Invesco Van Kampen Equity and Income Fund Investor ...
Investor Guide 2010 Edition
Invesco Van Kampen Equity and Income Fund (ACEIX) The All-Weather Portfolio Fund Highlights • Long-term results • Companies with potential for positive change • Comprehensive diversification
NOT FDIC INSURED
OFFER NO BANK GUARANTEE
MAY LOSE VALUE
What is all-weather investing? Table of contents INVESTING SENSE
Invest with intention, not emotion
1
Stocks, bonds and inflation
2
Stocks, bonds or both?
3
INVESTMENT SPECIFICS
A look inside Invesco Van Kampen Equity and Income Fund
4
An investment story
6
How Invesco Van Kampen Equity and Income Fund has delivered
9
INVESTOR STRATEGIES
Three different strategies, three different outcomes
10
The worst time to retire?
12
Building a future: The power of monthly investing
14
Invesco Van Kampen Equity and Income Fund: Your all-weather investment
15
Just as the weather can change quickly, so can the markets and the economy. In either case, it’s impossible for anyone to accurately predict what the future holds. That’s where an all-weather portfolio comes in. Invesco Van Kampen Equity and Income Fund seeks to provide investors with a level of stability as well as an opportunity for growth. Comprised of both stocks and bonds, this broadly diversified fund has the potential to perform well in any season. • Stocks for sunny seasons—Through investments in stocks, the fund may
participate in the growth potential of the market. • Bonds for chilly times—Through investments in bonds, the fund has the
potential to earn income from securities that have historically been more stable than stocks. That’s potential for growth with a measure of stability—a combination investors can feel good about in any market environment.
Risk considerations Market risk. The prices of securities held by the fund may decline in response to market risks. Income risk. The ability of the fund’s equity securities to generate income generally depends on the earnings and the continuing declaration of dividends by the issuers of such securities. The interest income on debt securities generally is affected by prevailing interest rates, which can vary widely over the short and long term. If dividends are reduced or discontinued or interest rates drop, distributions to shareholders from the fund may drop as well. Call risk. If interest rates fall, it is possible that issuers of callable securities held by the fund will call or prepay their securities before their maturity dates. In this event, the proceeds from the called securities would most likely be reinvested by the fund in securities bearing the new, lower interest rates, resulting in a possible decline in the fund’s income and distributions to shareholders and termination of any conversion option on convertible securities. Credit risk. Credit risk is the risk of loss on an investment due to the deterioration of an issuer’s financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer’s securities and may lead to the issuer’s inability to honor its contractual obligations, including making timely payment of interest and principal. Foreign risk. The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in securities regulation and trading, and foreign taxation issues. REIT risk. REITs are susceptible to risk associated with the ownership of real estate and the real estate industry in general. In addition, REITs depend on specialized management skills, may not be diversified, may have less trading volume and may be subject to more abrupt or erratic price movements than the overall securities market. Investments in REITs may involve duplication of management fees and certain other expenses. Value investing. The fund emphasizes a value style of investing, which focuses on undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” equity securities are less than returns on other styles of investing or the overall stock market. Value stocks also may decline in price, even though in theory they are already underpriced. Derivatives risk. The fund may use enhanced investment techniques such as derivatives. The principal risk of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Derivatives are subject to counterparty risk—the risk that the other party will not complete the transaction with the fund. If used after July 20, 2010, this brochure must be accompanied by a current Invesco Van Kampen Equity and Income Fund Strategy Spotlight quarterly update.
INVESTING SENSE
Invest with intention, not emotion It’s natural to want to chase the highest returns. And some investors do: jumping in when the market is good and bailing out when the market turns. But, as shown by the example below, that strategy can wreak havoc on returns. Historically, investors led by emotion have significantly lagged the market DALBAR’s 2010 Quantitative Analysis of Investor Behavior shows that the average equity investor acts emotionally, making irrational decisions that can negatively affect investment performance. In fact, the study shows that investors who let their emotions get the best of them generally find themselves with a portfolio that barely outpaces inflation over the long term. However, by suppressing any emotional urges and adhering to a disciplined investment strategy, investors are more likely to achieve their goals.
INVESTORS VS. INFLATION AND THE S&P 500 INDEX 20-year average annual total returns (as of 12/31/09)
Three investing mistakes: • Chasing last year’s winners
10%
• Not diversifying adequately 8.2%
• Trying to time the market
8
Three solid moves: • Investing based on long-term performance • Ignoring short-term market movements
6
• Relying on a professionally managed fund 4
3.2% 2.8% 2
0 Average Equity Investor
Inflation
Buy Hold (SP 500 Index)
Past performance is no guarantee of future results. Source: Dalbar, Inc. 2010 Quantitative Analysis of Investor Behavior (QAIB). QAIB calculates investor returns as the change in assets after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs, annualized over the period. The S&P 500 Index is an unmanaged index of 500 common stocks generally representative of the U.S. stock market. Inflation is measured by the Consumer Price Index. invesco.com
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INVESTING SENSE
Stocks, bonds and inflation To see inflation at work, take a look at the illustration below. It shows how the price of a stamp has increased over the years. In fact, inflation relentlessly erodes the value of a dollar over time. That means the money you save today may not be enough to purchase what you’ll need tomorrow.
5¢
10¢
1965
20¢
1975
32¢
1985
44¢
1995
2009
Luckily, there are investments that have far outpaced inflation—helping investors preserve the value of their assets. This is reflected in the chart below. PERFORMANCE OF A $10,000 INVESTMENT 12/31/89-12/31/09
Over the long term, stocks and bonds have each outpaced inflation. However, the strategic combination of both, as offered in Invesco Van Kampen Equity and Income Fund, has delivered performance that compares favorably with stock returns—with considerably less volatility. ■ Stocks = S&P 500 Index ■ Invesco Van Kampen Equity and Income Fund ■ Bonds = Barclays Capital Aggregate Bond Index ■ U.S. Treasuries = U.S. 3-Month Treasury Bills
$100,000
Invesco Van Kampen Equity and Income Fund $63,680
$75,000
Stocks $48,365
$50,000
Bonds $38,780
U.S. Treasuries $21,207 Cash (adjusted for inflation) $17,125
$25,000
$10,000
0 ‘90
’91
‘92
‘93
‘94
‘95
’96
‘97
’98
‘99
’00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
■ Cash = Consumer Price Index Past performance is no guarantee of future results. Performance shown for Invesco Van Kampen Equity and Income Fund is for Class A shares and does not include payment of the maximum sales charge of 5.75%; if it did, the results would have been lower. Important note: On the surface, conservative savings vehicles such as Treasury Bills and certificates of deposit (CDs) may appear attractive because they fluctuate less. But you need to balance these considerations with a realistic evaluation of how you want your investments to grow. CDs offer a guaranteed return of principal over a stated period of time and a fixed rate of interest. They are typically issued by institutions whose deposits are insured. The income and principal payments of U.S. government bonds are backed by the full faith and credit of the U.S. government if held to maturity. Mutual fund shares may be more volatile than other investments. They are not insured, and the value of shares, when redeemed, may be more or less than what you originally paid for them. Accordingly, it is possible to lose money in a mutual fund investment. Source: Lipper, Inc. While stocks typically entail greater risk and experience more fluctuations, they have historically outpaced bonds and cash over longer periods. 2
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Stocks, bonds or both? While stocks may provide growth, they can also be volatile. While bonds can provide a measure of stability from volatility, they have lacked the growth potential of stocks. But together they can be a powerful combination. In fact, owning both types of investments in a portfolio may provide the diversification, risk management and, ultimately, the performance that long-term investors seek.
STOCKS (S&P 500 INDEX)
Year-end
Initial investment: $10,000 on December 31, 1989
Investment value ($)
1990 9,689 1991 12,635 1992 13,596 1993 14,963 1994 15,160 1995 20,850 1996 25,634 1997 34,183 1998 43,959 1999 53,205 2000 48,362 2001 42,619 2002 33,203 2003 42,722 2004 47,367 2005 49,692 2006 57,534 2007 60,692 2008 38,242 2009 48,365 Average annual return over 20-year period
BONDS (BARCLAYS CAPITAL AGGREGATE BOND INDEX)
INVESCO VAN KAMPEN EQUITY AND INCOME FUND
Annual total return (%)
Investment value ($)
Annual total return (%)
Investment value ($)
Annual total return (%)
-3.11 30.40 7.61 10.06 1.31 37.53 22.95 33.35 28.60 21.03 -9.10 -11.88 -22.09 28.67 10.87 4.91 15.78 5.49 -36.99 26.47
10,896 12,640 13,575 14,899 14,464 17,136 17,759 19,473 21,165 20,991 23,431 25,410 28,015 29,165 30,431 31,170 32,520 34,786 36,609 38,780
8.96 16.00 7.40 9.75 -2.92 18.47 3.63 9.65 8.69 -0.82 11.63 8.44 10.25 4.10 4.34 2.43 4.33 6.97 5.24 5.93
9,533 12,076 13,371 15,511 15,203 20,159 23,294 28,915 33,828 37,194 44,704 43,709 40,073 48,953 54,715 58,991 66,383 68,549 51,559 63,680
-4.67 26.67 10.72 16.00 -1.98 32.60 15.55 24.13 16.99 9.95 20.19 -2.23 -8.32 22.16 11.77 7.81 12.53 3.26 -24.78 23.51
8.20%
7.01%
9.70%
Diversification does not guarantee a profit or eliminate the risk of loss. Past performance is no guarantee of future results. Source for graph and table: Lipper Inc. Indexes are unmanaged and do not include sales charges or fees that would be paid by an investor purchasing the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index. S&P 500 Index is a market-weighted index of 500 widely held common stocks of companies chosen for market size, liquidity and industry group representation. Performance shown reflects the reinvestment of distributions. Barclays Capital Aggregate Bond Index comprises 6,000 bonds, including U.S. government, mortgage-backed, corporate and Yankee bonds; performance shown reflects the reinvestment of distributions. Three-Month Treasury Bills are government-backed short-term securities that mature three months from their issue date. This index was used to represent U.S. Treasuries in the example. The Consumer Price Index is an index representing the rate of inflation of U.S. consumer prices as determined by the U.S. Bureau of Labor Statistics. This index was used to represent cash (adjusted for inflation) in the example shown. The indexes and their returns are not representative of any Invesco fund. invesco.com
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3
INVESTMENT SPECIFICS
A look inside Invesco Van Kampen Equity and Income Fund Invesco Van Kampen Equity and Income Fund offers you an all-seasons approach to investing by combining large-company value stocks, investment-grade bonds and convertible securities in one portfolio. The investment team leaves no stone unturned. All individual security selections are based on careful examination of macroand microeconomic factors.
SYMBOLS Class A Shares Class B Shares Class C Shares Class Y Shares Class R Shares
ACEIX ACEQX ACERX ACETX ACESX
Invesco Van Kampen Equity and Income Fund’s stock and bond combination can provide: • Built-in diversification to help beat inflation over time • Professional management focused on generating returns while limiting risk
PORTFOLIO ALLOCATION (as of 3/31/10) MANAGEMENT TEAM Thomas B. Bastian 16 years of financial industry experience Mary Jayne Maly 26 years of financial industry experience Cynthia Brien 27 years of financial industry experience Chuck Bruge 15 years of financial industry experience
U.S. Stocks
55.26% ■
Convertible Bonds
16.73% ■
International Stocks
9.96% ■
James O. Roeder 16 years of financial industry experience
U.S. Treasury Notes
8.07% ■
U.S. Corporate Bonds
5.96% ■
Mark J. Laskin 13 years of financial industry experience
International Bonds
1.81% ■
Sergio Marcheli 15 years of financial industry experience
Portfolio holdings are subject to change daily and without notice. Diversification does not guarantee a profit or eliminate the risk of loss.
