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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 811-03826
AIM Sector Funds (Invesco Sector Funds)
(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)
Registrant’s telephone number, including area code: (713) 626-1919
Date of fiscal year end: 4/30
Date of reporting period: 10/31/12
Item 1. Reports to Stockholders.
Fund Performance
2 Invesco Energy Fund
3 Invesco Energy Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. | |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.” 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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding | |
| risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss. | ||
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Energy Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Energy 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 & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at October 31, 2012. |
| (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 borrower's return of the securities loaned. See Note 1I. |
Portfolio Composition
By industry, based on Net Assets
as of October 31, 2012
| Oil & Gas Exploration & Production |
32.4 | % | |||
| Oil & Gas Equipment & Services |
28.1 | ||||
| Integrated Oil & Gas |
23.6 | ||||
| Oil & Gas Drilling |
8.2 | ||||
| Oil & Gas Refining & Marketing |
3.4 | ||||
| Coal & Consumable Fuels |
0.9 | ||||
| Oil & Gas Storage & Transportation |
0.7 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
2.7 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Energy Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Energy Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $130,819) |
$ | 10,763,094 | ||
| Dividends from affiliated money market funds (includes securities lending income of $76,497) |
123,635 | |||
| Total investment income |
10,886,729 | |||
| Expenses: |
||||
| Advisory fees |
4,272,524 | |||
| Administrative services fees |
173,315 | |||
| Custodian fees |
15,985 | |||
| Distribution fees: |
||||
| Class A |
805,972 | |||
| Class B |
320,914 | |||
| Class C |
901,136 | |||
| Investor Class |
486,181 | |||
| Transfer agent fees — A, B, C, Y and Investor |
1,594,400 | |||
| Transfer agent fees — R5 |
9,522 | |||
| Trustees’ and officers’ fees and benefits |
45,692 | |||
| Other |
162,716 | |||
| Total expenses |
8,788,357 | |||
| Less: Fees waived and expense offset arrangement(s) |
(56,210 | ) | ||
| Net expenses |
8,732,147 | |||
| Net investment income |
2,154,582 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
(16,877,872 | ) | ||
| Foreign currencies |
(219,288 | ) | ||
| (17,097,160 | ) | |||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(71,677,712 | ) | ||
| Foreign currencies |
(1,278 | ) | ||
| (71,678,990 | ) | |||
| Net realized and unrealized gain (loss) |
(88,776,150 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (86,621,568 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Energy Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
| |||||||
| Net investment income (loss) |
$ | 2,154,582 | $ | (1,692,879 | ) | |||
| Net realized gain (loss) |
(17,097,160 | ) | 97,150,656 | |||||
| Change in net unrealized appreciation (depreciation) |
(71,678,990 | ) | (470,786,911 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(86,621,568 | ) | (375,329,134 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
(78,160,836 | ) | (142,552,355 | ) | ||||
| Class B |
(11,121,908 | ) | (22,207,524 | ) | ||||
| Class C |
(19,953,276 | ) | (29,736,198 | ) | ||||
| Class Y |
(9,118,285 | ) | 6,265,580 | |||||
| Investor Class |
(25,931,392 | ) | (63,107,318 | ) | ||||
| Class R5 |
7,385,690 | 8,674,978 | ||||||
| Net increase (decrease) in net assets resulting from share transactions |
(136,900,007 | ) | (242,662,837 | ) | ||||
| Net increase (decrease) in net assets |
(223,521,575 | ) | (617,991,971 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
1,521,984,918 | 2,139,976,889 | ||||||
| End of period (includes undistributed net investment income (loss) of $994,390 and $(1,160,192), respectively) |
$ | 1,298,463,343 | $ | 1,521,984,918 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Energy Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, 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 Y, Investor Class and Class R5 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 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.
9 Invesco Energy Fund
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 are charged to 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. |
10 Invesco Energy Fund
| 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| K. | Foreign Currency Contracts — 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. | Other Risks —The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
The businesses in which the Fund invests may be adversely affected by foreign, federal or state regulations governing energy production, distribution and sale. Although individual security selection drives the performance of the Fund, short-term fluctuations in commodity prices may cause price fluctuations in its shares.
11 Invesco Energy Fund
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $350 million |
0 | .75% | ||||
| Next $350 million |
0 | .65% | ||||
| Next $1.3 billion |
0 | .55% | ||||
| Next $2 billion |
0 | .45% | ||||
| Next $2 billion |
0 | .40% | ||||
| Next $2 billion |
0 | .375% | ||||
| Over $8 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 June 30, 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 Y, Investor Class and Class R5 shares to 2.00%, 2.75%, 2.75%, 1.75%, 2.00% and 1.75%, respectively, 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 waivers 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, 2013. The Adviser 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $53,864.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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, 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 Fund’s Class A, Class B, Class C 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 Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended October 31, 2012, expenses incurred under the Plan are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $49,431 in front-end sales commissions from the sale of Class A shares and $2,199, $71,232 and $8,390 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.
12 Invesco Energy Fund
NOTE 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 1,315,477,557 | $ | — | $ | — | $ | 1,315,477,557 | ||||||||
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangements are comprised of transfer agency credits which result from balances in Demand Deposit Accounts (DDA) used by the transfer agent for clearing shareholder transactions. For the six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,346.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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.
13 Invesco Energy Fund
The Fund had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2018 |
$ | 18,311,213 | $ | — | $ | 18,311,213 | ||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $348,888,887 and $436,180,597, 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 |
$ | 166,579,403 | ||
| Aggregate unrealized (depreciation) of investment securities |
(50,534,122 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 116,045,281 | ||
Cost of investments for tax purposes is $1,199,432,276.
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months
ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
| |||||||||||||||
| Class A |
1,523,529 | $ | 55,550,194 | 5,299,676 | $ | 214,398,044 | ||||||||||
| Class B |
18,475 | 607,256 | 133,385 | 4,936,346 | ||||||||||||
| Class C |
235,317 | 7,656,400 | 1,038,929 | 37,569,135 | ||||||||||||
| Class Y |
337,416 | 12,420,823 | 1,122,529 | 45,651,471 | ||||||||||||
| Investor Class |
826,878 | 30,743,740 | 2,374,357 | 95,790,501 | ||||||||||||
| Class R5 |
436,179 | 16,601,544 | 368,848 | 14,974,267 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
84,913 | 3,088,852 | 179,827 | 7,228,474 | ||||||||||||
| Class B |
(93,426 | ) | (3,088,852 | ) | (200,855 | ) | (7,228,474 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(3,736,185 | ) | (136,799,882 | ) | (9,111,795 | ) | (364,178,873 | ) | ||||||||
| Class B |
(260,954 | ) | (8,640,312 | ) | (536,818 | ) | (19,915,396 | ) | ||||||||
| Class C |
(852,910 | ) | (27,609,676 | ) | (1,893,362 | ) | (67,305,333 | ) | ||||||||
| Class Y |
(601,006 | ) | (21,539,108 | ) | (999,702 | ) | (39,385,891 | ) | ||||||||
| Investor Class |
(1,558,826 | ) | (56,675,132 | ) | (3,973,334 | ) | (158,897,819 | ) | ||||||||
| Class R5 |
(241,448 | ) | (9,215,854 | ) | (156,014 | ) | (6,299,289 | ) | ||||||||
| Net increase (decrease) in share activity |
(3,882,048 | ) | $ | (136,900,007 | ) | (6,354,329 | ) | $ | (242,662,837 | ) | ||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 15% 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. |
14 Invesco Energy Fund
NOTE 10—Financial 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(b) |
Net assets, end of period (000’s 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(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 39.00 | $ | 0.08 | $ | (2.22 | ) | $ | (2.14 | ) | $ | — | $ | — | $ | — | $ | 36.86 | (5.49 | )% | $ | 605,169 | 1.16 | %(d) | 1.17 | %(d) | 0.44 | %(d) | 27 | % | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
47.26 | 0.01 | (8.27 | ) | (8.26 | ) | — | — | — | 39.00 | (17.48 | ) | 723,304 | 1.12 | 1.13 | 0.03 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
35.99 | (0.03 | ) | 11.33 | 11.30 | (0.03 | ) | — | (0.03 | ) | 47.26 | 31.42 | 1,048,194 | 1.13 | 1.13 | (0.10 | ) | 58 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
35.34 | (0.03 | ) | 0.68 | 0.65 | — | — | — | 35.99 | 1.84 | 742,987 | 1.16 | (e) | 1.16 | (e) | (1.00 | )(e) | 9 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
23.91 | 0.07 | 11.38 | 11.45 | (0.02 | ) | — | (0.02 | ) | 35.34 | 47.91 | 725,470 | 1.17 | 1.18 | 0.22 | 49 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
43.71 | 0.07 | (19.47 | ) | (19.40 | ) | — | (0.40 | ) | (0.40 | ) | 23.91 | (44.39 | ) | 453,133 | 1.16 | 1.17 | 0.20 | 61 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
41.02 | 0.00 | 13.10 | 13.10 | — | (10.41 | ) | (10.41 | ) | 43.71 | 32.35 | 851,105 | 1.11 | 1.12 | 0.01 | 64 | ||||||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
35.52 | (0.05 | ) | (2.02 | ) | (2.07 | ) | — | — | — | 33.45 | (5.83 | ) | 58,340 | 1.91 | (d) | 1.92 | (d) | (0.31 | )(d) | 27 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
43.37 | (0.26 | ) | (7.59 | ) | (7.85 | ) | — | — | — | 35.52 | (18.10 | ) | 73,896 | 1.87 | 1.88 | (0.72 | ) | 61 | |||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
33.25 | (0.29 | ) | 10.41 | 10.12 | — | — | — | 43.37 | 30.44 | 116,438 | 1.88 | 1.88 | (0.85 | ) | 58 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
32.68 | (0.05 | ) | 0.62 | 0.57 | — | — | — | 33.25 | 1.75 | 109,771 | 1.91 | (e) | 1.91 | (e) | (1.75 | )(e) | 9 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
22.26 | (0.16 | ) | 10.58 | 10.42 | — | — | — | 32.68 | 46.81 | 108,880 | 1.92 | 1.93 | (0.53 | ) | 49 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
41.04 | (0.19 | ) | (18.19 | ) | (18.38 | ) | — | (0.40 | ) | (0.40 | ) | 22.26 | (44.79 | ) | 78,085 | 1.91 | 1.92 | (0.55 | ) | 61 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
39.28 | (0.32 | ) | 12.49 | 12.17 | — | (10.41 | ) | (10.41 | ) | 41.04 | 31.35 | 172,190 | 1.86 | 1.87 | (0.74 | ) | 64 | ||||||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
34.66 | (0.05 | ) | (1.98 | ) | (2.03 | ) | — | — | — | 32.63 | (5.86 | ) | 170,497 | 1.91 | (d) | 1.92 | (d) | (0.31 | )(d) | 27 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
42.32 | (0.26 | ) | (7.40 | ) | (7.66 | ) | — | — | — | 34.66 | (18.10 | ) | 202,489 | 1.87 | 1.88 | (0.72 | ) | 61 | |||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
32.44 | (0.29 | ) | 10.17 | 9.88 | — | — | — | 42.32 | 30.46 | 283,422 | 1.88 | 1.88 | (0.85 | ) | 58 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
31.88 | (0.05 | ) | 0.61 | 0.56 | — | — | — | 32.44 | 1.76 | 207,451 | 1.91 | (e) | 1.91 | (e) | (1.75 | )(e) | 9 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
21.71 | (0.16 | ) | 10.33 | 10.17 | — | — | — | 31.88 | 46.85 | 205,003 | 1.92 | 1.93 | (0.53 | ) | 49 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
40.06 | (0.19 | ) | (17.76 | ) | (17.95 | ) | — | (0.40 | ) | (0.40 | ) | 21.71 | (44.82 | ) | 122,123 | 1.91 | 1.92 | (0.55 | ) | 61 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
38.53 | (0.32 | ) | 12.26 | 11.94 | — | (10.41 | ) | (10.41 | ) | 40.06 | 31.37 | 231,832 | 1.86 | 1.87 | (0.74 | ) | 64 | ||||||||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
39.07 | 0.13 | (2.22 | ) | (2.09 | ) | — | — | — | 36.98 | (5.35 | ) | 60,398 | 0.91 | (d) | 0.92 | (d) | 0.69 | (d) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
47.24 | 0.11 | (8.28 | ) | (8.17 | ) | — | — | — | 39.07 | (17.28 | ) | 74,126 | 0.87 | 0.88 | 0.28 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
35.96 | 0.06 | 11.33 | 11.39 | (0.12 | ) | — | (0.12 | ) | 47.23 | 31.73 | 83,807 | 0.88 | 0.88 | 0.15 | 58 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
35.31 | (0.02 | ) | 0.67 | 0.65 | — | — | — | 35.96 | 1.84 | 48,291 | 0.91 | (e) | 0.91 | (e) | (0.75 | )(e) | 9 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
23.86 | 0.16 | 11.36 | 11.52 | (0.07 | ) | — | (0.07 | ) | 35.31 | 48.29 | 47,084 | 0.92 | 0.93 | 0.47 | 49 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09(f) |
31.13 | 0.04 | (6.91 | ) | (6.87 | ) | — | (0.40 | ) | (0.40 | ) | 23.86 | (22.08 | ) | 8,894 | 1.04 | (e) | 1.05 | (e) | 0.32 | (e) | 61 | ||||||||||||||||||||||||||||||||||
| Investor Class |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
38.86 | 0.08 | (2.21 | ) | (2.13 | ) | — | — | — | 36.73 | (5.48 | ) | 377,782 | 1.16 | (d) | 1.17 | (d) | 0.44 | (d) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
47.09 | 0.01 | (8.24 | ) | (8.23 | ) | — | — | — | 38.86 | (17.48 | ) | 428,174 | 1.12 | 1.13 | 0.03 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
35.86 | (0.03 | ) | 11.29 | 11.26 | (0.03 | ) | — | (0.03 | ) | 47.09 | 31.42 | 594,201 | 1.13 | 1.13 | (0.10 | ) | 58 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
35.22 | (0.03 | ) | 0.67 | 0.64 | — | — | — | 35.86 | 1.82 | 484,002 | 1.16 | (e) | 1.16 | (e) | (1.00 | )(e) | 9 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
23.82 | 0.07 | 11.35 | 11.42 | (0.02 | ) | — | (0.02 | ) | 35.22 | 47.96 | 475,026 | 1.17 | 1.18 | 0.22 | 49 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
43.56 | 0.07 | (19.41 | ) | (19.34 | ) | — | (0.40 | ) | (0.40 | ) | 23.82 | (44.40 | ) | 335,874 | 1.16 | 1.17 | 0.20 | 61 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
40.91 | 0.00 | 13.06 | 13.06 | — | (10.41 | ) | (10.41 | ) | 43.56 | 32.34 | 681,147 | 1.11 | 1.12 | 0.01 | 64 | ||||||||||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
39.81 | 0.16 | (2.27 | ) | (2.11 | ) | — | — | — | 37.70 | (5.30 | ) | 26,277 | 0.78 | (d) | 0.79 | (d) | 0.82 | (d) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
48.07 | 0.16 | (8.42 | ) | (8.26 | ) | — | — | — | 39.81 | (17.18 | ) | 19,996 | 0.76 | 0.77 | 0.39 | 61 | |||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
36.60 | 0.10 | 11.55 | 11.65 | (0.18 | ) | — | (0.18 | ) | 48.07 | 31.92 | 13,915 | 0.77 | 0.77 | 0.26 | 58 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
35.93 | (0.02 | ) | 0.69 | 0.67 | — | — | — | 36.60 | 1.87 | 7,667 | 0.77 | (e) | 0.77 | (e) | (0.61 | )(e) | 9 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
24.32 | 0.21 | 11.59 | 11.80 | (0.19 | ) | — | (0.19 | ) | 35.93 | 48.57 | 6,411 | 0.74 | 0.75 | 0.65 | 49 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
44.23 | 0.24 | (19.75 | ) | (19.51 | ) | — | (0.40 | ) | (0.40 | ) | 24.32 | (44.11 | ) | 3,416 | 0.70 | 0.71 | 0.66 | 61 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
41.25 | 0.20 | 13.19 | 13.39 | — | (10.41 | ) | (10.41 | ) | 44.23 | 32.90 | 2,240 | 0.68 | 0.69 | 0.44 | 64 | ||||||||||||||||||||||||||||||||||||||||
| (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 annualized and based on average daily net assets (000’s omitted) of $639,521, $63,660, $178,758, $63,469, $385,774 and $18,889 for Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares, respectively. |
| (e) | Annualized. |
| (f) | Commencement date of October 03, 2008. |
15 Invesco Energy Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 945.10 | $ | 5.69 | $ | 1,019.36 | $ | 5.90 | 1.16 | % | ||||||||||||
| B | 1,000.00 | 941.70 | 9.35 | 1,015.58 | 9.70 | 1.91 | ||||||||||||||||||
| C | 1,000.00 | 941.40 | 9.35 | 1,015.58 | 9.70 | 1.91 | ||||||||||||||||||
| Y | 1,000.00 | 946.50 | 4.46 | 1,020.62 | 4.63 | 0.91 | ||||||||||||||||||
| Investor | 1,000.00 | 945.20 | 5.69 | 1,019.36 | 5.90 | 1.16 | ||||||||||||||||||
| R5 | 1,000.00 | 947.00 | 3.83 | 1,021.27 | 3.97 | 0.78 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
16 Invesco Energy Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco Energy Fund
18 Invesco Energy 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 | I-ENE-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Gold & Precious Metals Fund
3 Invesco Gold & Precious Metals Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. | |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could affect their value – they | |
maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Gold & Precious Metals Fund
Schedule of Investments
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Gold & Precious Metals Fund
Investment Abbreviations:
| ADR | – American Depositary Receipt | |
| ETF | – Exchange-Traded Fund | |
| SPDR | – Standard & Poor’s Depositary Receipt |
Notes to Schedule of Investments:
| (a) | All or a portion of this security was out on loan at October 31, 2012. |
| (b) | Non-income producing security. |
| (c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
| (d) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1J. |
Portfolio Composition
By industry, based on Net Assets
as of October 31, 2012
| Gold |
69.5 | % | |||
| Precious Metals & Minerals |
16.6 | ||||
| Investment Companies — Exchange Traded Funds |
6.4 | ||||
| Diversified Metals & Mining |
4.7 | ||||
| Coal & Consumable Fuels |
1.6 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
1.2 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Gold & Precious Metals Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Gold & Precious Metals Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $261,081) |
$ | 2,645,804 | ||
| Dividends from affiliated money market funds (includes securities lending income of $24,860) |
29,701 | |||
| Total investment income |
2,675,505 | |||
| Expenses: |
||||
| Advisory fees |
1,746,927 | |||
| Administrative services fees |
68,996 | |||
| Custodian fees |
21,651 | |||
| Distribution fees: |
||||
| Class A |
247,090 | |||
| Class B |
151,278 | |||
| Class C |
257,345 | |||
| Investor Class |
232,400 | |||
| Transfer agent fees |
610,398 | |||
| Trustees’ and officers’ fees and benefits |
22,141 | |||
| Other |
127,985 | |||
| Total expenses |
3,486,211 | |||
| Less: Fees waived and expense offset arrangement(s) |
(6,195 | ) | ||
| Net expenses |
3,480,016 | |||
| Net investment income (loss) |
(804,511 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
(4,842,445 | ) | ||
| Foreign currencies |
(42,183 | ) | ||
| (4,884,628 | ) | |||
| Change in net unrealized appreciation of: |
||||
| Investment securities |
59,085,027 | |||
| Foreign currencies |
846 | |||
| 59,085,873 | ||||
| Net realized and unrealized gain |
54,201,245 | |||
| Net increase in net assets resulting from operations |
$ | 53,396,734 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Gold & Precious Metals Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
||||||||
| Net investment income (loss) |
$ | (804,511 | ) | $ | (3,094,434 | ) | ||
| Net realized gain (loss) |
(4,884,628 | ) | 18,517,269 | |||||
| Change in net unrealized appreciation (depreciation) |
59,085,873 | (192,486,619 | ) | |||||
| Net increase (decrease) in net assets resulting from operations |
53,396,734 | (177,063,784 | ) | |||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
— | (5,825,221 | ) | |||||
| Class B |
— | (913,904 | ) | |||||
| Class C |
— | (1,320,193 | ) | |||||
| Class Y |
— | (360,851 | ) | |||||
| Investor Class |
— | (5,386,967 | ) | |||||
| Total distributions from net investment income |
— | (13,807,136 | ) | |||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
— | (11,917,726 | ) | |||||
| Class B |
— | (2,110,472 | ) | |||||
| Class C |
— | (3,048,685 | ) | |||||
| Class Y |
— | (713,773 | ) | |||||
| Investor Class |
— | (11,021,107 | ) | |||||
| Total distributions from net realized gains |
— | (28,811,763 | ) | |||||
| Share transactions–net: |
||||||||
| Class A |
(2,350,627 | ) | 13,026,620 | |||||
| Class B |
(3,699,880 | ) | (7,358,957 | ) | ||||
| Class C |
3,395,172 | (4,625,749 | ) | |||||
| Class Y |
(854,883 | ) | 10,925,562 | |||||
| Investor Class |
(1,958,213 | ) | (6,784,691 | ) | ||||
| Net increase (decrease) in net assets resulting from share transactions |
(5,468,431 | ) | 5,182,785 | |||||
| Net increase (decrease) in net assets |
47,928,303 | (214,499,898 | ) | |||||
| Net assets: |
||||||||
| Beginning of period |
491,013,949 | 705,513,847 | ||||||
| End of period (includes undistributed net investment income (loss) of $(33,531,227) and $(32,726,716), respectively) |
$ | 538,942,252 | $ | 491,013,949 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Gold & Precious Metals Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of five different classes of shares: Class A, Class B, Class C, Class Y and Investor Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waiver shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Investor Class 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
9 Invesco Gold & Precious Metals Fund
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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.
10 Invesco Gold & Precious Metals Fund
| 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Redemption Fees — The Fund had a 2% redemption fee that was retained by the Fund to offset transaction costs and other expenses associated with short-term redemptions and exchanges. The fee, subject to certain exceptions, was imposed on certain redemptions or exchanges of shares within 31 days of purchase. The redemption fee was recorded as an increase in shareholder capital and was allocated among the share classes based on the relative net assets of each class. Effective January 1, 2012, the Fund eliminated the 2% redemption fee assessed on shares of the Fund redeemed or exchanged within 31 days of purchase. |
| J. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. 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. |
| K. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
11 Invesco Gold & Precious Metals Fund
| L. | 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. |
| M. | Other Risks — The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
The Fund may invest a large percentage of its assets in a limited number of securities or other instruments, which could negatively affect the value of the Fund.
Fluctuations in the price of gold and precious metals may affect the profitability of companies in the gold and precious metals sector. Changes in the political or economic conditions of countries where companies in the gold and precious metals sector are located may have a direct effect on the price of gold and precious metals.
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $350 million |
0 | .75% | ||||
| Next $350 million |
0 | .65% | ||||
| Next $1.3 billion |
0 | .55% | ||||
| Next $2 billion |
0 | .45% | ||||
| Next $2 billion |
0 | .40% | ||||
| Next $2 billion |
0 | .375% | ||||
| Over $8 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 June 30, 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 Y and Investor Class shares to 2.00%, 2.75%, 2.75%, 1.75% and 2.00%, respectively, 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 waivers 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, 2013. The Advisor 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $4,759.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
12 Invesco Gold & Precious Metals Fund
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 and Investor Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended October 31, 2012, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $33,134 in front-end sales commissions from the sale of Class A shares and $791, $26,454 and $4,060 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 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 | |||||||||||||
| Australia |
$ | 5,725,908 | $ | 18,573,940 | $ | — | $ | 24,299,848 | ||||||||
| Brazil |
28,340,503 | — | — | 28,340,503 | ||||||||||||
| Canada |
338,982,580 | — | — | 338,982,580 | ||||||||||||
| Mali |
31,922,517 | — | — | 31,922,517 | ||||||||||||
| Peru |
3,072,821 | — | — | 3,072,821 | ||||||||||||
| South Africa |
9,409,271 | — | — | 9,409,271 | ||||||||||||
| United States |
119,040,225 | — | — | 119,040,225 | ||||||||||||
| $ | 536,493,825 | $ | 18,573,940 | $ | — | $ | 555,067,765 | |||||||||
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,436.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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.
13 Invesco Gold & Precious Metals Fund
NOTE 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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 did not have a capital loss carryforward as of April 30, 2012.
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $22,243,502 and $26,339,007, 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 |
$ | 109,872,877 | ||
| Aggregate unrealized (depreciation) of investment securities |
(48,321,448 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 61,551,429 | ||
Cost of investments for tax purposes is $493,516,336.
