UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-01540
AIM Funds Group (Invesco Funds Group)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
Sheri Morris 11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Name and address of agent for service)
Registrant’s telephone number, including area code: (713) 626-1919
Date of fiscal year end: 12/31
Date of reporting period: 06/30/18
Item 1. Report to Stockholders.
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| | Semiannual Report to Shareholders | | June 30, 2018 |
| |
| Invesco European Small Company Fund |
| Nasdaq: | | |
| | A: ESMAX ∎ C: ESMCX ∎ Y: ESMYX ∎ R6: ESMSX |

| | | | |
| | |
| | |
| | 2 | | Fund Performance |
| | 4 | | Letters to Shareholders |
| | 5 | | Schedule of Investments |
| | 7 | | Financial Statements |
| | 9 | | Notes to Financial Statements |
| | 16 | | Financial Highlights |
| | 17 | | Fund Expenses |
| | 18 | | Approval of Investment Advisory and Sub-Advisory Contracts |
| |
| | For the most current month-end Fund performance and commentary, please visit invesco.com/performance. Unless otherwise noted, all data provided by Invesco. This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing. |
| | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Fund Performance
| | | | |
Performance summary | |
Fund vs. Indexes | | | | |
Cumulative total returns, 12/31/17 to 6/30/18, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. | |
| |
Class A Shares | | | -3.02 | % |
Class C Shares | | | -3.41 | |
Class Y Shares | | | -2.88 | |
Class R6 Shares | | | -2.82 | |
MSCI Europe Index▼ (Broad Market Index) | | | -3.23 | |
MSCI Europe Small Cap Index▼ (Style-Specific Index) | | | -0.95 | |
Lipper European Funds Index∎ (Peer Group Index) | | | -3.40 | |
Source(s): ▼FactSet Research Systems Inc.; ∎Lipper Inc.
The MSCI Europe Index is an unmanaged index considered representative of stocks of developed European countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
The MSCI Europe Small Cap Index is an unmanaged index considered representative of small-cap European stocks. The index is computed using the net return, which withholds applicable taxes for non-resident investors.
The Lipper European Funds Index is an unmanaged index considered representative of European funds tracked by Lipper.
The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es).
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not.
|
For more information about your Fund Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
2 Invesco European Small Company Fund
| | | | | | |
| | Average Annual Total Returns | |
| | As of 6/30/18, including maximum applicable sales charges | | | | |
| | Class A Shares | |
| | Inception (8/31/00) | | | 10.89 | % |
| | 10 Years | | | 6.41 | |
| | 5 Years | | | 8.80 | |
| | 1 Year | | | -3.09 | |
| | Class C Shares | |
| | Inception (8/31/00) | | | 10.44 | % |
| | 10 Years | | | 6.22 | |
| | 5 Years | | | 9.22 | |
| | 1 Year | | | 0.74 | |
| | Class Y Shares | |
| | 10 Years | | | 7.28 | % |
| | 5 Years | | | 10.31 | |
| | 1 Year | | | 2.77 | |
| | Class R6 Shares | |
| | 10 Years | | | 7.06 | % |
| | 5 Years | | | 10.14 | |
| | 1 Year | | | 2.88 | |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class Y and Class
R6 shares was 1.44%, 2.19%, 1.19% and 1.15%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class Y and Class R6 shares was 1.46%, 2.21%, 1.21% and 1.17%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class Y and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2020. See current prospectus for more information. |
3 Invesco European Small Company Fund
Letters to Shareholders
| | | | | | | | | |

Bruce Crockett | | | | Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. |
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper, Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,

Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| | | | |

Philip Taylor | | | | Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction. This means that, no matter the asset class or the strategy, each investment team has a passion to exceed. We want to help investors achieve better outcomes, such as seeking higher returns, helping mitigate risk and generating income. Of course, investing with high conviction can’t guarantee a profit or ensure success; no investment strategy can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about |
your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.”
Finally, I’m pleased to share with you Invesco’s commitment to both the Principles for Responsible Investment and to considering environmental, social and governance issues in our robust investment process. I invite you to learn more at invesco.com/esg.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,