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Cash and Equivalents
1.41% ■
Other Bonds
0.78% ■
U.S. Treasury Bills
0.02% ■
A strategy you trust, companies you know Invesco Van Kampen Equity and Income Fund’s diversified strategy may give you the potential for both growth and income in a range of market climates. And, because the fund includes the stocks of wellestablished companies, as well as U.S. government bonds and high-quality corporate bonds, it may serve as the cornerstone of your portfolio. NAMES YOU KNOW: INVESCO VAN KAMPEN EQUITY AND INCOME FUND’S LARGEST STOCK POSITIONS (as of 3/31/10)
BRANDS YOU KNOW: OTHER COMPANIES THAT INVESCO VAN KAMPEN EQUITY AND INCOME FUND OWNS (as of 3/31/10)
Top ten holdings (% of total net assets)2
% of total net assets
$ Portion of $10,000 investment
JPMorgan Chase & Co. General Electric Co. Marsh & McLennan Cos. Inc. Viacom Inc. Bank of America Corp. Anadarko Petroleum Corp. eBay Inc. Occidental Petroleum Corp. Kraft Foods Inc. PNC Financial Services Group Inc.
3.41 2.20 2.07 1.88 1.71 1.59 1.57 1.56 1.41 1.35
341 220 207 188 171 159 157 156 141 135
Viacom Inc. eBay Inc. Kraft Foods, Inc. Bristol-Myers Squibb Co. Time Warner Inc. Sony Corp. Intel Corp. Coca-Cola Co. Gap, Inc. Unilever NV
Brands
% of net assets
$ Portion of $10,000 investment
CBS, MTV, Paramount eBay.com, PayPal, Skype Maxwell House, Nabisco, Oreo Abilify, Orencia, Plavix AOL, HBO, Warner Bros. Bravia, Cyber-shot, Playstation Celeron, Core, Pentium Coke, Dannon, MinuteMaid Banana Republic, Gap, Old Navy Breyer’s, Dove, Skippy, Slim-Fast
1.88 1.57 1.41 1.21 1.21 0.85 0.79 0.50 0.52 0.47
188 157 141 121 121 85 79 50 52 47
These partial lists are meant to serve as a general illustration of investment themes. They are not meant to be a recommendation of the individual stocks. Keep in mind that the portfolio includes many other investments; these lists are a snapshot, as of December 31, 2009. The holdings of the portfolio, which include common, convertible and convertible preferred stocks, are subject to change at any time, without notice.
AVERAGE ANNUAL TOTAL RETURNS (%) (as of 3/31/10) Invesco Van Kampen Equity and Income Fund Class A shares
1-year
3-year
5-year
10-year
25-year
Inception 8/3/60
Without sales charge With max. 5.75% sales charge Beta (relative to the S&P 500 Index)*
41.04 32.97 —
0.30 -1.65 0.69
4.33 3.11 0.68
5.46 4.83 0.61
10.56 10.30 0.68
10.41 10.27 —
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit invesco.com/performance or speak with your financial adviser. Investment returns and principal value will fluctuate, and fund shares, when redeemed, may be worth more or less than their original cost. Performance for other share classes will vary. The gross expense ratio is 0.82 percent for Class A shares. Expenses are as of the fund’s fiscal year end, as outlined in the fund’s current prospectus. If used after July 20, 2010, this brochure must be accompanied by a current Invesco Van Kampen Equity and Income Fund Strategy Spotlight quarterly update. Average annual total return with sales charges includes payment of the maximum sales charge of 5.75 percent for Class A shares, and Rule 12b-1 fees. Figures shown assume reinvestment of all dividends and capital gains. Performance for other share classes will vary. * Beta is provided by Lipper Inc. Beta is a measure of a fund’s sensitivity to market movements. By definition, the beta of the stock market is 1.00. Therefore, a fund with a beta of 1.10 is expected to perform 10 percent better than the market in “up” markets and 10 percent worse in “down” markets. The S&P 500 Index is an unmanaged index of 500 common stocks generally representative of the U.S. stock market. It is not possible to invest directly in an average or index. invesco.com | 5
Growth of a $10,000 investment $2,000,000 AN INVESTMENT STORY
After their summer wedding in 1960, Bob and Karen Green invested $10,000 in Invesco Van Kampen Equity and Income Fund. The Greens remained invested throughout the market’s ups and downs, always reinvesting their dividends. By December 31, 2009, their original investment may have helped to provide a secure retirement for them—as well as a legacy for their family.
1,000,000
100,000
Performance of an assumed $10,000 investment from first full month since inception (8/31/60 to 12/31/09).
1972 The Greens are busy raising their family and pursuing their careers
1964 The Greens purchase their first house
1961 East Germany builds Berlin Wall
1963 President Kennedy assassinated
10,000 8,000 Capital value* Annual dividends in cash ($)** Value at year end ($) Total value Annual dividends reinvested ($)** Value at year end ($) Annual total returns (%) Dow year end***
1968 Bob and Karen’s second child, Jennifer, is born
1960 Bob and Karen Green marry and invest $10,000; the next year, their first child, Matthew, is born
1966 Dow hits high of 1,000 for first time
1968 Martin Luther King, Jr. assassinated 1972 Watergate scandal; Dow closes above 1,000
‘61
‘62
‘63
‘64
‘65
‘66
‘67
‘68
‘69
‘70
‘71
‘72
‘73
522
562
562
495
507
529
528
646
822
1,028
896
878
989
10,803
9,386
10,143
11,081
13,433
11,818
16,367
21,672
16,263
15,834
19,249
18,633
14,814
544 11,608 17.13
617 10,688 -7.93
653 12,203 14.18
606 13,946 14.28
648 17,612 26.29
703 16,152 -8.29
731 23,181 43.52
928 31,748 36.96
1,224 24,935 -21.46
1,616 25,990 4.23
1,498 33,142 27.52
1,538 33,579 1.32
1,823 28,433 -15.32
731
652
763
874
969
786
905
944
800
839
890
1,020
851
These are fictional characters. This is a hypothetical example, but is based on actual fund performance for Class A shares. Performance shown in the mountain chart includes the reinvestment of distributions but does not include sales charges. *Source for capital value numbers: Morningstar Advisor WorkstationSM **Annual dividends in cash represents the dividends paid out at the end of each calendar year on the 2,299 shares acquired from the original $10,000 on 8/31/60. Annual dividends reinvested represents the dividends paid out at the end of each calendar year on the original shares, plus the dividends of additional shares acquired through reinvestment. 6
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1992 Bob and Karen become first-time grandparents 1986 Bob and Karen move to Florida as Jennifer begins college
1991 Gulf War 1979 Matthew Green begins college
1992 Formal end of Cold War 1983 U.S. unemployment rises to 9.7%
1982 Dow closes above 1,000 and never looks back
1975 Vietnam War ends 1979 U.S.S.R. invades Afghanistan
1974 President Nixon resigns
1987 Financial crisis; Dow falls more than 22% on Black Monday
1986 Iran Contra Affair
73
‘74
‘75
‘76
‘77
‘78
‘79
‘80
‘81
‘82
‘83
‘84
‘85
‘86
‘87
‘88
‘89
‘90
‘91
‘92
989
1,082
1,104
1,082
1,148
1,193
1,237
1,369
1,458
1,502
1,511
1,796
1,737
1,783
1,969
2,191
2,220
1,777
1,635
1,482
814
12,279
14,575
17,402
16,872
15,900
16,165
16,651
17,049
22,570
25,951
25,326
27,939
29,542
28,339
29,656
33,720
30,410
36,720
39,076
823 433 .32
2,136 25,567 -10.08
2,367 32,778 28.20
2,495 41,766 27.42
2,825 43,248 3.55
3,139 43,743 1.14
3,499 47,890 9.48
4,189 53,700 12.13
3,044 57,967 7.95
5,116 83,522 44.09
7,992 104,591 25.23%
7,432 109,626 4.81
7,717 129,289 17.94
8,436 145,081 12.21
9,880 147,839 1.90
11,748 166,438 12.58
12,797 10,896 202,621 193,134 21.74 -4.68
10,572 244,649 26.67
10,028 270,877 10.72
51
616
852
1,005
831
805
839
964
875
1,047
1,259
1,212
1,547
1,896
1,939
2,169
3,169
3,301
2,753
2,634
The illustration above is based on an initial investment of $10,000 in Class A shares made on 8/31/60. The illustration and calendar year returns represent those of Class A shares without the imposition of any sales charges. If sales charges were included, returns would be lower. Results are hypothetical. Performance for other share classes will vary. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions. The graph uses a logarithmic scale to more accurately reflect historic volatility. Past performance is no guarantee of future results. Past performance is no guarantee of future results and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit invesco.com/performance or speak with your financial adviser. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. Performance of other share classes will vary.
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The Greens’ average annual total return on this investment 10.35%
Ending value (12/31/09) $1,290,076
1995 The Greens both retire at age 65 2001 In wake of September 11 attacks, U.S. declares war on terrorism
S&P500 500Index Index S&P ending value (12/31/09) ending value (12/31/09) $936,863 $936,863
2009 Dow closes above 10,000 1999 Dow closes above 10,000 for first time
r
2008 Global credit crisis 2007 Dow closes above 14,000 for first time
1997 Asian stock market crisis
2005 Hurricane Katrina hits New Orleans and Gulf Coast
1995 Dow closes above 5,000 for first time
2003 War in Iraq begins
2
‘93
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
82
1,283
1,477
1,518
1,332
1,526
1,788
1,983
2,418
2,684
2,284
2,289
2,494
2,461
2,912
3,303
3,471
2,316
76
43,969
41,639
53,539
60,427
73,389
83,966
90,245
105,881
100,748
90,187
107,625
117,618
124,264
136,713
137,865
100,674
121,589
28 77 72
8,999 314,231 16.00
10,692 307,996 -1.98
11,362 408,389 32.60
10,255 471,902 15.55
12,015 585,773 24.13
14,386 685,309 16.99
16,318 735,507 9.95
20,379 905,653 20.19
23,193 885,495 -2.23
20,246 811,827 -8.32
20,792 21,256 23,372 28,246 32,786 35,322 24,252 991,724 1,108,464 1,195,087 1,344,839 1,388,709 1,044,525 1,290,076 22.16 11.77 7.81 12.53 3.26 -24.78 23.51
01
3,754
3,834
5,117
6,448
7,908
9,181
11,497
10,788
10,022
8,342
10,454
10,783
10,718
12,463
13,265
8,776
10,428
SM
*** The Dow Jones Industrial Average (Dow) includes 30 blue-chip stocks of large companies. The average is unmanaged, and its performance does not include any sales charges or fees that would be paid by an investor purchasing the securities that it represents. Such costs would lower performance. The S&P 500 Index is an unmanaged index of 500 common stocks generally representative of the U.S. stock market. It is not possible to invest directly in an average or index.