14 Invesco Gold & Precious Metals Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
5,244,319 | $ | 40,849,038 | 9,546,933 | $ | 92,252,175 | ||||||||||
| Class B |
68,076 | 523,974 | 453,870 | 4,359,950 | ||||||||||||
| Class C |
1,080,221 | 8,970,642 | 1,936,727 | 19,496,451 | ||||||||||||
| Class Y |
703,575 | 5,439,716 | 2,110,953 | 19,772,806 | ||||||||||||
| Investor Class |
2,311,979 | 18,261,518 | 4,728,938 | 45,765,064 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
— | — | 1,832,528 | 16,657,676 | ||||||||||||
| Class B |
— | — | 307,401 | 2,717,425 | ||||||||||||
| Class C |
— | — | 435,672 | 4,112,743 | ||||||||||||
| Class Y |
— | — | 108,603 | 998,065 | ||||||||||||
| Investor Class |
— | — | 1,739,843 | 15,919,565 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
142,662 | 1,091,649 | 402,943 | 3,756,197 | ||||||||||||
| Class B |
(147,446 | ) | (1,091,649 | ) | (414,486 | ) | (3,756,197 | ) | ||||||||
| Reacquired:(b) |
||||||||||||||||
| Class A |
(5,764,052 | ) | (44,291,314 | ) | (10,704,485 | ) | (99,639,428 | ) | ||||||||
| Class B |
(416,241 | ) | (3,132,205 | ) | (1,141,870 | ) | (10,680,135 | ) | ||||||||
| Class C |
(704,010 | ) | (5,575,470 | ) | (2,933,478 | ) | (28,234,943 | ) | ||||||||
| Class Y |
(848,534 | ) | (6,294,599 | ) | (1,028,265 | ) | (9,845,309 | ) | ||||||||
| Investor Class |
(2,646,296 | ) | (20,219,731 | ) | (7,115,143 | ) | (68,469,320 | ) | ||||||||
| Net increase (decrease) in share activity |
(975,747 | ) | $ | (5,468,431 | ) | 266,684 | $ | 5,182,785 | ||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 26% 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) | Net of redemption fees of $0 and $109,111 allocated among the classes based on relative net assets of each class for the six months ended October 31, 2012 and the year ended April 30, 2012, respectively. |
15 Invesco Gold & Precious Metals Fund
NOTE 10—Financial 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) |
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(a) |
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 to average |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 7.78 | $ | (0.01 | )(d) | $ | 0.90 | $ | 0.89 | $ | — | $ | — | $ | — | $ | 8.67 | 11.44 | % | $ | 218,308 | 1.32 | %(e) | 1.32 | %(e) | (0.22 | )%(e) | 5 | % | |||||||||||||||||||||||||||
| Year ended 04/30/12 |
11.22 | (0.04 | )(d) | (2.69 | ) | (2.73 | ) | (0.23 | ) | (0.48 | ) | (0.71 | ) | 7.78 | (25.24 | ) | 198,717 | 1.27 | 1.27 | (0.39 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
8.64 | (0.06 | )(d) | 2.97 | 2.91 | (0.33 | ) | — | (0.33 | ) | 11.22 | 33.86 | 274,558 | 1.23 | 1.23 | (0.65 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
7.84 | (0.01 | )(d) | 0.81 | 0.80 | — | — | — | 8.64 | 10.20 | 179,158 | 1.29 | (f) | 1.30 | (f) | (0.77 | )(f) | 2 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.91 | (0.06 | )(d) | 2.13 | 2.07 | (0.14 | ) | — | (0.14 | ) | 7.84 | 34.88 | 157,681 | 1.31 | 1.32 | (0.79 | ) | 3 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
7.77 | (0.01 | )(d) | (1.82 | ) | (1.83 | ) | (0.03 | ) | — | (0.03 | ) | 5.91 | (23.51 | ) | 97,402 | 1.46 | 1.47 | (0.18 | ) | 39 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
6.11 | (0.02 | ) | 1.73 | 1.71 | (0.05 | ) | — | (0.05 | ) | 7.77 | 28.00 | 122,756 | 1.35 | 1.36 | (0.48 | ) | 43 | ||||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
7.54 | (0.04 | )(d) | 0.87 | 0.83 | — | — | — | 8.37 | 11.01 | 31,638 | 2.07 | (e) | 2.07 | (e) | (0.97 | )(e) | 5 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
10.95 | (0.11 | )(d) | (2.61 | ) | (2.72 | ) | (0.21 | ) | (0.48 | ) | (0.69 | ) | 7.54 | (25.82 | ) | 32,217 | 2.02 | 2.02 | (1.14 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
8.46 | (0.13 | )(d) | 2.89 | 2.76 | (0.27 | ) | — | (0.27 | ) | 10.95 | 32.73 | 55,497 | 1.98 | 1.98 | (1.40 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
7.68 | (0.01 | )(d) | 0.79 | 0.78 | — | — | — | 8.46 | 10.16 | 45,239 | 2.04 | (f) | 2.05 | (f) | (1.52 | )(f) | 2 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.77 | (0.11 | )(d) | 2.08 | 1.97 | (0.06 | ) | — | (0.06 | ) | 7.68 | 34.07 | 41,467 | 2.06 | 2.07 | (1.54 | ) | 3 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
7.64 | (0.06 | )(d) | (1.80 | ) | (1.86 | ) | (0.01 | ) | — | (0.01 | ) | 5.77 | (24.22 | ) | 31,584 | 2.21 | 2.22 | (0.93 | ) | 39 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
6.01 | (0.07 | ) | 1.71 | 1.64 | (0.01 | ) | — | (0.01 | ) | 7.64 | 27.23 | 43,462 | 2.10 | 2.11 | (1.23 | ) | 43 | ||||||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
8.05 | (0.04 | )(d) | 0.93 | 0.89 | — | — | — | 8.94 | 11.06 | 60,035 | 2.07 | (e) | 2.07 | (e) | (0.97 | )(e) | 5 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
11.63 | (0.11 | )(d) | (2.78 | ) | (2.89 | ) | (0.21 | ) | (0.48 | ) | (0.69 | ) | 8.05 | (25.77 | ) | 51,017 | 2.02 | 2.02 | (1.14 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
8.97 | (0.14 | )(d) | 3.07 | 2.93 | (0.27 | ) | — | (0.27 | ) | 11.63 | 32.77 | 80,280 | 1.98 | 1.98 | (1.40 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
8.15 | (0.01 | )(d) | 0.83 | 0.82 | — | — | — | 8.97 | 10.06 | 53,588 | 2.04 | (f) | 2.05 | (f) | (1.52 | )(f) | 2 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
6.12 | (0.12 | )(d) | 2.21 | 2.09 | (0.06 | ) | — | (0.06 | ) | 8.15 | 34.08 | 51,104 | 2.06 | 2.07 | (1.54 | ) | 3 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
8.11 | (0.06 | )(d) | (1.92 | ) | (1.98 | ) | (0.01 | ) | — | (0.01 | ) | 6.12 | (24.30 | ) | 35,563 | 2.21 | 2.22 | (0.93 | ) | 39 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
6.39 | (0.07 | ) | 1.80 | 1.73 | (0.01 | ) | — | (0.01 | ) | 8.11 | 27.02 | 40,939 | 2.10 | 2.11 | (1.23 | ) | 43 | ||||||||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
7.86 | 0.00 | (d) | 0.92 | 0.92 | — | — | — | 8.78 | 11.70 | 21,204 | 1.07 | (e) | 1.07 | (e) | 0.03 | (e) | 5 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
11.32 | (0.01 | )(d) | (2.73 | ) | (2.74 | ) | (0.24 | ) | (0.48 | ) | (0.72 | ) | 7.86 | (25.14 | ) | 20,131 | 1.02 | 1.02 | (0.14 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
8.71 | (0.04 | )(d) | 3.00 | 2.96 | (0.35 | ) | — | (0.35 | ) | 11.32 | 34.19 | 15,493 | 0.98 | 0.98 | (0.40 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
7.91 | 0.00 | (d) | 0.80 | 0.80 | — | — | — | 8.71 | 10.11 | 5,690 | 1.04 | (f) | 1.05 | (f) | (0.52 | )(f) | 2 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.95 | (0.04 | )(d) | 2.15 | 2.11 | (0.15 | ) | — | (0.15 | ) | 7.91 | 35.46 | 4,973 | 1.06 | 1.07 | (0.54 | ) | 3 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09(g) |
5.09 | (0.00 | )(d) | 0.89 | 0.89 | (0.03 | ) | — | (0.03 | ) | 5.95 | 17.56 | 1,365 | 1.44 | (f) | 1.45 | (f) | (0.16 | )(f) | 39 | ||||||||||||||||||||||||||||||||||||
| Investor Class |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
7.83 | (0.01 | )(d) | 0.91 | 0.90 | — | — | — | 8.73 | 11.49 | 207,758 | 1.32 | (e) | 1.32 | (e) | (0.22 | )(e) | 5 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
11.28 | (0.04 | )(d) | (2.70 | ) | (2.74 | ) | (0.23 | ) | (0.48 | ) | (0.71 | ) | 7.83 | (25.20 | ) | 188,933 | 1.27 | 1.27 | (0.39 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
8.69 | (0.06 | )(d) | 2.98 | 2.92 | (0.33 | ) | — | (0.33 | ) | 11.28 | 33.78 | 279,686 | 1.23 | 1.23 | (0.65 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
7.89 | (0.01 | )(d) | 0.81 | 0.80 | — | — | — | 8.69 | 10.14 | 205,022 | 1.29 | (f) | 1.30 | (f) | (0.77 | )(f) | 2 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.94 | (0.06 | )(d) | 2.15 | 2.09 | (0.14 | ) | — | (0.14 | ) | 7.89 | 35.04 | 187,995 | 1.31 | 1.32 | (0.79 | ) | 3 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
7.82 | (0.01 | )(d) | (1.84 | ) | (1.85 | ) | (0.03 | ) | — | (0.03 | ) | 5.94 | (23.61 | ) | 136,151 | 1.46 | 1.47 | (0.18 | ) | 39 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
6.15 | (0.03 | ) | 1.75 | 1.72 | (0.05 | ) | — | (0.05 | ) | 7.82 | 27.98 | 181,711 | 1.35 | 1.36 | (0.48 | ) | 43 | ||||||||||||||||||||||||||||||||||||||
| (a) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
| (c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
| (d) | Calculated using average shares outstanding. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $196,061, $30,009, $51,049, $17,765 and $184,404 for Class A, Class B, Class C, Class Y and Investor Class shares, respectively. |
| (f) | Annualized. |
| (g) | Commencement date of October 3, 2008. |
16 Invesco Gold & Precious Metals Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class |
Beginning |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 1,114.40 | $ | 7.05 | $ | 1,018.53 | $ | 6.73 | 1.32 | % | ||||||||||||
| B |
1,000.00 | 1,110.10 | 11.03 | 1,014.75 | 10.53 | 2.07 | ||||||||||||||||||
| C |
1,000.00 | 1,110.60 | 11.03 | 1,014.75 | 10.53 | 2.07 | ||||||||||||||||||
| Y |
1,000.00 | 1,117.00 | 5.73 | 1,019.79 | 5.46 | 1.07 | ||||||||||||||||||
| Investor |
1,000.00 | 1,114.90 | 7.05 | 1,018.53 | 6.73 | 1.32 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
17 Invesco Gold & Precious Metals Fund
Approval of Investment Advisory and Sub-Advisory Contracts
18 Invesco Gold & Precious Metals Fund
19 Invesco Gold & Precious Metals 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
I-GPM-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Leisure Fund
3 Invesco Leisure Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could affect |
their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Leisure Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Leisure 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 & Poor’s. |
| (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 security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The value of these securities at October 31, 2012 was $6,044,204 which represented 1.70% of the Fund’s Net Assets. |
| (d) | All or a portion of this security was out on loan at October 31, 2012. |
| (e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Consumer Discretionary |
85.9 | % | |||
| Financials |
0.4 | ||||
| Information Technology |
6.4 | ||||
| Industrials |
2.1 | ||||
| Consumer Staples |
0.3 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
4.9 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Leisure Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Leisure Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $11,162) |
$ | 1,721,430 | ||
| Dividends from affiliated money market funds (includes securities lending income of $461,453) |
464,440 | |||
| Total investment income |
2,185,870 | |||
| Expenses: |
||||
| Advisory fees |
1,354,153 | |||
| Administrative services fees |
58,454 | |||
| Custodian fees |
10,861 | |||
| Distribution fees: |
||||
| Class A |
70,826 | |||
| Class B |
20,147 | |||
| Class C |
57,546 | |||
| Class R |
3,176 | |||
| Investor Class |
351,235 | |||
| Transfer agent fees |
403,240 | |||
| Trustees’ and officers’ fees and benefits |
18,180 | |||
| Other |
93,487 | |||
| Total expenses |
2,441,305 | |||
| Less: Fees waived and expense offset arrangement(s) |
(4,170 | ) | ||
| Net expenses |
2,437,135 | |||
| Net investment income (loss) |
(251,265 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
26,599,963 | |||
| Foreign currencies |
(6,954 | ) | ||
| 26,593,009 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(26,613,862 | ) | ||
| Foreign currencies |
(1,122 | ) | ||
| (26,614,984 | ) | |||
| Net realized and unrealized gain (loss) |
(21,975 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (273,240 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Leisure Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
| |||||||
| Net investment income (loss) |
$ | (251,265 | ) | $ | (840,932 | ) | ||
| Net realized gain |
26,593,009 | 36,516,622 | ||||||
| Change in net unrealized appreciation (depreciation) |
(26,614,984 | ) | (1,989,268 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(273,240 | ) | 33,686,422 | |||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
— | (1,560,232 | ) | |||||
| Class B |
— | (150,734 | ) | |||||
| Class C |
— | (352,457 | ) | |||||
| Class R |
— | (34,584 | ) | |||||
| Class Y |
— | (132,471 | ) | |||||
| Investor Class |
— | (8,145,664 | ) | |||||
| Total distributions from net realized gains |
— | (10,376,142 | ) | |||||
| Share transactions-net: |
||||||||
| Class A |
(13,958,352 | ) | 7,880,094 | |||||
| Class B |
(698,814 | ) | (2,504,149 | ) | ||||
| Class C |
(1,008,090 | ) | (358,626 | ) | ||||
| Class R |
47,252 | (171,375 | ) | |||||
| Class Y |
271,783 | 4,062,149 | ||||||
| Investor Class |
(27,964,587 | ) | (14,752,771 | ) | ||||
| Net increase (decrease) in net assets resulting from share transactions |
(43,310,808 | ) | (5,844,678 | ) | ||||
| Net increase (decrease) in net assets |
(43,584,048 | ) | 17,465,602 | |||||
| Net assets: |
||||||||
| Beginning of period |
399,802,390 | 382,336,788 | ||||||
| End of period (includes undistributed net investment income (loss) of $(715,703) and $(464,438), respectively) |
$ | 356,218,342 | $ | 399,802,390 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Leisure Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Investor Class. Investor Class shares of the Fund are offered only to certain grandfathered investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y and Investor Class 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.
9 Invesco Leisure 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. |
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
10 Invesco Leisure 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| K. | Foreign Currency Contracts — 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. | Other Risks — The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
The leisure sector depends on consumer discretionary spending, which generally falls during economic downturns. Securities of gambling casinos are often subject to high price volatility and are considered speculative. Securities of companies that make video and electronic games may be affected by the games’ risk of rapid obsolescence.
11 Invesco Leisure Fund
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $350 million |
0 | .75% | ||||
| Next $350 million |
0 | .65% | ||||
| Next $1.3 billion |
0 | .55% | ||||
| Next $2 billion |
0 | .45% | ||||
| Next $2 billion |
0 | .40% | ||||
| Next $2 billion |
0 | .375% | ||||
| Over $8 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 June 30, 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 and Investor Class shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 2.00%, respectively, 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 waivers 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, 2013. 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $3,168.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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 and Investor Class shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class B, Class C, Class R and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares, 0.50% of the average daily net assets of Class R shares and 0.25% of the average daily net assets of Investor Class shares. Of Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended October 31, 2012, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $4,607 in front-end sales commissions from the sale of Class A shares and $0, $2,114 and $132 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended October 31, 2012, the Fund incurred $215 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.
12 Invesco Leisure Fund
NOTE 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 354,359,752 | $ | 8,185,382 | $ | — | $ | 362,545,134 | ||||||||
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,002.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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 did not have a capital loss carryforward as of April 30, 2012.
13 Invesco Leisure Fund
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $95,182,333 and $148,653,444, 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 |
$ | 92,621,603 | ||
| Aggregate unrealized (depreciation) of investment securities |
(14,992,735 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 77,628,868 | ||
Cost of investments for tax purposes is $284,916,266.
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
284,685 | $ | 10,933,405 | 923,066 | $ | 33,574,158 | ||||||||||
| Class B |
5,150 | 187,882 | 11,034 | 372,878 | ||||||||||||
| Class C |
56,241 | 1,987,041 | 86,649 | 2,983,000 | ||||||||||||
| Class R |
8,544 | 330,463 | 9,758 | 341,341 | ||||||||||||
| Class Y |
84,999 | 3,182,324 | 148,694 | 5,494,531 | ||||||||||||
| Investor Class |
265,457 | 10,132,921 | 814,930 | 29,621,422 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
— | — | 45,595 | 1,490,512 | ||||||||||||
| Class B |
— | — | 4,351 | 135,264 | ||||||||||||
| Class C |
— | — | 11,120 | 333,607 | ||||||||||||
| Class R |
— | — | 1,065 | 34,584 | ||||||||||||
| Class Y |
— | — | 3,827 | 125,395 | ||||||||||||
| Investor Class |
— | — | 241,791 | 7,884,795 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
12,794 | 484,675 | 41,392 | 1,451,584 | ||||||||||||
| Class B |
(13,518 | ) | (484,675 | ) | (43,427 | ) | (1,451,584 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(668,373 | ) | (25,376,432 | ) | (816,919 | ) | (28,636,160 | ) | ||||||||
| Class B |
(11,147 | ) | (402,021 | ) | (46,770 | ) | (1,560,707 | ) | ||||||||
| Class C |
(87,971 | ) | (2,995,131 | ) | (113,079 | ) | (3,675,233 | ) | ||||||||
| Class R |
(7,496 | ) | (283,211 | ) | (14,812 | ) | (547,300 | ) | ||||||||
| Class Y |
(72,325 | ) | (2,910,541 | ) | (45,135 | ) | (1,557,777 | ) | ||||||||
| Investor Class |
(1,011,898 | ) | (38,097,508 | ) | (1,481,446 | ) | (52,258,988 | ) | ||||||||
| Net increase (decrease) in share activity |
(1,154,858 | ) | $ | (43,310,808 | ) | (218,316 | ) | $ | (5,844,678 | ) | ||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 17% of the outstanding shares of the Fund. 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. |
14 Invesco Leisure Fund
NOTE 10—Financial 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(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 (loss) to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 39.28 | $ | (0.02 | ) | $ | 0.20 | (d) | $ | 0.18 | $ | — | $ | — | $ | — | $ | 39.46 | 0.46 | %(d) | $ | 56,206 | 1.32 | %(e) | 1.32 | %(e) | (0.11 | )%(e) | 27 | % | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
36.78 | (0.07 | ) | 3.66 | 3.59 | — | (1.09 | ) | (1.09 | ) | 39.28 | 10.35 | 70,518 | 1.34 | 1.34 | (0.21 | ) | 78 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
32.56 | (0.01 | ) | 4.27 | 4.26 | (0.04 | ) | — | (0.04 | ) | 36.78 | 13.10 | 58,922 | 1.33 | 1.33 | (0.03 | ) | 53 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
31.19 | 0.02 | 1.35 | 1.37 | — | — | — | 32.56 | 4.39 | 66,194 | 1.34 | (f) | 1.34 | (f) | 0.83 | (f) | 6 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
20.32 | 0.04 | 11.27 | 11.31 | (0.44 | ) | — | (0.44 | ) | 31.19 | 55.88 | 58,698 | 1.39 | 1.39 | 0.16 | 55 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
39.82 | 0.36 | (17.29 | ) | (16.93 | ) | — | (2.57 | ) | (2.57 | ) | 20.32 | (42.67 | ) | 46,322 | 1.36 | 1.36 | 1.16 | 17 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
49.19 | 0.23 | (5.72 | ) | (5.49 | ) | (0.37 | ) | (3.51 | ) | (3.88 | ) | 39.82 | (11.89 | ) | 135,813 | 1.18 | 1.18 | 0.48 | 14 | ||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
37.25 | (0.16 | ) | 0.19 | (d) | 0.03 | — | — | — | 37.28 | 0.08 | (d) | 3,713 | 2.07 | (e) | 2.07 | (e) | (0.86 | )(e) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
35.20 | (0.32 | ) | 3.46 | 3.14 | — | (1.09 | ) | (1.09 | ) | 37.25 | 9.52 | 4,437 | 2.09 | 2.09 | (0.96 | ) | 78 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
31.36 | (0.24 | ) | 4.08 | 3.84 | — | — | — | 35.20 | 12.25 | 6,826 | 2.08 | 2.08 | (0.78 | ) | 53 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
30.06 | 0.00 | 1.30 | 1.30 | — | — | — | 31.36 | 4.33 | 9,534 | 2.09 | (f) | 2.09 | (f) | 0.08 | (f) | 6 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
19.51 | (0.15 | ) | 10.80 | 10.65 | (0.10 | ) | — | (0.10 | ) | 30.06 | 54.66 | 9,399 | 2.14 | 2.14 | (0.59 | ) | 55 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
38.68 | 0.13 | (16.73 | ) | (16.60 | ) | — | (2.57 | ) | (2.57 | ) | 19.51 | (43.08 | ) | 9,454 | 2.11 | 2.11 | 0.41 | 17 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
47.95 | (0.13 | ) | (5.55 | ) | (5.68 | ) | (0.08 | ) | (3.51 | ) | (3.59 | ) | 38.68 | (12.54 | ) | 27,495 | 1.93 | 1.93 | (0.27 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
35.94 | (0.15 | ) | 0.17 | (d) | 0.02 | — | — | — | 35.96 | 0.06 | (d) | 11,933 | 2.07 | (e) | 2.07 | (e) | (0.86 | )(e) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
34.00 | (0.31 | ) | 3.34 | 3.03 | — | (1.09 | ) | (1.09 | ) | 35.94 | 9.53 | 13,065 | 2.09 | 2.09 | (0.96 | ) | 78 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
30.29 | (0.24 | ) | 3.95 | 3.71 | — | — | — | 34.00 | 12.25 | 12,881 | 2.08 | 2.08 | (0.78 | ) | 53 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
29.03 | 0.00 | 1.26 | 1.26 | — | — | — | 30.29 | 4.34 | 14,536 | 2.09 | (f) | 2.09 | (f) | 0.08 | (f) | 6 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
18.84 | (0.14 | ) | 10.43 | 10.29 | (0.10 | ) | — | (0.10 | ) | 29.03 | 54.69 | 13,955 | 2.14 | 2.14 | (0.59 | ) | 55 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
37.51 | 0.12 | (16.22 | ) | (16.10 | ) | — | (2.57 | ) | (2.57 | ) | 18.84 | (43.09 | ) | 11,232 | 2.11 | 2.11 | 0.41 | 17 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
46.62 | (0.12 | ) | (5.40 | ) | (5.52 | ) | (0.08 | ) | (3.51 | ) | (3.59 | ) | 37.51 | (12.56 | ) | 33,073 | 1.93 | 1.93 | (0.27 | ) | 14 | ||||||||||||||||||||||||||||||||||
| Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
38.98 | (0.07 | ) | 0.20 | (d) | 0.13 | — | — | — | 39.11 | 0.33 | (d) | 1,385 | 1.57 | (e) | 1.57 | (e) | (0.36 | )(e) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
36.59 | (0.16 | ) | 3.64 | 3.48 | — | (1.09 | ) | (1.09 | ) | 38.98 | 10.10 | 1,339 | 1.59 | 1.59 | (0.46 | ) | 78 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
32.44 | (0.09 | ) | 4.24 | 4.15 | — | — | — | 36.59 | 12.79 | 1,403 | 1.58 | 1.58 | (0.28 | ) | 53 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
31.08 | 0.02 | 1.34 | 1.36 | — | — | — | 32.44 | 4.38 | 1,208 | 1.59 | (f) | 1.59 | (f) | 0.58 | (f) | 6 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
20.22 | (0.02 | ) | 11.21 | 11.19 | (0.33 | ) | — | (0.33 | ) | 31.08 | 55.50 | 1,154 | 1.64 | 1.64 | (0.09 | ) | 55 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
39.75 | 0.27 | (17.23 | ) | (16.96 | ) | — | (2.57 | ) | (2.57 | ) | 20.22 | (42.82 | ) | 599 | 1.61 | 1.61 | 0.91 | 17 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
49.14 | 0.10 | (5.71 | ) | (5.61 | ) | (0.27 | ) | (3.51 | ) | (3.78 | ) | 39.75 | (12.12 | ) | 903 | 1.43 | 1.43 | 0.23 | 14 | ||||||||||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
39.41 | 0.03 | 0.20 | (d) | 0.23 | — | — | — | 39.64 | 0.58 | (d) | 7,070 | 1.07 | (e) | 1.07 | (e) | 0.14 | (e) | 27 | |||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
36.80 | 0.01 | 3.69 | 3.70 | — | (1.09 | ) | (1.09 | ) | 39.41 | 10.64 | 6,529 | 1.09 | 1.09 | 0.04 | 78 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
32.57 | 0.07 | 4.28 | 4.35 | (0.12 | ) | — | (0.12 | ) | 36.80 | 13.37 | 2,145 | 1.08 | 1.08 | 0.22 | 53 | ||||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
31.19 | 0.03 | 1.35 | 1.38 | — | — | — | 32.57 | 4.43 | 3,120 | 1.09 | (f) | 1.09 | (f) | 1.08 | (f) | 6 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
20.31 | 0.11 | 11.25 | 11.36 | (0.48 | ) | — | (0.48 | ) | 31.19 | 56.19 | 2,482 | 1.14 | 1.14 | 0.41 | 55 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09(g) |
30.39 | 0.14 | (7.65 | ) | (7.51 | ) | — | (2.57 | ) | (2.57 | ) | 20.31 | (24.90 | ) | 576 | 1.27 | (f) | 1.28 | (f) | 1.25 | (f) | 17 | ||||||||||||||||||||||||||||||||||
| Investor Class |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
39.18 | (0.02 | ) | 0.20 | (d) | 0.18 | — | — | — | 39.36 | 0.46 | (d) | 275,913 | 1.32 | (e) | 1.32 | (e) | (0.11 | )(e) | 27 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
36.69 | (0.07 | ) | 3.65 | 3.58 | — | (1.09 | ) | (1.09 | ) | 39.18 | 10.34 | 303,914 | 1.34 | 1.34 | (0.21 | ) | 78 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
32.49 | (0.01 | ) | 4.25 | 4.24 | (0.04 | ) | — | (0.04 | ) | 36.69 | 13.07 | 300,160 | 1.33 | 1.33 | (0.03 | ) | 53 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
31.11 | 0.02 | 1.36 | 1.38 | — | — | — | 32.49 | 4.44 | 310,119 | 1.34 | (f) | 1.34 | (f) | 0.83 | (f) | 6 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
20.28 | 0.04 | 11.23 | 11.27 | (0.44 | ) | — | (0.44 | ) | 31.11 | 55.79 | 297,887 | 1.39 | 1.39 | 0.16 | 55 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
39.74 | 0.35 | (17.24 | ) | (16.89 | ) | — | (2.57 | ) | (2.57 | ) | 20.28 | (42.65 | ) | 217,365 | 1.36 | 1.36 | 1.16 | 17 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
49.10 | 0.23 | (5.71 | ) | (5.48 | ) | (0.37 | ) | (3.51 | ) | (3.88 | ) | 39.74 | (11.89 | ) | 482,760 | 1.18 | 1.18 | 0.48 | 14 | ||||||||||||||||||||||||||||||||||||
| (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) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received net gains (losses) on securities (both realized and unrealized) per share would have been $(0.11), $(0.12), $(0.14), $(0.11), $(0.11) and $(0.11) for Class A, Class B, Class C, Class R, Class Y and Investor Class shares, respectively and total returns would have been lower. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $56,199, $3,997, $11,415, $1,260, $7,851 and $278,698 for Class A, Class B, Class C, Class R, Class Y and Investor Class, respectively. |
| (f) | Annualized. |
| (g) | Commencement date of October 3, 2008. |
NOTE 11—Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco American Franchise Fund (the “Acquiring Fund”).
The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2013. Upon closing of the reorganization, shareholders of the Fund will receive a corresponding class of shares of the Acquiring Fund in exchange for their shares of the Fund and the Fund will liquidate and cease operations.
15 Invesco Leisure Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 1,004.80 | $ | 6.67 | $ | 1,018.55 | $ | 6.72 | 1.32 | % | ||||||||||||
| B | 1,000.00 | 1,000.80 | 10.44 | 1,014.77 | 10.51 | 2.07 | ||||||||||||||||||
| C | 1,000.00 | 1,000.80 | 10.44 | 1,014.77 | 10.51 | 2.07 | ||||||||||||||||||
| R | 1,000.00 | 1,003.60 | 7.93 | 1,017.29 | 7.98 | 1.57 | ||||||||||||||||||
| Y | 1,000.00 | 1,005.80 | 5.41 | 1,019.81 | 5.45 | 1.07 | ||||||||||||||||||
| Investor | 1,000.00 | 1,004.60 | 6.67 | 1,018.55 | 6.72 | 1.32 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
16 Invesco Leisure Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco Leisure Fund
18 Invesco Leisure 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
I-LEI-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Technology Fund
3 Invesco Technology Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor
|
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could affect their value – they |
maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Technology Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Technology 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 & Poor’s. |
| (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 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 October 31, 2012 was $7,059,090, which represented 1.08% of the Fund’s Net Assets. |
| (d) | The Fund has a 10.29% ownership of BlueStream Ventures L.P. (“BlueStream”) and has a remaining commitment of $829,416 to purchase additional interests in BlueStream, which is subject to the terms of the partnership agreement. BlueStream may be considered an affiliated company. Security is considered venture capital. The value of this security as of October 31, 2012 represented 0.43% of the Fund’s Net Assets. See Note 4. |
| (e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Information Technology |
90.4 | % | |||
| Consumer Discretionary |
2.2 | ||||
| Health Care |
1.2 | ||||
| Industrials |
0.6 | ||||
| Financials |
0.4 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
5.2 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Technology Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Technology Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
| |||
| Dividends |
$ | 3,357,764 | ||
| Dividends from affiliates |
16,103 | |||
| Total investment income |
3,373,867 | |||
| Expenses: |
||||
| Advisory fees |
2,473,888 | |||
| Administrative services fees |
98,099 | |||
| Custodian fees |
7,767 | |||
| Distribution fees: |
||||
| Class A |
351,737 | |||
| Class B |
101,312 | |||
| Class C |
134,485 | |||
| Investor Class |
309,991 | |||
| Transfer agent fees — A, B, C, Y and Investor |
1,750,392 | |||
| Transfer agent fees — R5 |
477 | |||
| Trustees’ and officers’ fees and benefits |
28,337 | |||
| Other |
137,481 | |||
| Total expenses |
5,393,966 | |||
| Less: Fees waived and expense offset arrangement(s) |
(21,529 | ) | ||
| Net expenses |
5,372,437 | |||
| Net investment income (loss) |
(1,998,570 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain from investment securities |
12,039,284 | |||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(93,869,134 | ) | ||
| Foreign currencies |
(31 | ) | ||
| (93,869,165 | ) | |||
| Net realized and unrealized gain (loss) |
(81,829,881 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (83,828,451 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Technology Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
|
|||||||
| Net investment income (loss) |
$ | (1,998,570 | ) | $ | (8,046,157 | ) | ||
| Net realized gain |
12,039,284 | 75,803,301 | ||||||
| Change in net unrealized appreciation (depreciation) |
(93,869,165 | ) | (41,778,112 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(83,828,451 | ) | 25,979,032 | |||||
| Share transactions-net: |
||||||||
| Class A |
(20,239,257 | ) | 72,515,088 | |||||
| Class B |
(3,823,850 | ) | 7,280,021 | |||||
| Class C |
(3,885,935 | ) | 9,356,894 | |||||
| Class Y |
(211,075 | ) | 1,057,446 | |||||
| Investor Class |
(25,293,098 | ) | (34,217,902 | ) | ||||
| Class R5 |
(8,730 | ) | 338,695 | |||||
| Net increase (decrease) in net assets resulting from share transactions |
(53,461,945 | ) | 56,330,242 | |||||
| Net increase (decrease) in net assets |
(137,290,396 | ) | 82,309,274 | |||||
| Net assets: |
||||||||
| Beginning of period |
788,006,964 | 705,697,690 | ||||||
| End of period (includes undistributed net investment income of $19,695,280 and $21,693,850, respectively) |
$ | 650,716,568 | $ | 788,006,964 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Technology Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, 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 Y, Investor Class and Class R5 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 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.
9 Invesco Technology Fund
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to 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. |
10 Invesco Technology Fund
| 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| 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 Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers in this sector.
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $350 million |
0 | .75% | ||||
| Next $350 million |
0 | .65% | ||||
| Next $1.3 billion |
0 | .55% | ||||
| Next $2 billion |
0 | .45% | ||||
| Next $2 billion |
0 | .40% | ||||
| Next $2 billion |
0 | .375% | ||||
| Over $8 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).
Effective July 1, 2012, the Adviser has contractually agreed, through at least June 30, 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 above) of Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares to 2.00%, 2.75%, 2.75%, 1.75%, 2.00% and 1.75%, respectively, of average daily net assets. Prior to July 1, 2012, the Adviser had contractually agreed to waive advisory fees and/or
11 Invesco Technology Fund
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 Y, Investor Class and Class R5 shares to 1.76%, 2.51%, 2.51%, 1.51%, 1.76% and 1.51%, respectively, 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 waivers 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, 2013. 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $16,296.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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, 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 Fund’s Class A, Class B, Class C 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 Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares. The Fund, pursuant to the Investor Class Plan, reimburses IDI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges that may be paid by any class of shares of the Fund. For the six months ended October 31, 2012, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $14,233 in front-end sales commissions from the sale of Class A shares and $7, $11,170 and $983 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 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 643,369,084 | $ | 4,231,048 | $ | 2,828,042 | $ | 650,428,174 | ||||||||
12 Invesco Technology Fund
NOTE 4—Investments in Other Affiliates
The 1940 Act defines affiliates as those issuances in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The following is a summary of the investments in other affiliates for the six months ended October 31, 2012.
| Value 04/30/12 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation (Depreciation) |
Realized Gain (Loss) |
Value 10/31/12 |
Dividend Income |
||||||||||||||||||||||
| BlueStream Ventures L.P. |
$ | 2,853,386 | $ | — | $ | — | $ | (25,344 | ) | $ | — | $ | 2,828,042 | $ | — | |||||||||||||
NOTE 5—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $5,233.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 7—Cash 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 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The Regulated Investment Company Modernization Act of 2010 (the “Act”) 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 did not have a capital loss carryforward as of April 30, 2012.
