Board, a nonprofit organization serving human needs based in Chicago |
130 | Board member of the Illinois Manufacturers Association; Member of the Board of Visitors, Institute for the Humanities, University of Michigan | ||||
Frank S. Bayley 1939 Trustee |
2003 | Retired
Formerly: Director, Badgley Funds, Inc. (registered investment company) (2 portfolios) and General Partner and Of Counsel, law firm of Baker & McKenzie, LLP |
117 | Director and Chairman, C.D. Stimson Company (a real estate investment company); Trustee and Overseer, The Curtis Institute of Music | ||||
James T. Bunch 1942 Trustee |
2000 | Managing Member, Grumman Hill Group LLC (family office private equity management)
Formerly: Founder, Green, Manning & Bunch Ltd. (investment banking firm)(1988-2010); Executive Committee, United States Golf Association; and Director, Policy Studies, Inc. and Van Gilder Insurance Corporation |
117 | Chairman, Board of Governors, Western Golf Association; Chairman-elect, Evans Scholars Foundation; and Director, Denver Film Society | ||||
Rodney F. Dammeyer 1940 Trustee |
2010 | Chairman of CAC, LLC, (private company offering capital investment and management advisory services)
Formerly: Prior to 2001, Managing Partner at Equity Group Corporate Investments; Prior to 1995, Chief Executive Officer of Itel Corporation (formerly Anixter International); Prior to 1985, experience includes Senior Vice President and Chief Financial Officer of Household International, Inc., Executive Vice President and Chief Financial Officer of Northwest Industries, Inc. and Partner of Arthur Andersen & Co.; From 1987 to 2010, Director/Trustee of investment companies in the Van Kampen Funds complex |
117 | Director of Quidel Corporation and Stericycle, Inc.; Prior to May 2008, Trustee of The Scripps Research Institute; Prior to February 2008, Director of Ventana Medical Systems, Inc. | ||||
Albert R. Dowden 1941 Trustee |
2003 | Director of a number of public and private business corporations, including the Boss Group, Ltd. (private investment and management); Reich & Tang Funds (5 portfolios) (registered investment company); and Homeowners of America Holding Corporation/ Homeowners of America Insurance Company (property casualty company)
Formerly: Director, Continental Energy Services, LLC (oil and gas pipeline service); Director, CompuDyne Corporation (provider of product and services to the public security market) and Director, Annuity and Life Re (Holdings), Ltd. (reinsurance company); Director, President and Chief Executive Officer, Volvo Group North America, Inc.; Senior Vice President, AB Volvo; Director of various public and private corporations; Chairman, DHJ Media, Inc.; Director Magellan Insurance Company; and Director, The Hertz Corporation, Genmar Corporation (boat manufacturer), National Media Corporation; Advisory Board of Rotary Power International (designer, manufacturer, and seller of rotary power engines); and Chairman, Cortland Trust, Inc. (registered investment company) |
117 | Director of Natures Sunshine Products, Inc. | ||||
Jack M. Fields 1952 Trustee |
2003 | Chief Executive Officer, Twenty First Century Group, Inc. (government affairs company); Owner and Chief Executive Officer, Dos Angeles Ranch, L.P. (cattle, hunting, corporate entertainment); and Discovery Global Education Fund (non-profit)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry company); Director of Cross Timbers Quail Research Ranch (non-profit); and member of the U.S. House of Representatives |
117 | Insperity, Inc. (formerly known as Administaff) | ||||
Prema Mathai-Davis 1950 Trustee |
2003 | Retired
Formerly: Chief Executive Officer, YWCA of the U.S.A. |
117 | None | ||||
Larry Soll 1942 Trustee |
1997 | Retired
Formerly: Chairman, Chief Executive Officer and President, Synergen Corp. (a biotechnology company) |
117 | None | ||||
Hugo F. Sonnenschein 1940 Trustee |
2010 | Distinguished Service Professor and President Emeritus of the University of Chicago and the Adam Smith Distinguished Service Professor in the Department of Economics at the University of Chicago
Formerly: President of the University of Chicago |
130 | Trustee of the University of Rochester and a member of its investment committee. Member of the National Academy of Sciences, the American Philosophical Society and a fellow of the American Academy of Arts and Sciences |