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INVESTMENT SPECIFICS
How Invesco Van Kampen Equity and Income Fund has delivered Invesco Van Kampen Equity and Income Fund has a seasoned management team watching over the fund day in, day out. Through all market conditions they adhere to a few time-tested management philosophies. Long-term results Invesco Van Kampen Equity and Income Fund delivered competitive performance through good and bad markets. The fund has outperformed both its benchmark and the market over the 10-year period with less risk. See chart A below. Invesco Van Kampen Equity and Income Fund has delivered top-decile performance within the Morningstar Moderate Allocation category for all of the 10-year rolling periods since March 1990. See chart B below.
0%
6
4
Lower Risk Higher Return
Above Average
Average
0
-2
Highest
25%
2
Lower returns (%)
Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Standard deviation is a measure of risk that represents the degree to which an investment’s performance has varied from its average performance over a particular period. The higher the number, the greater the risk.
B: INVESCO VAN KAMPEN EQUITY AND INCOME FUND VS. MORNINGSTAR MODERATE ALLOCATION CATEGORY (10-year rolling returns)
RETURN RANK
Higher returns (%)
A: COMPETITIVE RISK AND RETURN VS. INDEX AND MARKET (3/00-3/10)
Below Average
75%
0 2 4 6 Lower risk (%)
8
10
12 14 16 18 Higher risk (%)1
Invesco Van Kampen Equity and Income Fund A Russell 1000 Value Index
SP 500 Index
Lowest
100% 3/90 to 3/00
3/94 to 3/04
3/97 to 3/07
3/00 to 3/10
●
Invesco Van Kampen Equity and Income Fund—A Source: StyleADVISOR
Companies with potential for positive change The team uses a classic approach that seeks to convert business change into investment opportunity—be it new company management, new products or favorable industry trends.
Comprehensive diversification Owning both stocks and bonds may help to smooth out the market’s ups and downs. With Invesco Van Kampen Equity and Income Fund you get a broadly diversified portfolio of more than 300 stocks, bonds and convertible bonds. To illustrate the fund’s relative performance consistency, Illustration B shows the fund’s rolling 10-year Morningstar category percentile rank. The lower-numbered percentiles (such as the 5th percentile) represent better performance within the category, while higher-numbered percentiles (such as the 95th percentile) represent poorer performance. Past performance is no guarantee of future results. Percentile ranks based on returns calculated at NAV and do not include sales charges. If sales charges were included, performance would be lower and rank may be lower. In the Moderate Allocation category, Class A shares of the fund ranked 292 out of 1,175 funds for the 1-year, 250 out of 955 funds for the 3-year, 166 out of 777 funds for the 5-year and 26 out of 445 funds for the 10-year periods that ended March 31, 2010. Diversification does not guarantee a profit or eliminate the risk of loss.
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INVESTOR STRATEGIES
Three different strategies, three different outcomes Economic and market downturns make it difficult to invest, or to stay invested. Consider the scenarios of three fictional couples who initially invested through a particularly stormy market—from September 30, 1972, through September 30, 1974. THE SETUP
• The Stevens, the Ryans and the Andrews each invest $10,000 in Invesco Van Kampen Equity and Income Fund on 9/30/72.
THE STRATEGIES
The Stevens decide to sell Phil and Norma Steven take their $6,932 and invest it in a fixed account earning an average annual return of 7 percent. The markets go up and down, but their portfolio stays steady. As of December 31, 2009, their nest egg is worth just $75,283.
• The S&P 500 Index falls 38.31 percent by 9/30/74. • Each couple is left with $6,932. • As a result, each couple chooses a different investment strategy.
The Ryans stay put William and Jenny Ryan remain invested, but don’t add anything to their portfolio valued at $6,932. Thanks to this stay-put approach, the Ryans’ investment grows to $373,305 by December 31, 2009.
The Andrews keep investing Robert and Barb Andrew stay the course. They remain invested and go a step further. Working with their advisor, the Andrews set up a systematic investment plan, adding $100 a month to their portfolio value of $6,932, beginning on September 30, 1974. The Andrews’ strategy—invest for the long term through both good and bad times—turns out nicely. On December 31, 2009, their investment has grown to $791,049.
An important note about systematic monthly investments (also known as “dollar-cost averaging”): Keep in mind that a program of regular investments cannot ensure a profit or protect against loss in a declining market. Because such a program involves continuous investments regardless of fluctuating market values, you should consider your financial ability to continue the program through all market cycles. Remember, these are hypothetical characters and examples that reflect periods of unprecedented growth. Such growth may not be repeatable or sustainable. 10 | invesco.com
By using systematic investing, a proven strategy for weathering the market’s ups and downs, the Andrews were able to significantly grow their investment. THE OUTCOME
VALUE ON 12/31/09 $0
$250,000
KEY POINTS $500,000
$750,000
$1,000,000
The Stevens
• Take a long-term approach
Sold themselves short? Strategy: Sell Total investment: $10,000
• Expect market volatility
• Stay focused
$75,283
• Take advantage of market fluctuations with systematic investments
Average annual total return: 5.46%
The Ryans In patience, there is prudence Strategy: Hold
$373,305
Total investment: $10,000 Average annual total return: 10.21%
The Andrews A buying opportunity realized Strategy: Buy
$791,049
Total investment: $52,400 Average annual total return: 10.43%
Past performance is no guarantee of future results. Source: Morningstar Advisor WorkstationSM Performance shown above is for Class A shares and includes payment of the maximum sales charge of 5.75% and Rule 12b-1 fees. S&P 500 Index is a market-weighted index of 500 widely held common stocks of companies chosen for market size, liquidity and industry group representation. It is not possible to invest directly in an index. Figures above assume reinvestment of all dividends and capital gains. Performance for other share classes will vary. invesco.com | 11
INVESTOR STRATEGIES
The worst time to retire? A comfortable and happy retirement is a cornerstone of the American dream. But, for many, retirement is a source of anxiety, especially when the market takes a turn for the worse. The good news is that well-researched and welltimed systematic withdrawal plans can be just as powerful as systematic investment plans. Take a look at another fictional couple and how Invesco Van Kampen Equity and Income Fund made a difference in their lives. Keep in mind that this is a hypothetical scenario, but is based on actual fund performance.
The Shepherds begin retirement On December 31, 1972, Tom and Kerrie Shepherd began their retirement years. Working with their financial advisor, they invested $100,000—a sizable portion of their retirement savings—in Invesco Van Kampen Equity and Income Fund.
Storm clouds? Little did they know, the bear market of 1973-74 was right around the corner. Some might have thought this would have resulted in disaster. But because the Shepherds stayed the course, there’s a far happier ending to their story.
What the Shepherds gained Supplemental income– Tom and Kerrie began making annual withdrawals at year end, starting with $4,500 on December 31, 1973. Each year, they increased the amount of their withdrawal by 3 percent. In other words, they had rising retirement income. By December 31, 2009, Tom and Kerrie had withdrawn $297,784. This additional income helped pay for vacations, hobbies and home improvements. A legacy for heirs– Even after paying a healthy retirement income, the Shepherds’ assets continued to grow significantly. In fact, as of December 31, 2009, the hypothetical portfolio was valued at $1,255,986.
An important note about systematic withdrawal plans: Systematic withdrawal plans can have a significant effect on an investment. Redemptions may reduce or exhaust your account. There are differences in the taxation between withdrawals of principal, distributions and withdrawals of income; you should discuss these differences with your financial advisor and tax advisor. Invesco does not provide tax advice. Remember, these are hypothetical characters and examples that reflect periods of unprecedented growth. Such growth may not be repeatable or sustainable. 12
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THE SHEPHERDS’ RETIREMENT PORTFOLIO Annual amount withdrawn ($) 1972 — 1973 4,500 1974 4,635 1975 4,774 1976 4,917 1977 5,065 1978 5,217 1979 5,373 1980 5,534 1981 5,700 1982 5,871 1983 6,048 1984 6,229 1985 6,416 1986 6,608 1987 6,807 1988 7,011 Increasing 1989 7,221 1990 retirement 7,438 1991 7,661 income 1992 7,891 1993 8,128 1994 8,371 1995 8,622 1996 8,881 1997 9,148 1998 9,422 1999 9,705 2000 9,996 2001 10,296 2002 10,605 2003 10,923 2004 11,250 2005 11,588 2006 11,936 2007 12,294 2008 12,662 2009 13,042 Amount invested: $100,000 Total withdrawn + amount remaining on 12/31/09: $1,553,770 Average annual return as of 12/31/09: 9.77%
Remaining portfolio value ($) 96,250 77,000 64,605 78,052 94,536 92,826 88,671 91,705 97,295 102,584 141,174 166,310 168,086 191,820 208,641 205,801 224,681 266,305 246,399 304,459 329,209 373,772 357,983 466,047 529,647 648,304 749,043 813,879 968,219 936,374 847,868 1,024,829 1,134,215 1,211,262 1,351,106 1,382,887 1,027,483 1,255,986
More than 30 years later—and it’s still a nice retirement portfolio
Source: Morningstar Advisor WorkstationSM The fund offers a reduced sales charge based on specified breakpoints. Performance shown above is for Class A shares and reflects breakpoint pricing with a sales charge of 3.75%, resulting in a net initial investment of $96,250. Performance includes Rule 12b-1 fees. The maximum sales charge for Class A shares is 5.75%. This is a hypothetical example. The illustration assumes reinvestment of all dividends and capital gains. invesco.com
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13
INVESTOR STRATEGIES
Building a future: The power of monthly investing When Laura and David Garrity’s daughter, Ellen, was born in 1991, her happy grandparents gave the couple a gift of $5,000 for Ellen’s future. The Garritys’ financial advisor offered some great advice: • Invest in Invesco Van Kampen Equity and Income Fund • Add $200 to the fund each month • Increase their monthly contributions by 5 percent every year The strategy worked. The chart below shows that the Garritys’ investment experienced ups and downs over the years. But by the time Ellen was ready for college, her parents were able to send her to the private school she had her heart set on.
REAPING THE BENEFITS OF EARLY PLANNING AND REGULAR INVESTING $160,000
Ending value $146,198
Projected college costs for student beginning in 2009* 4-year public 4-year private $65,570 $153,596 $120,000
$80,000
$40,000
Initial investment $5,000 0 12/91
‘92
‘94
‘96
‘98
‘00
‘02
‘04
‘06
‘08
12/09
Past performance is no guarantee of future results. Source for fund data: Morningstar Advisor Workstation.SM Performance shown above is for Class A shares and includes payment of the maximum sales charge of 5.75% and Rule 12b-1 fees, resulting in a net initial investment of $4,713. Figures above assume reinvestment of all dividends and capital gains. Performance for other share classes will vary. This is a hypothetical example, and reflects periods of unprecedented growth. Such growth may not be repeatable or sustainable. *Estimates for college costs are based on 2009-2010 inflation-adjusted tuition, fees and room and board for a four-year program, as published in The College Board: Trends in College Pricing 2009. Please see page 10, “An important note about systematic monthly investments.” Keep in mind that this is a hypothetical scenario, but is based on actual fund performance. 14
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Invesco Van Kampen Equity and Income Fund: Your all-weather investment We can’t talk about an all-weather investment without showing all-weather results. The chart below offers proof that Invesco Van Kampen Equity and Income Fund’s diversified portfolio has helped it to deliver impressive performance over time—in up and down markets. In fact, the fund has done what it was designed to do: • Provided stock-like returns and outperformed bonds during up markets • Maintained greater stability than stocks during down markets • Outperformed both the stock and bond markets over time
GOOD WEATHER UP YEARS AVERAGE (%) (12/31/89-12/31/09)
• This chart compares the fund’s performance with stocks and bonds over the past 20 years from 12/31/89 to 12/31/09. • During this time, the fund had 15 years of positive performance and 5 years posted negative performance.