NOTE 9—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $148,429,304 and $216,569,931, 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 |
$ | 200,453,990 | ||
| Aggregate unrealized (depreciation) of investment securities |
(63,773,519 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 136,680,471 | ||
Cost of investments for tax purposes is $513,747,703.
13 Invesco Technology Fund
NOTE 10—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
303,540 | $ | 10,454,055 | 1,324,238 | $ | 45,523,802 | ||||||||||
| Class B |
8,427 | 272,997 | 50,053 | 1,576,848 | ||||||||||||
| Class C |
53,256 | 1,660,302 | 211,083 | 6,760,376 | ||||||||||||
| Class Y |
17,182 | 594,753 | 63,325 | 2,216,461 | ||||||||||||
| Investor Class |
218,389 | 7,478,258 | 760,954 | 25,852,726 | ||||||||||||
| Class R5 |
1,994 | 74,871 | 13,906 | 512,695 | ||||||||||||
| Issued in connection with acquisitions:(b) |
||||||||||||||||
| Class A |
— | — | 2,635,778 | 93,781,193 | ||||||||||||
| Class B |
— | — | 550,787 | 18,312,828 | ||||||||||||
| Class C |
— | — | 313,417 | 10,137,110 | ||||||||||||
| Class Y |
— | — | 612 | 21,728 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
61,892 | 2,122,715 | 215,420 | 7,333,296 | ||||||||||||
| Class B |
(66,899 | ) | (2,122,715 | ) | (231,514 | ) | (7,333,296 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(958,656 | ) | (32,816,027 | ) | (2,198,283 | ) | (74,123,203 | ) | ||||||||
| Class B |
(62,263 | ) | (1,974,132 | ) | (167,090 | ) | (5,276,359 | ) | ||||||||
| Class C |
(178,949 | ) | (5,546,237 | ) | (250,719 | ) | (7,540,592 | ) | ||||||||
| Class Y |
(23,036 | ) | (805,828 | ) | (34,644 | ) | (1,180,743 | ) | ||||||||
| Investor Class |
(953,692 | ) | (32,771,356 | ) | (1,788,344 | ) | (60,070,628 | ) | ||||||||
| Class R5 |
(2,170 | ) | (83,601 | ) | (4,744 | ) | (174,000 | ) | ||||||||
| Net increase (decrease) in share activity |
(1,580,985 | ) | $ | (53,461,945 | ) | 1,464,235 | $ | 56,330,242 | ||||||||
| (a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 8% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is 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 this entity are also owned beneficially. |
| (b) | As of the opening of business on May 23, 2011, the Fund acquired all the net assets of Invesco Van Kampen Technology Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of the Target Fund on April 14, 2011. The acquisition was accomplished by a tax-free exchange of 3,500,594 shares of the Fund for 21,922,655 shares outstanding of the Target Fund as of the close of business on May 20, 2011. Each class of the Target Fund was 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 at the close of business on May 20, 2011. The Target Fund’s net assets at that date of $122,252,859, including $28,512,048 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $694,559,865 and $816,812,724 immediately after the acquisition. |
| The pro forma results of operations for the year ended April 30, 2012 assuming the reorganization had been completed on May 1, 2011, the beginning of the annual reporting period are as follows: |
| Net investment income (loss) |
$ | (8,066,933 | ) | ||
| Net realized/unrealized gains |
31,977,912 | ||||
| Change in net assets resulting from operations |
$ | 23,910,979 |
| 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 has been included in the Fund’s Statement of Operations since May 23, 2011. |
14 Invesco Technology Fund
NOTE 11—Financial 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 |
Net asset value, end of period |
Total return(b) |
Net assets, end of period (000s omitted) |
Ratio of and/or expenses |
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(c) |
||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 37.33 | $ | (0.10 | ) | $ | (3.95 | ) | $ | (4.05 | ) | $ | 33.28 | (10.85 | )% | $ | 258,731 | 1.52 | %(d) | 1.52 | %(d) | (0.56 | )%(d) | 22 | % | |||||||||||||||||||
| Year ended 04/30/12 |
35.86 | (0.36 | ) | 1.83 | 1.47 | 37.33 | 4.10 | 312,389 | 1.55 | 1.56 | (1.06 | ) | 48 | |||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
28.53 | (0.22 | ) | 7.55 | (e) | 7.33 | 35.86 | 25.69 | 229,174 | 1.55 | 1.55 | (0.73 | ) | 42 | ||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
27.91 | (0.04 | ) | 0.66 | 0.62 | 28.53 | 2.22 | 191,274 | 1.66 | (f) | 1.66 | (f) | (1.56 | )(f) | 4 | |||||||||||||||||||||||||||||
| Year ended 03/31/10 |
17.77 | (0.20 | ) | 10.34 | 10.14 | 27.91 | 57.06 | 187,989 | 1.66 | 1.75 | (0.87 | ) | 35 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
25.58 | (0.00 | )(g) | (7.81 | )(h) | (7.81 | ) | 17.77 | (30.53 | )(h) | 122,823 | 1.55 | 1.83 | (0.02 | )(g) | 68 | ||||||||||||||||||||||||||||
| Year ended 03/31/08 |
28.49 | (0.23 | ) | (2.68 | ) | (2.91 | ) | 25.58 | (10.21 | ) | 217,236 | 1.55 | 1.56 | (0.77 | ) | 42 | ||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
34.61 | (0.21 | ) | (3.67 | ) | (3.88 | ) | 30.73 | (11.21 | ) | 17,429 | 2.27 | (d) | 2.27 | (d) | (1.31 | )(d) | 22 | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
33.47 | (0.57 | ) | 1.71 | 1.14 | 34.61 | 3.41 | 23,803 | 2.30 | 2.31 | (1.81 | ) | 48 | |||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
26.83 | (0.41 | ) | 7.05 | (e) | 6.64 | 33.47 | 24.75 | 16,253 | 2.30 | 2.30 | (1.48 | ) | 42 | ||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
26.26 | (0.05 | ) | 0.62 | 0.57 | 26.83 | 2.17 | 18,853 | 2.41 | (f) | 2.41 | (f) | (2.31 | )(f) | 4 | |||||||||||||||||||||||||||||
| Year ended 03/31/10 |
16.84 | (0.35 | ) | 9.77 | 9.42 | 26.26 | 55.94 | 19,173 | 2.41 | 2.50 | (1.62 | ) | 35 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
24.43 | (0.16 | )(g) | (7.43 | )(h) | (7.59 | ) | 16.84 | (31.07 | )(h) | 16,952 | 2.30 | 2.58 | (0.77 | )(g) | 68 | ||||||||||||||||||||||||||||
| Year ended 03/31/08 |
27.42 | (0.44 | ) | (2.55 | ) | (2.99 | ) | 24.43 | (10.90 | ) | 38,443 | 2.30 | 2.31 | (1.52 | ) | 42 | ||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
33.68 | (0.21 | ) | (3.56 | ) | (3.77 | ) | 29.91 | (11.19 | ) | 24,512 | 2.27 | (d) | 2.27 | (d) | (1.31 | )(d) | 22 | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
32.58 | (0.55 | ) | 1.65 | 1.10 | 33.68 | 3.38 | 31,836 | 2.30 | 2.31 | (1.81 | ) | 48 | |||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
26.12 | (0.41 | ) | 6.87 | (e) | 6.46 | 32.58 | 24.73 | 21,875 | 2.30 | 2.30 | (1.48 | ) | 42 | ||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
25.57 | (0.05 | ) | 0.60 | 0.55 | 26.12 | 2.15 | 16,931 | 2.41 | (f) | 2.41 | (f) | (2.31 | )(f) | 4 | |||||||||||||||||||||||||||||
| Year ended 03/31/10 |
16.40 | (0.35 | ) | 9.52 | 9.17 | 25.57 | 55.92 | 16,689 | 2.41 | 2.50 | (1.62 | ) | 35 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
23.78 | (0.16 | )(g) | (7.22 | )(h) | (7.38 | ) | 16.40 | (31.03 | )(h) | 9,340 | 2.30 | 2.58 | (0.77 | )(g) | 68 | ||||||||||||||||||||||||||||
| Year ended 03/31/08 |
26.69 | (0.42 | ) | (2.49 | ) | (2.91 | ) | 23.78 | (10.90 | ) | 16,116 | 2.30 | 2.31 | (1.52 | ) | 42 | ||||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
37.31 | (0.05 | ) | (3.96 | ) | (4.01 | ) | 33.30 | (10.75 | ) | 4,212 | 1.27 | (d) | 1.27 | (d) | (0.31 | )(d) | 22 | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
35.74 | (0.27 | ) | 1.84 | 1.57 | 37.31 | 4.39 | 4,937 | 1.30 | 1.31 | (0.81 | ) | 48 | |||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
28.37 | (0.14 | ) | 7.51 | (e) | 7.37 | 35.74 | 25.98 | 3,683 | 1.30 | 1.30 | (0.48 | ) | 42 | ||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
27.74 | (0.03 | ) | 0.66 | 0.63 | 28.37 | 2.27 | 2,931 | 1.41 | (f) | 1.41 | (f) | (1.31 | )(f) | 4 | |||||||||||||||||||||||||||||
| Year ended 03/31/10 |
17.63 | (0.14 | ) | 10.25 | 10.11 | 27.74 | 57.34 | 2,856 | 1.41 | 1.50 | (0.62 | ) | 35 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09(i) |
20.92 | 0.02 | (g) | (3.31 | )(h) | (3.29 | ) | 17.63 | (15.73 | )(h) | 541 | 1.30 | (f) | 1.86 | (f) | 0.23 | (f)(g) | 68 | ||||||||||||||||||||||||||
| Investor Class |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
37.06 | (0.08 | ) | (3.93 | ) | (4.01 | ) | 33.05 | (10.82 | ) | 344,911 | 1.44 | (d) | 1.44 | (d) | (0.48 | )(d) | 22 | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
35.58 | (0.35 | ) | 1.83 | 1.48 | 37.06 | 4.16 | 414,003 | 1.52 | 1.53 | (1.03 | ) | 48 | |||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
28.29 | (0.19 | ) | 7.48 | (e) | 7.29 | 35.58 | 25.77 | 434,078 | 1.46 | 1.46 | (0.64 | ) | 42 | ||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
27.67 | (0.04 | ) | 0.66 | 0.62 | 28.29 | 2.24 | 396,631 | 1.65 | (f) | 1.65 | (f) | (1.55 | )(f) | 4 | |||||||||||||||||||||||||||||
| Year ended 03/31/10 |
17.61 | (0.20 | ) | 10.26 | 10.06 | 27.67 | 57.13 | 391,424 | 1.66 | 1.75 | (0.87 | ) | 35 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
25.35 | (0.00 | )(g) | (7.74 | )(h) | (7.74 | ) | 17.61 | (30.53 | )(h) | 262,730 | 1.53 | 1.81 | 0.00 | (g) | 68 | ||||||||||||||||||||||||||||
| Year ended 03/31/08 |
28.23 | (0.22 | ) | (2.66 | ) | (2.88 | ) | 25.35 | (10.20 | ) | 424,981 | 1.52 | 1.53 | (0.74 | ) | 42 | ||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
40.64 | 0.02 | (4.31 | ) | (4.29 | ) | 36.35 | (10.56 | ) | 922 | 0.88 | (d) | 0.88 | (d) | 0.08 | (d) | 22 | |||||||||||||||||||||||||||
| Year ended 04/30/12 |
38.77 | (0.14 | ) | 2.01 | 1.87 | 40.64 | 4.82 | 1,038 | 0.88 | 0.89 | (0.39 | ) | 48 | |||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
30.64 | (0.02 | ) | 8.15 | (e) | 8.13 | 38.77 | 26.53 | 635 | 0.89 | 0.89 | (0.07 | ) | 42 | ||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
29.95 | (0.02 | ) | 0.71 | 0.69 | 30.64 | 2.30 | 516 | 0.90 | (f) | 0.90 | (f) | (0.80 | )(f) | 4 | |||||||||||||||||||||||||||||
| Year ended 03/31/10 |
18.93 | (0.03 | ) | 11.05 | 11.02 | 29.95 | 58.21 | 522 | 0.91 | 0.91 | (0.12 | ) | 35 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
27.07 | 0.12 | (g) | (8.26 | )(h) | (8.14 | ) | 18.93 | (30.07 | )(h) | 346 | 0.90 | 0.91 | 0.63 | (g) | 68 | ||||||||||||||||||||||||||||
| Year ended 03/31/08 |
29.95 | (0.03 | ) | (2.85 | ) | (2.88 | ) | 27.07 | (9.62 | ) | 9 | 0.86 | 0.87 | (0.10 | ) | 42 | ||||||||||||||||||||||||||||
| (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 year ended April 30, 2012, the portfolio turnover calculation excludes the value of securities purchased of $90,282,548 and sold of $44,478,217 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Van Kampen Technology Fund into the Fund. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $279,096, $20,097, $26,678, $4,435, $370,100 and $947 for Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares, respectively. |
| (e) | Net gains (losses) on securities (both realized and unrealized include capital gains realized on a distribution from BlueStream Ventures L.P. on October 17, 2010. Net gains (losses) on securities (both realized and unrealized), excluding the capital gains, are $7.29, $6.81, $6.63, $7.25, $7.22 and $7.87 for Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares, respectively. |
| (f) | Annualized. |
| (g) | Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets include a distribution from BlueStream Ventures L.P. on October 23, 2008. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the distribution are $(0.13) and (0.57)%; $(0.29) and (1.32)%; $(0.29) and (1.32)%; $(0.02) and (0.32)%; $(0.13) and (0.55)% and $(0.01) and 0.08% for Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares, respectively. |
| (h) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received Net gains (losses) on securities (both realized and unrealized) per share would have been $(8.01), $(7.63), $(7.42), $(3.33), $(7.94) and $(8.46) for Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares, respectively and total returns would have been lower. |
| (i) | Commencement date of October 3, 2008 for Class Y shares. |
15 Invesco Technology Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A |
$ | 1,000.00 | $ | 891.20 | $ | 7.25 | $ | 1,017.54 | $ | 7.73 | 1.52 | % | ||||||||||||
| B |
1,000.00 | 887.90 | 10.80 | 1,013.76 | 11.52 | 2.27 | ||||||||||||||||||
| C |
1,000.00 | 888.10 | 10.80 | 1,013.76 | 11.52 | 2.27 | ||||||||||||||||||
| Y |
1,000.00 | 892.50 | 6.06 | 1,018.80 | 6.46 | 1.27 | ||||||||||||||||||
| Investor |
1,000.00 | 891.80 | 6.87 | 1,017.95 | 7.32 | 1.44 | ||||||||||||||||||
| R5 |
1,000.00 | 894.40 | 4.20 | 1,020.77 | 4.48 | 0.88 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
16 Invesco Technology Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco Technology Fund
18 Invesco Technology 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
I-TEC-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Technology Sector Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.” 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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues |
specific to individual holdings that could affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
3 Invesco Technology Sector Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Technology Sector 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 & Poor’s. |
| (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 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 October 31, 2012 represented less than 1% of the Fund’s Net Assets. |
| (d) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Information Technology |
90.3 | % | |||
| Consumer Discretionary |
2.2 | ||||
| Health Care |
1.2 | ||||
| Industrials |
0.6 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
5.7 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Technology Sector Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Technology Sector Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
| |||
| Dividends |
$ | 489,636 | ||
| Dividends from affiliated money market funds |
3,687 | |||
| Total investment income |
493,323 | |||
| Expenses: |
||||
| Advisory fees |
345,689 | |||
| Administrative services fees |
25,205 | |||
| Custodian fees |
4,404 | |||
| Distribution fees: |
||||
| Class A |
112,983 | |||
| Class B |
17,870 | |||
| Class C |
42,478 | |||
| Transfer agent fees |
305,587 | |||
| Trustees’ and officers’ fees and benefits |
12,235 | |||
| Other |
86,560 | |||
| Total expenses |
953,011 | |||
| Less: Fees waived and expense offset arrangement(s) |
(3,561 | ) | ||
| Net expenses |
949,450 | |||
| Net investment income (loss) |
(456,127 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain from investment securities |
3,233,804 | |||
| Change in net unrealized appreciation (depreciation) of investment securities |
(14,503,494 | ) | ||
| Net realized and unrealized gain (loss) |
(11,269,690 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (11,725,817 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Technology Sector Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012, the one month ended April 30, 2012 and the year ended March 31, 2012
(Unaudited)
| Six months ended October 31, 2012 |
One month ended April 30, 2012 |
Year ended March 31, 2012 |
||||||||||
| Operations: |
||||||||||||
| Net investment income (loss) |
$ | (456,127 | ) | $ | (135,052 | ) | $ | (1,556,719 | ) | |||
| Net realized gain |
3,233,804 | 1,155,311 | 13,489,584 | |||||||||
| Change in net unrealized appreciation (depreciation) |
(14,503,494 | ) | (4,454,819 | ) | (1,299,811 | ) | ||||||
| Net increase (decrease) in net assets resulting from operations |
(11,725,817 | ) | (3,434,560 | ) | 10,633,054 | |||||||
| Share transactions–net: |
||||||||||||
| Class A |
(5,894,824 | ) | (633,738 | ) | (13,051,672 | ) | ||||||
| Class B |
(944,191 | ) | (179,827 | ) | (4,078,508 | ) | ||||||
| Class C |
(570,121 | ) | (106,730 | ) | (1,477,120 | ) | ||||||
| Class Y |
149,419 | 20,940 | 133,838 | |||||||||
| Net increase (decrease) in net assets resulting from share transactions |
(7,259,717 | ) | (899,355 | ) | (18,473,462 | ) | ||||||
| Net increase (decrease) in net assets |
(18,985,534 | ) | (4,333,915 | ) | (7,840,408 | ) | ||||||
| Net assets: |
||||||||||||
| Beginning of period |
114,067,558 | 118,401,473 | 126,241,881 | |||||||||
| End of period (includes undistributed net investment income of $(465,606), $(9,479) and $(529,108), respectively) |
$ | 95,082,024 | $ | 114,067,558 | $ | 118,401,473 | ||||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Technology Sector Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term capital appreciation.
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 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.
8 Invesco Technology Sector Fund
Debt obligations (including convertible bonds) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund 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. |
9 Invesco Technology Sector Fund
| 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Other Risks — The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers in this sector.
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $500 million |
0 | .67% | ||||
| Next $2.5 billion |
0 | .645% | ||||
| Over $3 billion |
0 | .62% | ||||
Under the terms of a master sub-advisory contract 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, 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, and Class Y shares to 2.00%, 2.75%, 2.75%, and 1.75%, respectively, 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 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, 2013. 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $3,396.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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 six months ended October 31, 2012, expenses incurred under these agreements are shown in the Statement of Operations as Distribution fees.
10 Invesco Technology Sector Fund
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $269 in front-end sales commissions from the sale of Class A shares and $0, $1,872 and $14 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 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 94,761,774 | $ | 629,165 | $ | — | $ | 95,390,939 | ||||||||
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $165.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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
11 Invesco Technology Sector Fund
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 had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2014 |
$ | 18,349,904 | $ | — | $ | 18,349,904 | ||||||
| April 30, 2016 |
12,866,974 | — | 12,866,974 | |||||||||
| April 30, 2018 |
13,022,537 | — | 13,022,537 | |||||||||
| $ | 44,239,415 | $ | — | $ | 44,239,415 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $22,496,685 and $31,680,603, 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 |
$ | 16,807,935 | ||
| Aggregate unrealized (depreciation) of investment securities |
(6,756,768 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 10,051,167 | ||
Cost of investments for tax purposes is $85,339,772.
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||||||||||
| Six months ended October 31, 2012(a) |
One month ended April 30, 2012 |
Year ended March 31, 2012 |
||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
| Sold: |
||||||||||||||||||||||||
| Class A |
49,314 | $ | 574,828 | 23,641 | $ | 298,639 | 177,951 | $ | 2,069,003 | |||||||||||||||
| Class B |
2,181 | 23,904 | 741 | 8,458 | 5,235 | 55,688 | ||||||||||||||||||
| Class C |
2,815 | 28,922 | 266 | 3,012 | 24,682 | 256,576 | ||||||||||||||||||
| Class Y |
17,536 | 210,426 | 2,120 | 27,670 | 16,503 | 201,775 | ||||||||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||||||||||
| Class A |
55,686 | 648,494 | 12,102 | 152,399 | 242,818 | 2,758,340 | ||||||||||||||||||
| Class B |
(62,886 | ) | (648,494 | ) | (13,629 | ) | (152,399 | ) | (272,363 | ) | (2,758,340 | ) | ||||||||||||
| Reacquired: |
||||||||||||||||||||||||
| Class A |
(608,858 | ) | (7,118,146 | ) | (85,713 | ) | (1,084,776 | ) | (1,591,354 | ) | (17,879,015 | ) | ||||||||||||
| Class B |
(30,972 | ) | (319,601 | ) | (3,187 | ) | (35,886 | ) | (135,477 | ) | (1,375,856 | ) | ||||||||||||
| Class C |
(58,226 | ) | (599,043 | ) | (9,846 | ) | (109,742 | ) | (174,645 | ) | (1,733,696 | ) | ||||||||||||
| Class Y |
(4,980 | ) | (61,007 | ) | (530 | ) | (6,730 | ) | (5,685 | ) | (67,937 | ) | ||||||||||||
| Net increase (decrease) in share activity |
(638,390 | ) | $ | (7,259,717 | ) | (74,035 | ) | $ | (899,355 | ) | (1,712,335 | ) | $ | (18,473,462 | ) | |||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 82% 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. |
12 Invesco Technology Sector Fund
NOTE 10—Financial 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 |
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 (loss) to average net assets |
Portfolio turnover(c) |
||||||||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 12.59 | $ | (0.05 | ) | $ | (1.26 | )(d) | $ | (1.31 | ) | $ | 11.28 | (10.41 | )%(d) | $ | 83,362 | 1.75 | %(e) | 1.76 | %(e) | (0.79 | )%(e) | 23 | % | |||||||||||||||||||
| One month ended 04/30/12 |
12.97 | (0.01 | ) | (0.37 | ) | (0.38 | ) | 12.59 | (2.93 | ) | 99,453 | 1.71 | (f) | 1.71 | (f) | (1.34 | )(f) | 4 | ||||||||||||||||||||||||||
| Year ended 03/31/12 |
11.70 | (0.15 | ) | 1.42 | (g) | 1.27 | 12.97 | 10.85 | (g) | 103,068 | 1.81 | 1.82 | (1.29 | ) | 38 | |||||||||||||||||||||||||||||
| Year ended 03/31/11 |
10.27 | (0.11 | ) | 1.54 | 1.43 | 11.70 | 13.92 | 106,661 | 1.70 | 1.70 | (1.08 | ) | 214 | |||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
7.12 | (0.11 | ) | 3.26 | 3.15 | 10.27 | 44.24 | 106,337 | 1.92 | (h) | 1.92 | (h) | (1.23 | )(h) | 113 | |||||||||||||||||||||||||||||
| Year ended 03/31/09 |
10.32 | (0.11 | ) | (3.09 | ) | (3.20 | ) | 7.12 | (31.01 | ) | 78,705 | 2.00 | (h) | 2.00 | (h) | (1.32 | )(h) | 81 | ||||||||||||||||||||||||||
| Year ended 03/31/08 |
10.42 | (0.13 | ) | 0.03 | (0.10 | ) | 10.32 | (0.96 | ) | 94,361 | 1.72 | (h) | 1.72 | (h) | (1.18 | )(h) | 122 | |||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
11.18 | (0.08 | ) | (1.13 | )(d) | (1.21 | ) | 9.97 | (10.82 | )(d) | 2,930 | 2.50 | (e) | 2.51 | (e) | (1.54 | )(e) | 23 | ||||||||||||||||||||||||||
| One month ended 04/30/12 |
11.52 | (0.02 | ) | (0.32 | ) | (0.34 | ) | 11.18 | (2.95 | ) | 4,309 | 2.46 | (f) | 2.46 | (f) | (2.09 | )(f) | 4 | ||||||||||||||||||||||||||
| Year ended 03/31/12 |
10.47 | (0.20 | ) | 1.25 | (g) | 1.05 | 11.52 | 10.03 | (g) | 4,626 | 2.56 | 2.57 | (2.04 | ) | 38 | |||||||||||||||||||||||||||||
| Year ended 03/31/11 |
9.26 | (0.17 | ) | 1.38 | 1.21 | 10.47 | 13.07 | 8,418 | 2.45 | 2.45 | (1.83 | ) | 214 | |||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
6.47 | (0.16 | ) | 2.95 | 2.79 | 9.26 | 43.12 | 14,261 | 2.67 | (h) | 2.67 | (h) | (1.98 | )(h) | 113 | |||||||||||||||||||||||||||||
| Year ended 03/31/09 |
9.45 | (0.17 | ) | (2.81 | ) | (2.98 | ) | 6.47 | (31.53 | ) | 19,556 | 2.75 | (h) | 2.75 | (h) | (2.07 | )(h) | 81 | ||||||||||||||||||||||||||
| Year ended 03/31/08 |
9.61 | (0.20 | ) | 0.04 | (0.16 | ) | 9.45 | (1.66 | ) | 81,609 | 2.47 | (h) | 2.47 | (h) | (1.93 | )(h) | 122 | |||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
11.18 | (0.08 | ) | (1.13 | )(d) | (1.21 | ) | 9.97 | (10.82 | )(d)(i) | 8,141 | 2.47 | (e)(i) | 2.48 | (e)(i) | (1.51 | )(e)(i) | 23 | ||||||||||||||||||||||||||
| One month ended 04/30/12 |
11.52 | (0.02 | ) | (0.32 | ) | (0.34 | ) | 11.18 | (2.95 | ) | 9,745 | 2.46 | (f) | 2.46 | (f) | (2.09 | )(f) | 4 | ||||||||||||||||||||||||||
| Year ended 03/31/12 |
10.46 | (0.20 | ) | 1.26 | (g) | 1.06 | 11.52 | 10.13 | (g) | 10,152 | 2.54 | 2.55 | (2.02 | ) | 38 | |||||||||||||||||||||||||||||
| Year ended 03/31/11 |
9.25 | (0.17 | ) | 1.38 | 1.21 | 10.46 | 13.08 | 10,794 | 2.45 | 2.45 | (1.83 | ) | 214 | |||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
6.46 | (0.16 | ) | 2.95 | 2.79 | 9.25 | 43.19 | 10,981 | 2.67 | (h) | 2.67 | (h) | (1.98 | )(h) | 113 | |||||||||||||||||||||||||||||
| Year ended 03/31/09 |
9.44 | (0.17 | ) | (2.81 | ) | (2.98 | ) | 6.46 | (31.57 | ) | 8,927 | 2.75 | (h) | 2.75 | (h) | (2.07 | )(h) | 81 | ||||||||||||||||||||||||||
| Year ended 03/31/08 |
9.60 | (0.20 | ) | 0.04 | (0.16 | ) | 9.44 | (1.67 | ) | 15,835 | 2.47 | (h) | 2.47 | (h) | (1.93 | )(h) | 122 | |||||||||||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
13.06 | (0.03 | ) | (1.32 | )(d) | (1.35 | ) | 11.71 | (10.34 | )(d) | 649 | 1.50 | (e) | 1.51 | (e) | (0.54 | )(e) | 23 | ||||||||||||||||||||||||||
| One month ended 04/30/12 |
13.45 | (0.01 | ) | (0.38 | ) | (0.39 | ) | 13.06 | (2.90 | ) | 560 | 1.46 | (f) | 1.46 | (f) | (1.09 | )(f) | 4 | ||||||||||||||||||||||||||
| Year ended 03/31/12 |
12.10 | (0.12 | ) | 1.47 | (g) | 1.35 | 13.45 | 11.16 | (g) | 555 | 1.56 | 1.57 | (1.04 | ) | 38 | |||||||||||||||||||||||||||||
| Year ended 03/31/11 |
10.59 | (0.09 | ) | 1.60 | 1.51 | 12.10 | 14.26 | 369 | 1.45 | 1.45 | (0.83 | ) | 214 | |||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
7.33 | (0.09 | ) | 3.35 | 3.26 | 10.59 | 44.47 | 312 | 1.67 | (h) | 1.67 | (h) | (0.98 | )(h) | 113 | |||||||||||||||||||||||||||||
| Year ended 03/31/09 |
10.60 | (0.09 | ) | (3.18 | ) | (3.27 | ) | 7.33 | (30.85 | ) | 218 | 1.75 | (h) | 1.75 | (h) | (1.07 | )(h) | 81 | ||||||||||||||||||||||||||
| Year ended 03/31/08 |
10.67 | (0.11 | ) | 0.04 | (0.07 | ) | 10.60 | (0.66 | ) | 860 | 1.47 | (h) | 1.47 | (h) | (0.93 | )(h) | 122 | |||||||||||||||||||||||||||
| (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) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received Net gains (losses) on securities (both realized and unrealized) per share would have been $(1.33), $(1.20), $(1.20) and $(1.39) for Class A, Class B, Class C and Class Y, respectively and total returns would have been lower. |
| (e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $89,491, $3,545, $8,691 and $623 for Class A, Class B, Class C and Class Y shares, respectively. |
| (f) | Annualized. |
| (g) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received Net gains (losses) on securities (both realized and unrealized) per share would have been $1.29, $1.12, $1.13 and $1.34 for Class A, Class B, Class C and Class Y, respectively and total returns would have been lower. |
| (h) | 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 less than 0.005% for the years ended March 31, 2010, 2009 and 2008, respectively. |
| (i) | 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 0.97%. |
13 Invesco Technology Sector Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 895.90 | $ | 8.36 | $ | 1,016.38 | $ | 8.89 | 1.75 | % | ||||||||||||
| B | 1,000.00 | 891.80 | 11.92 | 1,012.60 | 12.68 | 2.50 | ||||||||||||||||||
| C | 1,000.00 | 891.80 | 11.78 | 1,012.75 | 12.53 | 2.47 | ||||||||||||||||||
| Y | 1,000.00 | 896.60 | 7.17 | 1,017.64 | 7.63 | 1.50 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
14 Invesco Technology Sector Fund
Approval of Investment Advisory and Sub-Advisory Contracts
15 Invesco Technology Sector Fund
16 Invesco Technology Sector 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
MS-TECH-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Utilities Fund
3 Invesco Utilities Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could | |
| affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss. | ||
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Utilities Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By industry, based on Net Assets
as of October 31, 2012
| Electric Utilities |
52.0 | % | |||
| Multi-Utilities |
27.3 | ||||
| Gas Utilities |
6.5 | ||||
| Independent Power Producers & Energy Traders |
5.4 | ||||
| Integrated Telecommunication Services |
4.5 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
4.3 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Utilities Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Utilities Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
||||
| Dividends (net of foreign withholding taxes of $57,072) |
$ | 7,929,830 | ||
| Dividends from affiliated money market funds |
12,780 | |||
| Total investment income |
7,942,610 | |||
| Expenses: |
||||
| Advisory fees |
1,405,755 | |||
| Administrative services fees |
60,800 | |||
| Custodian fees |
11,831 | |||
| Distribution fees: |
||||
| Class A |
311,946 | |||
| Class B |
90,935 | |||
| Class C |
142,372 | |||
| Investor Class |
82,906 | |||
| Transfer agent fees — A, B, C, Y and Investor |
422,147 | |||
| Transfer agent fees — R5 |
614 | |||
| Transfer agent fees — R6 |
19 | |||
| Trustees’ and officers’ fees and benefits |
19,311 | |||
| Other |
132,699 | |||
| Total expenses |
2,681,335 | |||
| Less: Fees waived, expenses reimbursed and expense offset arrangement(s) |
(56,260 | ) | ||
| Net expenses |
2,625,075 | |||
| Net investment income |
5,317,535 | |||
| Realized and unrealized gain from: |
||||
| Net realized gain from: |
||||
| Investment securities |
1,718,868 | |||
| Foreign currencies |
3,141 | |||
| 1,722,009 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
14,666,367 | |||
| Foreign currencies |
(1,762 | ) | ||
| 14,664,605 | ||||
| Net realized and unrealized gain |
16,386,614 | |||
| Net increase in net assets resulting from operations |
$ | 21,704,149 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Utilities Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
||||||||
| Net investment income |
$ | 5,317,535 | $ | 9,103,618 | ||||
| Net realized gain |
1,722,009 | 8,133,321 | ||||||
| Change in net unrealized appreciation |
14,664,605 | 6,152,658 | ||||||
| Net increase in net assets resulting from operations |
21,704,149 | 23,389,597 | ||||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(3,243,102 | ) | (5,891,069 | ) | ||||
| Class B |
(169,204 | ) | (359,269 | ) | ||||
| Class C |
(268,383 | ) | (434,326 | ) | ||||
| Class Y |
(91,705 | ) | (90,371 | ) | ||||
| Investor Class |
(857,356 | ) | (1,763,095 | ) | ||||
| Class R5 |
(140,465 | ) | (234,908 | ) | ||||
| Total distributions from net investment income |
(4,770,215 | ) | (8,773,038 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
(3,327,122 | ) | 99,559,351 | |||||
| Class B |
(2,302,045 | ) | 4,250,140 | |||||
| Class C |
31,495 | 12,055,371 | ||||||
| Class Y |
(31,582 | ) | 4,054,666 | |||||
| Investor Class |
1,987,639 | (701,118 | ) | |||||
| Class R5 |
(8,096,045 | ) | 505,107 | |||||
| Class R6 |
8,798,673 | — | ||||||
| Net increase (decrease) in net assets resulting from share transactions |
(2,938,987 | ) | 119,723,517 | |||||
| Net increase in net assets |
13,994,947 | 134,340,076 | ||||||
| Net assets: |
||||||||
| Beginning of period |
363,254,498 | 228,914,422 | ||||||
| End of period (includes undistributed net investment income of $1,655,432 and $1,108,112, respectively) |
$ | 377,249,445 | $ | 363,254,498 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Utilities Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is long-term growth of capital and, secondarily, current income.