T-2 Invesco Small Cap Discovery Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Independent Trustees(continued) | ||||||||
Raymond Stickel, Jr. 1944 Trustee |
2005 | Retired
Formerly: Director, Mainstay VP Series Funds, Inc. (25 portfolios) and Partner, Deloitte & Touche |
117 | None | ||||
Other Officers | ||||||||
Russell C. Burk 1958 Senior Vice President and Senior Officer |
2005 | Senior Vice President and Senior Officer, The Invesco Funds | N/A | N/A | ||||
John M. Zerr 1962 Senior Vice President, Chief Legal Officer and Secretary |
2006 | Director, Senior Vice President, Secretary and General Counsel, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Senior Vice President and Secretary, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Vice President and Secretary, Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.) and IVZ Distributors, Inc. (formerly known as INVESCO Distributors, Inc.); Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice President, Chief Legal Officer and Secretary, The Invesco Funds; Manager, Invesco PowerShares Capital Management LLC; Director, Secretary and General Counsel, Invesco Investment Advisers LLC (formerly known as Van Kampen Asset Management); Secretary and General Counsel, Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.) and Chief Legal Officer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Director and Vice President, Van Kampen Advisors Inc.; Director, Vice President, Secretary and General Counsel, Van Kampen Investor Services Inc.; Director, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Senior Vice President, General Counsel and Secretary, Invesco Aim Advisers, Inc. and Van Kampen Investments Inc.; Director, Vice President and Secretary, Fund Management Company; Director, Senior Vice President, Secretary, General Counsel and Vice President, Invesco Aim Capital Management, Inc.; Chief Operating Officer and General Counsel, Liberty Ridge Capital, Inc. (an investment adviser); Vice President and Secretary, PBHG Funds (an investment company) and 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) and 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) |
N/A | N/A | ||||
Karen Dunn Kelley 1960 Vice President |
2003 | Head of Invescos World Wide Fixed Income and Cash Management Group; Director, Co-President, Co-Chief Executive Officer, and Co-Chairman, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Chairman, Invesco Senior Secured Management, Inc.; Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.); Executive Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.); Director, Invesco Mortgage Capital Inc., and Invesco Management Company Limited; Director and President, INVESCO Asset Management (Bermuda) Ltd., Vice President, The Invesco Funds (other than AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust); and President and Principal Executive Officer, The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust) and Short-Term Investments Trust only)
Formerly: Director, INVESCO Global Asset Management Limited and INVESCO Management S.A.; Senior Vice President, Van Kampen Investments Inc. and Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.); Director of Cash Management and Senior Vice President, Invesco Advisers, Inc. and Invesco Aim Capital Management, Inc.; President and Principal Executive Officer, Tax-Free Investments Trust; Director and President, Fund Management Company; Chief Cash Management Officer, Director of Cash Management, Senior Vice President, and Managing Director, Invesco Aim Capital Management, Inc.; Director of Cash Management, Senior Vice President, and Vice President, Invesco Advisers, Inc. and The Invesco Funds (AIM Treasurers Series Trust (Invesco Treasurers Series Trust), Short-Term Investments Trust and Tax-Free Investments Trust only) |
N/A | N/A |
T-3 Invesco Small Cap Discovery Fund
Trustees and Officers(continued)
Name, Year of Birth and Position(s) Held with the Trust |
Trustee and/ or Officer Since |
Principal Occupation(s) During Past 5 Years |
Number of Funds in Fund Complex Overseen by Trustee |
Other Directorship(s) Held by Trustee During Past 5 Years | ||||
Other Officers(continued) | ||||||||
Sheri Morris 1964 Vice President, Treasurer and Principal Financial Officer |
2003 | Vice President, Treasurer and Principal Financial Officer, The Invesco Funds; Vice President, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser); and Vice President, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust
Formerly: Vice President, Invesco Aim Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; Assistant Vice President and Assistant Treasurer, The Invesco Funds and Assistant Vice President, Invesco Advisers, Inc., Invesco Aim Capital Management, Inc. and Invesco Aim Private Asset Management, Inc.; and Treasurer, PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust |
N/A | N/A | ||||
Crissie M. Wisdom 1969 Anti-Money Laundering Compliance Officer |
2013 | Anti-Money Laundering Compliance Officer, Invesco Advisers, Inc. (formerly known as Invesco Institutional (N.A.), Inc.) (registered investment adviser), Invesco Capital Markets, Inc. (formerly known as Van Kampen Funds Inc.), Invesco Distributors, Inc., Invesco Investment Services, Inc., Invesco Management Group, Inc., Van Kampen Exchange Corp., The Invesco Funds, Invesco Funds (Chicago), and PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust, and PowerShares Actively Managed Exchange-Traded Fund Trust; and Fraud Prevention Manager and Controls and Risk Analysis Manager for Invesco Investment Services, Inc. | N/A | N/A | ||||
Todd L. Spillane 1958 Chief Compliance Officer |
2006 | Senior Vice President, Invesco Management Group, Inc. (formerly known as Invesco Aim Management Group, Inc.) and Van Kampen Exchange Corp.; Senior Vice President and Chief Compliance Officer, Invesco Advisers, Inc. (registered investment adviser) (formerly known as Invesco Institutional (N.A.), Inc.); Chief Compliance Officer, The Invesco Funds; Vice President, Invesco Distributors, Inc. (formerly known as Invesco Aim Distributors, Inc.) and Invesco Investment Services, Inc. (formerly known as Invesco Aim Investment Services, Inc.)
Formerly: Chief Compliance Officer, Invesco Funds (Chicago); Senior Vice President, Van Kampen Investments Inc.; Senior Vice President and Chief Compliance Officer, Invesco Aim Advisers, Inc. and Invesco Aim Capital Management, Inc.; Chief Compliance Officer, INVESCO Private Capital Investments, Inc. (holding company), Invesco Private Capital, Inc. (registered investment adviser), Invesco Global Asset Management (N.A.), Inc., Invesco Senior Secured Management, Inc. (registered investment adviser), Van Kampen Investor Services Inc., PowerShares Exchange-Traded Fund Trust, PowerShares Exchange-Traded Fund Trust II, PowerShares India Exchange-Traded Fund Trust and PowerShares Actively Managed Exchange-Traded Fund Trust; and Vice President, Invesco Aim Capital Management, Inc. and Fund Management Company |
N/A | N/A |
The Statement of Additional Information of the Trust includes additional information about the Funds Trustees and is available upon request, without charge, by calling 1.800.959.4246. Please refer to the Funds prospectus for information on the Funds sub-advisers.
Office of the Fund 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Investment Adviser Invesco Advisers, Inc. 1555 Peachtree Street, N.E. Atlanta, GA 30309 |
Distributor Invesco Distributors, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Auditors PricewaterhouseCoopers LLP 1201 Louisiana Street, Suite 2900 Houston, TX 77002-5678 | |||
Counsel to the Fund Stradley Ronon Stevens & Young, LLP 2005 Market Street, Suite 2600 Philadelphia, PA 19103-7018 |
Counsel to the Independent Trustees Goodwin Procter LLP 901 New York Avenue, N.W. Washington, D.C. 20001 |
Transfer Agent Invesco Investment Services, Inc. 11 Greenway Plaza, Suite 1000 Houston, TX 77046-1173 |
Custodian State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110-2801 |
T-4 Invesco Small Cap Discovery Fund
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Invesco privacy policy
You share personal and financial information with us that is necessary for your transactions and your account records. We take very seriously the obligation to keep that information confidential and private.
Invesco collects nonpublic personal information about you from account applications or other forms you complete and from your transactions with us or our affiliates. We do not disclose information about you or our former customers to service providers or other third parties except to the extent necessary to service your account and in other limited circumstances as permitted by law. For example, we use this information to facilitate the delivery of transaction confirmations, financial reports, prospectuses and tax forms.