BAD WEATHER DOWN YEARS AVERAGE (%) (12/31/89-12/31/09)
ALL WEATHER 20-YEAR AVERAGE (%) (12/31/89-12/31/09)
20%
19.01 15.45 10%
9.70
8.90
8.21
6.53
7.01
0%
-3.96
• The fund’s comprehensive diversification allowed it to deliver, on average, better returns than both the stock and bond markets over the 20-year period.
-10%
-16.64 -20%
• The bonds and convertibles in the fund’s portfolio contributed to relatively less volatility than the stock market.
Ending value of a $10,000 investment (12/31/89-12/31/09) ■ S&P 500 Index: $48,365 ■ Barclays Capital U.S. Aggregate Bond Index: $38,780 ■ Invesco Van Kampen Equity and Income Fund—A: $63,680
Past performance is no guarantee of future results. Diversification does not guarantee a profit or eliminate the risk of loss. The illustration above is based on an initial investment of $10,000 in Class A shares made 12/31/89. The returns represent those of Class A shares without the imposition of any sales charges. If sales charges were included, returns would be lower. S&P 500 Index is a market-weighted index of 500 widely held common stocks of companies chosen for market size, liquidity and industry group representation. Barclays Capital U.S. Aggregate Bond Index comprises 6,000 bonds, including U.S. government, mortgage-backed, corporate and Yankee bonds. It is not possible to invest directly in an index. invesco.com
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Invesco: Your independent partner for today’s marketplace As one of the world’s largest and most diversified independent investment management firms, Invesco has: • • • •
More than 700 investment professionals worldwide as of June 1, 2010 $423.1 billion in assets Investment centers operating in 13 countries Client support in 20 countries serving clients in more than 100 countries
Our specialized investment teams’ distinct perspectives offer diverse investment strategies spanning: • • • • •
Equity (domestic; international/global; regional/country; sector; small, mid and large cap; growth; value; core/blend; structured) Asset allocation (target maturity, target risk, diversified portfolios, balanced) Fixed income (domestic; international/global; taxable; nontaxable; long and short maturity; investment and noninvestment grade) Cash management Alternatives (commodities, natural resources, real estate, private equity)
Our strategies can be delivered in a wide variety of solutions, from mutual funds to collective trusts, index-based and active ETFs to unit investment trusts, separately managed accounts to variable insurance funds and more. Our single focus—money management—means all of our intellectual capital and resources are directed at helping investors achieve their financial objectives. We’re focused on doing one thing well: managing money, because we believe our focus can bring success for investors. Data as of Dec. 31, 2009, unless otherwise noted.
For more information, call your advisor or contact Invesco at 800-959-4246 from 7 a.m. to 6 p.m. Central time on weekdays. You can also visit us at invesco.com. Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisers for a prospectus/summary prospectus or visit invesco.com/fundprospectus. If used after July 20, 2010, this brochure must be accompanied by a current Invesco Van Kampen Equity and Income Fund Strategy Spotlight quarterly update. Past performance is no guarantee of future results. Diversification does not assure a profit or protect against a loss. Foreign securities investments involve risks in addition to those associated with domestic securities, including currency, political, economic and market risks. Investing in small- and mid-size companies involves risks in addition to those associated with large-size companies. REITs are more susceptible to the risks generally associated with investments in real estate. Bonds are subject to interest rate, price and credit risks. Prices tend to be inversely affected by changes in interest rates. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
Invesco Distributors, Inc. VK-EQI-BRO-1 06/10 invesco.com
Invesco Van Kampen Equity and Income Fund Data as of Sept. 30, 2010
50
Strategy Spotlight Invesco Van Kampen Equity and Income Fund vs. Morningstar Moderate Allocation category 10-year rolling return Invesco Van Kampen Equity and Income Fund has delivered top-quartile performance within the Morningstar Moderate Allocation category for all of the 10-year monthly rolling periods as of September 2010.
Source: StyleADVISOR. To illustrate the fund’s relative performance consistency, this chart shows the fund’s rolling 10-year Morningstar Category percentile rank. The lower-numbered percentiles (such as the fifth percentile) represent better performance within the category, while higher-numbered percentiles (such as the 95th percentile) represent poorer performance. Fund counts within the category include pre-inception performance of all secondary classes of shares. Past performance is no guarantee of future results. Ranks based on returns calculated at NAV and do not include sales charges. If sales charges were included, performance would be lower and rank may be lower. In the Moderate Allocation category, Class A shares of the fund ranked 998 out of 1,123 funds for the 1-year, 431 out of 939 funds for the 3-year, 398 out of 755 funds for the 5-year and 59 out of 413 funds for the 10-year periods that ended Sept. 30, 2010.
0%
Highest
RETURN RANK
25%
Above Average
Average
Below Average
75%
Lowest
100% 9/90 to 9/00
9/94 to 9/04
9/97 to 9/07
9/00 to 9/10
Invesco Van Kampen Equity and Income Fund Class A shares Source: StyleADVISOR
Portfolio Diversification in a Single Investment3,4
Higher returns (%)
Competitive Risk and Return vs. Index and Market (9/00-9/10)1,2 6
Lower Risk Higher Return
4
Diversification does not guarantee a profit or eliminate the risk of loss. ©2010 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers. It may not be copied or distributed and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Lower returns (%)
2
0
-2 0
2
4
Lower risk (%)
6
8
10
12
14
16
18
Higher risk (%)1
Invesco Van Kampen Equity and Income Fund A SP 500 Index Russell 1000 Value Index
U.S. stocks Convertible bonds U.S. Corporate bonds International stocks
54.71% 18.01 8.47 8.18
U.S. Government bonds Cash and equivalents International bonds Other bonds
7.67 1.66 1.23 0.07
1 Source: StyleADVISOR as of Sept. 30, 2010. Past performance is no guarantee of future results. Risk shown as percent standard deviation. Returns for Class A shares do not include sales charges. For more information on standard deviation and performance, please see definitions and performance disclosure on the back. 2 Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. S&P 500 Index is generally representative of the U.S. stock market. 3 Portfolio holdings are subject to change daily and without notice. 4 Other bonds include bonds that do not fit into other categories, such as asset backed and municipals.
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisers for a prospectus/ summary prospectus or visit invesco.com/fundprospectus.
Invesco Van Kampen Equity and Income Fund | Balanced | 9/30/2010
Management team
Performance Summary
Thomas B. Bastian 16 years of financial industry experience
Average Annual Total Returns (%) as of 9/30/10 Class A Shares 1-year 5-year 10-year Since inception (8/03/60) 3-year beta1 3-year standard deviation1
Mary Jayne Maly 26 years of financial industry experience James O. Roeder 16 years of financial industry experience Mark J. Laskin 13 years of financial industry experience Sergio Marcheli 15 years of financial industry experience Cynthia Brien 27 years of financial industry experience Chuck Burge 15 years of financial industry experience
Share Class: Symbol A: ACEIX Y: ACETX
B: ACEQX R: ACESX
Number of Holdings
C: ACERX
337
w/o sales w/max 5.50% charges sales charge 6.53 2.47 4.20 10.25 0.67 15.81
0.70 1.32 3.61 10.13 — —
Top 10 Holdings (% of Total Net Assets)2 JPMorgan Chase & Co. General Electric Co Marsh & Mclennan Co Viacom Inc Class B eBay Inc Occidental Petroleum Corp Kraft Foods Inc American Electric Power Co. Bank Of America Corp. Royal Dutch Shell
2.97 2.24 2.11 2.04 1.72 1.49 1.49 1.47 1.36 1.31
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit invesco. com/performance or speak with your financial adviser. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The gross expense ratio is 0.82% for Class A shares. Expenses are as of the fund’s fiscal year end as outlined in the fund’s current prospectus.
Top Industry Holdings (% of Total Net Assets)2,3 Other Diversified Financial Services Pharmaceuticals
6.51 6.02 5.22
Integrated Oil & Gas Industrial Conglomerates
4.48
Movies & Entertainment Electric Utilities Packaged Foods & Meats Biotechnology Regional Banks Investment Banking & Brokerage
3.92 3.17 2.62 2.49 2.48 2.48
Calendar Year Returns (%) Class A Shares4 2000 20.19
2001 -2.23
2002 -8.32
2003 22.16
2004 11.77
2005 7.81
2006 12.53
2007 3.26
2008 -24.78
2009 23.51
1 Beta is vs. the Russell 1000 Value Index. Beta (cash adjusted) is a measure of relative risk and the slope of regression. Standard deviation measures a fund’s range of total returns and identifies the spread of a fund’s short-term fluctuations. 2 Holdings are subject to change and are not buy/sell recommendations. 3 The holdings are organized 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. 4 Returns represent those of Class A shares without the imposition of any sales charges. If sales charges were included, returns would be lower. When applicable, inception year may reflect partial-year returns. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.
About risk Income risk. The ability of the fund’s equity securities to generate income generally depends on the earnings and the continuing declaration of dividends by the issuers of such securities. The interest income on debt securities generally is affected by prevailing interest rates, which can vary widely over the short and long term. If dividends are reduced or discontinued or interest rates drop, distributions to shareholders from the fund may drop as well. Call risk. If interest rates fall, it is possible that issuers of callable securities held by the fund will call or prepay their securities before their maturity dates. In this event, the proceeds from the called securities would most likely be reinvested by the fund in securities bearing the new, lower interest rates, resulting in a possible decline in the fund’s income and distributions to shareholders and termination of any conversion option on convertible securities. Credit risk. Credit risk is the risk of loss on an investment due to the deterioration of an issuer’s financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer’s securities and may lead to the issuer’s inability to honor its contractual obligations, including making timely payment of interest and principal. Foreign risk. The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in securities regulation and trading, and foreign taxation issues. REIT risk. REITs are susceptible to risk associated with the ownership of real estate and the real estate industry in general. In addition, REITs depend on specialized management skills, may not be diversified, may have less trading volume and may be subject to more abrupt or erratic price movements than the overall securities market. Investments in REITs may involve duplication of management fees and certain other expenses. Value investing risk. The fund emphasizes a value style of investing, which focuses on undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” equity securities are less than returns on other styles of investing or the overall stock market. Value stocks also may decline in price, even though in theory they are already underpriced. Derivatives risk. The fund may use enhanced investment techniques such as derivatives. The principal risk of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Derivatives are subject to counterparty risk — the risk that the other party will not complete the transaction with the fund.
invesco.com/us
VK-EQI-FLY-1 10/10
Invesco Distributors, Inc.
Invesco Van Kampen Equity and Income Fund (ACEIX) The All-Weather Portfolio Fund Highlights • Long-term results • Companies with potential for positive change • Comprehensive diversification
NOT FDIC INSURED
OFFER NO BANK GUARANTEE
MAY LOSE VALUE
What is all-weather investing? Table of contents INVESTING SENSE
Invest with intention, not emotion
1
Stocks, bonds and inflation
2
Stocks, bonds or both?