The Fund currently consists of seven different classes of shares: Class A, Class B, Class C, Class Y, Investor Class, 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. 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 Y, Investor Class, 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.
8 Invesco Utilities 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. |
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
9 Invesco Utilities Fund
| D. | Distributions — Distributions from income 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| 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 Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
The Fund may invest a large percentage of its assets in a limited number of securities or other instruments, which could negatively affect the value of the Fund.
The following factors may affect the Fund’s investments in the utilities sector: governmental regulation, economic factors, ability of the issuer to obtain financing, prices of natural resources and risks associated with nuclear power.
10 Invesco Utilities Fund
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $350 million |
0 | .75% | ||||
| Next $350 million |
0 | .65% | ||||
| Next $1.3 billion |
0 | .55% | ||||
| Next $2 billion |
0 | .45% | ||||
| Next $2 billion |
0 | .40% | ||||
| Next $2 billion |
0 | .375% | ||||
| Over $8 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 June 30, 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 Y, Investor Class, Class R5 and Class R6 shares to 1.32%, 2.07%, 2.07%, 1.07% , 1.32%, 1.07% and 1.07%, respectively, 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 waivers 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, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Adviser has contractually agreed, through at least June 30, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees $11,875 and reimbursed class level expenses of $29,154, $2,125, $3,326, $760 and $7,748 of Class A, Class B, Class C, Class Y and Investor Class 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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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, Investor Class, 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 Fund’s Class A, Class B, Class C 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 Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class B and Class C shares and 0.25% of the average daily net assets of Investor Class shares. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended October 31, 2012, expenses incurred under the Plan are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $27,617 in front-end sales commissions from the sale of Class A shares and $53, $8,415 and $1,180 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.
11 Invesco Utilities Fund
NOTE 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 377,756,478 | $ | — | $ | — | $ | 377,756,478 | ||||||||
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,272.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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.
12 Invesco Utilities Fund
The Fund had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2017 |
$ | 7,537,122 | $ | — | $ | 7,537,122 | ||||||
| April 30, 2018 |
5,898,431 | — | 5,898,431 | |||||||||
| Total capital loss carryforward |
$ | 13,435,553 | $ | — | $ | 13,435,553 | ||||||
| * | 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 Van Kampen Utility 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 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $2,604,676 and $9,349,467, 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 |
$ | 69,862,885 | ||
| Aggregate unrealized (depreciation) of investment securities |
(4,377,694 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 65,485,191 | ||
Cost of investments for tax purposes is $312,271,287.
13 Invesco Utilities Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
1,014,703 | $ | 17,660,247 | 3,541,640 | $ | 57,590,835 | ||||||||||
| Class B |
25,284 | 438,464 | 207,178 | 3,398,880 | ||||||||||||
| Class C |
181,012 | 3,116,821 | 620,880 | 10,216,335 | ||||||||||||
| Class Y |
123,989 | 2,191,270 | 357,217 | 5,912,838 | ||||||||||||
| Investor Class |
317,881 | 5,636,205 | 2,852,701 | 46,829,171 | ||||||||||||
| Class R5 |
41,866 | 730,465 | 101,093 | 1,649,716 | ||||||||||||
| Class R6(b) |
503,178 | 8,832,143 | — | — | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
176,186 | 3,046,269 | 329,993 | 5,364,850 | ||||||||||||
| Class B |
9,275 | 160,866 | 20,542 | 334,541 | ||||||||||||
| Class C |
12,451 | 217,797 | 23,778 | 391,063 | ||||||||||||
| Class Y |
4,801 | 83,730 | 4,951 | 81,618 | ||||||||||||
| Investor Class |
46,473 | 810,131 | 102,174 | 1,671,736 | ||||||||||||
| Class R5 |
8,007 | 138,480 | 14,311 | 232,691 | ||||||||||||
| Issued in connection with acquisitions:(c) |
||||||||||||||||
| Class A |
— | — | 5,771,955 | 95,030,805 | ||||||||||||
| Class B |
— | — | 548,086 | 9,040,291 | ||||||||||||
| Class C |
— | — | 512,232 | 8,517,635 | ||||||||||||
| Class Y |
— | — | 18,025 | 299,246 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
70,546 | 1,230,665 | 239,345 | 3,926,627 | ||||||||||||
| Class B |
(70,387 | ) | (1,230,665 | ) | (238,955 | ) | (3,926,627 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(1,451,193 | ) | (25,264,303 | ) | (3,821,648 | ) | (62,353,766 | ) | ||||||||
| Class B |
(96,305 | ) | (1,670,710 | ) | (282,113 | ) | (4,596,945 | ) | ||||||||
| Class C |
(186,835 | ) | (3,303,123 | ) | (428,603 | ) | (7,069,662 | ) | ||||||||
| Class Y |
(130,783 | ) | (2,306,582 | ) | (136,238 | ) | (2,239,036 | ) | ||||||||
| Investor Class |
(254,029 | ) | (4,458,697 | ) | (2,969,799 | ) | (49,202,025 | ) | ||||||||
| Class R5 |
(511,366 | ) | (8,964,990 | ) | (85,361 | ) | (1,377,300 | ) | ||||||||
| Class R6 |
(1,896 | ) | (33,470 | ) | — | — | ||||||||||
| Net increase (decrease) in share activity |
(167,142 | ) | $ | (2,938,987 | ) | 7,303,384 | $ | 119,723,517 | ||||||||
| (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. |
| (b) | Commencement date of September 24, 2012. |
| (c) | As of the opening of business on May 23, 2011, the Fund acquired all the net assets of Invesco Van Kampen Utility Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of the Target Fund on April 14, 2011. The acquisition was accomplished by a tax free exchange of 6,850,298 shares of the Fund for 5,962,860 shares outstanding of the Target Fund as of the close of business on May 20, 2011. Each class of the Target Fund was 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 as of the close of business on May 20, 2011. The Target Fund’s net assets at that date of $112,887,977 including $13,509,797 of unrealized appreciation were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $254,710,579 and $367,598,556 subsequent to the acquisition. |
| The pro forma results of operations for the year ended April 30, 2012 assuming the reorganization had been completed on May 1, 2011, the beginning of the annual reporting period, are as follows: |
| Net investment income |
$ | 9,513,581 | |||
| Net realized/unrealized gains |
16,390,552 | ||||
| Change in net assets resulting from operations |
$ | 25,904,133 |
| 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 has been included in the Fund’s Statement of Operations since May 23, 2011. |
14 Invesco Utilities Fund
NOTE 10—Financial 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 |
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 (loss) to average net assets |
Portfolio turnover(c) |
|||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 16.93 | $ | 0.25 | $ | 0.77 | $ | 1.02 | $ | (0.23 | ) | $ | 17.72 | 6.05 | % | $ | 248,988 | 1.31 | %(d) | 1.34 | %(d) | 2.89 | %(d) | 1 | % | |||||||||||||||||||||||
| Year ended 04/30/12 |
16.18 | 0.43 | 0.73 | 1.16 | (0.41 | ) | 16.93 | 7.31 | 241,103 | 1.32 | 1.37 | 2.66 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
14.28 | 0.40 | 1.87 | 2.27 | (0.37 | ) | 16.18 | 16.24 | 132,403 | 1.45 | 1.46 | 2.75 | 17 | |||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
14.00 | 0.01 | 0.27 | 0.28 | — | 14.28 | 2.00 | 130,406 | 1.49 | (e) | 1.50 | (e) | 0.53 | (e) | 0 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
11.57 | 0.34 | 2.43 | 2.77 | (0.34 | ) | 14.00 | 24.06 | 129,685 | 1.53 | 1.54 | 2.58 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
17.89 | 0.35 | (6.29 | )(f) | (5.94 | ) | (0.38 | ) | 11.57 | (33.56 | )(f) | 118,328 | 1.48 | 1.50 | 2.26 | 5 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
18.15 | 0.32 | (0.27 | ) | 0.05 | (0.31 | ) | 17.89 | 0.20 | 214,352 | 1.31 | 1.34 | 1.69 | 25 | ||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.97 | 0.19 | 0.76 | 0.95 | (0.16 | ) | 17.76 | 5.65 | 17,141 | 2.06 | (d) | 2.09 | (d) | 2.14 | (d) | 1 | ||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
16.22 | 0.31 | 0.73 | 1.04 | (0.29 | ) | 16.97 | 6.50 | 18,620 | 2.07 | 2.12 | 1.91 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
14.31 | 0.29 | 1.88 | 2.17 | (0.26 | ) | 16.22 | 15.42 | 13,669 | 2.20 | 2.21 | 2.00 | 17 | |||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
14.04 | (0.00 | ) | 0.27 | 0.27 | — | 14.31 | 1.92 | 15,680 | 2.24 | (e) | 2.25 | (e) | (0.22 | )(e) | 0 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
11.60 | 0.24 | 2.44 | 2.68 | (0.24 | ) | 14.04 | 23.19 | 15,828 | 2.28 | 2.29 | 1.83 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
17.95 | 0.24 | (6.32 | )(f) | (6.08 | ) | (0.27 | ) | 11.60 | (34.12 | )(f) | 18,254 | 2.23 | 2.25 | 1.51 | 5 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
18.21 | 0.18 | (0.27 | ) | (0.09 | ) | (0.17 | ) | 17.95 | (0.53 | ) | 47,990 | 2.06 | 2.09 | 0.94 | 25 | ||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
17.11 | 0.19 | 0.78 | 0.97 | (0.17 | ) | 17.91 | 5.67 | 27,864 | 2.06 | (d) | 2.09 | (d) | 2.14 | (d) | 1 | ||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
16.36 | 0.31 | 0.73 | 1.04 | (0.29 | ) | 17.11 | 6.46 | 26,511 | 2.07 | 2.12 | 1.91 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
14.43 | 0.30 | 1.90 | 2.20 | (0.27 | ) | 16.36 | 15.45 | 13,433 | 2.20 | 2.21 | 2.00 | 17 | |||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
14.15 | (0.00 | ) | 0.28 | 0.28 | — | 14.43 | 1.98 | 12,457 | 2.24 | (e) | 2.25 | (e) | (0.22 | )(e) | 0 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
11.70 | 0.25 | 2.45 | 2.70 | (0.25 | ) | 14.15 | 23.09 | 12,723 | 2.28 | 2.29 | 1.83 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
18.09 | 0.24 | (6.36 | )(f) | (6.12 | ) | (0.27 | ) | 11.70 | (34.06 | )(f) | 11,817 | 2.23 | 2.25 | 1.51 | 5 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
18.35 | 0.18 | (0.27 | ) | (0.09 | ) | (0.17 | ) | 18.09 | (0.52 | ) | 23,176 | 2.06 | 2.09 | 0.94 | 25 | ||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
17.07 | 0.28 | 0.77 | 1.05 | (0.25 | ) | 17.87 | 6.20 | 5,848 | 1.06 | (d) | 1.09 | (d) | 3.14 | (d) | 1 | ||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
16.32 | 0.48 | 0.73 | 1.21 | (0.46 | ) | 17.07 | 7.54 | 5,622 | 1.07 | 1.12 | 2.91 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
14.40 | 0.44 | 1.89 | 2.33 | (0.41 | ) | 16.32 | 16.56 | 1,393 | 1.20 | 1.21 | 3.00 | 17 | |||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
14.11 | 0.01 | 0.28 | 0.29 | — | 14.40 | 2.06 | 1,057 | 1.24 | (e) | 1.25 | (e) | 0.78 | (e) | 0 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
11.67 | 0.39 | 2.43 | 2.82 | (0.38 | ) | 14.11 | 24.26 | 1,038 | 1.28 | 1.29 | 2.83 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/09(g) |
14.51 | 0.15 | (2.77 | )(f) | (2.62 | ) | (0.22 | ) | 11.67 | (18.13 | )(f) | 300 | 1.46 | (e) | 1.47 | (e) | 2.28 | (e) | 5 | |||||||||||||||||||||||||||||
| Investor Class |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
17.07 | 0.26 | 0.76 | 1.02 | (0.23 | ) | 17.86 | 6.02 | 67,603 | 1.31 | (d) | 1.34 | (d) | 2.89 | (d) | 1 | ||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
16.32 | 0.44 | 0.73 | 1.17 | (0.42 | ) | 17.07 | 7.28 | 62,707 | 1.32 | 1.37 | 2.66 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
14.40 | 0.41 | 1.89 | 2.30 | (0.38 | ) | 16.32 | 16.27 | 60,196 | 1.45 | 1.46 | 2.75 | 17 | |||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
14.11 | 0.01 | 0.28 | 0.29 | — | 14.40 | 2.06 | 59,707 | 1.49 | (e) | 1.50 | (e) | 0.53 | (e) | 0 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
11.67 | 0.35 | 2.44 | 2.79 | (0.35 | ) | 14.11 | 23.96 | 59,381 | 1.53 | 1.54 | 2.58 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
18.04 | 0.35 | (6.34 | )(f) | (5.99 | ) | (0.38 | ) | 11.67 | (33.54 | )(f) | 53,227 | 1.48 | 1.50 | 2.26 | 5 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
18.30 | 0.32 | (0.27 | ) | 0.05 | (0.31 | ) | 18.04 | 0.22 | 95,682 | 1.31 | 1.34 | 1.69 | 25 | ||||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.94 | 0.29 | 0.77 | 1.06 | (0.27 | ) | 17.73 | 6.29 | 913 | 0.87 | (d) | 0.88 | (d) | 3.33 | (d) | 1 | ||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
16.19 | 0.51 | 0.72 | 1.23 | (0.48 | ) | 16.94 | 7.77 | 8,692 | 0.85 | 0.86 | 3.13 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/11 |
14.28 | 0.48 | 1.88 | 2.36 | (0.45 | ) | 16.19 | 16.94 | 7,820 | 0.93 | 0.94 | 3.27 | 17 | |||||||||||||||||||||||||||||||||||
| One month ended 04/30/10 |
14.00 | 0.01 | 0.27 | 0.28 | — | 14.28 | 2.00 | 10,034 | 0.98 | (e) | 0.99 | (e) | 1.04 | (e) | 0 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
11.57 | 0.42 | 2.43 | 2.85 | (0.42 | ) | 14.00 | 24.75 | 9,934 | 0.97 | 0.98 | 3.14 | 14 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
17.89 | 0.42 | (6.29 | )(f) | (5.87 | ) | (0.45 | ) | 11.57 | (33.24 | )(f) | 9,228 | 1.00 | 1.01 | 2.74 | 5 | ||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
18.15 | 0.40 | (0.27 | ) | 0.13 | (0.39 | ) | 17.89 | 0.63 | 18,522 | 0.89 | 0.89 | 2.11 | 25 | ||||||||||||||||||||||||||||||||||
| Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12(g) |
17.55 | 0.06 | 0.13 | 0.19 | — | 17.74 | 1.08 | 8,892 | 0.83 | (d) | 0.84 | (d) | 3.37 | (d) | 1 | |||||||||||||||||||||||||||||||||
| (a) | Calculated using average shares outstanding. |
| (b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, 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 year ending April 30, 2012, the portfolio turnover calculation excludes the value of securities purchased of $95,656,625 and sold of $8,278,596 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Van Kampen Utility Fund into the Fund. |
| (d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $247,523, $18,039, $28,242, $6,449, $65,784, $7,374 and $8,510 for Class A, Class B, Class C, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
| (e) | Annualized. |
| (f) | Includes litigation proceeds received during the period. Had the litigation proceeds not been received, net gains (losses) on securities (both realized and unrealized) per share would have been $(6.39), $(6.42), $(6.46), $(2.83), $(6.44) and $(6.39) for Class A, Class B, Class C, Class Y, Investor Class and Class R5 shares respectively, and total returns would have been lower. |
| (g) | Commencement date of October 3, 2008 for Class Y shares and September 24, 2012 for Class R6 shares. |
NOTE 11—Significant Event
On October 26, 2012, the Board of Trustees of the Trust approved the elimination of one of the fundamental investment restrictions of the Fund, subject to the approval of the Fund’s shareholders at a special meeting to be held on or about February 1, 2013. If approved by the Fund’s shareholders, the Fund will no longer be required to concentrate its investments in utilities-related industries, the Fund will be renamed Invesco Dividend Income Fund and its investment objective will change.
15 Invesco Utilities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. With the exception of the actual ending account value and expenses of the Class R6 shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012, through October 31, 2012. The actual ending account value and expenses of the Class R6 shares in the example below are based on an investment of $1,000 invested as of close of business September 24, 2012 (commencement date) and held through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period (as of close of business September 24, 2012 through October 31, 2012 for the Class R6 shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class R6 shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio | ||||||||||||||||||
| Ending (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period3 |
|||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 1,060.50 | $ | 6.80 | $ | 1,018.60 | $ | 6.67 | 1.31% | |||||||||||
| B |
1,000.00 | 1,056.50 | 10.68 | 1,014.82 | 10.46 | 2.06 | ||||||||||||||||
| C |
1,000.00 | 1,056.10 | 10.68 | 1,014.82 | 10.46 | 2.06 | ||||||||||||||||
| Y |
1,000.00 | 1,062.00 | 5.51 | 1,019.86 | 5.40 | 1.06 | ||||||||||||||||
| Investor |
1,000.00 | 1,060.20 | 6.80 | 1,018.60 | 6.67 | 1.31 | ||||||||||||||||
| R5 |
1,000.00 | 1,062.90 | 4.52 | 1,020.82 | 4.43 | 0.87 | ||||||||||||||||
| R6 |
1,000.00 | 1,010.80 | 0.87 | 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 May 1, 2012, through October 31, 2012 (as of close of business September 24, 2012, through October 31, 2012 for the Class R6 shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. For the Class R6 shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 38 (as of close of business September 24, 2012, through October 31, 2012)/365. Because the Class R6 shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect a one-half year period. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in Class R6 shares of the Fund and other funds because such data is based on a full six month period. |
16 Invesco Utilities Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco Utilities Fund
18 Invesco Utilities 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
I-UTI-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco American Value Fund
3 Invesco American Value Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market |
conditions – and issues specific to individual holdings that could affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco American Value Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco American Value Fund
Investment Abbreviations:
| Conv. | – Convertible | |
| Pfd. | – Preferred | |
| REIT | – Real Estate Investment Trust |
Notes to Schedule of Investments:
| (a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Financials |
19.2 | % | |||
| Consumer Discretionary |
13.5 | ||||
| Information Technology |
12.2 | ||||
| Industrials |
9.0 | ||||
| Health Care |
8.8 | ||||
| Materials |
7.2 | ||||
| Energy |
6.6 | ||||
| Utilities |
5.9 | ||||
| Consumer Staples |
5.6 | ||||
| Telecommunication Services |
2.8 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
9.2 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco American Value Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco American Value Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
||||
| Dividends |
$ | 10,224,424 | ||
| Dividends from affiliated money market funds |
87,317 | |||
| Interest |
219,435 | |||
| Total investment income |
10,531,176 | |||
| Expenses: |
||||
| Advisory fees |
4,151,309 | |||
| Administrative services fees |
151,748 | |||
| Custodian fees |
30,631 | |||
| Distribution fees: |
||||
| Class A |
887,123 | |||
| Class B |
50,136 | |||
| Class C |
374,626 | |||
| Class R |
108,442 | |||
| Transfer agent fees — A, B, C, R and Y |
1,211,300 | |||
| Transfer agent fees — R5 |
9,445 | |||
| Trustees’ and officers’ fees and benefits |
36,573 | |||
| Other |
201,672 | |||
| Total expenses |
7,213,005 | |||
| Less: Fees waived and expense offset arrangement(s) |
(91,559 | ) | ||
| Net expenses |
7,121,446 | |||
| Net investment income |
3,409,730 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain from investment securities |
27,017,840 | |||
| Change in net unrealized appreciation (depreciation) of investment securities |
(14,606,958 | ) | ||
| Net realized and unrealized gain |
12,410,882 | |||
| Net increase in net assets resulting from operations |
$ | 15,820,612 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco American Value Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
||||||||
| Net investment income |
$ | 3,409,730 | $ | 4,278,612 | ||||
| Net realized gain |
27,017,840 | 65,238,435 | ||||||
| Change in net unrealized appreciation (depreciation) |
(14,606,958 | ) | (44,749,388 | ) | ||||
| Net increase in net assets resulting from operations |
15,820,612 | 24,767,659 | ||||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(1,587,731 | ) | (1,844,303 | ) | ||||
| Class B |
(88,140 | ) | (143,539 | ) | ||||
| Class R |
(47,692 | ) | (13,130 | ) | ||||
| Class Y |
(971,570 | ) | (644,476 | ) | ||||
| Class R5 |
(95,794 | ) | (49,930 | ) | ||||
| Total distributions from net investment income |
(2,790,927 | ) | (2,695,378 | ) | ||||
| Share transactions–net: |
||||||||
| Class A |
32,567,962 | 138,013,689 | ||||||
| Class B |
(5,790,287 | ) | 5,476,959 | |||||
| Class C |
(582,595 | ) | 28,052,556 | |||||
| Class R |
13,010,169 | 17,600,497 | ||||||
| Class Y |
25,979,536 | 217,540,193 | ||||||
| Class R5 |
4,280,357 | 11,198,089 | ||||||
| Class R6 |
10,000 | — | ||||||
| Net increase in net assets resulting from share transactions |
69,475,142 | 417,881,983 | ||||||
| Net increase in net assets |
82,504,827 | 439,954,264 | ||||||
| Net assets: |
||||||||
| Beginning of period |
1,128,814,397 | 688,860,133 | ||||||
| End of period (includes undistributed net investment income of $2,987,065 and $2,368,262, respectively) |
$ | 1,211,319,224 | $ | 1,128,814,397 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco American Value Fund, formerly Invesco Van Kampen American Value Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek to provide a high total return by investing in equity securities of small- to medium-sized corporations.
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.
9 Invesco American Value 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. |
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
10 Invesco American Value Fund
| D. | Distributions — Distributions from income 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets sub-accounts fee attributed 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $500 million |
0 | .72% | ||||
| Next $535 million |
0 | .715% | ||||
| Next $31.965 billion |
0 | .65% | ||||
| Over $33 billion |
0 | .64% | ||||
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, 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 1.25%, 2.00%, 2.00%, 1.50%, 1.00%, 1.00% and 1.00%, respectively, 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 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, 2013. The Advisor 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $90,250.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
11 Invesco American Value 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, 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.
Effective May 23, 2011, IDI has contractually agreed to limit Rule 12b-1 plan fees on Class B to 0.49% of average daily net assets, through at least June 30, 2012. IDI did not waive Rule 12b-1 plan fees under this limitation during the period.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, IDI advised the Fund that IDI retained $105,210 in front-end sales commissions from the sale of Class A shares and $3,264, $13,951 and $1,946 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended October 31, 2012, the Fund incurred $2,284 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 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 1,188,414,287 | $ | 23,772,119 | $ | — | $ | 1,212,186,406 | ||||||||
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,309.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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.
12 Invesco American Value Fund
NOTE 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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 had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2018 |
$ | 59,097,366 | $ | — | $ | 59,097,366 | ||||||
| * | 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 and April 30, 2012, the dates of reorganizations of Invesco Mid-Cap Value Fund and Invesco Mid-Cap Basic Value Fund, respectively, into the Fund are realized on securities held in each fund at such dates of reorganizations, the capital loss carryforward may be further limited for up to five years from the dates of the reorganizations. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $182,950,675 and $89,470,162, 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 |
$ | 174,226,087 | ||
| Aggregate unrealized (depreciation) of investment securities |
(62,076,724 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 112,149,363 | ||
Cost of investments for tax purposes is $1,100,037,043.