Philip Taylor
Senior Managing Director, Invesco Ltd.
4 Invesco European Small Company Fund
Schedule of Investments
June 30, 2018
(Unaudited)
| | | | | | | | |
| | Shares | | | Value | |
Common Stocks & Other Equity Interests–73.13% | |
Belgium–1.15% | |
Sioen Industries N.V. | | | 251,000 | | | $ | 7,957,467 | |
Van de Velde N.V. | | | 45,106 | | | | 1,638,046 | |
| | | | | | | 9,595,513 | |
|
France–17.88% | |
Caisse Regionale de Credit Agricole Mutuel Brie Picardie — CCI | | | 94,000 | | | | 2,739,953 | |
Caisse Regionale de Credit Agricole Mutuel d’Ile-de-France | | | 55,078 | | | | 5,878,353 | |
Caisse Regionale de Credit Agricole Mutuel de Normandie-Seine — CCI | | | 46,988 | | | | 6,962,735 | |
Caisse Regionale de Credit Agricole Mutuel Nord de France — CCI | | | 365,844 | | | | 8,885,678 | |
Caisse Regionale de Credit Agricole Mutuel Sud Rhone Alpes — CCI | | | 19,700 | | | | 4,429,590 | |
Constuctions Industrielles de la Mediterranee S.A. | | | 80,972 | | | | 10,447,886 | |
GEA | | | 55,000 | | | | 6,486,573 | |
Gerard Perrier Industrie S.A. | | | 169,171 | | | | 11,496,885 | |
Infotel S.A. | | | 165,142 | | | | 10,471,012 | |
Kaufman & Broad S.A. | | | 304,000 | | | | 14,334,125 | |
Linedata Services(a) | | | 506,159 | | | | 20,804,674 | |
Maisons France Confort S.A. | | | 112,990 | | | | 5,620,577 | |
Manutan International | | | 93,000 | | | | 8,036,111 | |
Metropole Television S.A. | | | 192,790 | | | | 3,856,321 | |
Neurones | | | 280,000 | | | | 7,846,944 | |
Tessi S.A.(b) | | | 88,294 | | | | 19,692,273 | |
Total Gabon | | | 6,432 | | | | 1,143,299 | |
| | | | | | | 149,132,989 | |
|
Germany–2.87% | |
CENIT AG | | | 213,758 | | | | 4,343,131 | |
MorphoSys AG(b) | | | 125,562 | | | | 15,364,702 | |
SMT Scharf AG(b) | | | 68,697 | | | | 1,223,317 | |
Takkt AG | | | 164,690 | | | | 3,011,551 | |
| | | | | | | 23,942,701 | |
|
Greece–3.03% | |
Autohellas S.A. | | | 207,551 | | | | 5,525,746 | |
Hellenic Exchanges — Athens Stock Exchange S.A. | | | 940,000 | | | | 5,104,017 | |
Karelia Tobacco Co. Inc. S.A. | | | 7,255 | | | | 2,219,576 | |
Mytilineos Holdings S.A. | | | 1,241,192 | | | | 12,449,830 | |
| | | | | | | 25,299,169 | |
|
Ireland–5.36% | |
CPL Resources PLC | | | 1,141,792 | | | | 7,599,642 | |
Origin Enterprises PLC | | | 3,497,056 | | | | 25,387,939 | |
Total Produce PLC | | | 4,536,323 | | | | 11,759,483 | |
| | | | | | | 44,747,064 | |
| | | | | | | | |
| | Shares | | | Value | |
Israel–3.65% | |
Hilan Ltd. | | | 517,409 | | | $ | 11,409,774 | |
Israel Discount Bank Ltd.–Class A | | | 5,598,000 | | | | 16,377,009 | |
MIND C.T.I. Ltd.(a) | | | 1,200,000 | | | | 2,616,000 | |
| | | | | | | 30,402,783 | |
|
Italy–3.52% | |
Danieli & C. Officine Meccaniche S.p.A.– Savings Shares | | | 920,532 | | | | 16,209,571 | |
Gruppo MutuiOnline S.p.A. | | | 415,000 | | | | 6,900,640 | |
Mondo TV S.p.A.(b) | | | 1,440,000 | | | | 6,280,605 | |
| | | | | | | 29,390,816 | |
|
Norway–4.47% | |
Bonheur ASA | | | 531,206 | | | | 7,200,229 | |
Ekornes ASA | | | 590,214 | | | | 9,971,080 | |
Kongsberg Gruppen ASA | | | 387,721 | | | | 8,244,825 | |
Wilh. Wilhelmsen Holding ASA–Class A | | | 474,539 | | | | 11,885,469 | |
| | | | | | | 37,301,603 | |
|
Portugal–0.35% | |
Conduril — Engenharia S.A. | | | 46,308 | | | | 2,919,988 | |
|
Romania–7.70% | |
Banca Transilvania S.A. | | | 19,734,298 | | | | 11,859,554 | |
Fondul Proprietatea S.A. | | | 93,345,624 | | | | 20,662,443 | |
Societatea Nationala de Gaze Naturale ROMGAZ S.A. | | | 2,391,512 | | | | 22,366,530 | |
Transgaz S.A. Medias | | | 114,300 | | | | 9,373,736 | |
| | | | | | | 64,262,263 | |
|
Spain–1.81% | |
Baron de Ley, S.A.(b) | | | 68,000 | | | | 9,131,414 | |
Construcciones y Auxiliar de Ferrocarriles, S.A. | | | 124,000 | | | | 5,951,066 | |
| | | | | | | 15,082,480 | |
|
Switzerland–4.15% | |
Carlo Gavazzi Holding AG | | | 18,625 | | | | 6,244,067 | |
Kardex AG | | | 147,048 | | | | 20,402,297 | |
OC Oerlikon Corp. AG | | | 521,945 | | | | 8,006,003 | |
| | | | | | | 34,652,367 | |
|
Turkey–0.82% | |
AG Anadolu Grubu Holding A.S.–Class A | | | 1,476,313 | | | | 6,854,073 | |
|
United Kingdom–16.37% | |
City of London Investment Group PLC | | | 900,000 | | | | 4,870,062 | |
Clarkson PLC | | | 188,808 | | | | 5,731,342 | |
DCC PLC | | | 58,026 | | | | 5,280,378 | |
Diploma PLC | | | 458,327 | | | | 7,907,955 | |
Eurocell PLC | | | 1,809,000 | | | | 6,255,298 | |
IG Group Holdings PLC | | | 642,684 | | | | 7,303,125 | |
JPJ Group PLC(b) | | | 929,000 | | | | 11,759,105 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco European Small Company Fund
| | | | | | | | |
| | Shares | | | Value | |
United Kingdom–(continued) | |
Jupiter Fund Management PLC | | | 867,000 | | | $ | 5,098,157 | |
Lookers PLC | | | 8,915,000 | | | | 12,754,362 | |
Micro Focus International PLC | | | 357,900 | | | | 6,223,761 | |
NAHL Group PLC(a) | | | 2,324,183 | | | | 3,680,948 | |
Renew Holdings PLC | | | 1,981,000 | | | | 10,719,547 | |
SafeStyle UK PLC(a) | | | 4,775,000 | | | | 3,340,084 | |
Savills PLC | | | 981,600 | | | | 11,260,076 | |
Staffline Group PLC | | | 861,000 | | | | 10,647,579 | |
TP ICAP PLC | | | 1,105,220 | | | | 6,146,833 | |
Ultra Electronics Holdings PLC | | | 499,583 | | | | 10,879,269 | |
XLMedia PLC | | | 4,875,000 | | | | 6,659,216 | |
| | | | | | | 136,517,097 | |
Total Common Stocks & Other Equity Interests (Cost $495,534,611) | | | | 610,100,906 | |
| | | | | | | | |
| | Shares | | | Value | |
Money Market Funds–26.54% | |
Invesco Government & Agency Portfolio– Institutional Class, 1.80%(c) | | | 77,493,126 | | | $ | 77,493,126 | |
Invesco Liquid Assets Portfolio–Institutional Class, 2.02%(c) | | | 55,340,992 | | | | 55,357,594 | |
Invesco Treasury Portfolio–Institutional Class, 1.76%(c) | | | 88,563,572 | | | | 88,563,572 | |
Total Money Market Funds (Cost $221,407,447) | | | | 221,414,292 | |
TOTAL INVESTMENTS IN SECURITIES–99.67% (Cost $716,942,058) | | | | 831,515,198 | |
OTHER ASSETS LESS LIABILITIES–0.33% | | | | 2,731,765 | |
NET ASSETS–100.00% | | | $ | 834,246,963 | |
Notes to Schedule of Investments:
(a) | Affiliated company during the period. The Investment Company Act of 1940 defines an "affiliated person" as an issuance in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The aggregate value of these securities as of June 30, 2018 was $30,441,706, which represented 3.65% of the Fund’s Net Assets. See Note 4. |
(b) | Non-income producing security. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of June 30, 2018. |
Portfolio Composition
By sector, based on Net Assets
as of June 30, 2018
| | | | |
Industrials | | | 23.5 | % |
Financials | | | 13.6 | |
Information Technology | | | 11.6 | |
Consumer Discretionary | | | 10.7 | |
Consumer Staples | | | 5.8 | |
Energy | | | 4.8 | |
Health Care | | | 1.8 | |
Real Estate | | | 1.3 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 26.9 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco European Small Company Fund
Statement of Assets and Liabilities
June 30, 2018
(Unaudited)
| | | | |
Assets: | |
Investments in securities, at value (Cost $458,132,759) | | $ | 579,659,200 | |
Investments in affiliates, at value (Cost $258,809,299) | | | 251,855,998 | |
Foreign currencies, at value (Cost $2,470,663) | | | 2,483,430 | |
Receivable for: | | | | |
Fund shares sold | | | 1,740,810 | |
Dividends | | | 2,727,165 | |
Investment for trustee deferred compensation and retirement plans | | | 88,480 | |
Other assets | | | 56,428 | |
Total assets | | | 838,611,511 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 3,945,033 | |
Accrued fees to affiliates | | | 183,463 | |
Accrued trustees’ and officers’ fees and benefits | | | 5,757 | |
Accrued other operating expenses | | | 131,711 | |
Trustee deferred compensation and retirement plans | | | 98,584 | |
Total liabilities | | | 4,364,548 | |
Net assets applicable to shares outstanding | | $ | 834,246,963 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 687,297,660 | |
Undistributed net investment income | | | 8,068,663 | |
Undistributed net realized gain | | | 24,291,314 | |
Net unrealized appreciation | | | 114,589,326 | |
| | $ | 834,246,963 | |
| | | | |
| |
Net Assets: | | | | |
Class A | | $ | 171,765,801 | |
Class C | | $ | 31,090,676 | |
Class Y | | $ | 608,524,111 | |
Class R6 | | $ | 22,866,375 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Class A | | | 10,685,555 | |
Class C | | | 2,073,899 | |
Class Y | | | 37,660,775 | |
Class R6 | | | 1,414,470 | |
Class A: | | | | |
Net asset value per share | | $ | 16.07 | |
Maximum offering price per share | | | | |
(Net asset value of $16.07 ¸ 94.50%) | | $ | 17.01 | |
Class C: | | | | |
Net asset value and offering price per share | | $ | 14.99 | |
Class Y: | | | | |
Net asset value and offering price per share | | $ | 16.16 | |
Class R6: | | | | |
Net asset value and offering price per share | | $ | 16.17 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco European Small Company Fund
Statement of Operations
For the six months ended June 30, 2018
(Unaudited)
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $1,283,206) | | $ | 12,087,912 | |
Dividends from affiliates | | | 2,469,629 | |
Total investment income | | | 14,557,541 | |
| |
Expenses: | | | | |
Advisory fees | | | 3,903,581 | |
Administrative services fees | | | 106,827 | |
Custodian fees | | | 215,834 | |
Distribution fees: | | | | |
Class A | | | 228,385 | |
Class B | | | 326 | |
Class C | | | 169,071 | |
Transfer agent fees — A, B, C and Y | | | 451,756 | |
Transfer agent fees — R6 | | | 2,120 | |
Trustees’ and officers’ fees and benefits | | | 16,052 | |
Registration and filing fees | | | 48,821 | |
Reports to shareholders | | | 26,884 | |
Professional services fees | | | 24,156 | |
Other | | | 17,084 | |
Total expenses | | | 5,210,897 | |
Less: Fees waived and expense offset arrangement(s) | | | (139,866 | ) |
Net expenses | | | 5,071,031 | |
Net investment income | | | 9,486,510 | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Investment securities | | | 22,401,355 | |
Foreign currencies | | | (202,388 | ) |
| | | 22,198,967 | |
Change in net unrealized appreciation (depreciation) of: | | | | |
Investment securities | | | (58,672,190 | ) |
Foreign currencies | | | 10,210 | |
| | | (58,661,980 | ) |
Net realized and unrealized gain (loss) | | | (36,463,013 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (26,976,503 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco European Small Company Fund
Statement of Changes in Net Assets
For the six months ended June 30, 2018 and the year ended December 31, 2017
(Unaudited)
| | | | | | | | |
| | June 30, 2018 | | | December 31, 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 9,486,510 | | | $ | 13,165,872 | |
Net realized gain | | | 22,198,967 | | | | 17,713,215 | |
Change in net unrealized appreciation (depreciation) | | | (58,661,980 | ) | | | 118,895,483 | |
Net increase (decrease) in net assets resulting from operations | | | (26,976,503 | ) | | | 149,774,570 | |
| | |
Distributions to shareholders from net investment income: | | | | | | | | |
Class A | | | — | | | | (2,987,109 | ) |
Class B | | | — | | | | (4,641 | ) |
Class C | | | — | | | | (337,475 | ) |
Class Y | | | — | | | | (11,075,606 | ) |
Class R6 | | | — | | | | (219 | ) |
Total distributions from net investment income | | | — | | | | (14,405,050 | ) |
| | |
Distributions to shareholders from net realized gains: | | | | | | | | |
Class A | | | — | | | | (2,838,464 | ) |
Class B | | | — | | | | (7,702 | ) |
Class C | | | — | | | | (559,998 | ) |
Class Y | | | — | | | | (9,145,738 | ) |
Class R6 | | | — | | | | (177 | ) |
Total distributions from net realized gains | | | — | | | | (12,552,079 | ) |
| | |
Share transactions-net: | | | | | | | | |
Class A | | | (9,101,721 | ) | | | (36,384,645 | ) |
Class B | | | (472,760 | ) | | | (866,679 | ) |
Class C | | | (2,160,212 | ) | | | (3,322,288 | ) |
Class Y | | | 19,000,701 | | | | 266,053,459 | |
Class R6 | | | 24,564,593 | | | | 10,022 | |
Net increase in net assets resulting from share transactions | | | 31,830,601 | | | | 225,489,869 | |
Net increase in net assets | | | 4,854,098 | | | | 348,307,310 | |
| | |
Net assets: | | | | | | | | |
Beginning of period | | | 829,392,865 | | | | 481,085,555 | |
End of period (includes undistributed net investment income (loss) of $8,068,663 and $(1,417,847), respectively) | | $ | 834,246,963 | | | $ | 829,392,865 | |
Notes to Financial Statements
June 30, 2018
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco European Small Company Fund (the “Fund”) is a series portfolio of AIM Funds Group (Invesco Funds Group) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of four different classes of shares: Class A, Class C, Class Y and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares were permitted to continue to reinvest dividends and capital gains distributions in Class B shares until their conversion to Class A shares. Also, shareholders in Class B shares were able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they converted to Class A shares. Generally, Class B shares automatically converted to Class A shares on or about the month-end, which was at least eight years after the date of purchase. Redemptions of Class B shares prior to the conversion date were subject to a CDSC. Effective January 26, 2018, all of the
9 Invesco European Small Company Fund
Fund’s outstanding Class B shares were converted to Class A shares, in advance of their normally scheduled conversion. No CDSC was paid in connection with this early conversion.
As of the open of business on November 30, 2015, the Fund has closed public sales of its shares to new investors.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net
10 Invesco European Small Company Fund
realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R6 are charged to such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
J. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
11 Invesco European Small Company Fund
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | | | | | |
Average Daily Net Assets | | Rate | |
First $250 million | | | 0 | .935% | | | | |
Next $250 million | | | 0 | .91% | | | | |
Next $500 million | | | 0 | .885% | | | | |
Next $1.5 billion | | | 0 | .86% | | | | |
Next $2.5 billion | | | 0 | .835% | | | | |
Next $2.5 billion | | | 0 | .81% | | | | |
Next $2.5 billion | | | 0 | .785% | | | | |
Over $10 billion | | | 0 | .76% | | | | |
For the six months ended June 30, 2018, the effective advisory fees incurred by the Fund was 0.91%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC, formerly Invesco PowerShares Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2019, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class Y and Class R6 shares to 2.25%, 3.00%, 2.00% and 2.00%, respectively, of average daily net assets (the “expense limits”). Prior to their conversion to Class A shares, the expense limit for Class B shares was 3.00% of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2019. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2020, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended June 30, 2018, the Adviser waived advisory fees of $137,477.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class Y and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. Prior to their conversion to Class A shares, the Fund paid an annual rate of 1.00% of the average daily net assets of Class B shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges,
12 Invesco European Small Company Fund
that may be paid by any class of shares of the Fund. For the six months ended June 30, 2018, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2018, IDI advised the Fund that IDI retained $4,749 in front-end sales commissions from the sale of Class A shares and $653 from Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of June 30, 2018. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
The Fund’s policy is to recognize transfers in and out of the valuation levels as of the end of the reporting period. During the six months ended June 30, 2018, there were transfers from Level 1 to Level 2 of $89,644,017 and from Level 2 to Level 1 of $130,413,793, due to foreign fair value adjustments.
| | | | | | | | | | | | | | | | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities | | | | | | | | | | | | | | | | |
Belgium | | $ | 9,595,513 | | | $ | — | | | $ | — | | | $ | 9,595,513 | |
France | | | 145,249,737 | | | | 3,883,252 | | | | — | | | | 149,132,989 | |
Germany | | | 8,577,999 | | | | 15,364,702 | | | | — | | | | 23,942,701 | |
Greece | | | 25,299,169 | | | | — | | | | — | | | | 25,299,169 | |
Ireland | | | 19,359,125 | | | | 25,387,939 | | | | — | | | | 44,747,064 | |
Israel | | | 2,616,000 | | | | 27,786,783 | | | | — | | | | 30,402,783 | |
Italy | | | 23,110,211 | | | | 6,280,605 | | | | — | | | | 29,390,816 | |
Norway | | | 37,301,603 | | | | — | | | | — | | | | 37,301,603 | |
Portugal | | | 2,919,988 | | | | — | | | | — | | | | 2,919,988 | |
Romania | | | 54,888,527 | | | | 9,373,736 | | | | — | | | | 64,262,263 | |
Spain | | | 15,082,480 | | | | — | | | | — | | | | 15,082,480 | |
Switzerland | | | 34,652,367 | | | | — | | | | — | | | | 34,652,367 | |
Turkey | | | — | | | | 6,854,073 | | | | — | | | | 6,854,073 | |
United Kingdom | | | 94,268,043 | | | | 42,249,054 | | | | — | | | | 136,517,097 | |
Money Market Funds | | | 221,414,292 | | | | — | | | | — | | | | 221,414,292 | |
Total Investments | | $ | 694,335,054 | | | $ | 137,180,144 | | | $ | — | | | $ | 831,515,198 | |
13 Invesco European Small Company Fund
NOTE 4—Investments in Other Affiliates
The 1940 Act defines an “affiliated person” as an issuance in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The following is a summary of the investments in other affiliates (excluding affiliated money market funds) for the six months ended June 30, 2018.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Value 12/31/17 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in Unrealized Appreciation (Depreciation) | | | Realized Gain (Loss) | | | Value 06/30/18 | | | Dividend Income | |
Safestyle UK PLC(a) | | $ | 7,737,761 | | | $ | 2,000,224 | | | $ | — | | | $ | (6,397,901 | ) | | $ | — | | | $ | 3,340,084 | | | $ | — | |
Linedata Services | | | 23,872,553 | | | | — | | | | — | | | | (3,067,879 | ) | | | — | | | | 20,804,674 | | | | — | |
Mind CTI Ltd | | | 3,324,000 | | | | — | | | | — | | | | (708,000 | ) | | | — | | | | 2,616,000 | | | | 288,000 | |
NAHL Group PLC | | | 5,189,268 | | | | — | | | | — | | | | (1,508,320 | ) | | | — | | | | 3,680,948 | | | | 343,209 | |
Total | | $ | 40,123,582 | | | $ | 2,000,224 | | | $ | — | | | $ | (11,682,100 | ) | | $ | — | | | $ | 30,441,706 | | | $ | 631,209 | |
(a) | As of December 31, 2017, this security was not considered as an affiliate of the Fund. |
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended June 30, 2018, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $2,389.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of December 31, 2017.
14 Invesco European Small Company Fund
NOTE 9—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2018 was $75,958,614 and $36,792,910, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
Aggregate unrealized appreciation of investments | | $ | 145,654,067 | |
Aggregate unrealized (depreciation) of investments | | | (33,777,487 | ) |
Net unrealized appreciation of investments | | $ | 111,876,580 | |
Cost of investments for tax purposes is $719,638,618.
NOTE 10—Share Information
| | | | | | | | | | | | | | | | |
| | Summary of Share Activity | |
| | Six months ended June 30, 2018(a) | | | Year ended December 31, 2017 | |
| | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Class A | | | 858,994 | | | $ | 14,240,717 | | | | 2,177,203 | | | $ | 33,761,219 | |
Class B(b) | | | 150 | | | | 2,338 | | | | 1,276 | | | | 18,113 | |
Class C | | | 78,231 | | | | 1,225,142 | | | | 159,092 | | | | 2,315,394 | |
Class Y | | | 8,003,931 | | | | 135,041,906 | | | | 21,729,878 | | | | 341,938,593 | |
Class R6(d) | | | 1,583,159 | | | | 27,405,621 | | | | 683 | | | | 10,022 | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Class A | | | — | | | | — | | | | 333,085 | | | | 5,385,982 | |
Class B(b) | | | — | | | | — | | | | 761 | | | | 11,508 | |
Class C | | | — | | | | — | | | | 56,560 | | | | 856,327 | |
Class Y | | | — | | | | — | | | | 1,035,701 | | | | 16,809,426 | |
| | | | |
Conversion of Class B shares to Class A shares:(c) | | | | | | | | | | | | | | | | |
Class A | | | 13,814 | | | | 242,154 | | | | 46,770 | | | | 736,365 | |
Class B | | | (14,078 | ) | | | (242,154 | ) | | | (50,113 | ) | | | (736,365 | ) |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Class A | | | (1,422,914 | ) | | | (23,584,592 | ) | | | (5,102,092 | ) | | | (76,268,211 | ) |
Class B(b) | | | (14,959 | ) | | | (232,944 | ) | | | (11,144 | ) | | | (159,935 | ) |
Class C | | | (219,237 | ) | | | (3,385,354 | ) | | | (451,974 | ) | | | (6,494,009 | ) |
Class Y | | | (6,900,686 | ) | | | (116,041,205 | ) | | | (5,995,212 | ) | | | (92,694,560 | ) |
Class R6 | | | (169,372 | ) | | | (2,841,028 | ) | | | — | | | | — | |
Net increase in share activity | | | 1,797,033 | | | $ | 31,830,601 | | | | 13,930,474 | | | $ | 225,489,869 | |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 64% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Class B shares activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
(c) | Effective as of the close of business January 26, 2018, all outstanding Class B shares were converted to Class A shares. |
(d) | Commencement date of April 4, 2017 |
15 Invesco European Small Company Fund
NOTE 11—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net asset value, beginning of period | | | Net investment income(a) | | | Net gains (losses) on securities (both realized and unrealized) | | | Total from investment operations | | | Dividends from net investment income | | | Distributions from net realized gains | | | Total distributions | | | Net asset value, end of period | | | Total return(b) | | | Net assets, end of period (000’s omitted) | | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | | Ratio of net investment income to average net assets | | | Portfolio turnover(c) | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | $ | 16.58 | | | $ | 0.17 | | | $ | (0.68 | ) | | $ | (0.51 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | 16.07 | | | | (3.08 | )% | | $ | 171,766 | | | | 1.34 | %(e) | | | 1.37 | %(e) | | | 2.04 | %(e) | | | 6 | % |
Year ended 12/31/17 | | | 13.35 | | | | 0.29 | (d) | | | 3.47 | | | | 3.76 | | | | (0.27 | ) | | | (0.26 | ) | | | (0.53 | ) | | | 16.58 | | | | 28.29 | | | | 186,233 | | | | 1.40 | | | | 1.42 | | | | 1.85 | (d) | | | 10 | |
Year ended 12/31/16 | | | 12.55 | | | | 0.23 | | | | 0.85 | | | | 1.08 | | | | (0.28 | ) | | | — | | | | (0.28 | ) | | | 13.35 | | | | 8.61 | | | | 184,024 | | | | 1.40 | | | | 1.42 | | | | 1.80 | | | | 11 | |
Year ended 12/31/15 | | | 12.36 | | | | 0.14 | | | | 0.73 | | | | 0.87 | | | | (0.19 | ) | | | (0.49 | ) | | | (0.68 | ) | | | 12.55 | | | | 7.01 | | | | 205,621 | | | | 1.44 | | | | 1.46 | | | | 1.12 | | | | 19 | |
Year ended 12/31/14 | | | 14.85 | | | | 0.26 | (d) | | | (1.31 | ) | | | (1.05 | ) | | | (0.28 | ) | | | (1.16 | ) | | | (1.44 | ) | | | 12.36 | | | | (7.02 | ) | | | 173,809 | | | | 1.39 | | | | 1.41 | | | | 1.72 | (d) | | | 14 | |
Year ended 12/31/13 | | | 11.56 | | | | 0.12 | | | | 3.48 | | | | 3.60 | | | | (0.07 | ) | | | (0.24 | ) | | | (0.31 | ) | | | 14.85 | | | | 31.18 | | | | 308,622 | | | | 1.46 | | | | 1.49 | | | | 0.88 | | | | 9 | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18(h) | | | 15.49 | | | | 0.01 | | | | 0.87 | | | | 0.88 | | | | — | | | | — | | | | — | | | | 16.37 | | | | 5.68 | | | | — | | | | 2.09 | (e) | | | 2.12 | (e) | | | 1.29 | (e) | | | 6 | |
Year ended 12/31/17 | | | 12.51 | | | | 0.16 | (d) | | | 3.24 | | | | 3.40 | | | | (0.16 | ) | | | (0.26 | ) | | | (0.42 | ) | | | 15.49 | | | | 27.23 | | | | 447 | | | | 2.15 | | | | 2.17 | | | | 1.10 | (d) | | | 10 | |
Year ended 12/31/16 | | | 11.76 | | | | 0.13 | | | | 0.79 | | | | 0.92 | | | | (0.17 | ) | | | — | | | | (0.17 | ) | | | 12.51 | | | | 7.88 | | | | 1,102 | | | | 2.15 | | | | 2.17 | | | | 1.05 | | | | 11 | |
Year ended 12/31/15 | | | 11.65 | | | | 0.04 | | | | 0.68 | | | | 0.72 | | | | (0.12 | ) | | | (0.49 | ) | | | (0.61 | ) | | | 11.76 | | | | 6.16 | | | | 2,262 | | | | 2.19 | | | | 2.21 | | | | 0.37 | | | | 19 | |
Year ended 12/31/14 | | | 14.05 | | | | 0.14 | (d) | | | (1.23 | ) | | | (1.09 | ) | | | (0.15 | ) | | | (1.16 | ) | | | (1.31 | ) | | | 11.65 | | | | (7.71 | ) | | | 2,938 | | | | 2.14 | | | | 2.16 | | | | 0.97 | (d) | | | 14 | |
Year ended 12/31/13 | | | 10.99 | | | | 0.02 | | | | 3.29 | | | | 3.31 | | | | (0.01 | ) | | | (0.24 | ) | | | (0.25 | ) | | | 14.05 | | | | 30.14 | | | | 5,299 | | | | 2.21 | | | | 2.24 | | | | 0.13 | | | | 9 | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 15.52 | | | | 0.10 | | | | (0.63 | ) | | | (0.53 | ) | | | — | | | | — | | | | — | | | | 14.99 | | | | (3.41 | ) | | | 31,091 | | | | 2.09 | (e) | | | 2.12 | (e) | | | 1.29 | (e) | | | 6 | |
Year ended 12/31/17 | | | 12.53 | | | | 0.16 | (d) | | | 3.25 | | | | 3.41 | | | | (0.16 | ) | | | (0.26 | ) | | | (0.42 | ) | | | 15.52 | | | | 27.27 | | | | 34,366 | | | | 2.15 | | | | 2.17 | | | | 1.10 | (d) | | | 10 | |
Year ended 12/31/16 | | | 11.78 | | | | 0.13 | | | | 0.79 | | | | 0.92 | | | | (0.17 | ) | | | — | | | | (0.17 | ) | | | 12.53 | | | | 7.87 | | | | 30,709 | | | | 2.15 | | | | 2.17 | | | | 1.05 | | | | 11 | |
Year ended 12/31/15 | | | 11.66 | | | | 0.04 | | | | 0.69 | | | | 0.73 | | | | (0.12 | ) | | | (0.49 | ) | | | (0.61 | ) | | | 11.78 | | | | 6.24 | | | | 36,613 | | | | 2.19 | | | | 2.21 | | | | 0.37 | | | | 19 | |
Year ended 12/31/14 | | | 14.07 | | | | 0.14 | (d) | | | (1.24 | ) | | | (1.10 | ) | | | (0.15 | ) | | | (1.16 | ) | | | (1.31 | ) | | | 11.66 | | | | (7.78 | ) | | | 34,195 | | | | 2.14 | | | | 2.16 | | | | 0.97 | (d) | | | 14 | |
Year ended 12/31/13 | | | 11.00 | | | | 0.02 | | | | 3.30 | | | | 3.32 | | | | (0.01 | ) | | | (0.24 | ) | | | (0.25 | ) | | | 14.07 | | | | 30.20 | | | | 51,379 | | | | 2.21 | | | | 2.24 | | | | 0.13 | | | | 9 | |
Class Y | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.64 | | | | 0.19 | | | | (0.67 | ) | | | (0.48 | ) | | | — | | | | — | | | | — | | | | 16.16 | | | | (2.88 | ) | | | 608,524 | | | | 1.09 | (e) | | | 1.12 | (e) | | | 2.29 | (e) | | | 6 | |
Year ended 12/31/17 | | | 13.41 | | | | 0.34 | (d) | | | 3.46 | | | | 3.80 | | | | (0.31 | ) | | | (0.26 | ) | | | (0.57 | ) | | | 16.64 | | | | 28.48 | | | | 608,335 | | | | 1.15 | | | | 1.17 | | | | 2.10 | (d) | | | 10 | |
Year ended 12/31/16 | | | 12.60 | | | | 0.27 | | | | 0.85 | | | | 1.12 | | | | (0.31 | ) | | | — | | | | (0.31 | ) | | | 13.41 | | | | 8.95 | | | | 265,250 | | | | 1.15 | | | | 1.17 | | | | 2.05 | | | | 11 | |
Year ended 12/31/15 | | | 12.39 | | | | 0.18 | | | | 0.73 | | | | 0.91 | | | | (0.21 | ) | | | (0.49 | ) | | | (0.70 | ) | | | 12.60 | | | | 7.33 | | | | 257,177 | | | | 1.19 | | | | 1.21 | | | | 1.37 | | | | 19 | |
Year ended 12/31/14 | | | 14.90 | | | | 0.30 | (d) | | | (1.32 | ) | | | (1.02 | ) | | | (0.33 | ) | | | (1.16 | ) | | | (1.49 | ) | | | 12.39 | | | | (6.81 | ) | | | 140,910 | | | | 1.14 | | | | 1.16 | | | | 1.97 | (d) | | | 14 | |
Year ended 12/31/13 | | | 11.59 | | | | 0.16 | | | | 3.48 | | | | 3.64 | | | | (0.09 | ) | | | (0.24 | ) | | | (0.33 | ) | | | 14.90 | | | | 31.44 | | | | 288,198 | | | | 1.21 | | | | 1.24 | | | | 1.13 | | | | 9 | |
Class R6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.64 | | | | 0.20 | | | | (0.67 | ) | | | (0.47 | ) | | | — | | | | — | | | | — | | | | 16.17 | | | | (2.82 | ) | | | 22,866 | | | | 1.00 | (e) | | | 1.03 | (e) | | | 2.38 | (e) | | | 6 | |
Year ended 12/31/17(f) | | | 14.67 | | | | 0.27 | (d) | | | 2.28 | | | | 2.55 | | | | (0.32 | ) | | | (0.26 | ) | | | (0.58 | ) | | | 16.64 | | | | 17.49 | | | | 11 | | | | 1.08 | (g) | | | 1.10 | (g) | | | 2.17 | (d)(g) | | | 10 | |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Net investment income per share and the ratio of net investment income to average net assets include significant dividends received during the year ended December 31, 2017. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.24 and 1.51%, $0.11 and 0.76%, $0.11 and 0.76%, $0.29 and 1.76% and $0.22 and 1.83% for Class A, Class B, Class C, Class Y and Class R6 shares, respectively. |
| Net investment income per share and the ratio of net investment income to average net assets include significant dividends received during the year ended December 31, 2014. Net investment income per share and the ratio of net investment income to average net assets excluding the significant dividends are $0.18 and 1.23%, $0.07 and 0.48%, $0.07 and 0.48% and $0.22 and 1.48% for Class A, Class B, Class C and Class Y shares, respectively. |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $184,222, $459, $34,095, $630,096 and $19,811 for Class A, Class B, Class C, Class Y and Class R6 shares, respectively. |
(f) | Commencement date of April 4, 2017. |
(h) | Reflects activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
16 Invesco European Small Company Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2018 through June 30, 2018.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | | | | | | | | |
Class | | Beginning Account Value (01/01/18) | | | ACTUAL | | | HYPOTHETICAL (5% annual return before expenses) | | | Annualized Expense Ratio | |
| Ending Account Value (06/30/18)1 | | | Expenses Paid During Period2 | | | Ending Account Value (06/30/18) | | | Expenses Paid During Period2 | |
A | | $ | 1,000.00 | | | $ | 969.80 | | | $ | 6.54 | | | $ | 1,018.15 | | | $ | 6.71 | | | | 1.34 | % |
C | | | 1,000.00 | | | | 965.90 | | | | 10.19 | | | | 1,014.43 | | | | 10.44 | | | | 2.09 | |
Y | | | 1,000.00 | | | | 971.20 | | | | 5.33 | | | | 1,019.39 | | | | 5.46 | | | | 1.09 | |
R6 | | | 1,000.00 | | | | 971.80 | | | | 4.89 | | | | 1,019.84 | | | | 5.01 | | | | 1.00 | |
1 | The actual ending account value is based on the actual total return of the Fund for the period January 1, 2018 through June 30, 2018, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 181/365 to reflect the most recent fiscal half year. |
17 Invesco European Small Company Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 5-6, 2018, the Board of Trustees (the Board or the Trustees) of AIM Funds Group (Invesco Funds Group) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco European Small Company Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc., Invesco Canada Ltd. and separate Sub-Advisory Contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2018. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established three Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s
evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 6, 2018.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also reviewed and considered the benefits to shareholders of investing in a fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2017 to the performance of funds in the Broadridge performance universe and against the Lipper European Funds Index. The Board noted that performance of Class A shares of the Fund was in the second quintile of its performance universe for the one year period and the first quintile for the three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was above the performance of the Index for the one, three and five year periods. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was above the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for
18 Invesco European Small Company Fund
funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s actual and contractual management fees and total expense ratio were in the fifth and fourth quintiles of its expense group, respectively, and discussed with management reasons for such relative actual and contractual management fees and total expenses.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services. The Board considered the methodology used for calculating profitability and noted the periodic review of such methodology by an independent consultant. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds and the Fund. The
Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from Invesco representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any
securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco European Small Company Fund
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The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q (or any successor Form). The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q (or any successor Form) on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q (or any successor Form) may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov.
| | |
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. | |  |
| | | | |
SEC file numbers: 811-01540 and 002-27334 | | Invesco Distributors, Inc. | | ESC-SAR-1 08102018 1529 |
| | | | |
| | |
 | | Semiannual Report to Shareholders | | June 30, 2018 |
| |
| Invesco Global Core Equity Fund |
| Nasdaq: | | |
| | A: AWSAX ∎ C: AWSCX ∎ R: AWSRX ∎ Y: AWSYX ∎ R5: AWSIX ∎ R6: AWSSX |