3
INVESTMENT SPECIFICS
A look inside Invesco Van Kampen Equity and Income Fund
4
An investment story
6
How Invesco Van Kampen Equity and Income Fund has delivered
9
INVESTOR STRATEGIES
Three different strategies, three different outcomes
10
The worst time to retire?
12
Building a future: The power of monthly investing
14
Invesco Van Kampen Equity and Income Fund: Your all-weather investment
15
Just as the weather can change quickly, so can the markets and the economy. In either case, it’s impossible for anyone to accurately predict what the future holds. That’s where an all-weather portfolio comes in. Invesco Van Kampen Equity and Income Fund seeks to provide investors with a level of stability as well as an opportunity for growth. Comprised of both stocks and bonds, this broadly diversified fund has the potential to perform well in any season. • Stocks for sunny seasons—Through investments in stocks, the fund may
participate in the growth potential of the market. • Bonds for chilly times—Through investments in bonds, the fund has the
potential to earn income from securities that have historically been more stable than stocks. That’s potential for growth with a measure of stability—a combination investors can feel good about in any market environment.
Risk considerations Market risk. The prices of securities held by the fund may decline in response to market risks. Income risk. The ability of the fund’s equity securities to generate income generally depends on the earnings and the continuing declaration of dividends by the issuers of such securities. The interest income on debt securities generally is affected by prevailing interest rates, which can vary widely over the short and long term. If dividends are reduced or discontinued or interest rates drop, distributions to shareholders from the fund may drop as well. Call risk. If interest rates fall, it is possible that issuers of callable securities held by the fund will call or prepay their securities before their maturity dates. In this event, the proceeds from the called securities would most likely be reinvested by the fund in securities bearing the new, lower interest rates, resulting in a possible decline in the fund’s income and distributions to shareholders and termination of any conversion option on convertible securities. Credit risk. Credit risk is the risk of loss on an investment due to the deterioration of an issuer’s financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer’s securities and may lead to the issuer’s inability to honor its contractual obligations, including making timely payment of interest and principal. Foreign risk. The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in securities regulation and trading, and foreign taxation issues. REIT risk. REITs are susceptible to risk associated with the ownership of real estate and the real estate industry in general. In addition, REITs depend on specialized management skills, may not be diversified, may have less trading volume and may be subject to more abrupt or erratic price movements than the overall securities market. Investments in REITs may involve duplication of management fees and certain other expenses. Value investing. The fund emphasizes a value style of investing, which focuses on undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” equity securities are less than returns on other styles of investing or the overall stock market. Value stocks also may decline in price, even though in theory they are already underpriced. Derivatives risk. The fund may use enhanced investment techniques such as derivatives. The principal risk of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Derivatives are subject to counterparty risk—the risk that the other party will not complete the transaction with the fund. If used after July 20, 2010, this brochure must be accompanied by a current Invesco Van Kampen Equity and Income Fund Strategy Spotlight quarterly update.
INVESTING SENSE
Invest with intention, not emotion It’s natural to want to chase the highest returns. And some investors do: jumping in when the market is good and bailing out when the market turns. But, as shown by the example below, that strategy can wreak havoc on returns. Historically, investors led by emotion have significantly lagged the market DALBAR’s 2010 Quantitative Analysis of Investor Behavior shows that the average equity investor acts emotionally, making irrational decisions that can negatively affect investment performance. In fact, the study shows that investors who let their emotions get the best of them generally find themselves with a portfolio that barely outpaces inflation over the long term. However, by suppressing any emotional urges and adhering to a disciplined investment strategy, investors are more likely to achieve their goals.
INVESTORS VS. INFLATION AND THE S&P 500 INDEX 20-year average annual total returns (as of 12/31/09)
Three investing mistakes: • Chasing last year’s winners
10%
• Not diversifying adequately 8.2%
• Trying to time the market
8
Three solid moves: • Investing based on long-term performance • Ignoring short-term market movements
6
• Relying on a professionally managed fund 4
3.2% 2.8% 2
0 Average Equity Investor
Inflation
Buy Hold (SP 500 Index)
Past performance is no guarantee of future results. Source: Dalbar, Inc. 2010 Quantitative Analysis of Investor Behavior (QAIB). QAIB calculates investor returns as the change in assets after excluding sales, redemptions and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses and any other costs, annualized over the period. The S&P 500 Index is an unmanaged index of 500 common stocks generally representative of the U.S. stock market. Inflation is measured by the Consumer Price Index. invesco.com
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1
INVESTING SENSE
Stocks, bonds and inflation To see inflation at work, take a look at the illustration below. It shows how the price of a stamp has increased over the years. In fact, inflation relentlessly erodes the value of a dollar over time. That means the money you save today may not be enough to purchase what you’ll need tomorrow.
5¢
10¢
1965
20¢
1975
32¢
1985
44¢
1995
2009
Luckily, there are investments that have far outpaced inflation—helping investors preserve the value of their assets. This is reflected in the chart below. PERFORMANCE OF A $10,000 INVESTMENT 12/31/89-12/31/09
Over the long term, stocks and bonds have each outpaced inflation. However, the strategic combination of both, as offered in Invesco Van Kampen Equity and Income Fund, has delivered performance that compares favorably with stock returns—with considerably less volatility. ■ Stocks = S&P 500 Index ■ Invesco Van Kampen Equity and Income Fund ■ Bonds = Barclays Capital Aggregate Bond Index ■ U.S. Treasuries = U.S. 3-Month Treasury Bills
$100,000
Invesco Van Kampen Equity and Income Fund $63,680
$75,000
Stocks $48,365
$50,000
Bonds $38,780
U.S. Treasuries $21,207 Cash (adjusted for inflation) $17,125
$25,000
$10,000
0 ‘90
’91
‘92
‘93
‘94
‘95
’96
‘97
’98
‘99
’00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
■ Cash = Consumer Price Index Past performance is no guarantee of future results. Performance shown for Invesco Van Kampen Equity and Income Fund is for Class A shares and does not include payment of the maximum sales charge of 5.75%; if it did, the results would have been lower. Important note: On the surface, conservative savings vehicles such as Treasury Bills and certificates of deposit (CDs) may appear attractive because they fluctuate less. But you need to balance these considerations with a realistic evaluation of how you want your investments to grow. CDs offer a guaranteed return of principal over a stated period of time and a fixed rate of interest. They are typically issued by institutions whose deposits are insured. The income and principal payments of U.S. government bonds are backed by the full faith and credit of the U.S. government if held to maturity. Mutual fund shares may be more volatile than other investments. They are not insured, and the value of shares, when redeemed, may be more or less than what you originally paid for them. Accordingly, it is possible to lose money in a mutual fund investment. Source: Lipper, Inc. While stocks typically entail greater risk and experience more fluctuations, they have historically outpaced bonds and cash over longer periods. 2
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Stocks, bonds or both? While stocks may provide growth, they can also be volatile. While bonds can provide a measure of stability from volatility, they have lacked the growth potential of stocks. But together they can be a powerful combination. In fact, owning both types of investments in a portfolio may provide the diversification, risk management and, ultimately, the performance that long-term investors seek.
STOCKS (S&P 500 INDEX)
Year-end
Initial investment: $10,000 on December 31, 1989
Investment value ($)
1990 9,689 1991 12,635 1992 13,596 1993 14,963 1994 15,160 1995 20,850 1996 25,634 1997 34,183 1998 43,959 1999 53,205 2000 48,362 2001 42,619 2002 33,203 2003 42,722 2004 47,367 2005 49,692 2006 57,534 2007 60,692 2008 38,242 2009 48,365 Average annual return over 20-year period
BONDS (BARCLAYS CAPITAL AGGREGATE BOND INDEX)
INVESCO VAN KAMPEN EQUITY AND INCOME FUND
Annual total return (%)
Investment value ($)
Annual total return (%)
Investment value ($)
Annual total return (%)
-3.11 30.40 7.61 10.06 1.31 37.53 22.95 33.35 28.60 21.03 -9.10 -11.88 -22.09 28.67 10.87 4.91 15.78 5.49 -36.99 26.47
10,896 12,640 13,575 14,899 14,464 17,136 17,759 19,473 21,165 20,991 23,431 25,410 28,015 29,165 30,431 31,170 32,520 34,786 36,609 38,780
8.96 16.00 7.40 9.75 -2.92 18.47 3.63 9.65 8.69 -0.82 11.63 8.44 10.25 4.10 4.34 2.43 4.33 6.97 5.24 5.93
9,533 12,076 13,371 15,511 15,203 20,159 23,294 28,915 33,828 37,194 44,704 43,709 40,073 48,953 54,715 58,991 66,383 68,549 51,559 63,680
-4.67 26.67 10.72 16.00 -1.98 32.60 15.55 24.13 16.99 9.95 20.19 -2.23 -8.32 22.16 11.77 7.81 12.53 3.26 -24.78 23.51
8.20%
7.01%
9.70%
Diversification does not guarantee a profit or eliminate the risk of loss. Past performance is no guarantee of future results. Source for graph and table: Lipper Inc. Indexes are unmanaged and do not include sales charges or fees that would be paid by an investor purchasing the securities they represent. Such costs would lower performance. It is not possible to invest directly in an index. S&P 500 Index is a market-weighted index of 500 widely held common stocks of companies chosen for market size, liquidity and industry group representation. Performance shown reflects the reinvestment of distributions. Barclays Capital Aggregate Bond Index comprises 6,000 bonds, including U.S. government, mortgage-backed, corporate and Yankee bonds; performance shown reflects the reinvestment of distributions. Three-Month Treasury Bills are government-backed short-term securities that mature three months from their issue date. This index was used to represent U.S. Treasuries in the example. The Consumer Price Index is an index representing the rate of inflation of U.S. consumer prices as determined by the U.S. Bureau of Labor Statistics. This index was used to represent cash (adjusted for inflation) in the example shown. The indexes and their returns are not representative of any Invesco fund. invesco.com
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3
INVESTMENT SPECIFICS
A look inside Invesco Van Kampen Equity and Income Fund Invesco Van Kampen Equity and Income Fund offers you an all-seasons approach to investing by combining large-company value stocks, investment-grade bonds and convertible securities in one portfolio. The investment team leaves no stone unturned. All individual security selections are based on careful examination of macroand microeconomic factors.
SYMBOLS Class A Shares Class B Shares Class C Shares Class Y Shares Class R Shares
ACEIX ACEQX ACERX ACETX ACESX
Invesco Van Kampen Equity and Income Fund’s stock and bond combination can provide: • Built-in diversification to help beat inflation over time • Professional management focused on generating returns while limiting risk
PORTFOLIO ALLOCATION (as of 3/31/10) MANAGEMENT TEAM Thomas B. Bastian 16 years of financial industry experience Mary Jayne Maly 26 years of financial industry experience Cynthia Brien 27 years of financial industry experience Chuck Bruge 15 years of financial industry experience
U.S. Stocks
55.26% ■
Convertible Bonds
16.73% ■
International Stocks
9.96% ■
James O. Roeder 16 years of financial industry experience
U.S. Treasury Notes
8.07% ■
U.S. Corporate Bonds
5.96% ■
Mark J. Laskin 13 years of financial industry experience
International Bonds
1.81% ■
Sergio Marcheli 15 years of financial industry experience
Portfolio holdings are subject to change daily and without notice. Diversification does not guarantee a profit or eliminate the risk of loss.