Even within Invesco, only people involved in the servicing of your accounts and compliance monitoring have access to your information. To ensure the highest level of confidentiality and security, Invesco maintains physical, electronic and procedural safeguards that meet or exceed federal standards. Special measures, such as data encryption and authentication, apply to your communications with us on our website. More detail is available to you at invesco.com/privacy.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Funds semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Funds Forms N-Q on the SEC website at sec.gov. Copies of the Funds Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
||
SEC file numbers: 811-09913 and 333-36074 VK-SCD-AR-1 Invesco Distributors, Inc. |
ITEM 2. | CODE OF ETHICS. |
There were no amendments to the Code of Ethics (the Code) that applies to the Registrants Principal Executive Officer (PEO) and Principal Financial Officer (PFO) during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
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. |
(a) to (d)
Fees Billed by PWC Related to the Registrant
PWC billed the Registrant aggregate fees for services rendered to the Registrant for the last two fiscal years as follows:
Fees Billed for Services Rendered to the Registrant for fiscal year end 2013 |
(e)(2) Percentage of Fees Billed Applicable to Non-Audit Services Provided for fiscal year end 2013 Pursuant to Waiver of Pre-Approval Requirement(1) |
Fees Billed for Services Rendered to the Registrant for fiscal year end 2012 |
(e)(2) Percentage of Fees Billed Applicable to Non-Audit Services Provided for fiscal year end 2012 Pursuant to Waiver of Pre-Approval Requirement(1) |
|||||||||||||
Audit Fees |
$ | 470,602 | N/A | $ | 404,100 | N/A | ||||||||||
Audit-Related Fees |
$ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
Tax Fees(2) |
$ | 124,450 | 0 | % | $ | 104,700 | 0 | % | ||||||||
All Other Fees |
$ | 0 | 0 | % | $ | 0 | 0 | % | ||||||||
|
|
|
|
|||||||||||||
Total Fees |
$ | 595,052 | 0 | % | $ | 508,800 | 0 | % |
(g) PWC billed the Registrant aggregate non-audit fees of $124,450 for the fiscal year ended 2013, and $104,700 for the fiscal year ended 2012, for non-audit services rendered to the Registrant.
(1) | With respect to the provision of non-audit services, the pre-approval requirement is waived pursuant to a de minimis exception if (i) such services were not recognized as non-audit services by the Registrant at the time of engagement, (ii) the aggregate amount of all such services provided is no more than 5% of the aggregate audit and non-audit fees paid by the Registrant to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrants Audit Committee and approved by the Registrants Audit Committee prior to the completion of the audit. |
(2) | Tax fees for the fiscal year end 2013 include fees billed for reviewing tax returns and fund mergers. Tax fees for the fiscal year end 2012 includes fees billed for reviewing tax returns and consultation services. |
Fees Billed by PWC Related to Invesco and Invesco Affiliates
PWC billed Invesco Advisers, Inc. (Invesco), the Registrants adviser, and any entity controlling, controlled by or under common control with Invesco that provides ongoing services to the Registrant (Invesco Affiliates) aggregate fees for pre-approved non-audit services rendered to Invesco and Invesco Affiliates for the last two fiscal years as follows:
Fees Billed for Non- Audit Services Rendered to Invesco and Invesco Affiliates for fiscal year end 2013 That Were Required to be Pre-Approved by the Registrants Audit Committee |
(e)(2) Percentage of Fees Billed Applicable to Non-Audit Services Provided for fiscal year end 2013 Pursuant to Waiver of Pre- Approval Requirement(1) |
Fees Billed for Non- Audit Services Rendered to Invesco and Invesco Affiliates for fiscal year end 2012 That Were Required to be Pre-Approved by the Registrants Audit Committee |
(e)(2) Percentage of Fees Billed Applicable to Non-Audit Services Provided for fiscal year end 2012 Pursuant to Waiver of Pre- Approval 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 and Invesco Affiliates to PWC during a fiscal year; and (iii) such services are promptly brought to the attention of the Registrants Audit Committee and approved by the Registrants Audit Committee prior to the completion of the audit. |
(2) | (g) Including the fees for services not required to be pre-approved by the registrants audit committee, PWC billed Invesco and Invesco Affiliates aggregate non-audit fees of $7,055 for the fiscal year ended 2013, and $0 for the fiscal year ended 2012, for non-audit services rendered to Invesco and Invesco Affiliates. |
(h) The Audit Committee also has considered whether the provision of non-audit services that were rendered to Invesco and Invesco Affiliates that were not required to be pre-approved pursuant to SEC regulations, if any, is compatible with maintaining PWCs independence. To the extent that such services were provided, the Audit Committee determined that the provision of such services is compatible with PWC maintaining independence with respect to the Registrant.