| | | | | | |
| | |
| | 2 | | Fund Performance | | |
| | 4 | | Letters to Shareholders | | |
| | 5 | | Schedule of Investments | | |
| | 7 | | Financial Statements | | |
| | 9 | | Notes to Financial Statements | | |
| | 18 | | Financial Highlights | | |
| | 19 | | Fund Expenses | | |
| | 20 | | Approval of Investment Advisory and Sub-Advisory Contracts | | |
| |
| | For the most current month-end Fund performance and commentary, please visit invesco.com/performance. Unless otherwise noted, all data provided by Invesco. This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing. |
| | |
| | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Fund Performance
| | | | |
Performance summary | | | | |
Fund vs. Indexes Cumulative total returns, 12/31/17 to 6/30/18, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. | |
Class A Shares | | | -2.90 | % |
Class C Shares | | | -3.24 | |
Class R Shares | | | -3.03 | |
Class Y Shares | | | -2.72 | |
Class R5 Shares | | | -2.74 | |
Class R6 Shares | | | -2.74 | |
MSCI World Index q (Broad Market/Style-Specific Index) | | | 0.43 | |
Lipper Global Large-Cap Core Funds Index∎ (Peer Group Index) | | | -0.57 | |
Source(s): qFactSet Research Systems Inc.; ∎Lipper Inc. The MSCI World IndexSM is an unmanaged index considered representative of stocks of developed countries. The index is computed using the net return, which withholds applicable taxes for non-resident investors. The Lipper Global Large-Cap Core Funds Index is an unmanaged index considered representative of global large-cap core funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. | |
|
For more information about your Fund Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. |
2 Invesco Global Core Equity Fund
| | | | |
Average Annual Total Returns | |
As of 6/30/18, including maximum applicable sales charges | |
Class A Shares | | | | |
Inception (12/29/00) | | | 5.10 | % |
10 Years | | | 3.54 | |
5 Years | | | 6.33 | |
1 Year | | | 1.39 | |
Class C Shares | | | | |
Inception (12/29/00) | | | 4.68 | % |
10 Years | | | 3.36 | |
5 Years | | | 6.73 | |
1 Year | | | 5.53 | |
Class R Shares | | | | |
10 Years | | | 3.86 | % |
5 Years | | | 7.27 | |
1 Year | | | 7.03 | |
Class Y Shares | | | | |
10 Years | | | 4.37 | % |
5 Years | | | 7.80 | |
1 Year | | | 7.62 | |
Class R5 Shares | | | | |
Inception (10/25/05) | | | 4.81 | % |
10 Years | | | 4.56 | |
5 Years | | | 7.90 | |
1 Year | | | 7.59 | |
Class R6 Shares | | | | |
10 Years | | | 4.16 | % |
5 Years | | | 7.60 | |
1 Year | | | 7.52 | |
Class R shares incepted on May 23, 2011. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated.
Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.22%, 1.97%, 1.47%, 0.97%, 0.97% and 0.97%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.34%, 2.09%, 1.59%, 1.09%, 0.99% and 0.99%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least April 30, 2019. See current prospectus for more information. |
3 Invesco Global Core Equity Fund
Letters to Shareholders
| | |

Bruce Crockett | | Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. |
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper, Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,

Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| | |

Philip Taylor | | Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction. This means that, no matter the asset class or the strategy, each investment team has a passion to exceed. We want to help investors achieve better outcomes, such as seeking higher returns, helping mitigate risk and generating income. Of course, investing with high conviction can’t guarantee a profit or ensure success; no investment strategy can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about your account by completing a simple, secure online registration. To do so, select “Log In” |
on the right side of the homepage, and then select “Register for Individual Account Access.”
Finally, I’m pleased to share with you Invesco’s commitment to both the Principles for Responsible Investment and to considering environmental, social and governance issues in our robust investment process. I invite you to learn more at invesco.com/esg.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,