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Cash and Equivalents
1.41% ■
Other Bonds
0.78% ■
U.S. Treasury Bills
0.02% ■
A strategy you trust, companies you know Invesco Van Kampen Equity and Income Fund’s diversified strategy may give you the potential for both growth and income in a range of market climates. And, because the fund includes the stocks of wellestablished companies, as well as U.S. government bonds and high-quality corporate bonds, it may serve as the cornerstone of your portfolio. NAMES YOU KNOW: INVESCO VAN KAMPEN EQUITY AND INCOME FUND’S LARGEST STOCK POSITIONS (as of 3/31/10)
BRANDS YOU KNOW: OTHER COMPANIES THAT INVESCO VAN KAMPEN EQUITY AND INCOME FUND OWNS (as of 3/31/10)
Top ten holdings (% of total net assets)2
% of total net assets
$ Portion of $10,000 investment
JPMorgan Chase & Co. General Electric Co. Marsh & McLennan Cos. Inc. Viacom Inc. Bank of America Corp. Anadarko Petroleum Corp. eBay Inc. Occidental Petroleum Corp. Kraft Foods Inc. PNC Financial Services Group Inc.
3.41 2.20 2.07 1.88 1.71 1.59 1.57 1.56 1.41 1.35
341 220 207 188 171 159 157 156 141 135
Viacom Inc. eBay Inc. Kraft Foods, Inc. Bristol-Myers Squibb Co. Time Warner Inc. Sony Corp. Intel Corp. Coca-Cola Co. Gap, Inc. Unilever NV
Brands
% of net assets
$ Portion of $10,000 investment
CBS, MTV, Paramount eBay.com, PayPal, Skype Maxwell House, Nabisco, Oreo Abilify, Orencia, Plavix AOL, HBO, Warner Bros. Bravia, Cyber-shot, Playstation Celeron, Core, Pentium Coke, Dannon, MinuteMaid Banana Republic, Gap, Old Navy Breyer’s, Dove, Skippy, Slim-Fast
1.88 1.57 1.41 1.21 1.21 0.85 0.79 0.50 0.52 0.47
188 157 141 121 121 85 79 50 52 47
These partial lists are meant to serve as a general illustration of investment themes. They are not meant to be a recommendation of the individual stocks. Keep in mind that the portfolio includes many other investments; these lists are a snapshot, as of December 31, 2009. The holdings of the portfolio, which include common, convertible and convertible preferred stocks, are subject to change at any time, without notice.
AVERAGE ANNUAL TOTAL RETURNS (%) (as of 3/31/10) Invesco Van Kampen Equity and Income Fund Class A shares
1-year
3-year
5-year
10-year
25-year
Inception 8/3/60
Without sales charge With max. 5.75% sales charge Beta (relative to the S&P 500 Index)*
41.04 32.97 —
0.30 -1.65 0.69
4.33 3.11 0.68
5.46 4.83 0.61
10.56 10.30 0.68
10.41 10.27 —
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit invesco.com/performance or speak with your financial adviser. Investment returns and principal value will fluctuate, and fund shares, when redeemed, may be worth more or less than their original cost. Performance for other share classes will vary. The gross expense ratio is 0.82 percent for Class A shares. Expenses are as of the fund’s fiscal year end, as outlined in the fund’s current prospectus. If used after July 20, 2010, this brochure must be accompanied by a current Invesco Van Kampen Equity and Income Fund Strategy Spotlight quarterly update. Average annual total return with sales charges includes payment of the maximum sales charge of 5.75 percent for Class A shares, and Rule 12b-1 fees. Figures shown assume reinvestment of all dividends and capital gains. Performance for other share classes will vary. * Beta is provided by Lipper Inc. Beta is a measure of a fund’s sensitivity to market movements. By definition, the beta of the stock market is 1.00. Therefore, a fund with a beta of 1.10 is expected to perform 10 percent better than the market in “up” markets and 10 percent worse in “down” markets. The S&P 500 Index is an unmanaged index of 500 common stocks generally representative of the U.S. stock market. It is not possible to invest directly in an average or index. invesco.com | 5
Growth of a $10,000 investment $2,000,000 AN INVESTMENT STORY
After their summer wedding in 1960, Bob and Karen Green invested $10,000 in Invesco Van Kampen Equity and Income Fund. The Greens remained invested throughout the market’s ups and downs, always reinvesting their dividends. By December 31, 2009, their original investment may have helped to provide a secure retirement for them—as well as a legacy for their family.
1,000,000
100,000
Performance of an assumed $10,000 investment from first full month since inception (8/31/60 to 12/31/09).
1972 The Greens are busy raising their family and pursuing their careers
1964 The Greens purchase their first house
1961 East Germany builds Berlin Wall
1963 President Kennedy assassinated
10,000 8,000 Capital value* Annual dividends in cash ($)** Value at year end ($) Total value Annual dividends reinvested ($)** Value at year end ($) Annual total returns (%) Dow year end***
1968 Bob and Karen’s second child, Jennifer, is born
1960 Bob and Karen Green marry and invest $10,000; the next year, their first child, Matthew, is born
1966 Dow hits high of 1,000 for first time
1968 Martin Luther King, Jr. assassinated 1972 Watergate scandal; Dow closes above 1,000
‘61
‘62
‘63
‘64
‘65
‘66
‘67
‘68
‘69
‘70
‘71
‘72
‘73
522
562
562
495
507
529
528
646
822
1,028
896
878
989
10,803
9,386
10,143
11,081
13,433
11,818
16,367
21,672
16,263
15,834
19,249
18,633
14,814
544 11,608 17.13
617 10,688 -7.93
653 12,203 14.18
606 13,946 14.28
648 17,612 26.29
703 16,152 -8.29
731 23,181 43.52
928 31,748 36.96
1,224 24,935 -21.46
1,616 25,990 4.23
1,498 33,142 27.52
1,538 33,579 1.32
1,823 28,433 -15.32
731
652
763
874
969
786
905
944
800
839
890
1,020
851
These are fictional characters. This is a hypothetical example, but is based on actual fund performance for Class A shares. Performance shown in the mountain chart includes the reinvestment of distributions but does not include sales charges. *Source for capital value numbers: Morningstar Advisor WorkstationSM **Annual dividends in cash represents the dividends paid out at the end of each calendar year on the 2,299 shares acquired from the original $10,000 on 8/31/60. Annual dividends reinvested represents the dividends paid out at the end of each calendar year on the original shares, plus the dividends of additional shares acquired through reinvestment. 6
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1992 Bob and Karen become first-time grandparents 1986 Bob and Karen move to Florida as Jennifer begins college
1991 Gulf War 1979 Matthew Green begins college
1992 Formal end of Cold War 1983 U.S. unemployment rises to 9.7%
1982 Dow closes above 1,000 and never looks back
1975 Vietnam War ends 1979 U.S.S.R. invades Afghanistan
1974 President Nixon resigns
1987 Financial crisis; Dow falls more than 22% on Black Monday
1986 Iran Contra Affair
73
‘74
‘75
‘76
‘77
‘78
‘79
‘80
‘81
‘82
‘83
‘84
‘85
‘86
‘87
‘88
‘89
‘90
‘91
‘92
989
1,082
1,104
1,082
1,148
1,193
1,237
1,369
1,458
1,502
1,511
1,796
1,737
1,783
1,969
2,191
2,220
1,777
1,635
1,482
814
12,279
14,575
17,402
16,872
15,900
16,165
16,651
17,049
22,570
25,951
25,326
27,939
29,542
28,339
29,656
33,720
30,410
36,720
39,076
823 433 .32
2,136 25,567 -10.08
2,367 32,778 28.20
2,495 41,766 27.42
2,825 43,248 3.55
3,139 43,743 1.14
3,499 47,890 9.48
4,189 53,700 12.13
3,044 57,967 7.95
5,116 83,522 44.09
7,992 104,591 25.23%
7,432 109,626 4.81
7,717 129,289 17.94
8,436 145,081 12.21
9,880 147,839 1.90
11,748 166,438 12.58
12,797 10,896 202,621 193,134 21.74 -4.68
10,572 244,649 26.67
10,028 270,877 10.72
51
616
852
1,005
831
805
839
964
875
1,047
1,259
1,212
1,547
1,896
1,939
2,169
3,169
3,301
2,753
2,634
The illustration above is based on an initial investment of $10,000 in Class A shares made on 8/31/60. The illustration and calendar year returns represent those of Class A shares without the imposition of any sales charges. If sales charges were included, returns would be lower. Results are hypothetical. Performance for other share classes will vary. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions. The graph uses a logarithmic scale to more accurately reflect historic volatility. Past performance is no guarantee of future results. Past performance is no guarantee of future results and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit invesco.com/performance or speak with your financial adviser. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. Performance of other share classes will vary.
3
The Greens’ average annual total return on this investment 10.35%
Ending value (12/31/09) $1,290,076
1995 The Greens both retire at age 65 2001 In wake of September 11 attacks, U.S. declares war on terrorism
S&P500 500Index Index S&P ending value (12/31/09) ending value (12/31/09) $936,863 $936,863
2009 Dow closes above 10,000 1999 Dow closes above 10,000 for first time
r
2008 Global credit crisis 2007 Dow closes above 14,000 for first time
1997 Asian stock market crisis
2005 Hurricane Katrina hits New Orleans and Gulf Coast
1995 Dow closes above 5,000 for first time
2003 War in Iraq begins
2
‘93
‘94
‘95
‘96
‘97
‘98
‘99
‘00
‘01
‘02
‘03
‘04
‘05
‘06
‘07
‘08
‘09
82
1,283
1,477
1,518
1,332
1,526
1,788
1,983
2,418
2,684
2,284
2,289
2,494
2,461
2,912
3,303
3,471
2,316
76
43,969
41,639
53,539
60,427
73,389
83,966
90,245
105,881
100,748
90,187
107,625
117,618
124,264
136,713
137,865
100,674
121,589
28 77 72
8,999 314,231 16.00
10,692 307,996 -1.98
11,362 408,389 32.60
10,255 471,902 15.55
12,015 585,773 24.13
14,386 685,309 16.99
16,318 735,507 9.95
20,379 905,653 20.19
23,193 885,495 -2.23
20,246 811,827 -8.32
20,792 21,256 23,372 28,246 32,786 35,322 24,252 991,724 1,108,464 1,195,087 1,344,839 1,388,709 1,044,525 1,290,076 22.16 11.77 7.81 12.53 3.26 -24.78 23.51
01
3,754
3,834
5,117
6,448
7,908
9,181
11,497
10,788
10,022
8,342
10,454
10,783
10,718
12,463
13,265
8,776
10,428
SM
*** The Dow Jones Industrial Average (Dow) includes 30 blue-chip stocks of large companies. The average is unmanaged, and its performance does not include any sales charges or fees that would be paid by an investor purchasing the securities that it represents. Such costs would lower performance. The S&P 500 Index is an unmanaged index of 500 common stocks generally representative of the U.S. stock market. It is not possible to invest directly in an average or index.
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INVESTMENT SPECIFICS
How Invesco Van Kampen Equity and Income Fund has delivered Invesco Van Kampen Equity and Income Fund has a seasoned management team watching over the fund day in, day out. Through all market conditions they adhere to a few time-tested management philosophies. Long-term results Invesco Van Kampen Equity and Income Fund delivered competitive performance through good and bad markets. The fund has outperformed both its benchmark and the market over the 10-year period with less risk. See chart A below. Invesco Van Kampen Equity and Income Fund has delivered top-decile performance within the Morningstar Moderate Allocation category for all of the 10-year rolling periods since March 1990. See chart B below.