(f) Not applicable.
(e)(1)
PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
POLICIES AND PROCEDURES
As adopted by the Audit Committees of
the Invesco Funds (the Funds)
Last Amended May 4, 2010
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 Committees) 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 Auditors 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 Auditors 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 generally on an annual basis. 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 Committees at the 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 Committees will obtain, review and consider sufficient information concerning the proposed Auditor to make a reasonable evaluation of the Auditors 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 SECs Rules on auditor independence, and otherwise conforms to the Audit Committees 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 Funds 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 Committees 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 Committees 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 Committees 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 Committees 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
Generally on an annual basis, Invesco Advisers, Inc. (Invesco) 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 Funds 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 Auditors 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 Committees on a periodic basis as to the results of such monitoring. Both the Funds Treasurer and management of Invesco will immediately report to the chairman of the Audit Committees any breach of these policies and procedures that comes to the attention of the Funds Treasurer or senior management of Invesco.
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 Funds 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. |
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 August 13, 2013, 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 Registrants 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 Registrants officers, including the PEO and PFO, concluded that, as of August 13, 2013, the Registrants 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 Registrants 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 Registrants internal control over financial reporting. |
ITEM 12. | EXHIBITS. |
12(a) (1) | Code of Ethics. | |
12(a) (2) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
12(a) (3) | Not applicable. | |
12(b) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Counselor Series Trust (Invesco Counselor Series Trust)
By: | /s/ Philip A. Taylor | |
Philip A. Taylor | ||
Principal Executive Officer | ||
Date: | November 8, 2013 |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Philip A. Taylor | |
Philip A. Taylor | ||
Principal Executive Officer | ||
Date: | November 8, 2013 |
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Financial Officer | ||
Date: | November 8, 2013 |
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. |
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 Invesco 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 Officers 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 individuals 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 advisers 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 Invesco 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 individuals 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 Invesco Ltd. 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 Officers employment with Invesco, 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 Invesco 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
Colin Meadows
THE INVESCO FUNDS
CODE OF ETHICSACKNOWLEDGEMENT
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: |
I, Philip A. Taylor, Principal Executive Officer, certify that:
1. I have reviewed this report on Form N-CSR of AIM Counselor Series Trust (Invesco Counselor Series Trust);
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 registrants 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 registrants 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 registrants 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 registrants internal control over financial reporting.
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting.
Date: November 8, 2013 | /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 Counselor Series Trust (Invesco Counselor Series Trust);
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 registrants 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 registrants 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 registrants 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 registrants internal control over financial reporting.
5. The registrants other certifying officer(s) and I have disclosed to the registrants auditors and the audit committee of the registrants 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 registrants 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 registrants internal control over financial reporting.
Date: November 8, 2013 | /s/ Sheri Morris | |||
Sheri Morris, Principal Financial Officer |
CERTIFICATION OF SHAREHOLDER REPORT
In connection with the Certified Shareholder Report of AIM Counselor Series Trust (Invesco Counselor Series Trust) (the Company) on Form N-CSR for the period ended August 31, 2013, 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: November 8, 2013 | /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 Counselor Series Trust (Invesco Counselor Series Trust) (the Company) on Form N-CSR for the period ended August 31, 2013, 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: November 8, 2013 | /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.
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