Philip Taylor
Senior Managing Director, Invesco Ltd.
4 Invesco Global Core Equity Fund
Schedule of Investments
June 30, 2018
(Unaudited)
| | | | | | | | |
| | Shares | | | Value | |
Common Stocks & Other Equity Interests–97.18% | |
Australia–1.51% | |
Brambles Ltd. | | | 651,295 | | | $ | 4,287,124 | |
Rio Tinto PLC | | | 159,201 | | | | 8,780,720 | |
| | | | | | | 13,067,844 | |
|
Brazil–0.59% | |
PagSeguro Digital Ltd.–Class A(a) | | | 185,762 | | | | 5,154,895 | |
|
China–1.40% | |
Baidu, Inc.–ADR(a) | | | 50,139 | | | | 12,183,777 | |
|
Denmark–1.55% | |
A.P. Møller – Maersk A/S–Class B | | | 4,061 | | | | 5,058,351 | |
Novo Nordisk A/S–Class B | | | 182,033 | | | | 8,406,709 | |
| | | | | | | 13,465,060 | |
|
Germany–3.36% | |
Infineon Technologies AG | | | 203,191 | | | | 5,179,520 | |
KION Group AG | | | 51,431 | | | | 3,695,383 | |
Siemens AG | | | 153,436 | | | | 20,285,312 | |
| | | | | | | 29,160,215 | |
|
Hong Kong–2.56% | |
AIA Group Ltd. | | | 2,564,800 | | | | 22,204,076 | |
|
India–1.44% | |
Housing Development Finance Corp. Ltd. | | | 333,427 | | | | 9,291,837 | |
InterGlobe Aviation Ltd.–REGS(b) | | | 201,120 | | | | 3,197,300 | |
| | | | | | | 12,489,137 | |
|
Ireland–1.04% | |
James Hardie Industries PLC | | | 538,059 | | | | 9,058,581 | |
|
Italy–4.40% | |
Banca Mediolanum S.p.A. | | | 1,113,063 | | | | 7,526,728 | |
Enel S.p.A. | | | 3,904,438 | | | | 21,629,246 | |
Prysmian S.p.A. | | | 364,518 | | | | 9,056,439 | |
| | | | | | | 38,212,413 | |
|
Japan–13.67% | |
Asahi Group Holdings, Ltd. | | | 369,600 | | | | 18,937,409 | |
Daito Trust Construction Co., Ltd. | | | 81,300 | | | | 13,226,857 | |
Hitachi, Ltd. | | | 1,670,000 | | | | 11,765,170 | |
KDDI Corp. | | | 648,200 | | | | 17,724,559 | |
Komatsu Ltd. | | | 460,301 | | | | 13,103,223 | |
Nissan Chemical Corp. | | | 100,700 | | | | 4,692,188 | |
Seven & i Holdings Co., Ltd. | | | 226,600 | | | | 9,878,201 | |
Shimano Inc. | | | 69,900 | | | | 10,267,155 | |
SoftBank Group Corp. | | | 190,100 | | | | 13,642,443 | |
Suruga Bank Ltd. | | | 599,800 | | | | 5,369,483 | |
| | | | | | | 118,606,688 | |
|
Luxembourg–0.67% | |
ArcelorMittal | | | 199,434 | | | | 5,823,572 | |
|
Netherlands–3.51% | |
Heineken N.V. | | | 83,696 | | | | 8,390,733 | |
ING Groep N.V. | | | 788,434 | | | | 11,312,532 | |
| | | | | | | | |
| | Shares | | | Value | |
Netherlands–(continued) | |
Randstad N.V. | | | 183,486 | | | $ | 10,767,687 | |
| | | | | | | 30,470,952 | |
|
Norway–0.49% | |
Orkla ASA | | | 480,558 | | | | 4,207,800 | |
|
Singapore–0.87% | |
DBS Group Holdings Ltd. | | | 387,700 | | | | 7,528,236 | |
|
South Africa–0.48% | |
Naspers Ltd.–Class N | | | 16,274 | | | | 4,134,612 | |
|
South Korea–0.78% | |
Samsung Electronics Co., Ltd. | | | 161,550 | | | | 6,744,646 | |
|
Sweden–1.31% | |
Svenska Handelsbanken AB–Class A | | | 1,024,368 | | | | 11,367,619 | |
|
Switzerland–2.32% | |
Glencore PLC | | | 1,986,248 | | | | 9,417,519 | |
UBS Group AG | | | 695,601 | | | | 10,701,873 | |
| | | | | | | 20,119,392 | |
|
Taiwan–0.71% | |
Taiwan Semiconductor Manufacturing Co. Ltd. | | | 870,000 | | | | 6,192,488 | |
|
United Kingdom–8.32% | |
Imperial Brands PLC | | | 320,131 | | | | 11,923,201 | |
Just Eat PLC(a) | | | 1,081,862 | | | | 11,122,885 | |
Royal Dutch Shell PLC–Class A–ADR | | | 357,292 | | | | 24,735,325 | |
St. James’s Place PLC | | | 1,042,465 | | | | 15,787,825 | |
Vodafone Group PLC–ADR | | | 354,161 | | | | 8,609,654 | |
| | | | | | | 72,178,890 | |
|
United States–46.20% | |
Allergan PLC | | | 70,045 | | | | 11,677,902 | |
Alphabet Inc.–Class C(a) | | | 25,389 | | | | 28,325,238 | |
American Express Co. | | | 188,277 | | | | 18,451,146 | |
Aptiv PLC | | | 91,494 | | | | 8,383,595 | |
Biogen Inc.(a) | | | 41,804 | | | | 12,133,193 | |
BioMarin Pharmaceutical Inc.(a) | | | 87,907 | | | | 8,280,839 | |
Booking Holdings Inc.(a) | | | 6,356 | | | | 12,884,184 | |
Carnival Corp. | | | 170,967 | | | | 9,798,119 | |
Celgene Corp.(a) | | | 98,164 | | | | 7,796,185 | |
Chevron Corp. | | | 241,342 | | | | 30,512,869 | |
Cognizant Technology Solutions Corp.–Class A | | | 175,137 | | | | 13,834,072 | |
Colfax Corp.(a) | | | 426,795 | | | | 13,081,267 | |
Comcast Corp.–Class A | | | 355,145 | | | | 11,652,307 | |
Concho Resources Inc.(a) | | | 98,861 | | | | 13,677,419 | |
Delta Air Lines, Inc. | | | 343,066 | | | | 16,995,490 | |
eBay Inc.(a) | | | 368,340 | | | | 13,356,008 | |
EPAM Systems, Inc.(a) | | | 86,251 | | | | 10,723,587 | |
Facebook, Inc.–Class A(a) | | | 53,375 | | | | 10,371,830 | |
FedEx Corp. | | | 46,029 | | | | 10,451,345 | |
First Republic Bank | | | 270,484 | | | | 26,180,146 | |
HCA Healthcare, Inc. | | | 109,399 | | | | 11,224,337 | |
Marsh & McLennan Cos., Inc. | | | 113,577 | | | | 9,309,907 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Global Core Equity Fund
| | | | | | | | |
| | Shares | | | Value | |
United States–(continued) | |
Mastercard Inc.–Class A | | | 412 | | | $ | 80,966 | |
Moody’s Corp. | | | 30,865 | | | | 5,264,334 | |
NIKE, Inc.–Class B | | | 206,025 | | | | 16,416,072 | |
Oracle Corp. | | | 280,999 | | | | 12,380,816 | |
PepsiCo, Inc. | | | 105,403 | | | | 11,475,225 | |
Progressive Corp. (The) | | | 86,978 | | | | 5,144,749 | |
Sherwin-Williams Co. (The) | | | 22,605 | | | | 9,213,120 | |
U.S. Bancorp | | | 214,558 | | | | 10,732,191 | |
United Technologies Corp. | | | 116,189 | | | | 14,527,111 | |
Zimmer Biomet Holdings, Inc. | | | 58,991 | | | | 6,573,957 | |
| | | | | | | 400,909,526 | |
Total Common Stocks & Other Equity Interests (Cost $753,236,019) | | | | 843,280,419 | |
| | | | | | | | |
| | Shares | | | Value | |
Money Market Funds–2.56% | |
Invesco Government & Agency Portfolio–Institutional Class, 1.80%(c) | | | 8,742,657 | | | $ | 8,742,657 | |
Invesco Treasury Portfolio–Institutional Class, 1.76%(c) | | | 13,476,536 | | | | 13,476,536 | |
Total Money Market Funds (Cost $22,219,193) | | | | 22,219,193 | |
| | |
Options Purchased–0.02% | | | | | | | | |
(Cost $218,652)(d) | | | | | | | 167,090 | |
TOTAL INVESTMENTS IN SECURITIES–99.76% (Cost $775,673,864) | | | | 865,666,702 | |
OTHER ASSETS LESS LIABILITIES–0.24% | | | | 2,081,985 | |
NET ASSETS–100.00% | | | $ | 867,748,687 | |
Investment Abbreviations:
| | |
ADR | | – American Depositary Receipt |
REGS | | – Regulation S |
Notes to Schedule of Investments:
(a) | Non-income producing security. |
(b) | Security purchased or received in transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The value of this security at June 30, 2018 represented less than 1% of the Fund’s Net Assets. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of June 30, 2018. |
(d) | The table below details options purchased: See Note 1L: |
| | | | | | | | | | | | | | | | | | | | | | | | |
Open Exchange-Traded Index Options Purchased | |
Description | | Type of Contract | | | Expiration Date | | | Number of Contracts | | | Exercise Price | | | Notional Value(a) | | | Value | |
S&P 500 Index | | | Put | | | | 09/21/2018 | | | | 70 | | | | USD 2,600 | | | | USD 1,820,000 | | | $ | 167,090 | |
Total Options Purchased — Equity Risk (Cost $218,652) | | | | | | | | | | | | | | | | | | | $ | 167,090 | |
(a) | Notional Value is calculated by multiplying the Number of Contracts by the Exercise Price by the multiplier. |
| | | | | | | | | | | | | | | | | | | | | | |
Open Forward Foreign Currency Contracts | |
Settlement Date | | Counterparty | | Contract to | | | Unrealized Appreciation | |
| Deliver | | | Receive | |
08/08/2018 | | Goldman Sachs International | | | JPY | | | | 1,200,000,000 | | | | USD | | | | 10,988,357 | | | $ | 118,513 | |
08/08/2018 | | JPMorgan Chase Bank, N.A. | | | JPY | | | | 1,200,000,000 | | | | USD | | | | 10,989,212 | | | | 119,368 | |
Total Forward Foreign Currency Contracts — Currency Risk | | | | | | | | | | | | | | | | | | $ | 237,881 | |
Currency Abbreviations:
| | |
JPY | | – Japanese Yen |
USD | | – U.S. Dollar |
Portfolio Composition
By sector, based on Net Assets
as of June 30, 2018
| | | | |
Financials | | | 20.3 | % |
Information Technology | | | 17.0 | |
Industrials | | | 14.4 | |
Consumer Discretionary | | | 8.5 | |
Energy | | | 7.9 | |
Health Care | | | 7.6 | |
Consumer Staples | | | 7.5 | |
Materials | | | 5.4 | |
Telecommunication Services | | | 4.6 | |
Utilities | | | 2.5 | |
Real Estate | | | 1.5 | |
Put Options Purchased | | | 0.0 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 2.8 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Global Core Equity Fund
Statement of Assets and Liabilities
June 30, 2018
(Unaudited)
| | | | |
Assets: | | | | |
Investments in securities, at value (Cost $753,454,671) | | $ | 843,447,509 | |
Investments in affiliated money market funds, at value | | | 22,219,193 | |
Other investments: | | | | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 237,881 | |
Foreign currencies, at value (Cost $1,173,303) | | | 1,170,218 | |
Receivable for: | | | | |
Investments sold | | | 52,848 | |
Fund shares sold | | | 105,276 | |
Dividends | | | 1,757,672 | |
Investment for trustee deferred compensation and retirement plans | | | 223,957 | |
Other assets | | | 46,619 | |
Total assets | | | 869,261,173 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 413,879 | |
Amount due custodian | | | 96,065 | |
Accrued fees to affiliates | | | 546,825 | |
Accrued trustees’ and officers’ fees and benefits | | | 5,859 | |
Accrued other operating expenses | | | 159,144 | |
Trustee deferred compensation and retirement plans | | | 290,714 | |
Total liabilities | | | 1,512,486 | |
Net assets applicable to shares outstanding | | $ | 867,748,687 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 719,481,920 | |
Undistributed net investment income | | | 5,862,152 | |
Undistributed net realized gain | | | 52,180,341 | |
Net unrealized appreciation | | | 90,224,274 | |
| | $ | 867,748,687 | |
| | | | |
Net Assets: | | | | |
Class A | | $ | 745,957,267 | |
Class C | | $ | 71,953,336 | |
Class R | | $ | 1,677,026 | |
Class Y | | $ | 39,356,403 | |
Class R5 | | $ | 438,127 | |
Class R6 | | $ | 8,366,528 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Class A | | | 47,420,262 | |
Class C | | | 4,817,383 | |
Class R | | | 106,797 | |
Class Y | | | 2,499,626 | |
Class R5 | | | 27,454 | |
Class R6 | | | 524,161 | |
Class A: | | | | |
Net asset value per share | | $ | 15.73 | |
Maximum offering price per share | | | | |
(Net asset value of $15.73 ¸ 94.50%) | | $ | 16.65 | |
Class C: | | | | |
Net asset value and offering price per share | | $ | 14.94 | |
Class R: | | | | |
Net asset value and offering price per share | | $ | 15.70 | |
Class Y: | | | | |
Net asset value and offering price per share | | $ | 15.74 | |
Class R5: | | | | |
Net asset value and offering price per share | | $ | 15.96 | |
Class R6: | | | | |
Net asset value and offering price per share | | $ | 15.96 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Global Core Equity Fund
Statement of Operations
For the six months ended June 30, 2018
(Unaudited)
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $895,491) | | $ | 11,779,495 | |
Dividends from affiliated money market funds (includes securities lending income of $46,890) | | | 146,279 | |
Total investment income | | | 11,925,774 | |
| |
Expenses: | | | | |
Advisory fees | | | 3,552,394 | |
Administrative services fees | | | 118,009 | |
Custodian fees | | | 127,325 | |
Distribution fees: | | | | |
Class A | | | 979,637 | |
Class B | | | 6,953 | |
Class C | | | 393,748 | |
Class R | | | 4,282 | |
Transfer agent fees — A, B, C, R and Y | | | 711,891 | |
Transfer agent fees — R5 | | | 199 | |
Transfer agent fees — R6 | | | 1,291 | |
Trustees’ and officers’ fees and benefits | | | 16,541 | |
Registration and filing fees | | | 55,024 | |
Reports to shareholders | | | 81,896 | |
Professional services fees | | | 48,246 | |
Other | | | 14,793 | |
Total expenses | | | 6,112,229 | |
Less: Fees waived, expenses reimbursed and expense offset arrangement(s) | | | (291,146 | ) |
Net expenses | | | 5,821,083 | |
Net investment income | | | 6,104,691 | |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain (loss) from: | | | | |
Investment securities | | | 35,685,141 | |
Foreign currencies | | | (196,351 | ) |
Forward foreign currency contracts | | | (98,384 | ) |
| | | 35,390,406 | |
Change in net unrealized appreciation (depreciation) of: | | | | |
Investment securities | | | (66,711,675 | ) |
Foreign currencies | | | (37,517 | ) |
Forward foreign currency contracts | | | (413,819 | ) |
| | | (67,163,011 | ) |
Net realized and unrealized gain (loss) | | | (31,772,605 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (25,667,914 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Global Core Equity Fund
Statement of Changes in Net Assets
For the six months ended June 30, 2018 and the year ended December 31, 2017
(Unaudited)
| | | | | | | | |
| | June 30, 2018 | | | December 31, 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 6,104,691 | | | $ | 6,676,498 | |
Net realized gain | | | 35,390,406 | | | | 63,412,215 | |
Change in net unrealized appreciation (depreciation) | | | (67,163,011 | ) | | | 116,616,880 | |
Net increase (decrease) in net assets resulting from operations | | | (25,667,914 | ) | | | 186,705,593 | |
| | |
Distributions to shareholders from net investment income: | | | | | | | | |
Class A | | | — | | | | (7,230,525 | ) |
Class B | | | — | | | | (18,237 | ) |
Class C | | | — | | | | (139,297 | ) |
Class R | | | — | | | | (10,907 | ) |
Class Y | | | — | | | | (583,991 | ) |
Class R5 | | | — | | | | (4,616 | ) |
Class R6 | | | — | | | | (130 | ) |
Total distributions from net investment income | | | — | | | | (7,987,703 | ) |
| | |
Distributions to shareholders from net realized gains: | | | | | | | | |
Class A | | | — | | | | (32,823,437 | ) |
Class B | | | — | | | | (462,933 | ) |
Class C | | | — | | | | (3,539,311 | ) |
Class R | | | — | | | | (68,285 | ) |
Class Y | | | — | | | | (2,010,248 | ) |
Class R5 | | | — | | | | (16,566 | ) |
Class R6 | | | — | | | | (468 | ) |
Total distributions from net realized gains | | | — | | | | (38,921,248 | ) |
| | |
Share transactions-net: | | | | | | | | |
Class A | | | (29,753,920 | ) | | | (70,593,636 | ) |
Class B | | | (10,193,666 | ) | | | (8,102,869 | ) |
Class C | | | (7,289,682 | ) | | | (14,864,201 | ) |
Class R | | | 40,600 | | | | 432,928 | |
Class Y | | | (9,308,037 | ) | | | 17,631,362 | |
Class R5 | | | 36,320 | | | | (48,845 | ) |
Class R6 | | | 9,108,039 | | | | 10,015 | |
Net increase (decrease) in net assets resulting from share transactions | | | (47,360,346 | ) | | | (75,535,246 | ) |
Net increase (decrease) in net assets | | | (73,028,260 | ) | | | 64,261,396 | |
| | |
Net assets: | | | | | | | | |
Beginning of period | | | 940,776,947 | | | | 876,515,551 | |
End of period (includes undistributed net investment income of $5,862,152 and $(242,539), respectively) | | $ | 867,748,687 | | | $ | 940,776,947 | |
Notes to Financial Statements
June 30, 2018
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Global Core Equity Fund (the “Fund”) is a series portfolio of AIM Funds Group (Invesco Funds Group) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is long-term growth of capital.
9 Invesco Global Core Equity Fund
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares were permitted to continue to reinvest dividends and capital gains distributions in Class B shares until their conversion to Class A shares. Also, shareholders in Class B shares were able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they converted to Class A shares. Generally, Class B shares automatically converted to Class A shares on or about the month-end, which was at least eight years after the date of purchase. Redemptions of Class B shares prior to the conversion date were subject to a CDSC. Effective January 26, 2018, all of the Fund’s outstanding Class B shares were converted to Class A shares, in advance of their normally scheduled conversion. No CDSC was paid in connection with this early conversion.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
10 Invesco Global Core Equity Fund
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and |
11 Invesco Global Core Equity Fund
| the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
J. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
K. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
L. | Put Options Purchased — The Fund may purchase put options including options on securities indexes, or foreign currency and/or futures contracts. By purchasing a put option, the Fund obtains the right (but not the obligation) to sell the option’s underlying instrument at a fixed strike price. In return for this right, the Fund pays an option premium. The option’s underlying instrument may be a security, securities index, or a futures contract. Put options may be used by the Fund to hedge securities it owns by locking in a minimum price at which the Fund can sell. If security prices fall, the put option could be exercised to offset all or a portion of the Fund’s resulting losses. At the same time, because the maximum the Fund has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Fund to profit from an increase in the value of the securities hedged. Realized and unrealized gains and losses on put options purchased are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities. A risk in buying an option is that the Fund pays a premium whether or not the option is exercised. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased. |
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | |
Average Daily Net Assets | | Rate | |
First $250 million | | | 0.80% | |
Next $250 million | | | 0.78% | |
Next $500 million | | | 0.76% | |
Next $1.5 billion | | | 0.74% | |
Next $2.5 billion | | | 0.72% | |
Next $2.5 billion | | | 0.70% | |
Next $2.5 billion | | | 0.68% | |
Over $10 billion | | | 0.66% | |
For the six months ended June 30, 2018, the effective advisory fees incurred by the Fund was 0.78%.
12 Invesco Global Core Equity Fund
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least April 30, 2019, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.22%, 1.97%, 1.47%, 0.97%, 0.97% and 0.97%, respectively, of average daily net assets (the “expense limits”). Prior to their conversion to Class A shares, the expense limit for Class B shares was 1.97% of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on April 30, 2019. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. To the extent that the annualized expense ratio does not exceed the expense limits, the Adviser will retain its ability to be reimbursed for such fee waivers or reimbursements prior to the end of each fiscal year.
Further, the Adviser has contractually agreed, through at least June 30, 2020, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2018, the Adviser waived advisory fees of $5,852 and reimbursed class level expenses of $239,264, $426, $24,043, $523 and $12,698 of Class A, Class B, Class C, Class R, and Class Y shares, respectively.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. Prior to their conversion to Class A shares, the Fund paid an annual rate of 1.00% of the average daily net assets of Class B shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended June 30, 2018, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2018, IDI advised the Fund that IDI retained $16,810 in front-end sales commissions from the sale of Class A shares and $1,982 and $1,454 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
13 Invesco Global Core Equity Fund
The following is a summary of the tiered valuation input levels, as of June 30, 2018. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
The Fund’s policy is to recognize transfers in and out of the valuation levels as of the end of the reporting period.
During the six months ended June 30, 2018, there were transfers from Level 1 to Level 2 of $85,591,817 and from Level 2 to Level 1 of $56,487,859, due to foreign fair value adjustments.
| | | | | | | | | | | | | | | | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities | | | | | | | | | | | | | | | | |
Australia | | $ | — | | | $ | 13,067,844 | | | $ | — | | | $ | 13,067,844 | |
Brazil | | | 5,154,895 | | | | — | | | | — | | | | 5,154,895 | |
China | | | 12,183,777 | | | | — | | | | — | | | | 12,183,777 | |
Denmark | | | 5,058,351 | | | | 8,406,709 | | | | — | | | | 13,465,060 | |
Germany | | | 25,464,832 | | | | 3,695,383 | | | | — | | | | 29,160,215 | |
Hong Kong | | | — | | | | 22,204,076 | | | | — | | | | 22,204,076 | |
India | | | 12,489,137 | | | | — | | | | — | | | | 12,489,137 | |
Ireland | | | — | | | | 9,058,581 | | | | — | | | | 9,058,581 | |
Italy | | | — | | | | 38,212,413 | | | | — | | | | 38,212,413 | |
Japan | | | 47,800,904 | | | | 70,805,784 | | | | — | | | | 118,606,688 | |
Luxembourg | | | — | | | | 5,823,572 | | | | — | | | | 5,823,572 | |
Netherlands | | | — | | | | 30,470,952 | | | | — | | | | 30,470,952 | |
Norway | | | — | | | | 4,207,800 | | | | — | | | | 4,207,800 | |
Singapore | | | — | | | | 7,528,236 | | | | — | | | | 7,528,236 | |
South Africa | | | 4,134,612 | | | | — | | | | — | | | | 4,134,612 | |
South Korea | | | — | | | | 6,744,646 | | | | — | | | | 6,744,646 | |
Sweden | | | — | | | | 11,367,619 | | | | — | | | | 11,367,619 | |
Switzerland | | | — | | | | 20,119,392 | | | | — | | | | 20,119,392 | |