13 Invesco American Value Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
3,190,236 | $ | 95,962,192 | 3,090,521 | $ | 86,811,895 | ||||||||||
| Class B |
35,968 | 979,274 | 53,258 | 1,386,353 | ||||||||||||
| Class C |
287,414 | 7,723,851 | 290,064 | 7,418,928 | ||||||||||||
| Class R |
656,672 | 19,758,696 | 775,623 | 21,961,959 | ||||||||||||
| Class Y |
2,085,552 | 62,344,281 | 1,543,337 | 44,325,369 | ||||||||||||
| Class R5 |
590,046 | 17,651,331 | 529,752 | 15,196,051 | ||||||||||||
| Class R6(b) |
318.5 | 10,000 | — | — | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
48,587 | 1,486,199 | 63,757 | 1,751,147 | ||||||||||||
| Class B |
3,036 | 84,482 | 5,530 | 137,994 | ||||||||||||
| Class R |
1,529 | 47,583 | 486 | 13,129 | ||||||||||||
| Class Y |
29,898 | 912,785 | 20,992 | 580,444 | ||||||||||||
| Class R5 |
3,135 | 95,285 | 1,719 | 48,974 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
128,048 | 3,848,913 | 346,908 | 9,398,867 | ||||||||||||
| Class B |
(140,561 | ) | (3,848,913 | ) | (376,772 | ) | (9,398,867 | ) | ||||||||
| Issued in connection with acquisitions:(c) |
||||||||||||||||
| Class A |
— | — | 7,411,027 | 222,154,433 | ||||||||||||
| Class B |
— | — | 846,986 | 22,840,405 | ||||||||||||
| Class C |
— | — | 1,414,855 | 37,713,266 | ||||||||||||
| Class R |
— | — | 257,971 | 7,628,842 | ||||||||||||
| Class Y |
— | — | 6,704,048 | 204,483,380 | ||||||||||||
| Class R5 |
— | — | 9,398 | 279,372 | ||||||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(2,276,023 | ) | (68,729,342 | ) | (6,626,795 | ) | (182,102,653 | ) | ||||||||
| Class B |
(109,729 | ) | (3,005,130 | ) | (370,731 | ) | (9,488,926 | ) | ||||||||
| Class C |
(308,669 | ) | (8,306,446 | ) | (696,472 | ) | (17,079,638 | ) | ||||||||
| Class R |
(226,647 | ) | (6,796,110 | ) | (429,911 | ) | (12,003,433 | ) | ||||||||
| Class Y |
(1,219,677 | ) | (37,277,530 | ) | (1,155,863 | ) | (31,849,000 | ) | ||||||||
| Class R5 |
(431,218 | ) | (13,466,259 | ) | (143,864 | ) | (4,326,308 | ) | ||||||||
| Net increase in share activity |
2,347,915.5 | $ | 69,475,142 | 13,565,824 | $ | 417,881,983 | ||||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 34% 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 May 23, 2011, the Fund acquired all the net assets of Invesco Mid-Cap Value Fund and Invesco Mid Cap Basic Value Fund (the “Target Funds”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of the Target Funds April 14, 2011. The acquisition was accomplished by a tax-free exchange of 10,990,892 shares of the Fund for 11,782,241 shares outstanding of Invesco Mid-Cap Value Fund and 14,984,047 shares outstanding of Invesco Mid Cap Basic Value Fund as of the close of business on May 20, 2011. Each class of shares of the Target Funds was exchanged for the like class of shares of the Fund based on the relative net asset value of the Target Funds to the net asset value of the Fund at the close of business on May 20, 2011. Invesco Mid-Cap Value Fund’s net assets at that date of $121,971,596, including $19,608,737 of unrealized appreciation and Invesco Mid Cap Basic Value Fund’s net assets at that date of $197,340,066 including $39,514,293 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $681,095,239. The net assets immediately after the acquisition were $1,000,406,901. |
| Additionally, as of the opening of business on April 30, 2012, the Fund acquired all the net assets of Invesco U.S. Mid Cap Value Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Trustees of the Fund on January 12, 2012 and by the shareholders of the Target Fund on April 2, 2012. The acquisition was accomplished by a tax-free exchange of 5,653,393 shares of the Fund for 4,253,558 shares outstanding of the Target Fund as of the close of business on April 27, 2012. Each class of shares of the Target Fund was 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 at the close of business on April 27, 2012. The Target Fund’s net assets at that date of $175,788,036, including $16,826,087 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $957,360,938. The net assets immediately after the acquisition were $1,133,148,974. |
| The pro forma results of operations for the year ended April 30, 2012, assuming both reorganizations had been completed on May 1, 2011, the beginning of the annual reporting period are as follows: |
| Net investment income |
$ | 6,005,337 | |||
| Net realized/unrealized gains |
22,063,522 | ||||
| Change in net assets resulting from operations |
$ | 28,068,859 |
| The combined investment portfolios have been managed as a single integrated portfolio since the acquisitions were completed, it is not practicable to separate the amounts of revenue and earnings of each Target Fund that has been included in the Fund’s Statement of Operations since their respective reorganization dates. |
14 Invesco American Value Fund
NOTE 10—Financial Highlights
| 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 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 30.90 | $ | 0.09 | $ | 0.22 | $ | 0.31 | $ | (0.07 | ) | $ | — | $ | (0.07 | ) | $ | 31.14 | 1.00 | %(c) | $ | 740,256 | 1.22 | %(d) | 1.24 | %(d) | 0.58 | %(d) | 9 | % | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
29.86 | 0.14 | 0.98 | 1.12 | (0.08 | ) | — | (0.08 | ) | 30.90 | 3.80 | (c) | 700,857 | 1.31 | 1.32 | 0.52 | 30 | |||||||||||||||||||||||||||||||||||||||
| Ten months ended 04/30/11 |
22.22 | 0.07 | 7.61 | 7.68 | (0.04 | ) | — | (0.04 | ) | 29.86 | 34.57 | (c) | 549,428 | 1.26 | (e) | 1.27 | (e) | 0.34 | (e) | 28 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/10 |
17.44 | 0.11 | 4.78 | 4.89 | (0.11 | ) | — | (0.11 | ) | 22.22 | 28.07 | (c) | 450,675 | 1.31 | 1.31 | 0.50 | 50 | |||||||||||||||||||||||||||||||||||||||
| Year ended 06/30/09 |
24.18 | 0.16 | (6.54 | ) | (6.38 | ) | (0.14 | ) | (0.22 | ) | (0.36 | ) | 17.44 | (26.17 | )(f) | 398,513 | 1.41 | 1.41 | 0.90 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/08 |
34.55 | 0.12 | (5.01 | ) | (4.89 | ) | (0.14 | ) | (5.34 | ) | (5.48 | ) | 24.18 | (16.43 | )(f) | 633,126 | 1.25 | 1.25 | 0.43 | 65 | ||||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
28.15 | 0.08 | 0.19 | 0.27 | (0.06 | ) | — | (0.06 | ) | 28.36 | 0.97 | (c) | 37,906 | 1.22 | (d) | 1.24 | (d) | 0.58 | (d) | 9 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
27.19 | 0.14 | 0.90 | 1.04 | (0.08 | ) | — | (0.08 | ) | 28.15 | 3.84 | (c)(g) | 43,561 | 1.27 | (g) | 1.28 | (g) | 0.56 | (g) | 30 | ||||||||||||||||||||||||||||||||||||
| Ten months ended 04/30/11 |
20.23 | 0.04 | 6.93 | 6.97 | (0.01 | ) | — | (0.01 | ) | 27.19 | 34.45 | (c)(g) | 37,780 | 1.38 | (e)(g) | 1.39 | (e)(g) | 0.22 | (e)(g) | 28 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/10 |
15.89 | 0.05 | 4.37 | 4.42 | (0.08 | ) | — | (0.08 | ) | 20.23 | 27.82 | (c)(g) | 33,933 | 1.55 | (g) | 1.55 | (g) | 0.26 | (g) | 50 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/09 |
22.11 | 0.14 | (6.00 | ) | (5.86 | ) | (0.14 | ) | (0.22 | ) | (0.36 | ) | 15.89 | (26.22 | )(h)(i) | 31,586 | 1.48 | (i) | 1.48 | (i) | 0.82 | (i) | 60 | |||||||||||||||||||||||||||||||||
| Year ended 06/30/08 |
32.11 | 0.02 | (4.59 | ) | (4.57 | ) | (0.09 | ) | (5.34 | ) | (5.43 | ) | 22.11 | (16.70 | )(h)(i) | 53,854 | 1.59 | (i) | 1.59 | (i) | 0.08 | (i) | 65 | |||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
27.70 | (0.02 | ) | 0.20 | 0.18 | — | — | — | 27.88 | 0.65 | (c) | 75,930 | 1.97 | (d) | 1.99 | (d) | (0.17 | )(d) | 9 | |||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
26.89 | (0.05 | ) | 0.86 | 0.81 | — | — | — | 27.70 | 3.01 | (c)(j) | 76,053 | 2.03 | (j) | 2.04 | (j) | (0.20 | )(j) | 30 | |||||||||||||||||||||||||||||||||||||
| Ten months ended 04/30/11 |
20.11 | (0.07 | ) | 6.85 | 6.78 | — | — | — | 26.89 | 33.72 | (c)(j) | 46,700 | 1.97 | (e)(j) | 1.98 | (e)(j) | (0.37 | )(e)(j) | 28 | |||||||||||||||||||||||||||||||||||||
| Year ended 06/30/10 |
15.82 | (0.05 | ) | 4.35 | 4.30 | (0.01 | ) | — | (0.01 | ) | 20.11 | 27.18 | (c) | 38,952 | 2.06 | 2.06 | (0.25 | ) | 50 | |||||||||||||||||||||||||||||||||||||
| Year ended 06/30/09 |
22.03 | 0.03 | (5.96 | ) | (5.93 | ) | (0.06 | ) | (0.22 | ) | (0.28 | ) | 15.82 | (26.68 | )(i)(k) | 33,390 | 2.11 | (i) | 2.11 | (i) | 0.19 | (i) | 60 | |||||||||||||||||||||||||||||||||
| Year ended 06/30/08 |
32.05 | (0.09 | ) | (4.59 | ) | (4.68 | ) | — | (5.34 | ) | (5.34 | ) | 22.03 | (17.09 | )(k) | 54,508 | 2.00 | 2.00 | (0.33 | ) | 65 | |||||||||||||||||||||||||||||||||||
| Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
30.87 | 0.05 | 0.22 | 0.27 | (0.03 | ) | — | (0.03 | ) | 31.11 | 0.88 | (c) | 50,404 | 1.47 | (d) | 1.49 | (d) | 0.33 | (d) | 9 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
29.84 | 0.08 | 0.97 | 1.05 | (0.02 | ) | — | (0.02 | ) | 30.87 | 3.51 | (c) | 36,695 | 1.56 | 1.57 | 0.27 | 30 | |||||||||||||||||||||||||||||||||||||||
| Ten months ended 04/30/11 |
22.23 | 0.02 | 7.59 | 7.61 | (0.00 | ) | — | (0.00 | ) | 29.84 | 34.24 | (c) | 17,440 | 1.51 | (e) | 1.52 | (e) | 0.09 | (e) | 28 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/10 |
17.44 | 0.06 | 4.79 | 4.85 | (0.06 | ) | — | (0.06 | ) | 22.23 | 27.84 | (c) | 12,052 | 1.56 | 1.56 | 0.27 | 50 | |||||||||||||||||||||||||||||||||||||||
| Year ended 06/30/09 |
24.19 | 0.12 | (6.55 | ) | (6.43 | ) | (0.10 | ) | (0.22 | ) | (0.32 | ) | 17.44 | (26.36 | )(l) | 4,132 | 1.70 | 1.70 | 0.73 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/08 |
34.55 | 0.06 | (5.01 | ) | (4.95 | ) | (0.07 | ) | (5.34 | ) | (5.41 | ) | 24.19 | (16.65 | )(l) | 1,102 | 1.51 | 1.51 | 0.20 | 65 | ||||||||||||||||||||||||||||||||||||
| Class Y |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
31.01 | 0.13 | 0.21 | 0.34 | (0.10 | ) | — | (0.10 | ) | 31.25 | 1.12 | (c) | 289,315 | 0.97 | (d) | 0.99 | (d) | 0.83 | (d) | 9 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
29.98 | 0.21 | 0.97 | 1.18 | (0.15 | ) | — | (0.15 | ) | 31.01 | 4.01 | (c) | 259,308 | 1.06 | 1.07 | 0.77 | 30 | |||||||||||||||||||||||||||||||||||||||
| Ten months ended 04/30/11 |
22.31 | 0.13 | 7.63 | 7.76 | (0.09 | ) | — | (0.09 | ) | 29.98 | 34.81 | (c) | 37,488 | 1.01 | (e) | 1.02 | (e) | 0.59 | (e) | 28 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/10(m) |
17.50 | 0.17 | 4.81 | 4.98 | (0.17 | ) | — | (0.17 | ) | 22.31 | 28.47 | (c) | 10,772 | 1.06 | 1.06 | 0.76 | 50 | |||||||||||||||||||||||||||||||||||||||
| Year ended 06/30/09 |
24.27 | 0.21 | (6.58 | ) | (6.37 | ) | (0.18 | ) | (0.22 | ) | (0.40 | ) | 17.50 | (25.99 | )(n) | 8,135 | 1.19 | 1.19 | 1.23 | 60 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/08 |
34.65 | 0.18 | (5.00 | ) | (4.82 | ) | (0.22 | ) | (5.34 | ) | (5.56 | ) | 24.27 | (16.24 | )(n) | 6,909 | 1.02 | 1.02 | 0.67 | 65 | ||||||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
31.02 | 0.15 | 0.22 | 0.37 | (0.13 | ) | — | (0.13 | ) | 31.26 | 1.19 | (c) | 17,499 | 0.84 | (d) | 0.86 | (d) | 0.96 | (d) | 9 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
29.98 | 0.28 | 0.97 | 1.25 | (0.21 | ) | — | (0.21 | ) | 31.02 | 4.26 | (c) | 12,340 | 0.87 | 0.88 | 0.96 | 30 | |||||||||||||||||||||||||||||||||||||||
| Ten months ended 04/30/11 |
22.31 | 0.15 | 7.64 | 7.79 | (0.12 | ) | — | (0.12 | ) | 29.98 | 34.98 | (c) | 24 | 0.79 | (e) | 0.80 | (e) | 0.81 | (e) | 28 | ||||||||||||||||||||||||||||||||||||
| Year ended 06/30/10(o) |
23.19 | 0.03 | (0.88 | ) | (0.85 | ) | (0.03 | ) | — | (0.03 | ) | 22.31 | (3.69 | )(c) | 2,592 | 0.62 | (e) | 0.62 | (e) | 1.37 | (e) | 50 | ||||||||||||||||||||||||||||||||||
| Class R6 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31 /12(o) |
31.40 | 0.03 | (0.17 | ) | (0.14 | ) | — | — | — | 31.26 | (0.45 | )(c) | 10 | 0.75 | (d) | 0.76 | (d) | 1.05 | (d) | 9 | ||||||||||||||||||||||||||||||||||||
| (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 April 30, 2012, the portfolio turnover calculation excludes the value of securities purchased of $397,951,008 and sold of $108,111,947 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Mid-Cap Value Fund, Invesco Mid Cap Basic Value Fund and Invesco U.S. Mid Cap 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 annualized and based on average daily net assets (000’s omitted) of $703,913, $39,782, $74,278, $43,023, $275,618, $22,951 and $10 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 (loss) to average net assets reflect actual 12b-1 fees of 0.21%, 0.37 and 0.49% for the year ended April 30, 2012, the ten months ended April 30, 2011 and the year ended June 30, 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 (loss) 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 (loss) to average net assets reflect actual 12b-1 fees of 0.97% and 0.96% for the year ended April 30, 2012 and the ten months ended April 30, 2011. |
| (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, the Fund’s 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 June 1, 2010 and September 24, 2012 for Class R5 and Class R6 shares, respectively. |
15 Invesco American Value Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. With the exception of the actual ending account value and expenses of the Class R6 shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012. The actual ending account and expenses of the Class R6 shares in the below example are based on an investment of $1,000 invested as of close of business September 24, 2012 (commencement date) and held through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period (as of close of business September 24, 2012 through October 31, 2012 for the Class R6 shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class R6 shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period3 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 1,010.00 | $ | 6.18 | $ | 1,019.06 | $ | 6.21 | 1.22 | % | ||||||||||||
| B | 1,000.00 | 1,009.70 | 6.18 | 1,019.06 | 6.21 | 1.22 | ||||||||||||||||||
| C | 1,000.00 | 1,006.50 | 9.96 | 1,015.27 | 10.01 | 1.97 | ||||||||||||||||||
| R | 1,000.00 | 1,008.80 | 7.44 | 1,017.80 | 7.48 | 1.47 | ||||||||||||||||||
| Y | 1,000.00 | 1,011.20 | 4.92 | 1,020.32 | 4.94 | 0.97 | ||||||||||||||||||
| R5 | 1,000.00 | 1,011.60 | 4.26 | 1,020.97 | 4.28 | 0.84 | ||||||||||||||||||
| R6 | 1,000.00 | 995.50 | 0.78 | 1,021.42 | 3.82 | 0.75 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012 (as of close of business September 24, 2012 through October 31, 2012 for the Class R6 shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. For Class R6 shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 38 (as of close of business September 24, 2012 through October 31, 2012)/366. Because the Class R6 shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Class R6 shares of the Fund and other funds because such data is based on a full six-month period. |
16 Invesco American Value Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco American Value Fund
18 Invesco American Value 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 | VK-AMVA-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Comstock Fund
3 Invesco Comstock Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market |
conditions – and issues specific to individual holdings that could affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Comstock Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Comstock 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 & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets as of October 31, 2012
| Financials |
23.1 | % | |||
| Consumer Discretionary |
15.8 | ||||
| Health Care |
14.6 | ||||
| Energy |
12.6 | ||||
| Information Technology |
9.9 | ||||
| Industrials |
6.1 | ||||
| Consumer Staples |
5.9 | ||||
| Materials |
2.9 | ||||
| Telecommunication Services |
2.6 | ||||
| Utilities |
2.4 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
4.1 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Comstock Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Comstock Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
| |||
| Dividends (net of foreign withholding taxes of $1,638,997) |
$ | 102,399,103 | ||
| Dividends from affiliated money market funds |
165,819 | |||
| Total investment income |
102,564,922 | |||
| Expenses: |
||||
| Advisory fees |
16,484,734 | |||
| Administrative services fees |
372,486 | |||
| Custodian fees |
139,877 | |||
| Distribution fees: |
||||
| Class A |
6,637,426 | |||
| Class B |
1,548,339 | |||
| Class C |
2,146,573 | |||
| Class R |
473,302 | |||
| Transfer agent fees — A, B, C, R and Y |
7,553,445 | |||
| Transfer agent fees — R5 |
112,183 | |||
| Trustees’ and officers’ fees and benefits |
218,569 | |||
| Other |
865,699 | |||
| Total expenses |
36,552,633 | |||
| Less: Fees waived and expense offset arrangement(s) |
(1,318,686 | ) | ||
| Net expenses |
35,233,947 | |||
| Net investment income |
67,330,975 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities (includes net gains from securities sold to affiliates of $2,183,481) |
283,703,749 | |||
| Foreign currencies |
170,024 | |||
| Foreign currency contracts |
(17,921,800 | ) | ||
| 265,951,973 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(22,670,387 | ) | ||
| Foreign currency contracts |
(119,307 | ) | ||
| (22,789,694 | ) | |||
| Net realized and unrealized gain |
243,162,279 | |||
| Net increase in net assets resulting from operations |
$ | 310,493,254 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Comstock Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
|
|||||||
| Net investment income |
$ | 67,330,975 | $ | 134,462,189 | ||||
| Net realized gain |
265,951,973 | 456,911,483 | ||||||
| Change in net unrealized appreciation (depreciation) |
(22,789,694 | ) | (609,450,092 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
310,493,254 | (18,076,420 | ) | |||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
(41,376,427 | ) | (73,790,536 | ) | ||||
| Class B |
(2,409,946 | ) | (5,569,717 | ) | ||||
| Class C |
(1,790,587 | ) | (2,872,358 | ) | ||||
| Class R |
(1,245,228 | ) | (2,112,474 | ) | ||||
| Class Y |
(17,364,815 | ) | (31,358,652 | ) | ||||
| Class R5 |
(3,863,776 | ) | (5,008,575 | ) | ||||
| Total distributions from net investment income |
(68,050,779 | ) | (120,712,312 | ) | ||||
| Share transactions-net: |
||||||||
| Class A |
(247,462,613 | ) | (476,506,998 | ) | ||||
| Class B |
(65,820,905 | ) | (163,006,123 | ) | ||||
| Class C |
(35,618,802 | ) | (62,601,449 | ) | ||||
| Class R |
(1,611,462 | ) | (4,496,828 | ) | ||||
| Class Y |
(276,161,353 | ) | 349,785,336 | |||||
| Class R5 |
(132,085,318 | ) | 203,611,955 | |||||
| Class R6 |
147,566,983 | — | ||||||
| Net increase (decrease) in net assets resulting from share transactions |
(611,193,470 | ) | (153,214,107 | ) | ||||
| Net increase (decrease) in net assets |
(368,750,995 | ) | (292,002,839 | ) | ||||
| Net assets: |
||||||||
| Beginning of period |
8,989,886,015 | 9,281,888,854 | ||||||
| End of period (includes undistributed net investment income of $22,748,277 and $23,468,081, respectively) |
$ | 8,621,135,020 | $ | 8,989,886,015 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Comstock Fund, formerly Invesco Van Kampen Comstock Fund, (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek capital growth and income through investments in equity securities, including common stocks, preferred stocks and securities convertible into common and preferred stocks.
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.
9 Invesco Comstock 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. |
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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.
10 Invesco Comstock Fund
| 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| 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. |
11 Invesco Comstock Fund
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Daily Net Assets | Rate | |||||
| First $1 billion |
0 | .50% | ||||
| Next $1 billion |
0 | .45% | ||||
| Next $1 billion |
0 | .40% | ||||
| Over $3 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).
Effective July 1, 2012, the Adviser has contractually agreed, through at least June 30, 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 2.00%, 2.75%, 2.75%, 2.25%, 1.75%, 1.75% and 1.75% respectively, of average daily net assets. Prior to July 1, 2012, 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 and Class R5 shares to 0.89%, 1.64%, 1.64%, 1.14%, 0.64% and 0.64% respectively, 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 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, 2013. 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $151,284.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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.
Effective December 31, 2011, IDI has contractually agreed to limit Rule 12b-1 plan fees on Class B to 0.25% of average daily net assets, through at least December 31, 2012. For the six months ended October 31, 2012, 12b-1 fees for Class B shares were $387,085 after fee waivers of $1,161,254.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, IDI advised the Fund that IDI retained $233,810 in front-end sales commissions from the sale of Class A shares and $4,512, $91,363 and $4,206 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.
12 Invesco Comstock Fund
NOTE 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 8,481,463,433 | $ | 164,830,573 | $ | — | $ | 8,646,294,006 | ||||||||
| Foreign Currency Contracts* |
— | (119,307 | ) | — | (119,307 | ) | ||||||||||
| Total Investments |
$ | 8,481,463,433 | $ | 164,711,266 | $ | — | $ | 8,646,174,699 | ||||||||
| * | Unrealized appreciation (depreciation). |
NOTE 4—Derivative Investments
Value of Derivative Instruments at Period-End
The table below summarizes the value of the Fund’s derivative instruments, detailed by primary risk exposure, held as of October 31, 2012:
| Value | ||||||||
| Risk Exposure/Derivative Type | Assets | Liabilities | ||||||
| Currency risk |
||||||||
| Foreign currency contracts(a) |
$ | 2,422,752 | $ | (2,542,059 | ) | |||
| (a) | Values are disclosed on the Statement of Assets and Liabilities under Foreign currency contracts outstanding. |
Effect of Derivative Instruments for the six months ended October 31, 2012
The table below summarizes the gains (losses) on derivative instruments, detailed by primary risk exposure, recognized in earnings during the period:
| Location of Gain (Loss) on Statement of Operations |
||||
| Foreign Currency Contracts* |
||||
| Realized Gain (Loss) |
||||
| Currency risk |
$ | (17,921,800 | ) | |
| Change in Unrealized Appreciation (Depreciation) |
||||
| Currency risk |
(119,307 | ) | ||
| Total |
$ | (18,041,107 | ) | |
| * | The average notional value of foreign currency contracts outstanding during the period was $269,412,244. |
13 Invesco Comstock Fund
| Open Foreign Currency Contracts | ||||||||||||||||||||||||||
| Settlement |
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation |
||||||||||||||||||||||
| Deliver | Receive | |||||||||||||||||||||||||
| 11/30/12 |
Bank of New York |
CHF | 40,296,173 | USD | 43,541,307 | $ | 43,277,007 | $ | 264,300 | |||||||||||||||||
| 11/30/12 |
Citibank N.A. |
CHF | 40,296,173 | USD | 43,433,131 | 43,277,007 | 156,124 | |||||||||||||||||||
| 11/30/12 |
State Street |
CHF | 56,290,134 | USD | 60,523,121 | 60,454,091 | 69,030 | |||||||||||||||||||
| 11/30/12 |
Bank of New York |
EUR | 53,845,448 | USD | 70,050,774 | 69,799,962 | 250,812 | |||||||||||||||||||
| 11/30/12 |
CIBC N.A. |
EUR | 67,306,810 | USD | 87,720,292 | 87,249,952 | 470,340 | |||||||||||||||||||
| 11/30/12 |
Citibank N.A. |
EUR | 75,383,627 | USD | 98,281,619 | 97,719,946 | 561,673 | |||||||||||||||||||
| 11/30/12 |
State Street | EUR | 79,302,398 | USD | 103,450,330 | 102,799,857 | 650,473 | |||||||||||||||||||
| $ | 2,422,752 | |||||||||||||||||||||||||
| Settlement |
Counterparty |
Contract to | Notional Value |
Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||
| Deliver | Receive | |||||||||||||||||||||||||
| 11/30/12 |
Bank of New York |
GBP | 53,861,571 | USD | 86,217,833 | $ | 86,904,837 | $ | (687,004 | ) | ||||||||||||||||
| 11/30/12 |
CIBC N.A. |
GBP | 72,713,121 | USD | 116,570,767 | 117,321,530 | (750,763 | ) | ||||||||||||||||||
| 11/30/12 |
Citibank N.A. |
GBP | 37,335,053 | USD | 59,688,856 | 60,239,548 | (550,692 | ) | ||||||||||||||||||
| 11/30/12 |
State Street |
GBP | 36,625,869 | USD | 58,541,690 | 59,095,290 | (553,600 | ) | ||||||||||||||||||
| $ | (2,542,059 | ) | ||||||||||||||||||||||||
| Total foreign currency contracts |
$ | (119,307 | ) | |||||||||||||||||||||||
Currency Abbreviations:
NOTE 5—Security 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 six months ended October 31, 2012, the Fund engaged in securities sales of $6,120,743, which resulted in net realized gains of $2,183,481.
NOTE 6—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $6,148.
NOTE 7—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 8—Cash 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.
14 Invesco Comstock Fund
NOTE 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The Regulated Investment Company Modernization Act of 2010 (the “Act”) 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 had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2016 |
$ | 83,972,292 | $ | — | $ | 83,972,292 | ||||||
| April 30, 2017 |
1,239,683,554 | — | 1,239,683,554 | |||||||||
| April 30, 2018 |
8,704,739 | — | 8,704,739 | |||||||||
| Total capital loss carryforward |
$ | 1,332,360,585 | $ | — | $ | 1,332,360,585 | ||||||
| * | To the extent that unrealized gains as of May 23, 2011, the date of the reorganizations of Invesco Large Cap Basic Value Fund and Invesco Value II Fund and December 19, 2011, the date of the reorganization of Invesco Value 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. |
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $648,886,403 and $1,428,852,292, 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 |
$ | 1,245,125,832 | ||
| Aggregate unrealized (depreciation) of investment securities |
(881,897,087 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 363,228,745 | ||
Cost of investments for tax purposes is $8,283,065,261.