0%
6
4
Lower Risk Higher Return
Above Average
Average
0
-2
Highest
25%
2
Lower returns (%)
Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Standard deviation is a measure of risk that represents the degree to which an investment’s performance has varied from its average performance over a particular period. The higher the number, the greater the risk.
B: INVESCO VAN KAMPEN EQUITY AND INCOME FUND VS. MORNINGSTAR MODERATE ALLOCATION CATEGORY (10-year rolling returns)
RETURN RANK
Higher returns (%)
A: COMPETITIVE RISK AND RETURN VS. INDEX AND MARKET (3/00-3/10)
Below Average
75%
0 2 4 6 Lower risk (%)
8
10
12 14 16 18 Higher risk (%)1
Invesco Van Kampen Equity and Income Fund A Russell 1000 Value Index
SP 500 Index
Lowest
100% 3/90 to 3/00
3/94 to 3/04
3/97 to 3/07
3/00 to 3/10
●
Invesco Van Kampen Equity and Income Fund—A Source: StyleADVISOR
Companies with potential for positive change The team uses a classic approach that seeks to convert business change into investment opportunity—be it new company management, new products or favorable industry trends.
Comprehensive diversification Owning both stocks and bonds may help to smooth out the market’s ups and downs. With Invesco Van Kampen Equity and Income Fund you get a broadly diversified portfolio of more than 300 stocks, bonds and convertible bonds. To illustrate the fund’s relative performance consistency, Illustration B shows the fund’s rolling 10-year Morningstar category percentile rank. The lower-numbered percentiles (such as the 5th percentile) represent better performance within the category, while higher-numbered percentiles (such as the 95th percentile) represent poorer performance. Past performance is no guarantee of future results. Percentile ranks based on returns calculated at NAV and do not include sales charges. If sales charges were included, performance would be lower and rank may be lower. In the Moderate Allocation category, Class A shares of the fund ranked 292 out of 1,175 funds for the 1-year, 250 out of 955 funds for the 3-year, 166 out of 777 funds for the 5-year and 26 out of 445 funds for the 10-year periods that ended March 31, 2010. Diversification does not guarantee a profit or eliminate the risk of loss.
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INVESTOR STRATEGIES
Three different strategies, three different outcomes Economic and market downturns make it difficult to invest, or to stay invested. Consider the scenarios of three fictional couples who initially invested through a particularly stormy market—from September 30, 1972, through September 30, 1974. THE SETUP
• The Stevens, the Ryans and the Andrews each invest $10,000 in Invesco Van Kampen Equity and Income Fund on 9/30/72.
THE STRATEGIES
The Stevens decide to sell Phil and Norma Steven take their $6,932 and invest it in a fixed account earning an average annual return of 7 percent. The markets go up and down, but their portfolio stays steady. As of December 31, 2009, their nest egg is worth just $75,283.
• The S&P 500 Index falls 38.31 percent by 9/30/74. • Each couple is left with $6,932. • As a result, each couple chooses a different investment strategy.
The Ryans stay put William and Jenny Ryan remain invested, but don’t add anything to their portfolio valued at $6,932. Thanks to this stay-put approach, the Ryans’ investment grows to $373,305 by December 31, 2009.
The Andrews keep investing Robert and Barb Andrew stay the course. They remain invested and go a step further. Working with their advisor, the Andrews set up a systematic investment plan, adding $100 a month to their portfolio value of $6,932, beginning on September 30, 1974. The Andrews’ strategy—invest for the long term through both good and bad times—turns out nicely. On December 31, 2009, their investment has grown to $791,049.
An important note about systematic monthly investments (also known as “dollar-cost averaging”): Keep in mind that a program of regular investments cannot ensure a profit or protect against loss in a declining market. Because such a program involves continuous investments regardless of fluctuating market values, you should consider your financial ability to continue the program through all market cycles. Remember, these are hypothetical characters and examples that reflect periods of unprecedented growth. Such growth may not be repeatable or sustainable. 10 | invesco.com
By using systematic investing, a proven strategy for weathering the market’s ups and downs, the Andrews were able to significantly grow their investment. THE OUTCOME
VALUE ON 12/31/09 $0
$250,000
KEY POINTS $500,000
$750,000
$1,000,000
The Stevens
• Take a long-term approach
Sold themselves short? Strategy: Sell Total investment: $10,000
• Expect market volatility
• Stay focused
$75,283
• Take advantage of market fluctuations with systematic investments
Average annual total return: 5.46%
The Ryans In patience, there is prudence Strategy: Hold
$373,305
Total investment: $10,000 Average annual total return: 10.21%
The Andrews A buying opportunity realized Strategy: Buy
$791,049
Total investment: $52,400 Average annual total return: 10.43%
Past performance is no guarantee of future results. Source: Morningstar Advisor WorkstationSM Performance shown above is for Class A shares and includes payment of the maximum sales charge of 5.75% and Rule 12b-1 fees. S&P 500 Index is a market-weighted index of 500 widely held common stocks of companies chosen for market size, liquidity and industry group representation. It is not possible to invest directly in an index. Figures above assume reinvestment of all dividends and capital gains. Performance for other share classes will vary. invesco.com | 11
INVESTOR STRATEGIES
The worst time to retire? A comfortable and happy retirement is a cornerstone of the American dream. But, for many, retirement is a source of anxiety, especially when the market takes a turn for the worse. The good news is that well-researched and welltimed systematic withdrawal plans can be just as powerful as systematic investment plans. Take a look at another fictional couple and how Invesco Van Kampen Equity and Income Fund made a difference in their lives. Keep in mind that this is a hypothetical scenario, but is based on actual fund performance.
The Shepherds begin retirement On December 31, 1972, Tom and Kerrie Shepherd began their retirement years. Working with their financial advisor, they invested $100,000—a sizable portion of their retirement savings—in Invesco Van Kampen Equity and Income Fund.
Storm clouds? Little did they know, the bear market of 1973-74 was right around the corner. Some might have thought this would have resulted in disaster. But because the Shepherds stayed the course, there’s a far happier ending to their story.
What the Shepherds gained Supplemental income– Tom and Kerrie began making annual withdrawals at year end, starting with $4,500 on December 31, 1973. Each year, they increased the amount of their withdrawal by 3 percent. In other words, they had rising retirement income. By December 31, 2009, Tom and Kerrie had withdrawn $297,784. This additional income helped pay for vacations, hobbies and home improvements. A legacy for heirs– Even after paying a healthy retirement income, the Shepherds’ assets continued to grow significantly. In fact, as of December 31, 2009, the hypothetical portfolio was valued at $1,255,986.
An important note about systematic withdrawal plans: Systematic withdrawal plans can have a significant effect on an investment. Redemptions may reduce or exhaust your account. There are differences in the taxation between withdrawals of principal, distributions and withdrawals of income; you should discuss these differences with your financial advisor and tax advisor. Invesco does not provide tax advice. Remember, these are hypothetical characters and examples that reflect periods of unprecedented growth. Such growth may not be repeatable or sustainable. 12
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THE SHEPHERDS’ RETIREMENT PORTFOLIO Annual amount withdrawn ($) 1972 — 1973 4,500 1974 4,635 1975 4,774 1976 4,917 1977 5,065 1978 5,217 1979 5,373 1980 5,534 1981 5,700 1982 5,871 1983 6,048 1984 6,229 1985 6,416 1986 6,608 1987 6,807 1988 7,011 Increasing 1989 7,221 1990 retirement 7,438 1991 7,661 income 1992 7,891 1993 8,128 1994 8,371 1995 8,622 1996 8,881 1997 9,148 1998 9,422 1999 9,705 2000 9,996 2001 10,296 2002 10,605 2003 10,923 2004 11,250 2005 11,588 2006 11,936 2007 12,294 2008 12,662 2009 13,042 Amount invested: $100,000 Total withdrawn + amount remaining on 12/31/09: $1,553,770 Average annual return as of 12/31/09: 9.77%
Remaining portfolio value ($) 96,250 77,000 64,605 78,052 94,536 92,826 88,671 91,705 97,295 102,584 141,174 166,310 168,086 191,820 208,641 205,801 224,681 266,305 246,399 304,459 329,209 373,772 357,983 466,047 529,647 648,304 749,043 813,879 968,219 936,374 847,868 1,024,829 1,134,215 1,211,262 1,351,106 1,382,887 1,027,483 1,255,986
More than 30 years later—and it’s still a nice retirement portfolio
Source: Morningstar Advisor WorkstationSM The fund offers a reduced sales charge based on specified breakpoints. Performance shown above is for Class A shares and reflects breakpoint pricing with a sales charge of 3.75%, resulting in a net initial investment of $96,250. Performance includes Rule 12b-1 fees. The maximum sales charge for Class A shares is 5.75%. This is a hypothetical example. The illustration assumes reinvestment of all dividends and capital gains. invesco.com
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INVESTOR STRATEGIES
Building a future: The power of monthly investing When Laura and David Garrity’s daughter, Ellen, was born in 1991, her happy grandparents gave the couple a gift of $5,000 for Ellen’s future. The Garritys’ financial advisor offered some great advice: • Invest in Invesco Van Kampen Equity and Income Fund • Add $200 to the fund each month • Increase their monthly contributions by 5 percent every year The strategy worked. The chart below shows that the Garritys’ investment experienced ups and downs over the years. But by the time Ellen was ready for college, her parents were able to send her to the private school she had her heart set on.
REAPING THE BENEFITS OF EARLY PLANNING AND REGULAR INVESTING $160,000
Ending value $146,198
Projected college costs for student beginning in 2009* 4-year public 4-year private $65,570 $153,596 $120,000
$80,000
$40,000
Initial investment $5,000 0 12/91
‘92
‘94
‘96
‘98
‘00
‘02
‘04
‘06
‘08
12/09
Past performance is no guarantee of future results. Source for fund data: Morningstar Advisor Workstation.SM Performance shown above is for Class A shares and includes payment of the maximum sales charge of 5.75% and Rule 12b-1 fees, resulting in a net initial investment of $4,713. Figures above assume reinvestment of all dividends and capital gains. Performance for other share classes will vary. This is a hypothetical example, and reflects periods of unprecedented growth. Such growth may not be repeatable or sustainable. *Estimates for college costs are based on 2009-2010 inflation-adjusted tuition, fees and room and board for a four-year program, as published in The College Board: Trends in College Pricing 2009. Please see page 10, “An important note about systematic monthly investments.” Keep in mind that this is a hypothetical scenario, but is based on actual fund performance. 14
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Invesco Van Kampen Equity and Income Fund: Your all-weather investment We can’t talk about an all-weather investment without showing all-weather results. The chart below offers proof that Invesco Van Kampen Equity and Income Fund’s diversified portfolio has helped it to deliver impressive performance over time—in up and down markets. In fact, the fund has done what it was designed to do: • Provided stock-like returns and outperformed bonds during up markets • Maintained greater stability than stocks during down markets • Outperformed both the stock and bond markets over time
GOOD WEATHER UP YEARS AVERAGE (%) (12/31/89-12/31/09)
• This chart compares the fund’s performance with stocks and bonds over the past 20 years from 12/31/89 to 12/31/09. • During this time, the fund had 15 years of positive performance and 5 years posted negative performance.