Taiwan | | | — | | | | 6,192,488 | | | | — | | | | 6,192,488 | |
United Kingdom | | | 72,178,890 | | | | — | | | | — | | | | 72,178,890 | |
United States | | | 400,909,526 | | | | — | | | | — | | | | 400,909,526 | |
Money Market Funds | | | 22,219,193 | | | | — | | | | — | | | | 22,219,193 | |
Options Purchased | | | 167,090 | | | | — | | | | — | | | | 167,090 | |
Total Investments in Securities | | | 607,761,207 | | | | 257,905,495 | | | | — | | | | 865,666,702 | |
Other Investments — Assets* | | | | | | | | | | | | | | | | |
Forward Foreign Currency Contracts | | | — | | | | 237,881 | | | | — | | | | 237,881 | |
Total Investments | | $ | 607,761,207 | | | $ | 258,143,376 | | | $ | — | | | $ | 865,904,583 | |
* | Unrealized appreciation. |
NOTE 4—Derivative Investments
The Fund may enter into an International Swaps and Derivatives Association Master Agreement (“ISDA Master Agreement”) under which a fund may trade OTC derivatives. An OTC transaction entered into under an ISDA Master Agreement typically involves a collateral posting arrangement, payment netting provisions and close-out netting provisions. These netting provisions allow for reduction of credit risk through netting of contractual obligations. The enforceability of the netting provisions of the ISDA Master Agreement depends on the governing law of the ISDA Master Agreement, among other factors.
For financial reporting purposes, the Fund does not offset OTC derivative assets or liabilities that are subject to ISDA Master Agreements in the Statement of Assets and Liabilities.
14 Invesco Global Core Equity Fund
Value of Derivative Investments at Period-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of June 30, 2018:
| | | | | | | | | | | | |
| | Value | |
Derivative Assets | | Currency Risk | | | Equity Risk | | | Total | |
Options purchased, at value — Exchange-Traded(a) | | $ | — | | | $ | 167,090 | | | $ | 167,090 | |
Unrealized appreciation on forward foreign currency contracts outstanding | | | 237,881 | | | | — | | | | 237,881 | |
Total Derivative Assets | | | 237,881 | | | | 167,090 | | | | 404,971 | |
Derivatives not subject to master netting agreements | | | — | | | | (167,090 | ) | | | (167,090 | ) |
Total Derivative Assets subject to master netting agreements | | $ | 237,881 | | | $ | — | | | $ | 237,881 | |
(a) | Options purchased, at value as reported in the Schedule of Investments. |
Offsetting Assets and Liabilities
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative transactions as of June 30, 2018.
| | | | | | | | | | | | | | | | |
| | Financial Derivative Assets | | | Collateral (Received)/Pledged | | | Net Amount | |
Counterparty | | Forward Foreign Currency Contracts | | | Non-Cash | | | Cash | |
Goldman Sachs International | | $ | 118,513 | | | $ | — | | | $ | — | | | $ | 118,513 | |
JPMorgan Chase Bank, N.A. | | | 119,368 | | | | — | | | | — | | | | 119,368 | |
Total | | $ | 237,881 | | | $ | — | | | $ | — | | | $ | 237,881 | |
Effect of Derivative Investments for the six months ended June 30, 2018
The table below summarizes the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
| | | | | | | | | | | | |
| | Location of Gain (Loss) on Statement of Operations | |
| | Currency Risk | | | Equity Risk | | | Total | |
Realized Gain (Loss): | | | | | | | | | | | | |
Forward foreign currency contracts | | $ | (98,384 | ) | | $ | — | | | $ | (98,384 | ) |
Options purchased(a) | | | — | | | | (271,034 | ) | | | (271,034 | ) |
Change in Net Unrealized Appreciation (Depreciation): | | | | | | | | | | | | |
Forward foreign currency contracts | | | (413,819 | ) | | | — | | | | (413,819 | ) |
Options purchased(a) | | | — | | | | 946,158 | | | | 946,158 | |
Total | | $ | (512,203 | ) | | $ | 675,124 | | | $ | 162,921 | |
(a) | Options purchased are included in the net realized gain (loss) from investment securities and the change in net unrealized appreciation (depreciation) of investment securities. |
The table below summarizes the average notional value of forward foreign currency contracts and options purchased outstanding during the period.
| | | | | | | | |
| | Forward Foreign Currency Contracts | | | Options Purchased | |
Average notional value | | $ | 45,549,963 | | | $ | 66,630,000 | |
Average contracts | | | — | | | | 262 | |
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended June 30, 2018, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $8,340.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided
15 Invesco Global Core Equity Fund
for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of December 31, 2017.
NOTE 9—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2018 was $152,154,203 and $216,239,581, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
Aggregate unrealized appreciation of investments | | $ | 127,830,410 | |
Aggregate unrealized (depreciation) of investments | | | (38,194,411 | ) |
Net unrealized appreciation of investments | | $ | 89,635,999 | |
Cost of investments for tax purposes is $776,268,584.
16 Invesco Global Core Equity Fund
NOTE 10—Share Information
| | | | | | | | | | | | | | | | |
| | Summary of Share Activity | |
| | Six months ended June 30, 2018(a) | | | Year ended December 31, 2017 | |
| | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Class A | | | 640,582 | | | $ | 10,497,461 | | | | 1,756,224 | | | $ | 26,888,847 | |
Class B(b) | | | 73 | | | | 1,209 | | | | 7,932 | | | | 114,601 | |
Class C | | | 115,160 | | | | 1,804,170 | | | | 193,338 | | | | 2,837,331 | |
Class R | | | 13,497 | | | | 219,604 | | | | 48,057 | | | | 746,020 | |
Class Y | | | 291,250 | | | | 4,752,029 | | | | 2,075,804 | | | | 31,424,151 | |
Class R5 | | | 2,229 | | | | 38,168 | | | | 2,285 | | | | 35,981 | |
Class R6(c) | | | 619,067 | | | | 10,682,073 | | | | 673 | | | | 10,015 | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Class A | | | — | | | | — | | | | 2,310,480 | | | | 36,898,356 | |
Class B(b) | | | — | | | | — | | | | 30,635 | | | | 465,338 | |
Class C | | | — | | | | — | | | | 223,525 | | | | 3,404,353 | |
Class R | | | — | | | | — | | | | 4,959 | | | | 79,192 | |
Class Y | | | — | | | | — | | | | 136,691 | | | | 2,182,952 | |
Class R5 | | | — | | | | — | | | | 1,229 | | | | 19,890 | |
| | | | |
Conversion of Class B shares to Class A shares:(d) | | | | | | | | | | | | | | | | |
Class A | | | 530,251 | | | | 9,194,555 | | | | 379,498 | | | | 6,032,363 | |
Class B | | | (557,930 | ) | | | (9,194,555 | ) | | | (399,976 | ) | | | (6,032,363 | ) |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Class A | | | (3,025,906 | ) | | | (49,445,936 | ) | | | (9,165,869 | ) | | | (140,413,202 | ) |
Class B(b) | | | (61,362 | ) | | | (1,000,320 | ) | | | (182,498 | ) | | | (2,650,445 | ) |
Class C | | | (587,694 | ) | | | (9,093,852 | ) | | | (1,450,310 | ) | | | (21,105,885 | ) |
Class R | | | (10,989 | ) | | | (179,004 | ) | | | (24,695 | ) | | | (392,284 | ) |
Class Y | | | (832,159 | ) | | | (14,060,066 | ) | | | (1,044,606 | ) | | | (15,975,741 | ) |
Class R5 | | | (112 | ) | | | (1,848 | ) | | | (6,688 | ) | | | (104,716 | ) |
Class R6 | | | (95,579 | ) | | | (1,574,034 | ) | | | — | | | | — | |
Net increase (decrease) in share activity | | | (2,959,622 | ) | | $ | (47,360,346 | ) | | | (5,103,312 | ) | | $ | (75,535,246 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 47% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Class B shares activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
(c) | Commencement date of April 4, 2017. |
(d) | Effective as of the close of business January 26, 2018, all outstanding Class B shares were converted to Class A shares. |
17 Invesco Global Core Equity Fund
NOTE 11—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net asset value, beginning of period | | | Net investment income (loss)(a) | | | Net gains (losses) on securities (both realized and unrealized) | | | Total from investment operations | | | Dividends from net investment income | | | Distributions from net realized gains | | | Total distributions | | | Net asset value, end of period | | | Total return(b) | | | Net assets, end of period (000’s omitted) | | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | | Ratio of net investment income (loss) to average net assets | | | Portfolio turnover(c) | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | $ | 16.20 | | | $ | 0.11 | | | $ | (0.58 | ) | | $ | (0.47 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | 15.73 | | | | (2.90 | )% | | $ | 745,957 | | | | 1.22 | %(d) | | | 1.28 | %(d) | | | 1.39 | %(d) | | | 17 | % |
Year ended 12/31/17 | | | 13.89 | | | | 0.12 | | | | 3.04 | | | | 3.16 | | | | (0.15 | ) | | | (0.70 | ) | | | (0.85 | ) | | | 16.20 | | | | 22.83 | | | | 798,219 | | | | 1.22 | | | | 1.34 | | | | 0.80 | | | | 64 | |
Year ended 12/31/16 | | | 13.19 | | | | 0.13 | | | | 0.76 | | | | 0.89 | | | | (0.14 | ) | | | (0.05 | ) | | | (0.19 | ) | | | 13.89 | | | | 6.70 | | | | 749,810 | | | | 1.30 | | | | 1.30 | | | | 0.95 | (e) | | | 39 | |
Year ended 12/31/15 | | | 13.65 | | | | 0.10 | | | | (0.40 | ) | | | (0.30 | ) | | | (0.09 | ) | | | (0.07 | ) | | | (0.16 | ) | | | 13.19 | | | | (2.16 | ) | | | 818,600 | | | | 1.32 | | | | 1.32 | | | | 0.70 | | | | 66 | |
Year ended 12/31/14 | | | 15.36 | | | | 0.16 | | | | (0.14 | ) | | | 0.02 | | | | (0.17 | ) | | | (1.56 | ) | | | (1.73 | ) | | | 13.65 | | | | 0.38 | | | | 934,893 | | | | 1.29 | | | | 1.29 | | | | 1.03 | | | | 122 | |
Year ended 12/31/13 | | | 12.76 | | | | 0.22 | | | | 2.61 | | | | 2.83 | | | | (0.23 | ) | | | — | | | | (0.23 | ) | | | 15.36 | | | | 22.28 | | | | 1,077,776 | | | | 1.27 | | | | 1.30 | | | | 1.61 | | | | 33 | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18(f) | | | 15.40 | | | | 0.01 | | | | 1.07 | | | | 1.08 | | | | — | | | | — | | | | — | | | | 16.48 | | | | 7.01 | | | | — | | | | 1.97 | (d) | | | 2.03 | (d) | | | 0.64 | (d) | | | 17 | |
Year ended 12/31/17 | | | 13.23 | | | | 0.01 | | | | 2.89 | | | | 2.90 | | | | (0.03 | ) | | | (0.70 | ) | | | (0.73 | ) | | | 15.40 | | | | 21.95 | | | | 9,536 | | | | 1.97 | | | | 2.09 | | | | 0.05 | | | | 64 | |
Year ended 12/31/16 | | | 12.57 | | | | 0.03 | | | | 0.71 | | | | 0.74 | | | | (0.03 | ) | | | (0.05 | ) | | | (0.08 | ) | | | 13.23 | | | | 5.88 | | | | 15,390 | | | | 2.05 | | | | 2.05 | | | | 0.20 | (e) | | | 39 | |
Year ended 12/31/15 | | | 13.03 | | | | (0.01 | ) | | | (0.37 | ) | | | (0.38 | ) | | | (0.01 | ) | | | (0.07 | ) | | | (0.08 | ) | | | 12.57 | | | | (2.88 | ) | | | 21,718 | | | | 2.07 | | | | 2.07 | | | | (0.05 | ) | | | 66 | |
Year ended 12/31/14 | | | 14.73 | | | | 0.04 | | | | (0.14 | ) | | | (0.10 | ) | | | (0.04 | ) | | | (1.56 | ) | | | (1.60 | ) | | | 13.03 | | | | (0.40 | ) | | | 31,846 | | | | 2.04 | | | | 2.04 | | | | 0.28 | | | | 122 | |
Year ended 12/31/13 | | | 12.25 | | | | 0.15 | | | | 2.49 | | | | 2.64 | | | | (0.16 | ) | | | — | | | | (0.16 | ) | | | 14.73 | | | | 21.63 | | | | 44,937 | | | | 1.77 | | | | 2.05 | | | | 1.11 | | | | 33 | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 15.44 | | | | 0.05 | | | | (0.55 | ) | | | (0.50 | ) | | | — | | | | — | | | | — | | | | 14.94 | | | | (3.24 | ) | | | 71,953 | | | | 1.97 | (d) | | | 2.03 | (d) | | | 0.64 | (d) | | | 17 | |
Year ended 12/31/17 | | | 13.26 | | | | 0.01 | | | | 2.90 | | | | 2.91 | | | | (0.03 | ) | | | (0.70 | ) | | | (0.73 | ) | | | 15.44 | | | | 21.97 | | | | 81,668 | | | | 1.97 | | | | 2.09 | | | | 0.05 | | | | 64 | |
Year ended 12/31/16 | | | 12.60 | | | | 0.03 | | | | 0.71 | | | | 0.74 | | | | (0.03 | ) | | | (0.05 | ) | | | (0.08 | ) | | | 13.26 | | | | 5.87 | | | | 83,864 | | | | 2.05 | | | | 2.05 | | | | 0.20 | (e) | | | 39 | |
Year ended 12/31/15 | | | 13.07 | | | | (0.01 | ) | | | (0.38 | ) | | | (0.39 | ) | | | (0.01 | ) | | | (0.07 | ) | | | (0.08 | ) | | | 12.60 | | | | (2.95 | ) | | | 94,854 | | | | 2.07 | | | | 2.07 | | | | (0.05 | ) | | | 66 | |
Year ended 12/31/14 | | | 14.76 | | | | 0.04 | | | | (0.13 | ) | | | (0.09 | ) | | | (0.04 | ) | | | (1.56 | ) | | | (1.60 | ) | | | 13.07 | | | | (0.33 | ) | | | 111,552 | | | | 2.04 | | | | 2.04 | | | | 0.28 | | | | 122 | |
Year ended 12/31/13 | | | 12.27 | | | | 0.11 | | | | 2.50 | | | | 2.61 | | | | (0.12 | ) | | | — | | | | (0.12 | ) | | | 14.76 | | | | 21.32 | | | | 133,181 | | | | 2.02 | | | | 2.05 | | | | 0.86 | | | | 33 | |
Class R | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.19 | | | | 0.09 | | | | (0.58 | ) | | | (0.49 | ) | | | — | | | | — | | | | — | | | | 15.70 | | | | (3.03 | ) | | | 1,677 | | | | 1.47 | (d) | | | 1.53 | (d) | | | 1.14 | (d) | | | 17 | |
Year ended 12/31/17 | | | 13.88 | | | | 0.09 | | | | 3.03 | | | | 3.12 | | | | (0.11 | ) | | | (0.70 | ) | | | (0.81 | ) | | | 16.19 | | | | 22.54 | | | | 1,689 | | | | 1.47 | | | | 1.59 | | | | 0.55 | | | | 64 | |
Year ended 12/31/16 | | | 13.18 | | | | 0.09 | | | | 0.76 | | | | 0.85 | | | | (0.10 | ) | | | (0.05 | ) | | | (0.15 | ) | | | 13.88 | | | | 6.45 | | | | 1,054 | | | | 1.55 | | | | 1.55 | | | | 0.70 | (e) | | | 39 | |
Year ended 12/31/15 | | | 13.65 | | | | 0.06 | | | | (0.39 | ) | | | (0.33 | ) | | | (0.07 | ) | | | (0.07 | ) | | | (0.14 | ) | | | 13.18 | | | | (2.43 | ) | | | 1,035 | | | | 1.57 | | | | 1.57 | | | | 0.45 | | | | 66 | |
Year ended 12/31/14 | | | 15.35 | | | | 0.12 | | | | (0.13 | ) | | | (0.01 | ) | | | (0.13 | ) | | | (1.56 | ) | | | (1.69 | ) | | | 13.65 | | | | 0.17 | | | | 807 | | | | 1.54 | | | | 1.54 | | | | 0.78 | | | | 122 | |
Year ended 12/31/13 | | | 12.76 | | | | 0.19 | | | | 2.59 | | | | 2.78 | | | | (0.19 | ) | | | — | | | | (0.19 | ) | | | 15.35 | | | | 21.89 | | | | 882 | | | | 1.52 | | | | 1.55 | | | | 1.36 | | | | 33 | |
Class Y | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.19 | | | | 0.13 | | | | (0.58 | ) | | | (0.45 | ) | | | — | | | | — | | | | — | | | | 15.74 | | | | (2.78 | ) | | | 39,356 | | | | 0.97 | (d) | | | 1.03 | (d) | | | 1.64 | (d) | | | 17 | |
Year ended 12/31/17 | | | 13.88 | | | | 0.16 | | | | 3.04 | | | | 3.20 | | | | (0.19 | ) | | | (0.70 | ) | | | (0.89 | ) | | | 16.19 | | | | 23.14 | | | | 49,238 | | | | 0.97 | | | | 1.09 | | | | 1.05 | | | | 64 | |
Year ended 12/31/16 | | | 13.18 | | | | 0.16 | | | | 0.76 | | | | 0.92 | | | | (0.17 | ) | | | (0.05 | ) | | | (0.22 | ) | | | 13.88 | | | | 6.98 | | | | 25,996 | | | | 1.05 | | | | 1.05 | | | | 1.20 | (e) | | | 39 | |
Year ended 12/31/15 | | | 13.64 | | | | 0.13 | | | | (0.40 | ) | | | (0.27 | ) | | | (0.12 | ) | | | (0.07 | ) | | | (0.19 | ) | | | 13.18 | | | | (1.94 | ) | | | 18,405 | | | | 1.07 | | | | 1.07 | | | | 0.95 | | | | 66 | |
Year ended 12/31/14 | | | 15.35 | | | | 0.20 | | | | (0.14 | ) | | | 0.06 | | | | (0.21 | ) | | | (1.56 | ) | | | (1.77 | ) | | | 13.64 | | | | 0.65 | | | | 21,136 | | | | 1.04 | | | | 1.04 | | | | 1.28 | | | | 122 | |
Year ended 12/31/13 | | | 12.76 | | | | 0.26 | | | | 2.60 | | | | 2.86 | | | | (0.27 | ) | | | — | | | | (0.27 | ) | | | 15.35 | | | | 22.51 | | | | 17,125 | | | | 1.02 | | | | 1.05 | | | | 1.86 | | | | 33 | |
Class R5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.41 | | | | 0.13 | | | | (0.58 | ) | | | (0.45 | ) | | | — | | | | — | | | | — | | | | 15.96 | | | | (2.74 | ) | | | 438 | | | | 0.97 | (d) | | | 0.97 | (d) | | | 1.64 | (d) | | | 17 | |
Year ended 12/31/17 | | | 14.06 | | | | 0.16 | | | | 3.08 | | | | 3.24 | | | | (0.19 | ) | | | (0.70 | ) | | | (0.89 | ) | | | 16.41 | | | | 23.14 | | | | 416 | | | | 0.97 | | | | 0.99 | | | | 1.05 | | | | 64 | |
Year ended 12/31/16 | | | 13.35 | | | | 0.18 | | | | 0.77 | | | | 0.95 | | | | (0.19 | ) | | | (0.05 | ) | | | (0.24 | ) | | | 14.06 | | | | 7.07 | | | | 401 | | | | 0.94 | | | | 0.94 | | | | 1.31 | (e) | | | 39 | |
Year ended 12/31/15 | | | 13.81 | | | | 0.15 | | | | (0.40 | ) | | | (0.25 | ) | | | (0.14 | ) | | | (0.07 | ) | | | (0.21 | ) | | | 13.35 | | | | (1.80 | ) | | | 191 | | | | 0.95 | | | | 0.95 | | | | 1.07 | | | | 66 | |
Year ended 12/31/14 | | | 15.52 | | | | 0.22 | | | | (0.14 | ) | | | 0.08 | | | | (0.23 | ) | | | (1.56 | ) | | | (1.79 | ) | | | 13.81 | | | | 0.76 | | | | 362 | | | | 0.94 | | | | 0.94 | | | | 1.38 | | | | 122 | |
Year ended 12/31/13 | | | 12.90 | | | | 0.28 | | | | 2.62 | | | | 2.90 | | | | (0.28 | ) | | | — | | | | (0.28 | ) | | | 15.52 | | | | 22.60 | | | | 513 | | | | 0.95 | | | | 0.95 | | | | 1.93 | | | | 33 | |
Class R6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.41 | | | | 0.14 | | | | (0.59 | ) | | | (0.45 | ) | | | — | | | | — | | | | — | | | | 15.96 | | | | (2.74 | ) | | | 8,367 | | | | 0.91 | (d) | | | 0.91 | (d) | | | 1.70 | (d) | | | 17 | |
Year ended 12/31/17(g) | | | 14.89 | | | | 0.12 | | | | 2.29 | | | | 2.41 | | | | (0.19 | ) | | | (0.70 | ) | | | (0.89 | ) | | | 16.41 | | | | 16.27 | | | | 11 | | | | 0.97 | (h) | | | 1.01 | (h) | | | 1.05 | (h) | | | 64 | |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $790,184, $9,797, $79,402, $1,727, $41,937, $447 and $7,747 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Amount includes the effect of a one-time reimbursement of custody expenses. The ratio of net investment income excluding these payments would have been 0.84%, 0.09%, 0.09%,0.59%, 1.09% and 1.20% for Class A, Class B, Class C, Class R, Class Y and Class R5 shares, respectively. |
(f) | Reflects activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
(g) | Commencement date of April 4, 2017. |
18 Invesco Global Core Equity Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2018 through June 30, 2018.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
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Class | | Beginning Account Value (01/01/18) | | | ACTUAL | | | HYPOTHETICAL (5% annual return before expenses) | | | Annualized Expense Ratio | |
| Ending Account Value (06/30/18)1 | | | Expenses Paid During Period2 | | | Ending Account Value (06/30/18) | | | Expenses Paid During Period2 | |
A | | $ | 1,000.00 | | | $ | 971.00 | | | $ | 5.96 | | | $ | 1,018.74 | | | $ | 6.11 | | | | 1.22 | % |
C | | | 1,000.00 | | | | 967.60 | | | | 9.61 | | | | 1,015.03 | | | | 9.84 | | | | 1.97 | |
R | | | 1,000.00 | | | | 969.70 | | | | 7.18 | | | | 1,017.50 | | | | 7.35 | | | | 1.47 | |
Y | | | 1,000.00 | | | | 972.80 | | | | 4.74 | | | | 1,019.98 | | | | 4.86 | | | | 0.97 | |
R5 | | | 1,000.00 | | | | 972.60 | | | | 4.74 | | | | 1,019.98 | | | | 4.86 | | | | 0.97 | |
R6 | | | 1,000.00 | | | | 972.60 | | | | 4.45 | | | | 1,020.28 | | | | 4.56 | | | | 0.91 | |
1 | The actual ending account value is based on the actual total return of the Fund for the period January 1, 2018 through June 30, 2018, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 181/365 to reflect the most recent fiscal half year. |
19 Invesco Global Core Equity Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 5-6, 2018, the Board of Trustees (the Board or the Trustees) of AIM Funds Group (Invesco Funds Group) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Global Core Equity Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2018. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established three Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees
are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 6, 2018.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also reviewed and considered the benefits to shareholders of investing in a fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under
the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2017 to the performance of funds in the Broadridge performance universe and against the Lipper Global Large-Cap Core Funds Index. The Board noted that performance of Class A shares of the Fund was in the third quintile of its performance universe for the one year period and the fourth quintile for the three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one and three year periods and below the performance of the Index for the five year period. The Board noted that the Fund’s underweight and overweight exposure to and stock selection in certain sectors and regions negatively impacted performance. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the
20 Invesco Global Core Equity Fund
median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. The Board noted that Invesco Advisers or the Affiliated Sub-Advisers may charge lower fees to large institutional clients. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including management of cash flows as a result of redemptions and purchases, necessary infrastructure such as officers, office space, technology, legal and distribution, oversight of service providers, costs and business risks associated with launching new funds and sponsoring and maintaining the product line, preparation of annual registration statement updates and financial information and compliance with federal and state laws and regulations.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services. The Board considered the methodology used for calculating profitability and noted the periodic review of such methodology by an independent consultant. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from Invesco representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds
attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker receives commissions for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
21 Invesco Global Core Equity Fund
Explore High-Conviction Investing with Invesco