15 Invesco Comstock Fund
NOTE 11—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
11,860,356 | $ | 199,102,000 | 28,137,121 | $ | 441,783,452 | ||||||||||
| Class B |
62,175 | 1,038,974 | 203,709 | 3,285,777 | ||||||||||||
| Class C |
492,604 | 8,267,202 | 1,079,102 | 17,212,159 | ||||||||||||
| Class R |
1,875,721 | 31,437,650 | 3,888,940 | 60,770,192 | ||||||||||||
| Class Y |
12,565,979 | 209,056,539 | 48,895,738 | 742,021,366 | ||||||||||||
| Class R5 |
2,434,784 | 40,481,799 | 16,690,720 | 250,577,692 | ||||||||||||
| Class R6(b) |
8,535,772 | 150,827,093 | — | — | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
2,318,307 | 38,874,191 | 4,349,133 | 68,097,142 | ||||||||||||
| Class B |
136,926 | 2,290,207 | 332,838 | 5,199,128 | ||||||||||||
| Class C |
94,057 | 1,569,911 | 160,972 | 2,520,646 | ||||||||||||
| Class R |
73,378 | 1,228,933 | 133,892 | 2,096,694 | ||||||||||||
| Class Y |
1,006,383 | 16,829,214 | 1,922,517 | 30,095,202 | ||||||||||||
| Class R5 |
226,540 | 3,797,621 | 317,369 | 5,008,337 | ||||||||||||
| Issued in connection with acquisitions:(c) |
||||||||||||||||
| Class A |
— | — | 12,227,583 | 195,132,286 | ||||||||||||
| Class B |
— | — | 938,482 | 14,663,335 | ||||||||||||
| Class C |
— | — | 1,094,732 | 17,269,471 | ||||||||||||
| Class R |
— | — | 108,762 | 1,821,636 | ||||||||||||
| Class Y |
— | — | 5,264,763 | 87,582,134 | ||||||||||||
| Class R5 |
— | — | 42,555 | 713,103 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
2,578,548 | 43,044,562 | 6,428,978 | 101,706,655 | ||||||||||||
| Class B |
(2,579,269 | ) | (43,044,562 | ) | (6,369,442 | ) | (101,706,655 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(31,543,574 | ) | (528,483,366 | ) | (82,162,169 | ) | (1,283,226,533 | ) | ||||||||
| Class B |
(1,566,142 | ) | (26,105,524 | ) | (5,430,937 | ) | (84,447,708 | ) | ||||||||
| Class C |
(2,715,720 | ) | (45,455,915 | ) | (6,338,779 | ) | (99,603,725 | ) | ||||||||
| Class R |
(2,055,033 | ) | (34,278,045 | ) | (4,397,026 | ) | (69,185,350 | ) | ||||||||
| Class Y |
(30,954,024 | ) | (502,047,106 | ) | (32,973,058 | ) | (509,913,366 | ) | ||||||||
| Class R5 |
(10,063,995 | ) | (176,364,738 | ) | (3,334,005 | ) | (52,687,177 | ) | ||||||||
| Class R6(b) |
(185,963 | ) | (3,260,110 | ) | — | — | ||||||||||
| Net increase (decrease) in share activity |
(37,402,190 | ) | $ | (611,193,470 | ) | (8,787,510 | ) | $ | (153,214,107 | ) | ||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 40% 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 May 23, 2011, the Fund acquired all the net assets of Invesco Large Cap Basic Value Fund and Invesco Value II Fund (the “Target Funds”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of the Target Funds on April 14, 2011. The acquisition was accomplished by a tax- free exchange of 13,377,277 shares of the Fund for 7,828,863 shares outstanding of Invesco Large Cap Basic Value Fund and 8,473,367 shares outstanding of Invesco Value II Fund as of the close of business on May 20, 2011. Each class of the Target Funds were exchanged for the like class of shares of the Fund, based on the relative net asset value of the Target Funds to the net asset value of the Fund on the close of business, May 20, 2011. Invesco Large Cap Basic Value Fund’s net assets as of the close of business on May 20, 2011 of $85,450,496, including $18,438,726 of unrealized appreciation and Invesco Value II Fund’s net assets as of the close of business on May 20, 2011 of $138,753,893 including $21,433,501 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $9,011,495,941. The net assets immediately after the acquisition were $9,235,700,330. |
| Additionally, as of the opening of business on December 19, 2011, the Fund acquired all the net assets of Invesco Value Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of the Target Fund on November 28, 2011. The acquisition was accomplished by a tax- free exchange of 6,299,600 shares of the Fund for 7,875,802 shares outstanding of the Target Fund as of the close of business on December 16, 2011. Each class of the Target Fund was 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, December 16, 2011. The Target Fund’s net assets at that date of $92,977,576, including $5,974,337 of unrealized depreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $7,998,387,222. The net assets immediately after the acquisition were $8,091,364,798. |
| The pro forma results of operations for the year ended April 30, 2012, assuming both reorganizations had been completed on May 1, 2011, the beginning of the annual reporting period are as follows: |
| Net investment income |
$ | 135,691,777 | |||
| Net realized/unrealized gains |
(188,267,656 | ) | |||
| Change in net assets resulting from operations |
$ | (52,575,879 | ) |
| The combined investment portfolios have been managed as a single integrated portfolio since the acquisitions were completed. It is not practicable to separate the amounts of revenue and earnings of each Target Fund that has been included in the Fund’s Statement of Operations since their respective reorganization dates. |
16 Invesco Comstock Fund
NOTE 12—Financial 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 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 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 16.93 | $ | 0.13 | $ | 0.54 | $ | 0.67 | $ | (0.13 | ) | $ | — | $ | (0.13 | ) | $ | 17.47 | 4.00 | %(c) | $ | 5,387,965 | 0.86 | %(d) | 0.86 | %(d) | 1.54 | %(d) | 8 | % | ||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.20 | 0.25 | (0.30 | ) | (0.05 | ) | (0.22 | ) | — | (0.22 | ) | 16.93 | (0.19 | )(c) | 5,473,149 | 0.88 | 0.88 | 1.55 | 17 | |||||||||||||||||||||||||||||||||||||
| Four months ended 04/30/11 |
15.73 | 0.06 | 1.46 | 1.52 | (0.05 | ) | — | (0.05 | ) | 17.20 | 9.71 | (c) | 6,092,190 | 0.84 | (e) | 0.84 | (e) | 1.18 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/10 |
13.81 | 0.20 | 1.93 | 2.13 | (0.21 | ) | — | (0.21 | ) | 15.73 | 15.60 | (c) | 5,760,670 | 0.86 | 0.86 | 1.39 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/09 |
10.85 | 0.19 | 2.95 | 3.14 | (0.18 | ) | — | (0.18 | ) | 13.81 | 29.45 | (f) | 5,759,425 | 0.89 | 0.89 | 1.63 | 14 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/08 |
17.48 | 0.32 | (6.48 | ) | (6.16 | ) | (0.32 | ) | (0.15 | ) | (0.47 | ) | 10.85 | (35.89 | )(f) | 5,798,794 | 0.84 | 0.84 | 2.16 | 19 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/07 |
19.26 | 0.36 | (0.69 | ) | (0.33 | ) | (0.37 | ) | (1.08 | ) | (1.45 | ) | 17.48 | (1.89 | )(f) | 12,091,921 | 0.78 | 0.78 | 1.82 | 22 | ||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.93 | 0.13 | 0.53 | 0.66 | (0.13 | ) | — | (0.13 | ) | 17.46 | 3.94 | (c) | 285,110 | 0.86 | (d) | 1.61 | (d) | 1.54 | (d) | 8 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.20 | 0.25 | (0.30 | ) | (0.05 | ) | (0.22 | ) | — | (0.22 | ) | 16.93 | (0.19 | )(c)(g) | 343,166 | 0.88 | (g) | 0.88 | (g) | 1.55 | (g) | 17 | ||||||||||||||||||||||||||||||||||
| Four months ended 04/30/11 |
15.73 | 0.06 | 1.46 | 1.52 | (0.05 | ) | — | (0.05 | ) | 17.20 | 9.71 | (c)(g) | 526,168 | 0.84 | (e)(g) | 0.84 | (e)(g) | 1.18 | (e)(g) | 10 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/10 |
13.81 | 0.20 | 1.93 | 2.13 | (0.21 | ) | — | (0.21 | ) | 15.73 | 15.60 | (c)(g) | 547,060 | 0.86 | (g) | 0.86 | (g) | 1.39 | (g) | 18 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/09 |
10.85 | 0.19 | 2.95 | 3.14 | (0.18 | ) | — | (0.18 | ) | 13.81 | 29.45 | (f)(g) | 756,515 | 0.89 | (g) | 0.89 | (g) | 1.64 | (g) | 14 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/08 |
17.49 | 0.32 | (6.49 | ) | (6.17 | ) | (0.32 | ) | (0.15 | ) | (0.47 | ) | 10.85 | (35.93 | )(f)(g) | 906,301 | 0.84 | (g) | 0.84 | (g) | 2.16 | (g) | 19 | |||||||||||||||||||||||||||||||||
| Year ended 12/31/07 |
19.26 | 0.23 | (0.68 | ) | (0.45 | ) | (0.24 | ) | (1.08 | ) | (1.32 | ) | 17.49 | (2.46 | )(f)(g) | 1,991,609 | 1.41 | (g) | 1.41 | (g) | 1.19 | (g) | 22 | |||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.93 | 0.07 | 0.53 | 0.60 | (0.07 | ) | — | (0.07 | ) | 17.46 | 3.56 | (c) | 425,820 | 1.61 | (d) | 1.61 | (d) | 0.79 | (d) | 8 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.20 | 0.13 | (0.30 | ) | (0.17 | ) | (0.10 | ) | — | (0.10 | ) | 16.93 | (0.94 | )(c) | 448,866 | 1.63 | 1.63 | 0.80 | 17 | |||||||||||||||||||||||||||||||||||||
| Four months ended 04/30/11 |
15.74 | 0.02 | 1.46 | 1.48 | (0.02 | ) | — | (0.02 | ) | 17.20 | 9.43 | (c) | 524,840 | 1.59 | (e) | 1.59 | (e) | 0.43 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/10 |
13.81 | 0.09 | 1.94 | 2.03 | (0.10 | ) | — | (0.10 | ) | 15.74 | 14.82 | (c) | 506,742 | 1.61 | 1.61 | 0.64 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/09 |
10.86 | 0.10 | 2.94 | 3.04 | (0.09 | ) | — | (0.09 | ) | 13.81 | 28.37 | (f) | 538,048 | 1.64 | 1.64 | 0.87 | 14 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/08 |
17.49 | 0.21 | (6.48 | ) | (6.27 | ) | (0.21 | ) | (0.15 | ) | (0.36 | ) | 10.86 | (36.35 | )(f) | 544,631 | 1.59 | 1.59 | 1.41 | 19 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/07 |
19.27 | 0.21 | (0.69 | ) | (0.48 | ) | (0.22 | ) | (1.08 | ) | (1.30 | ) | 17.49 | (2.63 | )(f) | 1,243,097 | 1.53 | 1.53 | 1.07 | 22 | ||||||||||||||||||||||||||||||||||||
| Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.93 | 0.11 | 0.53 | 0.64 | (0.11 | ) | — | (0.11 | ) | 17.46 | 3.82 | (c) | 195,889 | 1.11 | (d) | 1.11 | (d) | 1.29 | (d) | 8 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.19 | 0.20 | (0.28 | ) | (0.08 | ) | (0.18 | ) | — | (0.18 | ) | 16.93 | (0.38 | )(c) | 191,685 | 1.13 | 1.13 | 1.30 | 17 | |||||||||||||||||||||||||||||||||||||
| Four months ended 04/30/11 |
15.73 | 0.05 | 1.45 | 1.50 | (0.04 | ) | — | (0.04 | ) | 17.19 | 9.57 | (c) | 199,254 | 1.09 | (e) | 1.09 | (e) | 0.93 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/10 |
13.81 | 0.16 | 1.93 | 2.09 | (0.17 | ) | — | (0.17 | ) | 15.73 | 15.32 | (c) | 184,927 | 1.11 | 1.11 | 1.14 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/09 |
10.85 | 0.15 | 2.96 | 3.11 | (0.15 | ) | — | (0.15 | ) | 13.81 | 29.13 | (f) | 164,959 | 1.14 | 1.14 | 1.35 | 14 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/08 |
17.49 | 0.28 | (6.49 | ) | (6.21 | ) | (0.28 | ) | (0.15 | ) | (0.43 | ) | 10.85 | (36.09 | )(f) | 130,746 | 1.09 | 1.09 | 1.91 | 19 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/07 |
19.26 | 0.31 | (0.68 | ) | (0.37 | ) | (0.32 | ) | (1.08 | ) | (1.40 | ) | 17.49 | (2.09 | )(f) | 296,167 | 1.03 | 1.03 | 1.56 | 22 | ||||||||||||||||||||||||||||||||||||
| Class Y(h) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.93 | 0.15 | 0.54 | 0.69 | (0.15 | ) | — | (0.15 | ) | 17.47 | 4.12 | (c) | 1,899,829 | 0.61 | (d) | 0.61 | (d) | 1.79 | (d) | 8 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.20 | 0.28 | (0.29 | ) | (0.01 | ) | (0.26 | ) | — | (0.26 | ) | 16.93 | 0.06 | (c) | 2,135,728 | 0.63 | 0.63 | 1.80 | 17 | |||||||||||||||||||||||||||||||||||||
| Four months ended 04/30/11 |
15.73 | 0.08 | 1.45 | 1.53 | (0.06 | ) | — | (0.06 | ) | 17.20 | 9.78 | (c) | 1,771,697 | 0.59 | (e) | 0.59 | (e) | 1.43 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/10 |
13.80 | 0.23 | 1.94 | 2.17 | (0.24 | ) | — | (0.24 | ) | 15.73 | 15.97 | (c) | 1,530,636 | 0.61 | 0.61 | 1.65 | 18 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/09 |
10.85 | 0.21 | 2.95 | 3.16 | (0.21 | ) | — | (0.21 | ) | 13.80 | 29.67 | (f) | 1,181,166 | 0.64 | 0.64 | 1.85 | 14 | |||||||||||||||||||||||||||||||||||||||
| Year ended 12/31/08 |
17.48 | 0.35 | (6.48 | ) | (6.13 | ) | (0.35 | ) | (0.15 | ) | (0.50 | ) | 10.85 | (35.73 | )(f) | 896,154 | 0.59 | 0.59 | 2.41 | 19 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/07 |
19.25 | 0.40 | (0.68 | ) | (0.28 | ) | (0.41 | ) | (1.08 | ) | (1.49 | ) | 17.48 | (1.59 | )(f) | 1,857,415 | 0.53 | 0.53 | 2.07 | 22 | ||||||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.93 | 0.16 | 0.53 | 0.69 | (0.16 | ) | — | (0.16 | ) | 17.46 | 4.13 | (c) | 280,661 | 0.48 | (d) | 0.48 | (d) | 1.92 | (d) | 8 | ||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.19 | 0.31 | (0.28 | ) | 0.03 | (0.29 | ) | — | (0.29 | ) | 16.93 | 0.33 | (c) | 397,292 | 0.44 | 0.44 | 1.99 | 17 | ||||||||||||||||||||||||||||||||||||||
| Four months ended 04/30/11 |
15.72 | 0.09 | 1.45 | 1.54 | (0.07 | ) | — | (0.07 | ) | 17.19 | 9.82 | (c) | 167,740 | 0.36 | (e) | 0.36 | (e) | 1.66 | (e) | 10 | ||||||||||||||||||||||||||||||||||||
| Year ended 12/31/10(i) |
13.33 | 0.14 | 2.44 | 2.58 | (0.19 | ) | — | (0.19 | ) | 15.72 | 19.53 | (c) | 164,600 | 0.49 | (e) | 0.49 | (e) | 1.68 | (e) | 18 | ||||||||||||||||||||||||||||||||||||
| Class R6 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12(i) |
17.67 | 0.04 | (0.24 | ) | (0.20 | ) | — | — | — | 17.47 | (1.13 | )(c) | 145,861 | 0.41 | (d) | 0.41 | (d) | 1.99 | (d) | 8 | ||||||||||||||||||||||||||||||||||||
| (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 period ending April 30, 2012, the portfolio turnover calculation excludes the value of securities purchased of $279,205,287 and sold of $89,253,686 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Large Cap Basic Value Fund, Invesco Value Fund and Invesco Value II 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 annualized and based on average daily net assets (000’s omitted) of $5,279,324, $307,143, $425,815, $187,777, $1,883,365, $372,694 and $144,268 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 all classes for the period and does not include payments of the maximum sales charge of 5.75% or contingent deferred sales charge (CDSC) on Class A shares, the maximum CDSC of 5%, charged on certain redemptions of Class B shares, made within one year of purchase and declining to 0% after the fifth year or on the maximum CDSC of 1%, charged on certain redemptions of Class C shares within one year of purchase. On purchases of $1 million or more of Class A shares, 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% on Class A shares, up to 1% on Class B and Class C shares or up to 0.50% on Class R shares, and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. |
| (g) | 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% for the year ended April 30, 2012, the four months ended April 30, 2011 and the year ended December 31, 2010 and reflect actual 12b-1 fees of 1.00% for the years ended December 31, 2009, 2008 and 2007. |
| (h) | On June 1, 2010, the Fund’s former Class I shares were reorganized into Class Y shares. |
| (i) | Commencement date of June 1, 2010 and September 24, 2012 for Class R5 and Class R6 shares, respectively. |
17 Invesco Comstock Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. With the exception of the actual ending account value and expenses of the Class R6 shares, the example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012, through October 31, 2012. The actual ending account and expenses of the Class R6 shares in the below example are based on an investment of $1,000 invested as of close of business September 24, 2012 (commencement date) and held through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period (as of close of business September 24, 2012 through October 31, 2012 for the Class R6 shares). Because the actual ending account value and expense information in the example is not based upon a six month period for the Class R6 shares, the ending account value and expense information may not provide a meaningful comparison to mutual funds that provide such information for a full six month period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period3 |
|||||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 1,040.00 | $ | 4.42 | $ | 1,020.87 | $ | 4.38 | 0.86 | % | ||||||||||||
| B |
1,000.00 | 1,039.40 | 4.42 | 1,020.87 | 4.38 | 0.86 | ||||||||||||||||||
| C |
1,000.00 | 1,035.60 | 8.26 | 1,017.09 | 8.19 | 1.61 | ||||||||||||||||||
| R |
1,000.00 | 1,038.20 | 5.70 | 1,019.61 | 5.65 | 1.11 | ||||||||||||||||||
| Y |
1,000.00 | 1,041.20 | 3.14 | 1,022.13 | 3.11 | 0.61 | ||||||||||||||||||
| R5 |
1,000.00 | 1,041.30 | 2.47 | 1,022.79 | 2.45 | 0.48 | ||||||||||||||||||
| R6 |
1,000.00 | 988.70 | 0.42 | 1,023.14 | 2.09 | 0.41 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012, through October 31, 2012 (as of close of business September 24, 2012, through October 31, 2012 for the Class R6 shares), after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Actual expenses are equal to the 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. For Class R6 shares actual expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 38 (as of close of business September 24, 2012, through October 31, 2012)/365. Because the Class R6 shares have not been in existence for a full six month period, the actual ending account value and expense information shown may not provide a meaningful comparison to fund expense information of classes that show such data for a full six month period and, because the actual ending account value and expense information in the expense example covers a short time period, return and expense data may not be indicative of return and expense data for longer time periods. |
| 3 | Hypothetical expenses are equal to the annualized expense ratio indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. The hypothetical ending account value and expenses may be used to compare ongoing costs of investing in the Class R6 shares of the Fund and other funds because such data is based on a full six-month period. |
18 Invesco Comstock Fund
Approval of Investment Advisory and Sub-Advisory Contracts
19 Invesco Comstock Fund
20 Invesco Comstock 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
VK-COM-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Mid Cap Growth Fund
3 Invesco Mid Cap Growth Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market |
conditions – and issues specific to individual holdings that could affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Mid Cap Growth Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Mid Cap Growth Fund
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Mid Cap Growth 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 & Poor’s. |
| (b) | Non-income producing security. |
| (c) | All or a portion of this security was out on loan at October 31, 2012. |
| (d) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended. The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2012 was $16,906,564, which represented less than 1% of the Fund’s Net Assets. |
| (e) | The money market fund and the Fund are affiliated by having the same investment adviser. |
| (f) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Consumer Discretionary |
25.7 | % | |||
| Information Technology |
18.3 | ||||
| Industrials |
17.3 | ||||
| Health Care |
13.2 | ||||
| Energy |
6.3 | ||||
| Materials |
5.7 | ||||
| Financials |
5.5 | ||||
| Consumer Staples |
3.1 | ||||
| Telecommunication Services |
2.8 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
2.1 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Mid Cap Growth Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Mid Cap Growth Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
||||
| Dividends (net of foreign withholding taxes of $56,394) |
$ | 10,685,691 | ||
| Dividends from affiliated money market funds (includes securities lending income of $1,554,651) |
1,585,975 | |||
| Total investment income |
12,271,666 | |||
| Expenses: |
||||
| Advisory fees |
6,157,749 | |||
| Administrative services fees |
207,991 | |||
| Custodian fees |
11,620 | |||
| Distribution fees: |
||||
| Class A |
1,799,302 | |||
| Class B |
147,027 | |||
| Class C |
602,473 | |||
| Class R |
80,990 | |||
| Transfer agent fees — A, B, C, R and Y |
2,612,946 | |||
| Transfer agent fees — R5 |
5,775 | |||
| Trustees’ and officers’ fees and benefits |
50,198 | |||
| Other |
208,524 | |||
| Total expenses |
11,884,595 | |||
| Less: Fees waived and expense offset arrangement(s) |
(33,469 | ) | ||
| Net expenses |
11,851,126 | |||
| Net investment income |
420,540 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from investment securities |
(14,319,812 | ) | ||
| Change in net unrealized appreciation (depreciation) of investment securities |
(28,430,964 | ) | ||
| Net realized and unrealized gain (loss) |
(42,750,776 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (42,330,236 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Mid Cap Growth Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
||||||||
| Net investment income (loss) |
$ | 420,540 | $ | (9,217,806 | ) | |||
| Net realized gain (loss) |
(14,319,812 | ) | (45,098,949 | ) | ||||
| Change in net unrealized appreciation (depreciation) |
(28,430,964 | ) | (117,227,576 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(42,330,236 | ) | (171,544,331 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
— | (84,792,467 | ) | |||||
| Class B |
— | (9,607,933 | ) | |||||
| Class C |
— | (8,351,094 | ) | |||||
| Class R |
— | (902,695 | ) | |||||
| Class Y |
— | (3,275,918 | ) | |||||
| Class R5 |
— | (101,928 | ) | |||||
| Total distributions from net realized gains |
— | (107,032,035 | ) | |||||
| Share transactions–net: |
||||||||
| Class A |
297,100,985 | (116,385,683 | ) | |||||
| Class B |
6,660,877 | (32,997,614 | ) | |||||
| Class C |
34,919,410 | (15,859,736 | ) | |||||
| Class R |
18,911,822 | 5,617,373 | ||||||
| Class Y |
(1,064,979 | ) | 11,779,418 | |||||
| Class R5 |
10,073,871 | 2,446,795 | ||||||
| Net increase (decrease) in net assets resulting from share transactions |
366,601,986 | (145,399,447 | ) | |||||
| Net increase (decrease) in net assets |
324,271,750 | (423,975,813 | ) | |||||
| Net assets: |
||||||||
| Beginning of period |
1,476,073,962 | 1,900,049,775 | ||||||
| End of period (includes undistributed net investment income (loss) of $(2,981,649) and $(3,402,189), respectively) |
$ | 1,800,345,712 | $ | 1,476,073,962 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Mid Cap Growth Fund, formerly Invesco Van Kampen Mid Cap Growth Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek capital growth.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Class R5. On September 24, 2012, Institutional Class shares were renamed Class R5 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 R5 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.
10 Invesco Mid Cap Growth 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. |
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
11 Invesco Mid Cap Growth 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 are charged to 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. Lending securities entails a risk of loss to the Fund if and to the extent that the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower fails to return the securities. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, is included in Dividends from 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| K. | Foreign Currency Contracts — 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. |
12 Invesco Mid Cap Growth Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||
| First $500 million |
0.75% | |||
| Next $500 million |
0.70% | |||
| Over $1 billion |
0.65% | |||
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, 2012, the Adviser has contractually agreed, through at least June 30, 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 above) of Class A, Class B, Class C, Class R, Class Y and Class R5 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 1.75%, respectively, of average daily net assets. Prior to July 1, 2012, 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 and Class R5 shares to 1.40%, 2.15%, 2.15%, 1.65%, 1.15% and 1.15%, respectively, 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 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, 2013. The Advisor 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $28,830.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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 six months ended October 31, 2012, IDI advised the Fund that IDI retained $63,722 in front-end sales commissions from the sale of Class A shares and $416, $53,918 and $1,071 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended October 31, 2012, the Fund incurred $9,974 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.
13 Invesco Mid Cap Growth Fund
NOTE 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 1,797,891,809 | $ | 16,906,564 | $ | — | $ | 1,814,798,373 | ||||||||
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $4,639.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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.
14 Invesco Mid Cap Growth Fund
The Fund had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2016 |
$ | 31,689,462 | $ | — | $ | 31,689,462 | ||||||
| Not subject to expiration |
26,510,215 | — | 26,510,215 | |||||||||
| $ | 58,199,677 | $ | — | $ | 58,199,677 | |||||||
| * | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $804,579,080 and $683,986,191, 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 |
$ | 263,025,713 | ||
| Aggregate unrealized (depreciation) of investment securities |
(64,907,610 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 198,118,103 | ||
Cost of investments for tax purposes is $1,616,680,270.