BAD WEATHER DOWN YEARS AVERAGE (%) (12/31/89-12/31/09)
ALL WEATHER 20-YEAR AVERAGE (%) (12/31/89-12/31/09)
20%
19.01 15.45 10%
9.70
8.90
8.21
6.53
7.01
0%
-3.96
• The fund’s comprehensive diversification allowed it to deliver, on average, better returns than both the stock and bond markets over the 20-year period.
-10%
-16.64 -20%
• The bonds and convertibles in the fund’s portfolio contributed to relatively less volatility than the stock market.
Ending value of a $10,000 investment (12/31/89-12/31/09) ■ S&P 500 Index: $48,365 ■ Barclays Capital U.S. Aggregate Bond Index: $38,780 ■ Invesco Van Kampen Equity and Income Fund—A: $63,680
Past performance is no guarantee of future results. Diversification does not guarantee a profit or eliminate the risk of loss. The illustration above is based on an initial investment of $10,000 in Class A shares made 12/31/89. The returns represent those of Class A shares without the imposition of any sales charges. If sales charges were included, returns would be lower. S&P 500 Index is a market-weighted index of 500 widely held common stocks of companies chosen for market size, liquidity and industry group representation. Barclays Capital U.S. Aggregate Bond Index comprises 6,000 bonds, including U.S. government, mortgage-backed, corporate and Yankee bonds. It is not possible to invest directly in an index. invesco.com
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15
Invesco: Your independent partner for today’s marketplace As one of the world’s largest and most diversified independent investment management firms, Invesco has: • • • •
More than 700 investment professionals worldwide as of June 1, 2010 $423.1 billion in assets Investment centers operating in 13 countries Client support in 20 countries serving clients in more than 100 countries
Our specialized investment teams’ distinct perspectives offer diverse investment strategies spanning: • • • • •
Equity (domestic; international/global; regional/country; sector; small, mid and large cap; growth; value; core/blend; structured) Asset allocation (target maturity, target risk, diversified portfolios, balanced) Fixed income (domestic; international/global; taxable; nontaxable; long and short maturity; investment and noninvestment grade) Cash management Alternatives (commodities, natural resources, real estate, private equity)
Our strategies can be delivered in a wide variety of solutions, from mutual funds to collective trusts, index-based and active ETFs to unit investment trusts, separately managed accounts to variable insurance funds and more. Our single focus—money management—means all of our intellectual capital and resources are directed at helping investors achieve their financial objectives. We’re focused on doing one thing well: managing money, because we believe our focus can bring success for investors. Data as of Dec. 31, 2009, unless otherwise noted.
For more information, call your advisor or contact Invesco at 800-959-4246 from 7 a.m. to 6 p.m. Central time on weekdays. You can also visit us at invesco.com. Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisers for a prospectus/summary prospectus or visit invesco.com/fundprospectus. If used after July 20, 2010, this brochure must be accompanied by a current Invesco Van Kampen Equity and Income Fund Strategy Spotlight quarterly update. Past performance is no guarantee of future results. Diversification does not assure a profit or protect against a loss. Foreign securities investments involve risks in addition to those associated with domestic securities, including currency, political, economic and market risks. Investing in small- and mid-size companies involves risks in addition to those associated with large-size companies. REITs are more susceptible to the risks generally associated with investments in real estate. Bonds are subject to interest rate, price and credit risks. Prices tend to be inversely affected by changes in interest rates. The tax information contained herein is general and is not exhaustive by nature. It was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer under U.S. federal tax laws. Federal and state tax laws are complex and constantly changing. You should always consult your own legal or tax professional for information concerning your individual situation.
Invesco Distributors, Inc. VK-EQI-BRO-1 06/10 invesco.com
Invesco Van Kampen Equity and Income Fund Data as of Sept. 30, 2010
50
Strategy Spotlight Invesco Van Kampen Equity and Income Fund vs. Morningstar Moderate Allocation category 10-year rolling return Invesco Van Kampen Equity and Income Fund has delivered top-quartile performance within the Morningstar Moderate Allocation category for all of the 10-year monthly rolling periods as of September 2010.
Source: StyleADVISOR. To illustrate the fund’s relative performance consistency, this chart shows the fund’s rolling 10-year Morningstar Category percentile rank. The lower-numbered percentiles (such as the fifth percentile) represent better performance within the category, while higher-numbered percentiles (such as the 95th percentile) represent poorer performance. Fund counts within the category include pre-inception performance of all secondary classes of shares. Past performance is no guarantee of future results. Ranks based on returns calculated at NAV and do not include sales charges. If sales charges were included, performance would be lower and rank may be lower. In the Moderate Allocation category, Class A shares of the fund ranked 998 out of 1,123 funds for the 1-year, 431 out of 939 funds for the 3-year, 398 out of 755 funds for the 5-year and 59 out of 413 funds for the 10-year periods that ended Sept. 30, 2010.
0%
Highest
RETURN RANK
25%
Above Average
Average
Below Average
75%
Lowest
100% 9/90 to 9/00
9/94 to 9/04
9/97 to 9/07
9/00 to 9/10
Invesco Van Kampen Equity and Income Fund Class A shares Source: StyleADVISOR
Portfolio Diversification in a Single Investment3,4
Higher returns (%)
Competitive Risk and Return vs. Index and Market (9/00-9/10)1,2 6
Lower Risk Higher Return
4
Diversification does not guarantee a profit or eliminate the risk of loss. ©2010 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers. It may not be copied or distributed and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
Lower returns (%)
2
0
-2 0
2
4
Lower risk (%)
6
8
10
12
14
16
18
Higher risk (%)1
Invesco Van Kampen Equity and Income Fund A SP 500 Index Russell 1000 Value Index
U.S. stocks Convertible bonds U.S. Corporate bonds International stocks
54.71% 18.01 8.47 8.18
U.S. Government bonds Cash and equivalents International bonds Other bonds
7.67 1.66 1.23 0.07
1 Source: StyleADVISOR as of Sept. 30, 2010. Past performance is no guarantee of future results. Risk shown as percent standard deviation. Returns for Class A shares do not include sales charges. For more information on standard deviation and performance, please see definitions and performance disclosure on the back. 2 Russell 1000® Value Index is an unmanaged index considered representative of large-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. S&P 500 Index is generally representative of the U.S. stock market. 3 Portfolio holdings are subject to change daily and without notice. 4 Other bonds include bonds that do not fit into other categories, such as asset backed and municipals.
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisers for a prospectus/ summary prospectus or visit invesco.com/fundprospectus.
Invesco Van Kampen Equity and Income Fund | Balanced | 9/30/2010
Management team
Performance Summary
Thomas B. Bastian 16 years of financial industry experience
Average Annual Total Returns (%) as of 9/30/10 Class A Shares 1-year 5-year 10-year Since inception (8/03/60) 3-year beta1 3-year standard deviation1
Mary Jayne Maly 26 years of financial industry experience James O. Roeder 16 years of financial industry experience Mark J. Laskin 13 years of financial industry experience Sergio Marcheli 15 years of financial industry experience Cynthia Brien 27 years of financial industry experience Chuck Burge 15 years of financial industry experience
Share Class: Symbol A: ACEIX Y: ACETX
B: ACEQX R: ACESX
Number of Holdings
C: ACERX
337
w/o sales w/max 5.50% charges sales charge 6.53 2.47 4.20 10.25 0.67 15.81
0.70 1.32 3.61 10.13 — —
Top 10 Holdings (% of Total Net Assets)2 JPMorgan Chase & Co. General Electric Co Marsh & Mclennan Co Viacom Inc Class B eBay Inc Occidental Petroleum Corp Kraft Foods Inc American Electric Power Co. Bank Of America Corp. Royal Dutch Shell
2.97 2.24 2.11 2.04 1.72 1.49 1.49 1.47 1.36 1.31
Performance data quoted represents past performance, which is no guarantee of future results, and current performance may be lower or higher than the figures shown. For the most recent month-end performance figures, please visit invesco. com/performance or speak with your financial adviser. Investment returns and principal value will fluctuate and fund shares, when redeemed, may be worth more or less than their original cost. The gross expense ratio is 0.82% for Class A shares. Expenses are as of the fund’s fiscal year end as outlined in the fund’s current prospectus.
Top Industry Holdings (% of Total Net Assets)2,3 Other Diversified Financial Services Pharmaceuticals
6.51 6.02 5.22
Integrated Oil & Gas Industrial Conglomerates
4.48
Movies & Entertainment Electric Utilities Packaged Foods & Meats Biotechnology Regional Banks Investment Banking & Brokerage
3.92 3.17 2.62 2.49 2.48 2.48
Calendar Year Returns (%) Class A Shares4 2000 20.19
2001 -2.23
2002 -8.32
2003 22.16
2004 11.77
2005 7.81
2006 12.53
2007 3.26
2008 -24.78
2009 23.51
1 Beta is vs. the Russell 1000 Value Index. Beta (cash adjusted) is a measure of relative risk and the slope of regression. Standard deviation measures a fund’s range of total returns and identifies the spread of a fund’s short-term fluctuations. 2 Holdings are subject to change and are not buy/sell recommendations. 3 The holdings are organized 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. 4 Returns represent those of Class A shares without the imposition of any sales charges. If sales charges were included, returns would be lower. When applicable, inception year may reflect partial-year returns. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. Investors should also be aware that these returns were primarily achieved during favorable market conditions.
About risk Income risk. The ability of the fund’s equity securities to generate income generally depends on the earnings and the continuing declaration of dividends by the issuers of such securities. The interest income on debt securities generally is affected by prevailing interest rates, which can vary widely over the short and long term. If dividends are reduced or discontinued or interest rates drop, distributions to shareholders from the fund may drop as well. Call risk. If interest rates fall, it is possible that issuers of callable securities held by the fund will call or prepay their securities before their maturity dates. In this event, the proceeds from the called securities would most likely be reinvested by the fund in securities bearing the new, lower interest rates, resulting in a possible decline in the fund’s income and distributions to shareholders and termination of any conversion option on convertible securities. Credit risk. Credit risk is the risk of loss on an investment due to the deterioration of an issuer’s financial health. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer’s securities and may lead to the issuer’s inability to honor its contractual obligations, including making timely payment of interest and principal. Foreign risk. The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, foreign currency exchange controls, political and economic instability, differences in securities regulation and trading, and foreign taxation issues. REIT risk. REITs are susceptible to risk associated with the ownership of real estate and the real estate industry in general. In addition, REITs depend on specialized management skills, may not be diversified, may have less trading volume and may be subject to more abrupt or erratic price movements than the overall securities market. Investments in REITs may involve duplication of management fees and certain other expenses. Value investing risk. The fund emphasizes a value style of investing, which focuses on undervalued companies with characteristics for improved valuations. This style of investing is subject to the risk that the valuations never improve or that the returns on “value” equity securities are less than returns on other styles of investing or the overall stock market. Value stocks also may decline in price, even though in theory they are already underpriced. Derivatives risk. The fund may use enhanced investment techniques such as derivatives. The principal risk of derivatives is that the fluctuations in their values may not correlate perfectly with the overall securities markets. Derivatives are subject to counterparty risk — the risk that the other party will not complete the transaction with the fund.
invesco.com/us
VK-EQI-FLY-1 10/10
Invesco Distributors, Inc.