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Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
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∎ | | Fund reports and prospectuses |
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q (or any successor Form). The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q (or any successor Form) on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q (or any successor Form) may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
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Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. | |  |
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SEC file numbers: 811-01540 and 002-27334 | | Invesco Distributors, Inc. | | GCE-SAR-1 | | 08142018 1213 |
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| | Semiannual Report to Shareholders | | June 30, 2018 |
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| Invesco International Small Company Fund |
| Nasdaq: | | |
| | A: IEGAX ∎ C: IEGCX ∎ Y: IEGYX ∎ R5: IEGIX ∎ R6: IEGFX |

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| | 2 | | Fund Performance | | |
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| | 4 | | Letters to Shareholders | | |
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| | 5 | | Schedule of Investments | | |
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| | 7 | | Financial Statements | | |
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| | 9 | | Notes to Financial Statements | | |
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| | 16 | | Financial Highlights | | |
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| | 17 | | Fund Expenses | | |
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| | 18 | | Approval of Investment Advisory and Sub-Advisory Contracts | | |
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| | For the most current month-end Fund performance and commentary, please visit invesco.com/performance. Unless otherwise noted, all data provided by Invesco. This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing. |
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| | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Fund Performance
| | | | |
Performance summary | | | | |
Fund vs. Indexes | | | | |
Cumulative total returns, 12/31/17 to 6/30/18, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. | |
| |
Class A Shares | | | -3.98 | % |
Class C Shares | | | -4.35 | |
Class Y Shares | | | -3.87 | |
Class R5 Shares | | | -3.86 | |
Class R6 Shares | | | -3.81 | |
MSCI All Country World ex-USA Small Cap Indexq | | | | |
(Broad Market/Style-Specific Index) | | | -2.94 | |
Lipper International Small/Mid-Cap Core Funds Index∎ (Peer Group Index) | | | -3.37 | |
Source(s): qFactSet Research Systems Inc.; ∎Lipper Inc. | | | | |
|
The MSCI All Country World ex-USA Small Cap Index represents the performance of small-cap stocks in developed and emerging markets, excluding the US. The index is computed using the net return, which withholds applicable taxes for non-resident investors. | |
The Lipper International Small/Mid-Cap Core Funds Index is an unmanaged index considered representative of international small/mid-cap core funds tracked by Lipper. | |
| |
The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | |
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. | |
| | | | |
For more information about your Fund | | | | |
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance. Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends. | |
2 Invesco International Small Company Fund
| | | | |
Average Annual Total Returns | |
As of 6/30/18, including maximum applicable sales charges | |
| |
Class A Shares | | | | |
Inception (8/31/00) | | | 9.10 | % |
10 Years | | | 4.67 | |
5 Years | | | 5.02 | |
1 Year | | | 0.10 | |
| |
Class C Shares | | | | |
Inception (8/31/00) | | | 8.65 | % |
10 Years | | | 4.48 | |
5 Years | | | 5.42 | |
1 Year | | | 4.20 | |
| |
Class Y Shares | | | | |
10 Years | | | 5.52 | % |
5 Years | | | 6.48 | |
1 Year | | | 6.23 | |
| |
Class R5 Shares | | | | |
Inception (10/25/05) | | | 8.29 | % |
10 Years | | | 5.68 | |
5 Years | | | 6.59 | |
1 Year | | | 6.31 | |
| |
Class R6 Shares | | | | |
10 Years | | | 5.51 | % |
5 Years | | | 6.67 | |
1 Year | | | 6.42 | |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The net annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class Y, Class R5 and Class R6 shares was 1.60%, 2.35%, 1.35%, 1.26% and 1.17%, respectively.1 The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class Y, Class R5 and Class R6 shares was 1.61%, 2.36%, 1.36%, 1.27% and 1.18%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
1 | Total annual Fund operating expenses after any contractual fee waivers and/or expense reimbursements by the adviser in effect through at least June 30, 2020. See current prospectus for more information. |
3 Invesco International Small Company Fund
Letters to Shareholders
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Bruce Crockett | | Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. |
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper, Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,

Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| | |

Philip Taylor | | Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction. This means that, no matter the asset class or the strategy, each investment team has a passion to exceed. We want to help investors achieve better outcomes, such as seeking higher returns, helping mitigate risk and generating income. Of course, investing with high conviction can’t guarantee a profit or ensure success; no investment strategy can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access |
information about your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.”
Finally, I’m pleased to share with you Invesco’s commitment to both the Principles for Responsible Investment and to considering environmental, social and governance issues in our robust investment process. I invite you to learn more at invesco.com/esg.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,