15 Invesco Mid Cap Growth Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
1,743,976 | $ | 47,038,702 | 4,978,879 | $ | 140,017,333 | ||||||||||
| Class B |
16,337 | 393,608 | 66,704 | 1,635,680 | ||||||||||||
| Class C |
137,246 | 3,127,208 | 440,126 | 10,605,381 | ||||||||||||
| Class R |
120,373 | 3,207,980 | 294,289 | 8,306,287 | ||||||||||||
| Class Y |
324,044 | 8,782,361 | 1,066,698 | 30,010,470 | ||||||||||||
| Class R5 |
29,165 | 794,326 | 103,690 | 2,784,970 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
— | — | 3,220,770 | 82,322,866 | ||||||||||||
| Class B |
— | — | 422,298 | 9,375,010 | ||||||||||||
| Class C |
— | — | 364,305 | 7,901,774 | ||||||||||||
| Class R |
— | — | 35,595 | 901,986 | ||||||||||||
| Class Y |
— | — | 109,757 | 2,856,977 | ||||||||||||
| Class R5 |
— | — | 3,883 | 101,106 | ||||||||||||
| Issued in connection with acquisitions:(b) |
||||||||||||||||
| Class A |
16,448,346 | 428,914,181 | — | — | ||||||||||||
| Class B |
1,150,727 | 26,095,316 | — | — | ||||||||||||
| Class C |
2,165,559 | 47,714,113 | — | — | ||||||||||||
| Class R |
888,909 | 22,949,747 | — | — | ||||||||||||
| Class Y |
236,389 | 6,285,183 | — | — | ||||||||||||
| Class R5 |
464,820 | 12,375,874 | — | — | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
358,361 | 9,600,854 | 812,822 | 22,957,151 | ||||||||||||
| Class B |
(412,207 | ) | (9,600,854 | ) | (910,976 | ) | (22,957,151 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(7,017,050 | ) | (188,452,752 | ) | (12,854,778 | ) | (361,683,033 | ) | ||||||||
| Class B |
(437,417 | ) | (10,227,193 | ) | (875,986 | ) | (21,051,153 | ) | ||||||||
| Class C |
(700,766 | ) | (15,921,911 | ) | (1,415,824 | ) | (34,366,891 | ) | ||||||||
| Class R |
(272,533 | ) | (7,245,905 | ) | (130,919 | ) | (3,590,900 | ) | ||||||||
| Class Y |
(592,137 | ) | (16,132,523 | ) | (742,708 | ) | (21,088,029 | ) | ||||||||
| Class R5 |
(113,282 | ) | (3,096,329 | ) | (15,533 | ) | (439,281 | ) | ||||||||
| Net increase (decrease) in share activity |
14,538,860 | $ | 366,601,986 | (5,026,908 | ) | $ | (145,399,447 | ) | ||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 34% 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) | As of the opening of business on June 11, 2012, the Fund acquired all the net assets of Invesco Capital Development Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Trustees of the Fund November 30, 2011 and by the shareholders of the Target Fund on April 30, 2012. The acquisition was accomplished by a tax-free exchange of 21,354,750 shares of the Fund for 35,123,891 shares outstanding of the Target Fund as of the close of business on June 8, 2012. Each class of the Target Fund was 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 at the close of business on June 8, 2012. The Target Fund’s net assets at that date of $544,334,414, including $67,690,735 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $1,347,144,886 and $1,891,479,300 immediately after the acquisition. |
| The pro forma results of operations for the six months ended October 31, 2012 assuming the reorganization had been completed on May 1, 2012, the beginning of the annual reporting period, are as follows: |
| Net investment income |
$ | 125,284 | |||
| Net realized/unrealized gains (losses) |
(43,448,775 | ) | |||
| Change in net assets resulting from operations |
$ | (43,323,491 | ) |
| 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 has been included in the Fund’s Statement of Operations since June 11, 2012. |
16 Invesco Mid Cap Growth Fund
NOTE 10—Financial 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 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 |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 28.15 | $ | 0.01 | $ | (1.15 | ) | $ | (1.14 | ) | $ | — | $ | 27.01 | (4.05 | )%(c) | $ | 1,462,067 | 1.29 | %(d) | 1.29 | %(d) | 0.09 | %(d) | 48 | % | ||||||||||||||||||||||
| Year ended 04/30/12 |
33.15 | (0.16 | ) | (2.82 | ) | (2.98 | ) | (2.02 | ) | 28.15 | (8.37 | )(c) | 1,199,482 | 1.31 | 1.31 | (0.57 | ) | 109 | ||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
31.79 | (0.03 | ) | 1.39 | 1.36 | — | 33.15 | 4.28 | (c) | 1,539,895 | 1.28 | (e) | 1.28 | (e) | (1.10 | )(e) | 21 | |||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
24.65 | (0.16 | ) | 7.30 | 7.14 | — | 31.79 | 28.97 | (c) | 1,485,888 | 1.29 | 1.29 | (0.61 | ) | 162 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
14.37 | (0.10 | ) | 10.38 | 10.28 | — | 24.65 | 71.54 | (f) | 1,441,286 | 1.24 | 1.31 | (0.49 | ) | 25 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
25.07 | (0.11 | ) | (10.43 | ) | (10.54 | ) | (0.16 | )(g) | 14.37 | (42.02 | )(f) | 848,832 | 1.19 | 1.40 | (0.58 | ) | 29 | ||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
26.68 | (0.03 | ) | 1.48 | 1.45 | (3.06 | ) | 25.07 | 3.87 | (f) | 1,154,865 | 1.21 | N/A | (0.09 | ) | 60 | ||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
24.47 | 0.01 | (1.00 | ) | (0.99 | ) | — | 23.48 | (4.05 | )(c) | 112,449 | 1.29 | (d) | 1.29 | (d) | 0.09 | (d) | 48 | ||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
29.11 | (0.11 | ) | (2.51 | ) | (2.62 | ) | (2.02 | ) | 24.47 | (8.29 | )(c) | 109,449 | 1.21 | 1.21 | (0.47 | ) | 109 | ||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
27.91 | (0.03 | ) | 1.23 | 1.20 | — | 29.11 | 4.30 | (c)(h) | 167,947 | 1.35 | (e)(h) | 1.35 | (e)(h) | (1.17 | )(e)(h) | 21 | |||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
21.69 | (0.20 | ) | 6.42 | 6.22 | — | 27.91 | 28.68 | (c)(i) | 165,822 | 1.53 | (i) | 1.53 | (i) | (0.85 | )(i) | 162 | |||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
12.68 | (0.13 | ) | 9.14 | 9.01 | — | 21.69 | 71.06 | (j)(k) | 224,558 | 1.50 | (j) | 1.57 | (j) | (0.74 | )(j) | 25 | |||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
22.24 | (0.16 | ) | (9.24 | ) | (9.40 | ) | (0.16 | )(g) | 12.68 | (42.24 | )(j)(k) | 168,132 | 1.58 | (j) | 1.81 | (j) | (0.94 | )(j) | 29 | ||||||||||||||||||||||||||||
| Year ended 03/31/08 |
24.07 | (0.16 | ) | 1.39 | 1.23 | (3.06 | ) | 22.24 | 3.36 | (j)(k) | 164,016 | 1.73 | (j) | N/A | (0.60 | )(j) | 60 | |||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
23.82 | (0.07 | ) | (0.99 | ) | (1.06 | ) | — | 22.76 | (4.45 | )(c) | 128,213 | 2.00 | (d) | 2.00 | (d) | (0.62 | )(d) | 48 | |||||||||||||||||||||||||||||
| Year ended 04/30/12 |
28.63 | (0.32 | ) | (2.47 | ) | (2.79 | ) | (2.02 | ) | 23.82 | (9.06 | )(c) | 95,998 | 2.06 | 2.06 | (1.32 | ) | 109 | ||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
27.47 | (0.04 | ) | 1.20 | 1.16 | — | 28.63 | 4.22 | (c) | 132,885 | 2.03 | (e) | 2.03 | (e) | (1.85 | )(e) | 21 | |||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
21.45 | (0.32 | ) | 6.34 | 6.02 | — | 27.47 | 28.07 | (c) | 128,536 | 2.04 | 2.04 | (1.36 | ) | 162 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
12.60 | (0.23 | ) | 9.08 | 8.85 | — | 21.45 | 70.24 | (l) | 112,608 | 1.99 | 2.06 | (1.24 | ) | 25 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
22.19 | (0.23 | ) | (9.20 | ) | (9.43 | ) | (0.16 | )(g) | 12.60 | (42.47 | )(l) | 69,522 | 1.94 | 2.15 | (1.33 | ) | 29 | ||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
24.08 | (0.22 | ) | 1.39 | 1.17 | (3.06 | ) | 22.19 | 3.10 | (l) | 103,250 | 1.97 | N/A | (0.84 | ) | 60 | ||||||||||||||||||||||||||||||||
| Class R |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
27.88 | (0.02 | ) | (1.15 | ) | (1.17 | ) | — | 26.71 | (4.20 | )(c) | 35,085 | 1.54 | (d) | 1.54 | (d) | (0.16 | )(d) | 48 | |||||||||||||||||||||||||||||
| Year ended 04/30/12 |
32.94 | (0.23 | ) | (2.81 | ) | (3.04 | ) | (2.02 | ) | 27.88 | (8.62 | )(c) | 16,080 | 1.56 | 1.56 | (0.82 | ) | 109 | ||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
31.59 | (0.04 | ) | 1.39 | 1.35 | — | 32.94 | 4.27 | (c) | 12,443 | 1.53 | (e) | 1.53 | (e) | (1.35 | )(e) | 21 | |||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
24.55 | (0.24 | ) | 7.28 | 7.04 | — | 31.59 | 28.68 | (c) | 11,742 | 1.54 | 1.54 | (0.86 | ) | 162 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
14.35 | (0.22 | ) | 10.42 | 10.20 | — | 24.55 | 71.08 | (m) | 4,118 | 1.49 | 1.56 | (0.96 | ) | 25 | |||||||||||||||||||||||||||||||||
| Period ended 03/31/09(n) |
24.15 | (0.08 | ) | (9.56 | ) | (9.64 | ) | (0.16 | ) | 14.35 | (39.89 | )(m)(o) | 99 | 1.44 | (e) | 1.76 | (e) | (0.66 | )(e) | 29 | ||||||||||||||||||||||||||||
| Class Y(p) |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
28.70 | 0.05 | (1.18 | ) | (1.13 | ) | — | 27.57 | (3.94 | )(c) | 49,461 | 1.04 | (d) | 1.04 | (d) | 0.34 | (d) | 48 | ||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
33.66 | (0.09 | ) | (2.85 | ) | (2.94 | ) | (2.02 | ) | 28.70 | (8.12 | )(c) | 52,408 | 1.06 | 1.06 | (0.32 | ) | 109 | ||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
32.27 | (0.02 | ) | 1.41 | 1.39 | — | 33.66 | 4.31 | (c) | 46,867 | 1.03 | (e) | 1.03 | (e) | (0.85 | )(e) | 21 | |||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
24.96 | (0.09 | ) | 7.40 | 7.31 | — | 32.27 | 29.29 | (c) | 41,968 | 1.04 | 1.04 | (0.36 | ) | 162 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
14.52 | (0.05 | ) | 10.49 | 10.44 | — | 24.96 | 71.90 | (q) | 143,273 | 0.99 | 1.06 | (0.24 | ) | 25 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
25.26 | (0.06 | ) | (10.52 | ) | (10.58 | ) | (0.16 | )(g) | 14.52 | (41.86 | )(q) | 84,681 | 0.94 | 1.15 | (0.31 | ) | 29 | ||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
26.80 | 0.04 | 1.48 | 1.52 | (3.06 | ) | 25.26 | 4.12 | (q) | 89,448 | 0.98 | N/A | 0.14 | 60 | ||||||||||||||||||||||||||||||||||
| Class R5 |
| |||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
28.73 | 0.07 | (1.18 | ) | (1.11 | ) | — | 27.62 | (3.86 | )(c) | 13,070 | 0.85 | (d) | 0.85 | (d) | 0.53 | (d) | 48 | ||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
33.64 | (0.03 | ) | (2.86 | ) | (2.89 | ) | (2.02 | ) | 28.73 | (7.97 | )(c) | 2,656 | 0.85 | 0.85 | (0.11 | ) | 109 | ||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
32.24 | (0.02 | ) | 1.42 | 1.40 | — | 33.64 | 4.34 | (c) | 14 | 0.85 | (e) | 0.85 | (e) | (0.67 | )(e) | 21 | |||||||||||||||||||||||||||||||
| Period ended 03/31/11(n) |
24.57 | (0.05 | ) | 7.72 | 7.67 | — | 32.24 | 31.22 | (c) | 13 | 0.82 | (e) | 0.82 | (e) | (0.26 | )(e) | 162 | |||||||||||||||||||||||||||||||
| (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 six months ended October 31, 2012, the portfolio turnover calculation excludes the value of securities purchased of $463,100,189 and sold of $272,857,307 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Capital Development 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 annualized and based on average daily net assets (000’s omitted) of $1,427,707, $116,671, $124,116, $32,132, $51,648 and $11,588 for Class A, Class B, Class C, Class R, Class Y and Class R5 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) | Includes return of capital distributions of less than $0.01. |
| (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 0.32%. |
| (i) | 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 0.49%. |
| (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 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. |
| (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) | 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. |
| (n) | Commencement date of July 11, 2008 and June 1, 2010 for Class R shares and Class R5 shares, respectively. |
| (o) | Non-annualized. |
| (p) | On June 1, 2010, the Fund’s former Class I shares were reorganized into Class Y shares. |
| (q) | 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/A=Not | Applicable |
17 Invesco Mid Cap Growth Fund
NOTE 11—Subsequent Event
The Board of Trustees of the Fund 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 Dynamics Fund (the “Target Fund”).
The Agreement requires approval of the Target Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2013. Upon closing of the reorganization, shareholders of the Target Fund will receive a corresponding class of shares of the Fund in exchange for their shares of the Target Fund and the Target Fund will liquidate and cease operations.
18 Invesco Mid Cap Growth Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
| A | $ | 1,000.00 | $ | 959.50 | $ | 6.37 | $ | 1,018.70 | $ | 6.56 | 1.29 | % | ||||||||||||
| B | 1,000.00 | 959.50 | 6.37 | 1,018.70 | 6.56 | 1.29 | ||||||||||||||||||
| C | 1,000.00 | 955.50 | 9.86 | 1,015.12 | 10.16 | 2.00 | ||||||||||||||||||
| R | 1,000.00 | 958.00 | 7.60 | 1,017.44 | 7.83 | 1.54 | ||||||||||||||||||
| Y | 1,000.00 | 960.60 | 5.14 | 1,019.96 | 5.30 | 1.04 | ||||||||||||||||||
| R5 | 1,000.00 | 961.40 | 4.28 | 1,020.92 | 4.33 | 0.85 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
19 Invesco Mid Cap Growth Fund
Approval of Investment Advisory and Sub-Advisory Contracts
20 Invesco Mid Cap Growth Fund
21 Invesco Mid Cap Growth 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 | VK-MCG-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Small Cap Value Fund
3 Invesco Small Cap Value Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: | |
| One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: | |
| This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could affect their value – they |
maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss.
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Small Cap Value Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Small Cap Value 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 & Poor’s. |
| (b) | Non-income producing security. |
| (c) | Affiliated company during the period. The Investment Company Act of 1940 defines affiliates as those companies in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The aggregate value of these securities as of October 31, 2012 was $306,110,841, which represented 14.66% of the Fund’s Net Assets. See Note 4. |
| (d) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Industrials |
23.3 | % | |||
| Information Technology |
22.1 | ||||
| Financials |
16.9 | ||||
| Consumer Discretionary |
14.6 | ||||
| Health Care |
14.3 | ||||
| Energy |
4.6 | ||||
| Materials |
3.2 | ||||
| Consumer Staples |
0.1 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
0.9 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Small Cap Value Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Small Cap Value Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
||||
| Dividends |
$ | 7,279,161 | ||
| Dividends from affiliates |
696,587 | |||
| Total investment income |
7,975,748 | |||
| Expenses: |
||||
| Advisory fees |
6,772,506 | |||
| Administrative services fees |
223,725 | |||
| Custodian fees |
28,765 | |||
| Distribution fees: |
||||
| Class A |
1,570,190 | |||
| Class B |
152,191 | |||
| Class C |
639,318 | |||
| Transfer agent fees |
2,420,623 | |||
| Trustees’ and officers’ fees and benefits |
63,102 | |||
| Other |
243,038 | |||
| Total expenses |
12,113,458 | |||
| Less: Fees waived, expenses reimbursed and expense offset arrangement(s) |
(573,539 | ) | ||
| Net expenses |
11,539,919 | |||
| Net investment income (loss) |
(3,564,171 | ) | ||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain from investment securities |
157,031,855 | |||
| Change in net unrealized appreciation (depreciation) of investment securities |
(202,086,451 | ) | ||
| Net realized and unrealized gain (loss) |
(45,054,596 | ) | ||
| Net increase (decrease) in net assets resulting from operations |
$ | (48,618,767 | ) | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Small Cap Value Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
||||||||
| Net investment income (loss) |
$ | (3,564,171 | ) | $ | (4,781,131 | ) | ||
| Net realized gain |
157,031,855 | 250,939,667 | ||||||
| Change in net unrealized appreciation (depreciation) |
(202,086,451 | ) | (351,966,248 | ) | ||||
| Net increase (decrease) in net assets resulting from operations |
(48,618,767 | ) | (105,807,712 | ) | ||||
| Distributions to shareholders from net realized gains: |
||||||||
| Class A |
— | (83,002,653 | ) | |||||
| Class B |
— | (2,902,184 | ) | |||||
| Class C |
— | (10,267,086 | ) | |||||
| Class Y |
— | (44,320,919 | ) | |||||
| Total distributions from net realized gains |
— | (140,492,842 | ) | |||||
| Share transactions-net: |
||||||||
| Class A |
(73,982,815 | ) | 412,440,578 | |||||
| Class B |
(5,203,666 | ) | 220,542 | |||||
| Class C |
(12,724,159 | ) | 12,739,973 | |||||
| Class Y |
(17,349,860 | ) | 617,701,249 | |||||
| Net increase (decrease) in net assets resulting from share transactions |
(109,260,500 | ) | 1,043,102,342 | |||||
| Net increase (decrease) in net assets |
(157,879,267 | ) | 796,801,788 | |||||
| Net assets: |
||||||||
| Beginning of period |
2,245,367,411 | 1,448,565,623 | ||||||
| End of period (includes undistributed net investment income (loss) of $(3,674,723) and $(110,552), respectively) |
$ | 2,087,488,144 | $ | 2,245,367,411 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Small Cap Value Fund, formerly Invesco Van Kampen Small Cap Value Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek capital appreciation.
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 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”).
9 Invesco Small Cap Value 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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
| F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund 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. |
10 Invesco Small Cap Value Fund
| 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
NOTE 2—Advisory 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 Fund’s average daily net assets as follows:
| Average Net Assets | Rate | |||||
| First $500 million |
0 | .67% | ||||
| Next $500 million |
0 | .645% | ||||
| Over $1 billion |
0 | .62% | ||||
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, 2012, the Adviser has contractually agreed, through at least June 30, 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 waivers and/or expense reimbursements (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%, respectively, of average daily net assets. Prior to July 1, 2012, 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 waivers and/or expense reimbursements (excluding certain items discussed below) of Class A, Class B, Class C, and Class Y shares to 1.03%, 1.40% (after Rule 12b-1 fee limit), 1.78% and 0.78%, respectively, 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 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, 2013. To the extent that the annualized expense ratio does not exceed the expense limitation, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Adviser has contractually agreed, through at least June 30, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $553,034.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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.
Expenses under the Plans before fee waivers are shown as distribution fees in the Statement of Operations as Distribution fees. For the six months ended October 31, 2012, 12b-1 fees for Class B shares were $132,595 after fee waivers of $19,596.
11 Invesco Small Cap Value Fund
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2012, IDI advised the Fund that IDI retained $11,422 in front-end sales commissions from the sale of Class A shares and $487, $15,392 and $823 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 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 2,093,247,014 | $ | — | $ | — | $ | 2,093,247,014 | ||||||||
NOTE 4—Investments in Other Affiliates
The 1940 Act defines affiliates as those issuances in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The following is a summary of the investments in other affiliates for the six months ended October 31, 2012.
| Value 04/30/12 |
Purchases at Cost |
Proceeds from Sales |
Change in Unrealized Appreciation (Depreciation) |
Realized Gain (Loss) |
Value 10/31/12 |
Dividend Income |
||||||||||||||||||||||
| ACCO Brands Corp.(a) |
$ | 44,545,391 | $ | 5,732,227 | $ | — | $ | (13,768,383 | ) | $ | — | $ | 36,509,235 | $ | — | |||||||||||||
| Aegion Corp. |
41,502,325 | — | — | 500,302 | — | 42,002,627 | — | |||||||||||||||||||||
| AMN Healthcare Services, Inc. |
26,848,710 | — | — | 12,844,166 | — | 39,692,876 | — | |||||||||||||||||||||
| CIBER, Inc. |
24,865,984 | — | — | (6,216,496 | ) | — | 18,649,488 | — | ||||||||||||||||||||
| FBR & Co. |
15,850,445 | — | (8,341,759 | ) | 4,149,809 | (2,873,655 | ) | 8,784,840 | — | |||||||||||||||||||
| Lattice Semiconductor Corp. |
36,698,844 | 16,750,245 | — | (11,045,345 | ) | — | 42,403,744 | — | ||||||||||||||||||||
| Methode Electronics, Inc. |
21,639,444 | — | — | 4,276,672 | — | 25,916,116 | 358,523 | |||||||||||||||||||||
| Resources Connection Inc. |
33,003,130 | — | — | (1,627,273 | ) | — | 31,375,857 | 279,688 | ||||||||||||||||||||
| Sanmina-SCI Corp. |
44,339,747 | 2,316,292 | — | 19,964 | — | 46,676,003 | — | |||||||||||||||||||||
| Sonic Corp. |
41,135,387 | 60,565 | (8,372,557 | ) | 15,841,936 | 43,413 | 48,708,744 | — | ||||||||||||||||||||
| THQ Inc. |
4,549,227 | — | (4 | ) | (2,648,647 | ) | (30 | ) | 1,900,546 | — | ||||||||||||||||||
| Total |
$ | 334,978,634 | $ | 24,859,329 | $ | (16,714,320 | ) | $ | 2,326,705 | $ | (2,830,272 | ) | $ | 342,620,076 | $ | 638,211 | ||||||||||||
| (a) | As of October 31, 2012, the issuer is no longer considered an affiliate of the Fund. |
NOTE 5—Security 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 six months ended October 31, 2012, the Fund engaged in securities purchases of $7,521,334.
12 Invesco Small Cap Value Fund
NOTE 6—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $909.
NOTE 7—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 8—Cash 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 9—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. The Regulated Investment Company Modernization Act of 2010 (the “Act”) 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 had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2017 |
$ | 2,851,148 | $ | — | $ | 2,851,148 | ||||||
| * | 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 reorganizations of Invesco Special Value Fund, Invesco Small-Mid Special Value Fund, Invesco U.S. Small Cap Value Fund and Invesco U.S. Small-Mid Cap Value Fund into the Fund, are realized on securities held in each fund at such date of the reorganizations, the capital loss carryforward may be further limited for up to five years from the date of the reorganizations. |
NOTE 10—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $455,054,283 and $535,867,118, 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 |
$ | 231,968,461 | ||
| Aggregate unrealized (depreciation) of investment securities |
(132,289,454 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 99,679,007 | ||
Cost of investments for tax purposes is $1,993,568,007.
13 Invesco Small Cap Value Fund
NOTE 11—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
5,334,354 | $ | 90,754,961 | 18,125,813 | $ | 312,999,273 | ||||||||||
| Class B |
6,298 | 94,797 | 18,890 | 296,099 | ||||||||||||
| Class C |
132,792 | 1,999,844 | 515,139 | 7,516,931 | ||||||||||||
| Class Y |
3,782,815 | 66,286,614 | 8,637,301 | 152,677,204 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
— | — | 5,145,436 | 80,062,984 | ||||||||||||
| Class B |
— | — | 192,510 | 2,697,063 | ||||||||||||
| Class C |
— | — | 708,420 | 9,740,782 | ||||||||||||
| Class Y |
— | — | 2,712,264 | 42,799,519 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
162,422 | 2,755,481 | 1,008,126 | 17,262,960 | ||||||||||||
| Class B |
(180,871 | ) | (2,755,481 | ) | (1,111,006 | ) | (17,262,960 | ) | ||||||||
| Issued in connection with acquisitions:(b) |
||||||||||||||||
| Class A |
— | — | 28,565,022 | 546,905,635 | ||||||||||||
| Class B |
— | — | 1,395,411 | 24,277,773 | ||||||||||||
| Class C |
— | — | 2,655,889 | 45,515,921 | ||||||||||||
| Class Y |
— | — | 34,418,470 | 666,710,807 | ||||||||||||
| Reacquired:(c) |
||||||||||||||||
| Class A |
(9,756,969 | ) | (167,493,257 | ) | (32,468,502 | ) | (544,790,274 | ) | ||||||||
| Class B |
(165,846 | ) | (2,542,982 | ) | (605,579 | ) | (9,787,433 | ) | ||||||||
| Class C |
(980,839 | ) | (14,724,003 | ) | (3,353,548 | ) | (50,033,661 | ) | ||||||||
| Class Y |
(4,813,757 | ) | (83,636,474 | ) | (14,235,705 | ) | (244,486,281 | ) | ||||||||
| Net increase (decrease) in share activity |
(6,479,601 | ) | $ | (109,260,500 | ) | 52,324,351 | $ | 1,043,102,342 | ||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 31% 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) | As of the opening of business on May 23, 2011 the Fund acquired all the net assets of Invesco Special Value Fund, Invesco Small-Mid Special Value Fund, Invesco U.S. Small Cap Value Fund and Invesco U.S. Small-Mid Cap Value Fund (the “Target Funds”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2010 and by the shareholders of the Target Funds on April 14, 2011. The acquisition was accomplished by a tax-free exchange of 67,034,792 shares of the Fund for 28,177,350, 7,763,887, 29,315,528 and 1,571,735 shares outstanding of Invesco Special Value Fund, Invesco Small-Mid Special Value Fund, Invesco U.S. Small Cap Value Fund and Invesco U.S. Small-Mid Cap Value Fund, respectively, as of the close of business on May 20, 2011. Each class of the Target Funds was exchanged for the like class of shares of the Fund based on the relative net asset value of the Target Funds to the net asset value of the Fund at the close of business on May 20, 2011. The net assets of Invesco Special Value Fund, Invesco Small-Mid Special Value Fund, Invesco U.S. Small Cap Value Fund and Invesco U.S. Small-Mid Cap Value Fund at that date of $390,180,913, $94,779,328, $783,803,191 and $14,646,704, including $97,721,791, $24,269,354, $189,121,985 and $3,495,853 of unrealized appreciation, were combined with those of the Fund. The Fund’s net assets immediately before the acquisition were $1,450,891,862, and the Fund’s net assets immediately after the acquisition were $2,734,301,998. |
| The pro forma results of operations for the year ended April 30, 2012 assuming the reorganization had been completed on May 1, 2011, the beginning of the annual reporting period are as follows: |
| Net investment income (loss) |
$ | (5,675,124 | ) | ||
| Net realized/unrealized gains (losses) |
(125,107,953 | ) | |||
| Change in net assets resulting from operations |
$ | (130,783,077 | ) |
| The combined investment portfolios, which were 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 Funds that have been included in the Fund’s Statement of Operations since May 20, 2011. |
| (c) | Net of redemption fees of $0 and $67,324 allocated among the classes based on relative net assets of each class for six months ended October 31, 2012 and for the year ended April 30, 2012. |
14 Invesco Small Cap Value Fund
NOTE 12—Financial 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) onsecurities (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 and/or expenses |
Ratio of net investment income (loss) to average net assets |
Portfolio turnover(b) |
|||||||||||||||||||||||||||||||||||||||||||
| Class A |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 17.80 | $ | (0.03 | ) | $ | (0.34 | ) | $ | (0.37 | ) | $ | — | $ | — | $ | — | $ | 17.43 | (2.08 | )%(c) | $ | 1,224,427 | 1.12 | %(d) | 1.17 | %(d) | (0.37 | )%(d) | 22 | % | |||||||||||||||||||||||||
| Year ended 04/30/12 |
19.71 | (0.04 | ) | (0.75 | ) | (0.79 | ) | — | (1.12 | ) | (1.12 | ) | 17.80 | (e) | (3.18 | )(c) | 1,326,668 | 1.03 | 1.17 | (0.24 | ) | 50 | ||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
19.17 | (0.01 | ) | 0.55 | 0.54 | — | — | — | 19.71 | (e) | 2.82 | (c) | 1,067,286 | 1.33 | (f) | 1.36 | (f) | (0.84 | )(f) | 5 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
16.06 | (0.03 | ) | 3.75 | 3.72 | — | (0.61 | ) | (0.61 | ) | 19.17 | (e) | 23.46 | (c) | 1,045,598 | 1.19 | 1.18 | (0.19 | ) | 67 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
9.56 | (0.05 | ) | 6.55 | 6.50 | (0.00 | )(g) | — | (0.00 | )(g) | 16.06 | 68.04 | (h) | 675,936 | 1.25 | 1.25 | (0.38 | ) | 28 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
14.41 | 0.05 | (4.83 | ) | (4.78 | ) | (0.03 | ) | (0.04 | ) | (0.07 | ) | 9.56 | (33.21 | )(h) | 225,016 | 1.34 | 1.34 | 0.40 | 63 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
17.57 | (0.03 | ) | (1.49 | ) | (1.52 | ) | — | (1.64 | ) | (1.64 | ) | 14.41 | (9.31 | )(h) | 248,178 | 1.29 | 1.29 | (0.21 | ) | 46 | |||||||||||||||||||||||||||||||||||
| Class B |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
16.01 | (0.08 | ) | (0.31 | ) | (0.39 | ) | — | — | — | 15.62 | (2.44 | )(c) | 28,049 | 1.74 | (d) | 1.92 | (d) | (0.99 | )(d) | 22 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.91 | (0.08 | ) | (0.70 | ) | (0.78 | ) | — | (1.12 | ) | (1.12 | ) | 16.01 | (e) | (3.45 | )(c) | 34,194 | 1.33 | 1.81 | (0.54 | ) | 50 | ||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
17.42 | (0.01 | ) | 0.50 | 0.49 | — | — | — | 17.91 | (e) | 2.81 | (c)(i) | 40,226 | 1.33 | (f)(i) | 1.36 | (f)(i) | (0.84 | )(f)(i) | 5 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
14.69 | (0.09 | ) | 3.43 | 3.34 | — | (0.61 | ) | (0.61 | ) | 17.42 | (e) | 23.07 | (c)(i) | 40,485 | 1.57 | (i) | 1.56 | (i) | (0.57 | )(i) | 67 | ||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
8.77 | (0.09 | ) | 6.01 | 5.92 | — | — | — | 14.69 | 67.50 | (j)(k) | 49,140 | 1.62 | (k) | 1.62 | (k) | (0.78 | )(k) | 28 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
13.24 | 0.02 | (4.44 | ) | (4.42 | ) | (0.01 | ) | (0.04 | ) | (0.05 | ) | 8.77 | (33.39 | )(j)(k) | 37,961 | 1.51 | (k) | 1.51 | (k) | 0.16 | (k) | 63 | |||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
16.35 | (0.11 | ) | (1.36 | ) | (1.47 | ) | — | (1.64 | ) | (1.64 | ) | 13.24 | (9.64 | )(j)(k) | 78,649 | 1.73 | (k) | 1.73 | (k) | (0.68 | )(k) | 46 | |||||||||||||||||||||||||||||||||
| Class C |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
15.69 | (0.08 | ) | (0.31 | ) | (0.39 | ) | — | — | — | 15.30 | (2.49 | )(c) | 123,894 | 1.86 | (d) | 1.91 | (d) | (1.11 | )(d) | 22 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
17.65 | (0.15 | ) | (0.69 | ) | (0.84 | ) | — | (1.12 | ) | (1.12 | ) | 15.69 | (e) | (3.85 | )(c) | 140,342 | 1.76 | 1.90 | (0.97 | ) | 50 | ||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
17.17 | (0.02 | ) | 0.50 | 0.48 | — | — | — | 17.65 | (e) | 2.80 | (c) | 148,624 | 2.08 | (f) | 2.11 | (f) | (1.59 | )(f) | 5 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
14.55 | (0.14 | ) | 3.37 | 3.23 | — | (0.61 | ) | (0.61 | ) | 17.17 | (e) | 22.52 | (c) | 146,633 | 1.94 | 1.93 | (0.94 | ) | 67 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
8.72 | (0.14 | ) | 5.97 | 5.83 | — | — | — | 14.55 | 66.86 | (l) | 109,871 | 2.00 | 2.00 | (1.14 | ) | 28 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
13.23 | (0.04 | ) | (4.43 | ) | (4.47 | ) | — | (0.04 | ) | (0.04 | ) | 8.72 | (33.76 | )(l) | 50,495 | 2.10 | 2.10 | (0.36 | ) | 63 | |||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
16.38 | (0.15 | ) | (1.36 | ) | (1.51 | ) | — | (1.64 | ) | (1.64 | ) | 13.23 | (9.95 | )(l) | 64,492 | 2.04 | 2.04 | (0.95 | ) | 46 | |||||||||||||||||||||||||||||||||||
| Class Y(m) |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
18.07 | (0.01 | ) | (0.35 | ) | (0.36 | ) | — | — | — | 17.71 | (1.99 | )(c) | 711,118 | 0.87 | (d) | 0.92 | (d) | (0.12 | )(d) | 22 | |||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
19.94 | 0.00 | (0.75 | ) | (0.75 | ) | — | (1.12 | ) | (1.12 | ) | 18.07 | (e) | (2.93 | )(c) | 744,163 | 0.78 | 0.92 | 0.01 | 50 | ||||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
19.38 | (0.01 | ) | 0.57 | 0.56 | — | — | — | 19.94 | (e) | 2.89 | (c) | 192,429 | 1.08 | (f) | 1.11 | (f) | (0.59 | )(f) | 5 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
16.19 | 0.01 | 3.79 | 3.80 | — | (0.61 | ) | (0.61 | ) | 19.38 | (e) | 23.77 | (c) | 178,627 | 0.94 | 0.93 | 0.06 | 67 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
9.63 | (0.02 | ) | 6.61 | 6.59 | (0.03 | ) | — | (0.03 | ) | 16.19 | 68.43 | (n) | 128,802 | 1.00 | 1.00 | (0.13 | ) | 28 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
14.53 | 0.08 | (4.88 | ) | (4.80 | ) | (0.06 | ) | (0.04 | ) | (0.10 | ) | 9.63 | (33.09 | )(n) | 32,407 | 1.09 | 1.09 | 0.63 | 63 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
17.66 | 0.02 | (1.51 | ) | (1.49 | ) | — | (1.64 | ) | (1.64 | ) | 14.53 | (9.03 | )(n) | 34,486 | 1.06 | 1.06 | 0.12 | 46 | |||||||||||||||||||||||||||||||||||||
| (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 period ending April 30, 2012, the portfolio turnover calculation excludes the value of securities purchased of $983,090,206 and sold of $586,342,254 in the effort to realign the Fund’s portfolio holdings after the reorganization of the Target Funds 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 annualized and based on average daily net assets (000’s omitted) of $1,245,912, $30,190, $128,205 and $702,079 for Class A, Class B, Class C and Class Y shares, respectively. |
| (e) | Includes redemption fees added to shares of beneficial interest which were less than $0.005 per share. |
| (f) | Annualized. |
| (g) | Amount is less than $0.01 per share. |
| (h) | 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. |
| (i) | 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% and 0.63% for the period April 1, 2011 to April 30, 2011 and the year ended March 31, 2011, respectively. |
| (j) | 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. |
| (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 less than 1%. |
| (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 Fund’s 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. |
15 Invesco Small Cap Value Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class | Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio2 | ||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2,3 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2,4 |
|||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 979.20 | $ | 5.59 | $ | 1,019.56 | $ | 5.70 | 1.12% | |||||||||||
| B |
1,000.00 | 975.60 | 8.66 | 1,016.43 | 8.84 | 1.74 | ||||||||||||||||
| C |
1,000.00 | 975.10 | 9.26 | 1,015.83 | 9.45 | 1.86 | ||||||||||||||||
| Y |
1,000.00 | 980.10 | 4.34 | 1,020.82 | 4.43 | 0.87 | ||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. Effective July 1, 2012, the Fund’s 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 and Class Y shares to 2.00%, 2.75%, 2.75% 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 1.16%, 1.91%, 1.90% and 0.91% for Class A, Class B, Class C and Class Y 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 $5.79, $9.51, $9.46 and $4.54 for Class A, Class B, Class C and Class Y 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 $5.90, $9.70, $9.65 and $4.63 for Class A, Class B, Class C and Class Y shares, respectively. |
16 Invesco Small Cap Value Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco Small Cap Value Fund
18 Invesco Small Cap Value 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
VK-SCV-SAR-1 | Invesco Distributors, Inc. |
Fund Performance
2 Invesco Value Opportunities Fund
3 Invesco Value Opportunities Fund
Letters to Shareholders
|
Bruce Crockett |
Dear Fellow Shareholders: One of our most important responsibilities as independent Trustees of the Invesco Funds is our annual review of the funds’ advisory and sub-advisory contracts with Invesco. This annual review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco has provided as adviser to the Invesco Funds and the reasonableness of the fees that it charges for those services. In our roles as Trustees, we spend months reviewing thousands of pages of detailed information that we request from Invesco in connection with our annual review. We focus on the quality and costs of the services to be provided by Invesco and its affiliates. Some of the most important things we look at are fund performance, expenses and fees. All of the Trustees have substantial personal investments in the Invesco Funds complex. We’re fund shareholders just like you. |
We also use information from many independent sources during the review process, including materials provided by the independent Senior Officer of the Invesco Funds, who reports directly to the independent Trustees. We also meet in private sessions with independent legal counsel and review performance and fee data on the Invesco Funds prepared by Lipper Inc., an independent, third-party firm widely recognized as a leader in its field.
I’m pleased to report that the Invesco Funds Board determined in June that renewing the investment advisory agreement and the sub-advisory contracts with Invesco would serve the best interests of each fund and its shareholders. For more detailed information about our assessment and conclusions with respect to each of the Invesco Funds, visit invesco.com/us, click on the “About Us” section and go to “Legal Information.” Information on the recent investment advisory renewal process can be found by clicking the last item under “Corporate Governance.”
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
|
Philip Taylor |
Dear Shareholders: This report contains helpful information about your Fund, including its long-term performance and a complete list of your Fund’s investments as of the close of the reporting period. Additional information, including timely insight and information from many of Invesco’s investment professionals, is available at our website, invesco.com/us. There, you also can access information about your Invesco account at any time. Intentional InvestingSM is the science and art of investing with purpose, prudence and diligence – and it’s how Invesco’s investment professionals manage your money every day. This highly disciplined process begins when specialized teams of investment professionals clearly define an investment objective and then establish specific investment strategies to try to achieve that objective. While our investment teams closely monitor economic and market conditions – and issues specific to individual holdings that could | |
| affect their value – they maintain a long-term investment perspective. Intentional Investing is also embedding risk controls and processes into every aspect of our business; offering a diverse combination of investment strategies and vehicles designed to meet your needs; and communicating clearly, delivering expert insights from our portfolio managers and other investment professionals, and providing a website full of tools and articles to help you stay informed. However, neither Intentional Investing nor diversification can guarantee a profit or protect against loss. | ||
If you have questions about your account, please contact an Invesco client services representative at 800 959 4246. If you have an Invesco-related question or comment, feel free to 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.
4 Invesco Value Opportunities Fund
Schedule of Investments(a)
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Value Opportunities 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 & Poor’s. |
| (b) | Non-income producing security. |
| (c) | The money market fund and the Fund are affiliated by having the same investment adviser. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2012
| Financials |
36.4 | % | |||
| Consumer Discretionary |
15.0 | ||||
| Energy |
14.8 | ||||
| Health Care |
8.3 | ||||
| Consumer Staples |
4.8 | ||||
| Information Technology |
4.5 | ||||
| Industrials |
4.1 | ||||
| Telecommunication Services |
2.3 | ||||
| Materials |
1.1 | ||||
| Money Market Funds Plus Other Assets Less Liabilities |
8.7 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Value Opportunities Fund
Statement of Assets and Liabilities
October 31, 2012
(Unaudited)
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Value Opportunities Fund
Statement of Operations
For the six months ended October 31, 2012
(Unaudited)
| Investment income: |
||||
| Dividends (net of foreign withholding taxes of $350,218) |
$ | 11,203,078 | ||
| Dividends from affiliated money market funds |
38,108 | |||
| Total investment income |
11,241,186 | |||
| Expenses: |
||||
| Advisory fees |
3,028,741 | |||
| Administrative services fees |
121,412 | |||
| Custodian fees |
1,333 | |||
| Distribution fees: |
||||
| Class A |
895,612 | |||
| Class B |
77,087 | |||
| Class C |
466,432 | |||
| Class R |
47,986 | |||
| Transfer agent fees — A, B, C, R and Y |
1,413,211 | |||
| Transfer agent fees — R5 |
447 | |||
| Trustees’ and officers’ fees and benefits |
32,549 | |||
| Other |
65,757 | |||
| Total expenses |
6,150,567 | |||
| Less: Fees waived and expense offset arrangement(s) |
(35,684 | ) | ||
| Net expenses |
6,114,883 | |||
| Net investment income |
5,126,303 | |||
| Realized and unrealized gain (loss) from: |
||||
| Net realized gain (loss) from: |
||||
| Investment securities |
51,615,711 | |||
| Foreign currencies |
(8,607 | ) | ||
| 51,607,104 | ||||
| Change in net unrealized appreciation (depreciation) of: |
||||
| Investment securities |
(25,616,095 | ) | ||
| Foreign currencies |
6,749 | |||
| (25,609,346 | ) | |||
| Net realized and unrealized gain |
25,997,758 | |||
| Net increase in net assets resulting from operations |
$ | 31,124,061 | ||
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Value Opportunities Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2012 and the year ended April 30, 2012
(Unaudited)
| October 31, 2012 |
April 30, 2012 |
|||||||
| Operations: |
||||||||
| Net investment income |
$ | 5,126,303 | $ | 7,688,448 | ||||
| Net realized gain |
51,607,104 | 69,971,545 | ||||||
| Change in net unrealized appreciation (depreciation) |
(25,609,346 | ) | (60,851,233 | ) | ||||
| Net increase in net assets resulting from operations |
31,124,061 | 16,808,760 | ||||||
| Distributions to shareholders from net investment income: |
||||||||
| Class A |
— | (84,669 | ) | |||||
| Class R |
— | (2,153 | ) | |||||
| Class Y |
— | (1,909 | ) | |||||
| Class R5 |
— | (619 | ) | |||||
| Total distributions from net investment income |
— | (89,350 | ) | |||||
| Share transactions–net: |
||||||||
| Class A |
(54,632,995 | ) | 679,828,323 | |||||
| Class B |
(12,322,058 | ) | 60,768,316 | |||||
| Class C |
(7,713,853 | ) | 92,902,757 | |||||
| Class R |
(1,272,867 | ) | 19,115,136 | |||||
| Class Y |
(530,827 | ) | 6,596,330 | |||||
| Class R5 |
(260,914 | ) | 4,344,063 | |||||
| Net increase (decrease) in net assets resulting from share transactions |
(76,733,514 | ) | 863,554,925 | |||||
| Net increase (decrease) in net assets |
(45,609,453 | ) | 880,274,335 | |||||
| Net assets: |
||||||||
| Beginning of period |
944,779,863 | 64,505,528 | ||||||
| End of period (includes undistributed net investment income of $12,300,216 and $7,173,913, respectively) |
$ | 899,170,410 | $ | 944,779,863 | ||||
Notes to Financial Statements
October 31, 2012
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Value Opportunities Fund , formerly Invesco Van Kampen Value Opportunities Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (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 eleven separate portfolios, each authorized to issue an unlimited number of shares of beneficial interest. The assets, liabilities and operations of each portfolio are accounted for separately. Information presented in these financial statements pertains only to the Fund. Matters affecting each portfolio or class will be voted on exclusively by the shareholders of such portfolio or class.
The Fund’s investment objective is to seek capital growth and income.
The Fund currently consists of six different classes of shares: Class A, Class B, Class C, Class R, Class Y and Class R5. On September 24, 2012, Institutional Class shares were renamed Class R5 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 R5 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
9 Invesco Value Opportunities Fund
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, yield, quality, type of issue, coupon rate, maturity, individual trading characteristics and other market data. Debt securities are subject to interest rate and credit risks. In addition, all debt securities involve some risk of default with respect to interest and/or principal payments.
Foreign securities (including foreign exchange contracts) are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and 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 trade is not the current value as of the close of the NYSE. Foreign securities meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and 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 are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
| B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income is recorded on the accrual basis from settlement date. Dividend income (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 Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and Statement of Changes in Net Assets, or the net investment income per share and ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the 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 issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
| D. | Distributions — Distributions from income and net realized capital gain, if any, are generally 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 necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
10 Invesco Value Opportunities 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 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. 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 Trust’s 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 Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
| I. | 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 Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable.
| 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. |
NOTE 2—Advisory 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 Fund’s 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 $1.5 billion |
0 | .62% | ||||
| Next $2.5 billion |
0 | .595% | ||||
| Next $2.5 billion |
0 | .57% | ||||
| Next $2.5 billion |
0 | .545% | ||||
| Over $10 billion |
0 | .52% | ||||
Under the terms of a master sub-advisory agreement 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).
11 Invesco Value Opportunities Fund
Effective July 1, 2012, the Adviser has contractually agreed, through at least June 30, 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 above) of Class A, Class B, Class C, Class R, Class Y and Class R5 shares to 2.00%, 2.75%, 2.75%, 2.25%, 1.75% and 1.75%, respectively, of average daily net assets. Prior to July 1, 2012, 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 and Class R5 shares to 1.41%, 2.16%, 2.16%, 1.66%, 1.16% and 1.16%, respectively, 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 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, 2013. 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, 2013, 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 six months ended October 31, 2012, the Adviser waived advisory fees of $31,762.
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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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 six months ended October 31, 2012, 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 six months ended October 31, 2012, IDI advised the Fund that IDI retained $20,435 in front-end sales commissions from the sale of Class A shares and $5, $27,222 and $1,494 from Class A, Class B and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended October 31, 2012, the Fund incurred $292 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 3—Additional 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 investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, 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 Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2012. 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 |
$ | 883,685,238 | $ | 18,703,629 | $ | — | $ | 902,388,867 | ||||||||
12 Invesco Value Opportunities Fund
NOTE 4—Expense 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 six months ended October 31, 2012, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,922.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
“Trustees’ and Officers’ Fees and Benefits” include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and “Trustees’ and Officers’ Fees and Benefits” also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various 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 6—Cash 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 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
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 (the “Act”) 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 had a capital loss carryforward as of April 30, 2012, which expires as follows:
| Capital Loss Carryforward* | ||||||||||||
| Expiration | Short-Term | Long-Term | Total | |||||||||
| April 30, 2016 |
$ | 65,537,319 | $ | — | $ | 65,537,319 | ||||||
| April 30, 2017 |
264,868,797 | — | 264,868,797 | |||||||||
| Total capital loss carryforward |
$ | 330,406,116 | $ | — | $ | 330,406,116 | ||||||
| * | 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 Basic 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. |
NOTE 8—Investment Securities
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended October 31, 2012 was $54,969,645 and $164,166,730, 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 |
$ | 187,617,661 | ||
| Aggregate unrealized (depreciation) of investment securities |
(77,443,618 | ) | ||
| Net unrealized appreciation of investment securities |
$ | 110,174,043 | ||
Cost of investments for tax purposes is $792,214,824.
13 Invesco Value Opportunities Fund
NOTE 9—Share Information
| Summary of Share Activity | ||||||||||||||||
| Six months ended October 31, 2012(a) |
Year ended April 30, 2012 |
|||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Sold: |
||||||||||||||||
| Class A |
1,307,068 | $ | 13,383,591 | 3,674,506 | $ | 33,685,777 | ||||||||||
| Class B |
65,781 | 655,954 | 111,008 | 1,446,227 | ||||||||||||
| Class C |
199,954 | 1,980,514 | 376,239 | 3,924,269 | ||||||||||||
| Class R(b) |
127,792 | 1,304,305 | 376,401 | 3,556,925 | ||||||||||||
| Class Y |
84,908 | 877,560 | 221,708 | 2,035,298 | ||||||||||||
| Class R5(b) |
6,797 | 72,358 | 181,444 | 1,576,092 | ||||||||||||
| Issued as reinvestment of dividends: |
||||||||||||||||
| Class A |
— | — | 8,826 | 80,215 | ||||||||||||
| Class R |
— | — | 237 | 2,153 | ||||||||||||
| Class Y |
— | — | 196 | 1,775 | ||||||||||||
| Class R5 |
— | — | 68 | 619 | ||||||||||||
| Issued in connection with acquisitions:(c) |
||||||||||||||||
| Class A |
— | — | 81,789,030 | 808,828,507 | ||||||||||||
| Class B |
— | — | 10,498,963 | 102,352,547 | ||||||||||||
| Class C |
— | — | 11,653,261 | 113,178,199 | ||||||||||||
| Class R |
— | — | 2,088,804 | 20,662,849 | ||||||||||||
| Class Y |
— | — | 1,124,328 | 11,072,165 | ||||||||||||
| Class R5 |
— | — | 915,801 | 9,022,329 | ||||||||||||
| Automatic conversion of Class B shares to Class A shares: |
||||||||||||||||
| Class A |
790,402 | 8,021,830 | 2,745,919 | 25,936,805 | ||||||||||||
| Class B |
(801,402 | ) | (8,021,830 | ) | (2,786,360 | ) | (25,936,805 | ) | ||||||||
| Reacquired: |
||||||||||||||||
| Class A |
(7,446,867 | ) | (76,038,416 | ) | (20,243,628 | ) | (188,702,981 | ) | ||||||||
| Class B |
(493,947 | ) | (4,956,182 | ) | (1,862,334 | ) | (17,093,653 | ) | ||||||||
| Class C |
(985,732 | ) | (9,694,367 | ) | (2,639,413 | ) | (24,199,711 | ) | ||||||||
| Class R |
(252,117 | ) | (2,577,172 | ) | (546,966 | ) | (5,106,791 | ) | ||||||||
| Class Y |
(137,797 | ) | (1,408,387 | ) | (704,227 | ) | (6,512,908 | ) | ||||||||
| Class R5 |
(33,815 | ) | (333,272 | ) | (703,479 | ) | (6,254,977 | ) | ||||||||
| Net increase (decrease) in share activity |
(7,568,975 | ) | $ | (76,733,514 | ) | 86,280,332 | $ | 863,554,925 | ||||||||
| (a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 29% of the outstanding shares of the Fund. 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 May 23, 2011. |
| (c) | As of the opening of business on May 23, 2011, the Fund acquired all the net assets of Invesco Basic Value Fund (the “Target Fund”) pursuant to a plan of reorganization approved by the Trustees of the Fund on November 10, 2011 and by the shareholders of the Target Fund on April 14, 2011. The acquisition was accomplished by a tax free exchange of 108,070,187 shares of the Fund for 49,783,080 shares outstanding of the Target Fund as of the close of business on May 20, 2011. Each class of the Target Fund was 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 as of the close of business on May 20, 2011. The Target Fund’s net assets at that date of $1,065,116,596, including $204,658,708 of unrealized appreciation, were combined with those of the Fund. The net assets of the Fund immediately before the acquisition were $62,948,257. The net assets of the Fund subsequent to the acquisition were $1,128,064,853. |
| The pro forma results of operations for the year ended April 30, 2012 assuming the reorganization had been completed on May 1, 2011, the beginning of the annual reporting period, are as follows: |
| Net investment income |
$ | 9,031,132 | |||
| Net realized/unrealized gains (losses) |
(24,797,985 | ) | |||
| Change in net assets resulting from operations |
$ | (15,766,853 | ) |
| 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 Fund’s Statement of Operations since May 23, 2011. |
14 Invesco Value Opportunities Fund
NOTE 10—Financial 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 (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 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
$ | 10.24 | $ | 0.06 | $ | 0.31 | $ | 0.37 | $ | — | $ | — | $ | — | $ | 10.61 | 3.61 | %(c) | $ | 710,787 | 1.27 | %(d) | 1.28 | %(d) | 1.20 | %(d) | 6 | % | ||||||||||||||||||||||||||||
| Year ended 04/30/12 |
10.18 | 0.09 | (0.03 | ) | 0.06 | (0.00 | ) | — | (0.00 | ) | 10.24 | 0.60 | (c) | 740,384 | 1.40 | 1.40 | 0.92 | 46 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
9.98 | (0.00 | ) | 0.20 | 0.20 | — | — | — | 10.18 | 2.00 | (c) | 44,328 | 1.40 | (e) | 1.98 | (e) | (0.51 | )(e) | 2 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
8.95 | 0.06 | 1.06 | 1.12 | (0.09 | ) | — | (0.09 | ) | 9.98 | 12.61 | (c) | 43,855 | 1.42 | 1.47 | 0.68 | 80 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.84 | 0.06 | 3.12 | 3.18 | (0.07 | ) | — | (0.07 | ) | 8.95 | 54.55 | (f) | 53,983 | 1.44 | 1.44 | 0.72 | 13 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
9.77 | 0.09 | (3.94 | ) | (3.85 | ) | (0.08 | ) | — | (0.08 | ) | 5.84 | (39.47 | )(f) | 43,175 | 1.41 | 1.41 | 1.11 | 34 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
13.11 | 0.09 | (2.29 | ) | (2.20 | ) | (0.07 | ) | (1.07 | ) | (1.14 | ) | 9.77 | (18.06 | )(f) | 112,133 | 1.28 | 1.28 | 0.69 | 54 | ||||||||||||||||||||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
10.09 | 0.06 | 0.31 | 0.37 | — | — | — | 10.46 | 3.67 | (c)(g) | 57,157 | 1.27 | (d)(g) | 1.28 | (d)(g) | 1.20 | (d)(g) | 6 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
10.04 | 0.09 | (0.04 | ) | 0.05 | — | — | — | 10.09 | 0.50 | (c)(g) | 67,547 | 1.38 | (g) | 1.38 | (g) | 0.94 | (g) | 46 | |||||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
9.84 | (0.00 | ) | 0.20 | 0.20 | — | — | — | 10.04 | 2.03 | (c)(g) | 7,331 | 1.46 | (e)(g) | 2.04 | (e)(g) | (0.57 | )(e)(g) | 2 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
8.79 | 0.01 | 1.04 | 1.05 | — | — | — | 9.84 | 11.95 | (c)(g) | 7,392 | 1.99 | (g) | 2.04 | (g) | 0.11 | (g) | 80 | ||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.73 | — | 3.06 | 3.06 | — | — | — | 8.79 | 53.40 | (f) | 8,629 | 2.19 | 2.19 | (0.03 | ) | 13 | ||||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
9.54 | 0.03 | (3.84 | ) | (3.81 | ) | — | — | — | 5.73 | (39.94 | )(f) | 9,097 | 2.17 | 2.17 | 0.34 | 34 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
12.85 | (0.01 | ) | (2.23 | ) | (2.24 | ) | — | (1.07 | ) | (1.07 | ) | 9.54 | (18.70 | )(f) | 24,583 | 2.04 | 2.04 | (0.05 | ) | 54 | |||||||||||||||||||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
9.99 | 0.02 | 0.31 | 0.33 | — | — | — | 10.32 | 3.30 | (c)(g) | 97,039 | 1.97 | (d)(g) | 1.98 | (d)(g) | 0.50 | (d)(g) | 6 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
10.00 | 0.02 | (0.03 | ) | (0.01 | ) | — | — | — | 9.99 | (0.10 | )(c)(g) | 101,785 | 2.11 | (g) | 2.11 | (g) | 0.21 | (g) | 46 | ||||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
9.80 | (0.01 | ) | 0.21 | 0.20 | — | — | — | 10.00 | 2.04 | (c)(g) | 8,021 | 2.07 | (e)(g) | 2.65 | (e)(g) | (1.18 | )(e)(g) | 2 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
8.77 | 0.01 | 1.03 | 1.04 | (0.01 | ) | — | (0.01 | ) | 9.80 | 11.81 | (c)(g) | 8,033 | 2.06 | (g) | 2.11 | (g) | 0.04 | (g) | 80 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.73 | 0.00 | 3.06 | 3.06 | (0.02 | ) | — | (0.02 | ) | 8.77 | 53.42 | (f)(g) | 9,337 | 2.18 | (g) | 2.18 | (g) | (0.02 | )(g) | 13 | ||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
9.55 | 0.03 | (3.84 | ) | (3.81 | ) | (0.01 | ) | — | (0.01 | ) | 5.73 | (39.90 | )(f)(g) | 7,791 | 2.10 | (g) | 2.10 | (g) | 0.43 | (g) | 34 | ||||||||||||||||||||||||||||||||||
| Year ended 03/31/08 |
12.86 | 0.00 | (2.24 | ) | (2.24 | ) | — | (1.07 | ) | (1.07 | ) | 9.55 | (18.69 | )(f)(g) | 19,118 | 2.03 | (g) | 2.03 | (g) | (0.04 | )(g) | 54 | ||||||||||||||||||||||||||||||||||
| Class R |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
10.22 | 0.05 | 0.31 | 0.36 | — | — | — | 10.58 | 3.52 | (c) | 18,978 | 1.52 | (d) | 1.53 | (d) | 0.95 | (d) | 6 | ||||||||||||||||||||||||||||||||||||||
| Period ended 04/30/12(h) |
9.89 | 0.07 | 0.26 | 0.33 | (0.00 | ) | — | (0.00 | ) | 10.22 | 3.35 | (c) | 19,599 | 1.65 | (e) | 1.65 | (e) | 0.67 | (e) | 46 | ||||||||||||||||||||||||||||||||||||
| Class Y(i) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
10.22 | 0.07 | 0.32 | 0.39 | — | — | — | 10.61 | 3.82 | (c) | 11,297 | 1.02 | (d) | 1.03 | (d) | 1.45 | (d) | 6 | ||||||||||||||||||||||||||||||||||||||
| Year ended 04/30/12 |
10.14 | 0.11 | (0.03 | ) | 0.08 | (0.00 | ) | — | (0.00 | ) | 10.22 | 0.80 | (c) | 11,424 | 1.15 | 1.15 | 1.17 | 46 | ||||||||||||||||||||||||||||||||||||||
| One month ended 04/30/11 |
9.93 | (0.00 | ) | 0.21 | 0.21 | — | — | — | 10.14 | 2.11 | (c) | 4,826 | 1.15 | (e) | 1.73 | (e) | (0.26 | )(e) | 2 | |||||||||||||||||||||||||||||||||||||
| Year ended 03/31/11 |
8.94 | 0.08 | 1.05 | 1.13 | (0.14 | ) | — | (0.14 | ) | 9.93 | 12.75 | (c) | 4,757 | 1.17 | 1.22 | 0.93 | 80 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/10 |
5.83 | 0.07 | 3.13 | 3.20 | (0.09 | ) | — | (0.09 | ) | 8.94 | 54.98 | (f) | 50,475 | 1.19 | 1.19 | 0.96 | 13 | |||||||||||||||||||||||||||||||||||||||
| Year ended 03/31/09 |
9.77 | 0.11 | (3.94 | ) | (3.83 | ) | (0.11 | ) | — | (0.11 | ) | 5.83 | (39.30 | )(f) | 35,805 | 1.17 | 1.17 | 1.41 | 34 | |||||||||||||||||||||||||||||||||||||
| Period ended 03/31/08 |
13.13 | 0.11 | (2.28 | ) | (2.17 | ) | (0.12 | ) | (1.07 | ) | (1.19 | ) | 9.77 | (17.91 | )(f) | 50,817 | 1.07 | (j) | 1.07 | (j) | 1.03 | 54 | ||||||||||||||||||||||||||||||||||
| Class R5 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Six months ended 10/31/12 |
10.26 | 0.09 | 0.31 | 0.40 | — | — | — | 10.66 | 3.90 | (c) | 3,912 | 0.73 | (d) | 0.74 | (d) | 1.74 | (d) | 6 | ||||||||||||||||||||||||||||||||||||||
| Period ended 04/30/12(h) |
9.85 | 0.14 | 0.27 | 0.41 | (0.00 | ) | — | (0.00 | ) | 10.26 | 4.18 | (c) | 4,040 | 0.81 | (e) | 0.81 | (e) | 1.51 | (e) | 46 | ||||||||||||||||||||||||||||||||||||
| (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 period ending April 30, 2012, the portfolio turnover calculation excludes the value of securities purchased of $846,280,438 and sold of $257,706,685 in the effort to realign the Fund’s portfolio holdings after the reorganization of Invesco Basic 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 annualized and based on average daily net assets (000’s omitted) of $710,649, $61,167, $96,730, $19,038, $11,075 and $3,760 for Class A, Class B, Class C, Class R, Class Y and Class R5 shares, respectively. |
| (e) | Annualized. |
| (f) | Assumes reinvestment of all distributions for the period for all classes. Does not include payment of the maximum sales charge of 5.75% or contingent deferred sales charge (“CDSC”) on Class A shares, maximum CDSC of 5% on Class B shares or maximum CDSC of 1% on Class C shares. On purchases of $1 million or more, a CDSC of 1% may be imposed on certain redemptions of Class A shares 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% on Class A shares and up to 1% on Class B and Class C shares. Does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares for either class. |
| (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 0.25% for Class B shares and 0.96% for Class C shares for the six months ended October 31, 2012, 0.23% for Class B shares and 0.96% for Class C shares for the year ended April 30, 2012, 0.31% for Class B shares and 0.92% for Class C shares for the period April 1, 2011 to April 30, 2011 and 0.82% for Class B shares and 0.89% for Class C shares for the year ended March 31, 2011 and less than 1% for Class C shares for the years ended March 31, 2010, 2009 and 2008. |
| (h) | Commencement date of May 23, 2011. |
| (i) | On June 1, 2010, the Fund’s former Class I shares were reorganized into Class Y shares. |
| (j) | The Ratio of Expenses to Average Net Assets does not reflect credits earned on cash balances. If these credits were reflected as a reduction of expenses, the ratio would decrease by 0.01% for the year ended March 31, 2008. |
15 Invesco Value Opportunities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, and redemption fees, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2012 through October 31, 2012.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions, and redemption fees, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| Class |
Beginning Account Value (05/01/12) |
ACTUAL | HYPOTHETICAL (5% annual return before expenses) |
Annualized Expense Ratio |
||||||||||||||||||||
| Ending Account Value (10/31/12)1 |
Expenses Paid During Period2 |
Ending Account Value (10/31/12) |
Expenses Paid During Period2 |
|||||||||||||||||||||
|
A |
$ | 1,000.00 | $ | 1,036.10 | $ | 6.52 | $ | 1,018.80 | $ | 6.46 | 1.27 | % | ||||||||||||
| B |
1,000.00 | 1,036.70 | 6.52 | 1,018.80 | 6.46 | 1.27 | ||||||||||||||||||
| C |
1,000.00 | 1,033.00 | 10.09 | 1,015.27 | 10.01 | 1.97 | ||||||||||||||||||
| R |
1,000.00 | 1,035.20 | 7.80 | 1,017.54 | 7.73 | 1.52 | ||||||||||||||||||
| Y |
1,000.00 | 1,038.20 | 5.24 | 1,020.06 | 5.19 | 1.02 | ||||||||||||||||||
| R5 |
1,000.00 | 1,039.00 | 3.75 | 1,021.53 | 3.72 | 0.73 | ||||||||||||||||||
| 1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2012 through October 31, 2012, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
| 2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/365 to reflect the most recent fiscal half year. |
16 Invesco Value Opportunities Fund
Approval of Investment Advisory and Sub-Advisory Contracts
17 Invesco Value Opportunities Fund
18 Invesco Value Opportunities 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 Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 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 12 months ended June 30, 2012, 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: 811-03826 and 002-85905 |
VK-VOPP-SAR-1 | Invesco Distributors, Inc. |
| ITEM 2. | CODE OF ETHICS. |
| There were no amendments to the Code of Ethics (the “Code”) that applies to the Registrant’s Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”) during the period covered by the report. The Registrant did not grant any waivers, including implicit waivers, from any provisions of the Code to the PEO or PFO during the period covered by this report. |
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
| Not applicable. |
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
| Not applicable. |
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
| Not applicable. |
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
| Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form. |
| ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
| Not applicable. |
| ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
| Not applicable. |
| ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
| Not applicable. |
| ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
| None. |
| ITEM 11. | CONTROLS AND PROCEDURES. |
| (a) |
As of November 19, 2012 an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of November 19, 2012, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is |
| recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. | ||
| (b) |
There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. | |
| ITEM 12. | EXHIBITS. |
| 12(a) (1) |
Not applicable. | |
| 12(a) (2) |
Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
| 12(a) (3) |
Not applicable. | |
| 12(b) |
Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Registrant: AIM Sector Funds (Invesco Sector Funds) | ||
| By: | /s/ Philip A. Taylor | |
| Philip A. Taylor Principal Executive Officer | ||
Date: January 7, 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: January 7, 2013
| By: | /s/ Sheri Morris | |
| Sheri Morris Principal Financial Officer |
Date: January 7, 2013
EXHIBIT INDEX
| 12(a) (1) | Not applicable. | |
| 12(a) (2) | Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. | |
| 12(a) (3) | Not applicable. | |
| 12(b) | Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. | |