Philip Taylor
Senior Managing Director, Invesco Ltd.
4 Invesco International Small Company Fund
Schedule of Investments
June 30, 2018
(Unaudited)
| | | | | | | | |
| | Shares | | | Value | |
Common Stocks & Other Equity Interests–91.33% | |
Australia–0.79% | |
Tassal Group Ltd. | | | 832,143 | | | $ | 2,551,654 | |
|
Brazil–5.42% | |
Fleury S.A. | | | 887,700 | | | | 6,075,147 | |
TOTVS S.A. | | | 251,800 | | | | 1,742,736 | |
Wilson Sons Ltd.–BDR | | | 922,700 | | | | 9,643,454 | |
| | | | | | | 17,461,337 | |
|
Canada–11.96% | |
Calian Group Ltd. | | | 367,000 | | | | 8,723,473 | |
E-L Financial Corp. Ltd. | | | 9,400 | | | | 5,862,863 | |
Epsilon Energy Ltd.(a) | | | 1,894,560 | | | | 4,034,965 | |
exactEarth Ltd.(a) | | | 352,656 | | | | 308,477 | |
Medical Facilities Corp. | | | 215,600 | | | | 2,290,965 | |
Total Energy Services Inc. | | | 722,190 | | | | 6,383,090 | |
TransGlobe Energy Corp.(a) | | | 2,739,269 | | | | 7,584,193 | |
Trican Well Service Ltd.(a) | | | 1,483,313 | | | | 3,373,474 | |
| | | | | | | 38,561,500 | |
|
Egypt–2.84% | |
Eastern Tobacco | | | 907,920 | | | | 9,161,569 | |
|
Estonia–2.70% | |
Olympic Entertainment Group A.S.(a) | | | 2,267,546 | | | | 5,242,671 | |
Silvano Fashion Group A.S.–Class A | | | 937,000 | | | | 3,468,408 | |
| | | | | | | 8,711,079 | |
|
France–9.26% | |
AURES Technologies S.A. | | | 67,164 | | | | 3,646,874 | |
Caisse Regionale de Credit Agricole Mutuel Nord de France–CCI | | | 206,000 | | | | 5,003,361 | |
Constuctions Industrielles de la Mediterranee S.A. | | | 25,804 | | | | 3,329,512 | |
Linedata Services | | | 58,928 | | | | 2,422,120 | |
Metropole Television S.A. | | | 203,770 | | | | 4,075,950 | |
Precia S.A.(b) | | | 35,321 | | | | 8,826,287 | |
Tessi S.A.(a) | | | 11,400 | | | | 2,542,550 | |
| | | | | | | 29,846,654 | |
|
Germany–5.33% | |
MorphoSys AG(a) | | | 107,102 | | | | 13,105,800 | |
publity AG(a) | | | 190,000 | | | | 2,373,934 | |
Takkt AG | | | 93,000 | | | | 1,700,615 | |
| | | | | | | 17,180,349 | |
|
Greece–2.00% | |
European Reliance General Insurance Co. S.A. | | | 605,000 | | | | 2,451,411 | |
Mytilineos Holdings S.A. | | | 397,000 | | | | 3,982,126 | |
| | | | | | | 6,433,537 | |
| | | | | | | | |
| | Shares | | | Value | |
Indonesia–0.83% | |
PT Pakuwon Jati Tbk(a) | | | 72,271,800 | | | $ | 2,672,997 | |
|
Ireland–2.18% | |
Origin Enterprises PLC | | | 405,000 | | | | 2,940,220 | |
Total Produce PLC | | | 1,570,000 | | | | 4,069,902 | |
| | | | | | | 7,010,122 | |
|
Israel–2.87% | |
Israel Discount Bank Ltd.–Class A | | | 1,741,000 | | | | 5,093,314 | |
Taptica International Ltd. | | | 925,000 | | | | 4,150,771 | |
| | | | | | | 9,244,085 | |
|
Italy–3.69% | |
Danieli & C. Officine Meccaniche S.p.A.–Savings Shares | | | 523,910 | | | | 9,225,487 | |
Openjob SpA Agenzia Per Il Lavoro(a) | | | 238,000 | | | | 2,673,519 | |
| | | | | | | 11,899,006 | |
|
Japan–0.85% | |
Nippon Ceramic Co., Ltd. | | | 104,900 | | | | 2,735,739 | |
|
Malaysia–0.76% | |
Heineken Malaysia Bhd. | | | 451,200 | | | | 2,444,535 | |
|
Mexico–2.92% | |
Bolsa Mexicana de Valores, S.A.B. de C.V. | | | 4,247,001 | | | | 7,146,673 | |
Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. | | | 431,666 | | | | 2,253,697 | |
| | | | | | | 9,400,370 | |
|
Netherlands–0.87% | |
Aalberts Industries N.V. | | | 58,546 | | | | 2,801,112 | |
|
New Zealand–1.91% | |
Freightways Ltd. | | | 661,085 | | | | 3,501,427 | |
Trade Me Group Ltd. | | | 833,126 | | | | 2,637,133 | |
| | | | | | | 6,138,560 | |
|
Norway–2.42% | |
Kongsberg Gruppen ASA | | | 154,919 | | | | 3,294,329 | |
Oslo Bors VPS Holding ASA | | | 320,000 | | | | 4,518,165 | |
| | | | | | | 7,812,494 | |
|
Poland–1.80% | |
Polski Bank Komorek Macierzystych S.A. | | | 209,000 | | | | 4,173,416 | |
Stalexport Autostrady S.A. | | | 2,051,070 | | | | 1,640,124 | |
| | | | | | | 5,813,540 | |
|
Romania–6.87% | |
Banca Transilvania S.A. | | | 8,604,119 | | | | 5,170,745 | |
Fondul Proprietatea S.A. | | | 26,265,596 | | | | 5,813,999 | |
Societatea Nationala de Gaze Naturale ROMGAZ S.A. | | | 786,000 | | | | 7,351,037 | |
Transgaz S.A. Medias | | | 46,200 | | | | 3,788,859 | |
| | | | | | | 22,124,640 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco International Small Company Fund
| | | | | | | | |
| | Shares | | | Value | |
South Africa–2.49% | |
Cartrack Holdings Ltd. | | | 1,500,000 | | | $ | 1,855,713 | |
Combined Motor Holdings Ltd. | | | 1,638,000 | | | | 3,206,239 | |
Net 1 UEPS Technologies, Inc.(a) | | | 325,000 | | | | 2,951,000 | |
| | | | | | | 8,012,952 | |
|
Sweden–1.07% | |
Vitec Software Group AB–Class B | | | 360,000 | | | | 3,447,745 | |
|
Switzerland–0.92% | |
Kardex AG | | | 21,300 | | | | 2,955,286 | |
|
Turkey–0.83% | |
AG Anadolu Grubu Holding A.S. | | | 573,400 | | | | 2,662,122 | |
|
United Kingdom–17.75% | |
Bioventix PLC | | | 64,000 | | | | 2,483,336 | |
Character Group PLC (The) | | | 326,909 | | | | 2,243,563 | |
Clarkson PLC | | | 142,000 | | | | 4,310,467 | |
DCC PLC | | | 75,551 | | | | 6,875,157 | |
Eurocell PLC | | | 1,131,000 | | | | 3,910,858 | |
Goodwin PLC | | | 46,301 | | | | 1,170,219 | |
HomeServe PLC | | | 327,805 | | | | 3,879,298 | |
IG Group Holdings PLC | | | 300,791 | | | | 3,418,032 | |
JPJ Group PLC(a) | | | 286,000 | | | | 3,620,134 | |
Jupiter Fund Management PLC | | | 873,948 | | | | 5,139,013 | |
| | | | | | | | |
| | Shares | | | Value | |
United Kingdom–(continued) | |
Micro Focus International PLC | | | 144,765 | | | $ | 2,517,415 | |
Mortgage Advice Bureau (Holdings) Ltd. | | | 615,000 | | | | 5,066,947 | |
Savills PLC | | | 591,866 | | | | 6,789,381 | |
Staffline Group PLC | | | 183,000 | | | | 2,263,074 | |
System1 Group PLC | | | 400,000 | | | | 1,478,176 | |
TP ICAP PLC | | | 366,680 | | | | 2,039,341 | |
| | | | | | | 57,204,411 | |
Total Common Stocks & Other Equity Interests (Cost $241,244,405) | | | | 294,287,395 | |
|
Money Market Funds–8.34% | |
Invesco Government & Agency Portfolio–Institutional Class, 1.80%(c) | | | 9,286,225 | | | | 9,286,225 | |
Invesco Liquid Assets Portfolio–Institutional Class, 2.02%(c) | | | 6,719,380 | | | | 6,721,396 | |
Invesco Treasury Portfolio–Institutional Class, 1.76%(c) | | | 10,876,347 | | | | 10,876,347 | |
Total Money Market Funds (Cost $26,882,613) | | | | 26,883,968 | |
TOTAL INVESTMENTS IN SECURITIES–99.67% (Cost $268,127,018) | | | | 321,171,363 | |
OTHER ASSETS LESS LIABILITIES–0.33% | | | | 1,048,106 | |
NET ASSETS–100.00% | | | $ | 322,219,469 | |
Investment Abbreviations:
| | |
BDR | | – Brazilian Depositary Receipt |
Notes to Schedule of Investments:
(a) | Non-income producing security. |
(b) | Affiliated company during the period. The Investment Company Act of 1940 defines an “affiliated person” as an issuance in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the Investment Company Act of 1940) of that issuer. The value of this security as of June 30, 2018 represented 2.74% of the Fund’s Net Assets. See Note 4. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of June 30, 2018. |
Portfolio Composition
By sector, based on Net Assets
as of June 30, 2018
| | | | |
Industrials | | | 27.3 | % |
Financials | | | 17.6 | |
Energy | | | 10.1 | |
Consumer Discretionary | | | 9.9 | |
Health Care | | | 8.7 | |
Information Technology | | | 7.4 | |
Consumer Staples | | | 6.6 | |
Real Estate | | | 3.7 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 8.7 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco International Small Company Fund
Statement of Assets and Liabilities
June 30, 2018
(Unaudited)
| | | | |
Assets: | | | | |
Investments in securities, at value (Cost $236,871,771) | | $ | 285,461,108 | |
Investments in affiliates, at value (Cost $31,255,247) | | | 35,710,255 | |
Foreign currencies, at value (Cost $1,130,578) | | | 1,134,729 | |
Receivable for: | | | | |
Fund shares sold | | | 341,011 | |
Dividends | | | 860,478 | |
Investment for trustee deferred compensation and retirement plans | | | 132,873 | |
Other assets | | | 34,215 | |
Total assets | | | 323,674,669 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Fund shares reacquired | | | 1,078,813 | |
Accrued foreign taxes | | | 329 | |
Accrued fees to affiliates | | | 126,846 | |
Accrued trustees’ and officers’ fees and benefits | | | 4,931 | |
Accrued other operating expenses | | | 99,022 | |
Trustee deferred compensation and retirement plans | | | 145,259 | |
Total liabilities | | | 1,455,200 | |
Net assets applicable to shares outstanding | | $ | 322,219,469 | |
|
Net assets consist of: | |
Shares of beneficial interest | | $ | 257,810,333 | |
Undistributed net investment income | | | 1,718,474 | |
Undistributed net realized gain | | | 9,655,816 | |
Net unrealized appreciation | | | 53,034,846 | |
| | $ | 322,219,469 | |
| | | | |
Net Assets: | | | | |
Class A | | $ | 160,695,555 | |
Class C | | $ | 17,805,539 | |
Class Y | | $ | 49,096,620 | |
Class R5 | | $ | 5,954,534 | |
Class R6 | | $ | 88,667,221 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Class A | | | 8,659,379 | |
Class C | | | 1,012,992 | |
Class Y | | | 2,638,681 | |
Class R5 | | | 322,781 | |
Class R6 | | | 4,808,371 | |
Class A: | | | | |
Net asset value per share | | $ | 18.56 | |
Maximum offering price per share | | | | |
(Net asset value of $18.56 ¸ 94.50%) | | $ | 19.64 | |
Class C: | | | | |
Net asset value and offering price per share | | $ | 17.58 | |
Class Y: | | | | |
Net asset value and offering price per share | | $ | 18.61 | |
Class R5: | | | | |
Net asset value and offering price per share | | $ | 18.45 | |
Class R6: | | | | |
Net asset value and offering price per share | | $ | 18.44 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco International Small Company Fund
Statement of Operations
For the six months ended June 30, 2018
(Unaudited)
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $579,127) | | $ | 6,408,887 | |
Dividends from affiliated money market funds | | | 287,714 | |
Total investment income | | | 6,696,601 | |
| |
Expenses: | | | | |
Advisory fees | | | 1,565,747 | |
Administrative services fees | | | 49,065 | |
Custodian fees | | | 138,834 | |
Distribution fees: | | | | |
Class A | | | 210,102 | |
Class B | | | 297 | |
Class C | | | 96,538 | |
Transfer agent Fees — A, B, C and Y | | | 228,032 | |
Transfer agent fees — R5 | | | 3,156 | |
Transfer agent fees — R6 | | | 18,563 | |
Trustees’ and officers’ fees and benefits | | | 13,148 | |
Registration and filing fees | | | 52,657 | |
Reports to shareholders | | | 26,748 | |
Professional services fees | | | 29,134 | |
Other | | | 25,791 | |
Total expenses | | | 2,457,812 | |
Less: Fees waived and expense offset arrangement(s) | | | (24,845 | ) |
Net expenses | | | 2,432,967 | |
Net investment income | | | 4,263,634 | |
| |
Realized and unrealized gain from: | | | | |
Net realized gain (loss) from: | | | | |
Investment securities (net of foreign taxes of $177,871) | | | 8,892,983 | |
Foreign currencies | | | (176,839 | ) |
| | | 8,716,144 | |
Change in net unrealized appreciation (depreciation) of: | | | | |
Investment securities (net of foreign taxes of $205,137) | | | (26,537,827 | ) |
Foreign currencies | | | 3,289 | |
| | | (26,534,538 | ) |
Net realized and unrealized gain (loss) | | | (17,818,394 | ) |
Net increase (decrease) in net assets resulting from operations | | $ | (13,554,760 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco International Small Company Fund
Statement of Changes in Net Assets
For the six months ended June 30, 2018 and the year ended December 31, 2017
(Unaudited)
| | | | | | | | |
| | June 30, 2018 | | | December 31, 2017 | |
Operations: | | | | | | | | |
Net investment income | | $ | 4,263,634 | | | $ | 4,441,966 | |
Net realized gain | | | 8,716,144 | | | | 17,890,275 | |
Change in net unrealized appreciation (depreciation) | | | (26,534,538 | ) | | | 56,098,999 | |
Net increase (decrease) in net assets resulting from operations | | | (13,554,760 | ) | | | 78,431,240 | |
| | |
Distributions to shareholders from net investment income: | | | | | | | | |
Class A | | | — | | | | (4,079,768 | ) |
Class B | | | — | | | | (8,912 | ) |
Class C | | | — | | | | (389,742 | ) |
Class Y | | | — | | | | (1,662,515 | ) |
Class R5 | | | — | | | | (177,866 | ) |
Class R6 | | | — | | | | (2,387,347 | ) |
Total distributions from net investment income | | | — | | | | (8,706,150 | ) |
| | |
Distributions to shareholders from net realized gains: | | | | | | | | |
Class A | | | — | | | | (5,502,708 | ) |
Class B | | | — | | | | (16,164 | ) |
Class C | | | — | | | | (706,627 | ) |
Class Y | | | — | | | | (2,065,629 | ) |
Class R5 | | | — | | | | (214,681 | ) |
Class R6 | | | — | | | | (2,795,866 | ) |
Total distributions from net realized gains | | | — | | | | (11,301,675 | ) |
| | |
Share transactions-net: | | | | | | | | |
Class A | | | 5,070,347 | | | | 10,540,419 | |
Class B | | | (433,608 | ) | | | (734,869 | ) |
Class C | | | (1,167,666 | ) | | | 331,036 | |
Class Y | | | (11,110,124 | ) | | | (13,819,859 | ) |
Class R5 | | | (233,361 | ) | | | (5,760,686 | ) |
Class R6 | | | 10,024,959 | | | | 62,763,225 | |
Net increase in net assets resulting from share transactions | | | 2,150,547 | | | | 53,319,266 | |
Net increase (decrease) in net assets | | | (11,404,213 | ) | | | 111,742,681 | |
| | |
Net assets: | | | | | | | | |
Beginning of period | | | 333,623,682 | | | | 221,881,001 | |
End of period (includes undistributed net investment income of $1,718,474 and $(2,545,160), respectively) | | $ | 322,219,469 | | | $ | 333,623,682 | |
Notes to Financial Statements
June 30, 2018
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco International Small Company Fund (the “Fund”) is a series portfolio of AIM Funds Group (Invesco Funds Group) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s investment objective is long-term growth of capital.
The Fund currently consists of five different classes of shares: Class A, Class C, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares were permitted to continue to reinvest dividends and capital gains distributions in Class B shares until their
9 Invesco International Small Company Fund
conversion to Class A shares. Also, shareholders in Class B shares were able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they converted to Class A shares. Generally, Class B shares automatically converted to Class A shares on or about the month-end, which was at least eight years after the date of purchase. Redemptions of Class B shares prior to the conversion date were subject to a CDSC. Effective January 26, 2018, all of the Fund’s outstanding Class B shares were converted to Class A shares, in advance of their normally scheduled conversion. No CDSC was paid in connection with this early conversion.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies.
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
10 Invesco International Small Company Fund
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Foreign Currency Translations — Foreign currency is valued at the close of the NYSE based on quotations posted by banks and major currency dealers. Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at date of valuation. Purchases and sales of portfolio securities (net of foreign taxes withheld on disposition) and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for the portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. The combined results of changes in foreign exchange rates and the fluctuation of market prices on investments (net of estimated foreign tax withholding) are included with the net realized and unrealized gain or loss from investments in the Statement of Operations. Reported net realized foreign currency gains or losses arise from (1) sales of foreign currencies, (2) currency gains or losses realized between the trade and settlement dates on securities transactions, and (3) the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign currency gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. |
The Fund may invest in foreign securities, which may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests and are shown in the Statement of Operations.
J. | Forward Foreign Currency Contracts — The Fund may engage in foreign currency transactions either on a spot (i.e. for prompt delivery and settlement) basis, or through forward foreign currency contracts, to manage or minimize currency or exchange rate risk. |
The Fund may also enter into forward foreign currency contracts for the purchase or sale of a security denominated in a foreign currency in order to “lock in” the U.S. dollar price of that security, or the Fund may also enter into forward foreign currency contracts that do not provide for
11 Invesco International Small Company Fund
physical settlement of the two currencies, but instead are settled by a single cash payment calculated as the difference between the agreed upon exchange rate and the spot rate at settlement based upon an agreed upon notional amount (non-deliverable forwards). The Fund will set aside liquid assets in an amount equal to the daily mark-to-market obligation for forward foreign currency contracts.
A forward foreign currency contract is an obligation between two parties (“Counterparties”) to purchase or sell a specific currency for an agreed-upon price at a future date. The use of forward foreign currency contracts does not eliminate fluctuations in the price of the underlying securities the Fund owns or intends to acquire but establishes a rate of exchange in advance. Fluctuations in the value of these contracts are measured by the difference in the contract date and reporting date exchange rates and are recorded as unrealized appreciation (depreciation) until the contracts are closed. When the contracts are closed, realized gains (losses) are recorded. Realized and unrealized gains (losses) on the contracts are included in the Statement of Operations. The primary risks associated with forward foreign currency contracts include failure of the Counterparty to meet the terms of the contract and the value of the foreign currency changing unfavorably. These risks may be in excess of the amounts reflected in the Statement of Assets and Liabilities.
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | | | | | |
Average Daily Net Assets | | Rate | |
First $250 million | | | 0 | .935% | | | | |
Next $250 million | | | 0 | .91% | | | | |
Next $500 million | | | 0 | .885% | | | | |
Next $1.5 billion | | | 0 | .86% | | | | |
Next $2.5 billion | | | 0 | .835% | | | | |
Next $2.5 billion | | | 0 | .81% | | | | |
Next $2.5 billion | | | 0 | .785% | | | | |
Over $10 billion | | | 0 | .76% | | | | |
For the six months ended June 30, 2018, the effective advisory fees incurred by the Fund was 0.93%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2019, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class Y, Class R5 and Class R6 shares to 2.25%, 3.00%, 2.00%, 2.00% and 2.00% of average daily net assets, respectively (the “expense limits”). Prior to their conversion to Class A shares, the expense limit for Class B shares was 3.00% of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2019. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2020, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended June 30, 2018, the Adviser waived advisory fees of $23,074.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A and Class C shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. Prior to their conversion to Class A shares, the Fund paid an annual rate of 1.00% of the average daily net assets of Class B shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales
12 Invesco International Small Company Fund
charges, that may be paid by any class of shares of the Fund. For the six months ended June 30, 2018, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2018, IDI advised the Fund that IDI retained $36,205 in front-end sales commissions from the sale of Class A shares and $2,502 and $287 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of June 30, 2018. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
The Fund’s policy is to recognize transfers in and out of the valuation levels as of the end of the reporting period.
During the six months ended June 30, 2018, there were transfers from Level 1 to Level 2 of $30,179,760 and from Level 2 to Level 1 of $33,294,249, due to foreign fair value adjustments.
| | | | | | | | | | | | | | | | |
| | Level 1 | | | Level 2 | | | Level 3 | | | Total | |
Investments in Securities | | | | | | | | | | | | | | | | |
Australia | | $ | — | | | $ | 2,551,654 | | | $ | — | | | $ | 2,551,654 | |
Brazil | | | 17,461,337 | | | | — | | | | — | | | | 17,461,337 | |
Canada | | | 38,561,500 | | | | — | | | | — | | | | 38,561,500 | |
Egypt | | | 9,161,569 | | | | — | | | | — | | | | 9,161,569 | |
Estonia | | | 8,711,079 | | | | — | | | | — | | | | 8,711,079 | |
France | | | 29,846,654 | | | | — | | | | — | | | | 29,846,654 | |
Germany | | | 4,074,549 | | | | 13,105,800 | | | | — | | | | 17,180,349 | |
Greece | | | 6,433,537 | | | | — | | | | — | | | | 6,433,537 | |
Indonesia | | | 2,672,997 | | | | — | | | | — | | | | 2,672,997 | |
Ireland | | | 4,069,902 | | | | 2,940,220 | | | | — | | | | 7,010,122 | |
Israel | | | 4,150,771 | | | | 5,093,314 | | | | — | | | | 9,244,085 | |
Italy | | | 11,899,006 | | | | — | | | | — | | | | 11,899,006 | |
Japan | | | 2,735,739 | | | | — | | | | — | | | | 2,735,739 | |
Malaysia | | | 2,444,535 | | | | — | | | | — | | | | 2,444,535 | |
Mexico | | | 9,400,370 | | | | — | | | | — | | | | 9,400,370 | |
Netherlands | | | — | | | | 2,801,112 | | | | — | | | | 2,801,112 | |
New Zealand | | | 3,501,427 | | | | 2,637,133 | | | | — | | | | 6,138,560 | |
Norway | | | 7,812,494 | | | | — | | | | — | | | | 7,812,494 | |
Poland | | | 4,173,416 | | | | 1,640,124 | | | | — | | | | 5,813,540 | |
Romania | | | 18,335,780 | | | | 3,788,860 | | | | — | | | | 22,124,640 | |
South Africa | | | 8,012,952 | | | | — | | | | — | | | | 8,012,952 | |
Sweden | | | 3,447,745 | | | | — | | | | — | | | | 3,447,745 | |
Switzerland | | | 2,955,286 | | | | — | | | | — | | | | 2,955,286 | |
Turkey | | | — | | | | 2,662,122 | | | | — | | | | 2,662,122 | |
United Kingdom | | | 30,192,223 | | | | 27,012,188 | | | | — | | | | 57,204,411 | |
Money Market Funds | | | 26,883,968 | | | | — | | | | — | | | | 26,883,968 | |
Total Investments | | $ | 256,938,836 | | | $ | 64,232,527 | | | $ | — | | | $ | 321,171,363 | |
13 Invesco International Small Company Fund
NOTE 4—Investments in Affiliates
The 1940 Act defines an “affiliated person” as an issuance in which a fund holds 5% or more of the outstanding voting securities. The Fund has not owned enough of the outstanding voting securities of the issuer to have control (as defined in the 1940 Act) of that issuer. The following is a summary of the investments in other affiliates (excluding affiliated money market funds) for the six months ended June 30, 2018.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Value 12/31/17 | | | Purchases at Cost | | | Proceeds from Sales | | | Change in Unrealized Appreciation (Depreciation) | | | Realized Gain (Loss) | | | Value 06/30/18 | | | Dividend Income | |
Precia S.A. | | $ | 9,280,812 | | | $ | — | | | $ | — | | | $ | (454,525 | ) | | $ | — | | | $ | 8,826,287 | | | $ | — | |
NOTE 5—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended June 30, 2018, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,771.
NOTE 6—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 7—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 8—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of December 31, 2017.
NOTE 9—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2018 was $36,493,590 and $18,415,261, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
Aggregate unrealized appreciation of investments | | $ | 71,256,528 | |
Aggregate unrealized (depreciation) of investments | | | (20,817,135 | ) |
Net unrealized appreciation of investments | | $ | 50,439,393 | |
Cost of investments for tax purposes is $270,731,970.
14 Invesco International Small Company Fund
NOTE 10—Share Information
| | | | | | | | | | | | | | | | |
| | Summary of Share Activity | |
| | Six months ended June 30, 2018(a) | | | Year ended December 31, 2017 | |
| | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Class A | | | 1,493,677 | | | $ | 28,988,754 | | | | 3,223,594 | | | $ | 59,237,437 | |
Class B(b) | | | 71 | | | | 1,356 | | | | 1,378 | | | | 24,446 | |
Class C | | | 108,097 | | | | 1,995,467 | | | | 248,579 | | | | 4,367,303 | |
Class Y | | | 403,487 | | | | 7,794,800 | | | | 2,884,187 | | | | 50,811,800 | |
Class R5 | | | 37,092 | | | | 714,068 | | | | 148,126 | | | | 2,645,110 | |
Class R6 | | | 1,004,013 | | | | 19,297,130 | | | | 3,629,908 | | | | 69,334,857 | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Class A | | | — | | | | — | | | | 490,038 | | | | 9,114,701 | |
Class B(b) | | | — | | | | — | | | | 1,362 | | | | 24,103 | |
Class C | | | — | | | | — | | | | 58,829 | | | | 1,040,712 | |
Class Y | | | — | | | | — | | | | 174,142 | | | | 3,244,291 | |
Class R5 | | | — | | | | — | | | | 21,266 | | | | 392,547 | |
Class R6 | | | — | | | | — | | | | 276,002 | | | | 5,089,494 | |
| | | | |
Conversion of Class B shares to Class A shares:(c) | | | | | | | | | | | | | | | | |
Class A | | | 19,336 | | | | 393,290 | | | | 32,478 | | | | 603,644 | |
Class B | | | (20,347 | ) | | | (393,290 | ) | | | (34,172 | ) | | | (603,644 | ) |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Class A | | | (1,259,658 | ) | | | (24,311,697 | ) | | | (3,257,973 | ) | | | (58,415,363 | ) |
Class B(b) | | | (2,167 | ) | | | (41,674 | ) | | | (10,642 | ) | | | (179,774 | ) |
Class C | | | (173,504 | ) | | | (3,163,133 | ) | | | (295,687 | ) | | | (5,076,979 | ) |
Class Y | | | (978,904 | ) | | | (18,904,924 | ) | | | (3,584,420 | ) | | | (67,875,950 | ) |
Class R5 | | | (49,612 | ) | | | (947,429 | ) | | | (469,800 | ) | | | (8,798,343 | ) |
Class R6 | | | (485,600 | ) | | | (9,272,171 | ) | | | (624,111 | ) | | | (11,661,126 | ) |
Net increase in share activity | | | 95,981 | | | $ | 2,150,547 | | | | 2,913,084 | | | $ | 53,319,266 | |
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 48% of the outstanding shares of the Fund. IDI has an agreement with this entity to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to this entity, which is considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by this entity are also owned beneficially. |
(b) | Class B shares activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
(c) | Effective as of the close of business January 26, 2018, all outstanding Class B shares were converted to Class A shares. |
15 Invesco International Small Company Fund
NOTE 11—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net asset value, beginning of period | | | Net investment income(a) | | | Net gains (losses) on securities (both realized and unrealized) | | | Total from investment operations | | | Dividends from net investment income | | | Distributions from net realized gains | | | Total distributions | | | Net asset value, end of period | | | Total return(b) | | | Net assets, end of period (000’s omitted) | | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | | Ratio of net investment income to average net assets | | | Portfolio turnover(c) | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | $ | 19.33 | | | $ | 0.23 | | | $ | (1.00 | ) | | $ | (0.77 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | 18.56 | | | | (3.98 | )% | | $ | 160,696 | | | | 1.55 | %(d) | | | 1.56 | %(d) | | | 2.42 | %(d) | | | 6 | % |
Year ended 12/31/17 | | | 15.44 | | | | 0.27 | | | | 4.84 | | | | 5.11 | | | | (0.52 | ) | | | (0.70 | ) | | | (1.22 | ) | | | 19.33 | | | | 33.42 | | | | 162,497 | | | | 1.58 | | | | 1.59 | | | | 1.48 | | | | 16 | |
Year ended 12/31/16 | | | 15.42 | | | | 0.34 | | | | 1.02 | | | | 1.36 | | | | (0.37 | ) | | | (0.97 | ) | | | (1.34 | ) | | | 15.44 | | | | 8.79 | | | | 122,232 | | | | 1.57 | | | | 1.58 | | | | 2.13 | | | | 15 | |
Year ended 12/31/15 | | | 18.40 | | | | 0.21 | | | | (1.92 | ) | | | (1.71 | ) | | | (0.19 | ) | | | (1.08 | ) | | | (1.27 | ) | | | 15.42 | | | | (9.30 | ) | | | 119,301 | | | | 1.52 | | | | 1.53 | | | | 1.18 | | | | 8 | |
Year ended 12/31/14 | | | 21.34 | | | | 0.28 | | | | (1.40 | ) | | | (1.12 | ) | | | (0.28 | ) | | | (1.54 | ) | | | (1.82 | ) | | | 18.40 | | | | (5.01 | ) | | | 185,380 | | | | 1.45 | | | | 1.46 | | | | 1.31 | | | | 20 | |
Year ended 12/31/13 | | | 20.81 | | | | 0.29 | | | | 1.64 | | | | 1.93 | | | | (0.31 | ) | | | (1.09 | ) | | | (1.40 | ) | | | 21.34 | | | | 9.50 | | | | 285,785 | | | | 1.45 | | | | 1.47 | | | | 1.37 | | | | 17 | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18(e) | | | 18.38 | | | | 0.02 | | | | 0.93 | | | | 0.95 | | | | — | | | | — | | | | — | | | | 19.33 | | | | 5.17 | | | | — | | | | 2.30 | (d) | | | 2.31 | (d) | | | 1.67 | (d) | | | 6 | |
Year ended 12/31/17 | | | 14.73 | | | | 0.13 | | | | 4.61 | | | | 4.74 | | | | (0.39 | ) | | | (0.70 | ) | | | (1.09 | ) | | | 18.38 | | | | 32.46 | | | | 413 | | | | 2.33 | | | | 2.34 | | | | 0.73 | | | | 16 | |
Year ended 12/31/16 | | | 14.75 | | | | 0.21 | | | | 0.98 | | | | 1.19 | | | | (0.24 | ) | | | (0.97 | ) | | | (1.21 | ) | | | 14.73 | | | | 8.03 | | | | 950 | | | | 2.32 | | | | 2.33 | | | | 1.38 | | | | 15 | |
Year ended 12/31/15 | | | 17.66 | | | | 0.07 | | | | (1.84 | ) | | | (1.77 | ) | | | (0.06 | ) | | | (1.08 | ) | | | (1.14 | ) | | | 14.75 | | | | (9.99 | ) | | | 1,514 | | | | 2.27 | | | | 2.28 | | | | 0.43 | | | | 8 | |
Year ended 12/31/14 | | | 20.54 | | | | 0.12 | | | | (1.35 | ) | | | (1.23 | ) | | | (0.11 | ) | | | (1.54 | ) | | | (1.65 | ) | | | 17.66 | | | | (5.78 | ) | | | 2,828 | | | | 2.20 | | | | 2.21 | | | | 0.56 | | | | 20 | |
Year ended 12/31/13 | | | 20.03 | | | | 0.12 | | | | 1.58 | | | | 1.70 | | | | (0.10 | ) | | | (1.09 | ) | | | (1.19 | ) | | | 20.54 | | | | 8.71 | | | | 5,282 | | | | 2.20 | | | | 2.22 | | | | 0.62 | | | | 17 | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 18.38 | | | | 0.15 | | | | (0.95 | ) | | | (0.80 | ) | | | — | | | | — | | | | — | | | | 17.58 | | | | (4.35 | ) | | | 17,806 | | | | 2.30 | (d) | | | 2.31 | (d) | | | 1.67 | (d) | | | 6 | |
Year ended 12/31/17 | | | 14.73 | | | | 0.13 | | | | 4.61 | | | | 4.74 | | | | (0.39 | ) | | | (0.70 | ) | | | (1.09 | ) | | | 18.38 | | | | 32.46 | | | | 19,819 | | | | 2.33 | | | | 2.34 | | | | 0.73 | | | | 16 | |
Year ended 12/31/16 | | | 14.76 | | | | 0.21 | | | | 0.97 | | | | 1.18 | | | | (0.24 | ) | | | (0.97 | ) | | | (1.21 | ) | | | 14.73 | | | | 7.96 | | | | 15,712 | | | | 2.32 | | | | 2.33 | | | | 1.38 | | | | 15 | |
Year ended 12/31/15 | | | 17.67 | | | | 0.07 | | | | (1.84 | ) | | | (1.77 | ) | | | (0.06 | ) | | | (1.08 | ) | | | (1.14 | ) | | | 14.76 | | | | (9.98 | ) | | | 18,098 | | | | 2.27 | | | | 2.28 | | | | 0.43 | | | | 8 | |
Year ended 12/31/14 | | | 20.54 | | | | 0.12 | | | | (1.34 | ) | | | (1.22 | ) | | | (0.11 | ) | | | (1.54 | ) | | | (1.65 | ) | | | 17.67 | | | | (5.73 | ) | | | 26,458 | | | | 2.20 | | | | 2.21 | | | | 0.56 | | | | 20 | |
Year ended 12/31/13 | | | 20.03 | | | | 0.12 | | | | 1.58 | | | | 1.70 | | | | (0.10 | ) | | | (1.09 | ) | | | (1.19 | ) | | | 20.54 | | | | 8.71 | | | | 33,764 | | | | 2.20 | | | | 2.22 | | | | 0.62 | | | | 17 | |
Class Y | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 19.36 | | | | 0.26 | | | | (1.01 | ) | | | (0.75 | ) | | | — | | | | — | | | | — | | | | 18.61 | | | | (3.87 | ) | | | 49,097 | | | | 1.30 | (d) | | | 1.31 | (d) | | | 2.67 | (d) | | | 6 | |
Year ended 12/31/17 | | | 15.46 | | | | 0.32 | | | | 4.84 | | | | 5.16 | | | | (0.56 | ) | | | (0.70 | ) | | | (1.26 | ) | | | 19.36 | | | | 33.74 | | | | 62,218 | | | | 1.33 | | | | 1.34 | | | | 1.73 | | | | 16 | |
Year ended 12/31/16 | | | 15.43 | | | | 0.38 | | | | 1.03 | | | | 1.41 | | | | (0.41 | ) | | | (0.97 | ) | | | (1.38 | ) | | | 15.46 | | | | 9.10 | | | | 57,810 | | | | 1.32 | | | | 1.33 | | | | 2.38 | | | | 15 | |
Year ended 12/31/15 | | | 18.42 | | | | 0.26 | | | | (1.94 | ) | | | (1.68 | ) | | | (0.23 | ) | | | (1.08 | ) | | | (1.31 | ) | | | 15.43 | | | | (9.11 | ) | | | 60,497 | | | | 1.27 | | | | 1.28 | | | | 1.43 | | | | 8 | |
Year ended 12/31/14 | | | 21.38 | | | | 0.34 | | | | (1.42 | ) | | | (1.08 | ) | | | (0.34 | ) | | | (1.54 | ) | | | (1.88 | ) | | | 18.42 | | | | (4.79 | ) | | | 121,933 | | | | 1.20 | | | | 1.21 | | | | 1.56 | | | | 20 | |
Year ended 12/31/13 | | | 20.84 | | | | 0.35 | | | | 1.65 | | | | 2.00 | | | | (0.37 | ) | | | (1.09 | ) | | | (1.46 | ) | | | 21.38 | | | | 9.82 | | | | 122,163 | | | | 1.20 | | | | 1.22 | | | | 1.62 | | | | 17 | |
Class R5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 19.18 | | | | 0.26 | | | | (0.99 | ) | | | (0.73 | ) | | | — | | | | — | | | | — | | | | 18.45 | | | | (3.81 | ) | | | 5,955 | | | | 1.22 | (d) | | | 1.23 | (d) | | | 2.75 | (d) | | | 6 | |
Year ended 12/31/17 | | | 15.32 | | | | 0.33 | | | | 4.81 | | | | 5.14 | | | | (0.58 | ) | | | (0.70 | ) | | | (1.28 | ) | | | 19.18 | | | | 33.90 | | | | 6,433 | | | | 1.24 | | | | 1.25 | | | | 1.82 | | | | 16 | |
Year ended 12/31/16 | | | 15.30 | | | | 0.39 | | | | 1.02 | | | | 1.41 | | | | (0.42 | ) | | | (0.97 | ) | | | (1.39 | ) | | | 15.32 | | | | 9.21 | | | | 9,740 | | | | 1.19 | | | | 1.20 | | | | 2.51 | | | | 15 | |
Year ended 12/31/15 | | | 18.27 | | | | 0.27 | | | | (1.91 | ) | | | (1.64 | ) | | | (0.25 | ) | | | (1.08 | ) | | | (1.33 | ) | | | 15.30 | | | | (8.96 | ) | | | 24,821 | | | | 1.17 | | | | 1.18 | | | | 1.53 | | | | 8 | |
Year ended 12/31/14 | | | 21.23 | | | | 0.35 | | | | (1.41 | ) | | | (1.06 | ) | | | (0.36 | ) | | | (1.54 | ) | | | (1.90 | ) | | | 18.27 | | | | (4.74 | ) | | | 63,044 | | | | 1.13 | | | | 1.14 | | | | 1.63 | | | | 20 | |
Year ended 12/31/13 | | | 20.71 | | | | 0.36 | | | | 1.63 | | | | 1.99 | | | | (0.38 | ) | | | (1.09 | ) | | | (1.47 | ) | | | 21.23 | | | | 9.88 | | | | 91,240 | | | | 1.13 | | | | 1.15 | | | | 1.69 | | | | 17 | |
Class R6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 19.17 | | | | 0.27 | | | | (1.00 | ) | | | (0.73 | ) | | | — | | | | — | | | | — | | | | 18.44 | | | | (3.81 | ) | | | 88,667 | | | | 1.16 | (d) | | | 1.17 | (d) | | | 2.81 | (d) | | | 6 | |
Year ended 12/31/17 | | | 15.31 | | | | 0.36 | | | | 4.80 | | | | 5.16 | | | | (0.60 | ) | | | (0.70 | ) | | | (1.30 | ) | | | 19.17 | | | | 34.04 | | | | 82,244 | | | | 1.15 | | | | 1.16 | | | | 1.91 | | | | 16 | |
Year ended 12/31/16 | | | 15.30 | | | | 0.40 | | | | 1.02 | | | | 1.42 | | | | (0.44 | ) | | | (0.97 | ) | | | (1.41 | ) | | | 15.31 | | | | 9.22 | | | | 15,436 | | | | 1.13 | | | | 1.14 | | | | 2.57 | | | | 15 | |
Year ended 12/31/15 | | | 18.27 | | | | 0.28 | | | | (1.91 | ) | | | (1.63 | ) | | | (0.26 | ) | | | (1.08 | ) | | | (1.34 | ) | | | 15.30 | | | | (8.87 | ) | | | 38,080 | | | | 1.09 | | | | 1.10 | | | | 1.61 | | | | 8 | |
Year ended 12/31/14 | | | 21.24 | | | | 0.37 | | | | (1.42 | ) | | | (1.05 | ) | | | (0.38 | ) | | | (1.54 | ) | | | (1.92 | ) | | | 18.27 | | | | (4.68 | ) | | | 45,946 | | | | 1.04 | | | | 1.05 | | | | 1.72 | | | | 20 | |
Year ended 12/31/13 | | | 20.72 | | | | 0.38 | | | | 1.63 | | | | 2.01 | | | | (0.40 | ) | | | (1.09 | ) | | | (1.49 | ) | | | 21.24 | | | | 9.97 | | | | 36,554 | | | | 1.04 | | | | 1.06 | | | | 1.78 | | | | 17 | |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $169,474, $418, $19,468, $56,514, $6,388 and $88,200 for Class A, Class B, Class C, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Reflects activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
16 Invesco International Small Company Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2018 through June 30, 2018.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Beginning Account Value (01/01/18) | | | ACTUAL | | | HYPOTHETICAL (5% annual return before expenses) | | | | |
Class | | Ending Account Value (06/30/18)1 | | | Expenses Paid During Period2 | | | Ending Account Value (06/30/18) | | | Expenses Paid During Period 2 | | | Annualized Expense Ratio | |
A | | $ | 1,000.00 | | | $ | 960.20 | | | $ | 7.53 | | | $ | 1,017.11 | | | $ | 7.75 | | | | 1.55 | % |
C | | | 1,000.00 | | | | 956.50 | | | | 11.16 | | | | 1,013.39 | | | | 11.48 | | | | 2.30 | |
Y | | | 1,000.00 | | | | 961.30 | | | | 6.32 | | | | 1,018.35 | | | | 6.51 | | | | 1.30 | |
R5 | | | 1,000.00 | | | | 961.40 | | | | 5.93 | | | | 1,018.74 | | | | 6.11 | | | | 1.22 | |
R6 | | | 1,000.00 | | | | 961.90 | | | | 5.64 | | | | 1,019.04 | | | | 5.81 | | | | 1.16 | |
1 | The actual ending account value is based on the actual total return of the Fund for the period January 1, 2018 through June 30, 2018, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 181/365 to reflect the most recent fiscal half year. |
17 Invesco International Small Company Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 5-6, 2018, the Board of Trustees (the Board or the Trustees) of AIM Funds Group (Invesco Funds Group) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco International Small Company Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2018. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established three Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees
are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 6, 2018.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also reviewed and considered the benefits to shareholders of investing in a fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under
the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2017 to the performance of funds in the Broadridge performance universe and against the Lipper International Small/Mid-Cap Core Funds Index. The Board noted that performance of Class A shares of the Fund was in the second quintile of its performance universe for the one year period, the fourth quintile for the three year period and the fifth quintile for the five year period (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one year period, and below the performance of the Index for the three and five year periods. The Board noted that the Fund’s overweight and underweight positions in certain sectors and regions as well as its cash position detracted from Fund performance. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for
18 Invesco International Small Company Fund
Class A shares of the Fund was reasonably comparable to the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components. The Board noted that the Fund’s actual and contractual management fees as well as its total expense ratio were in the fourth quintile of its expense group, and discussed with management reasons for such relative actual and contractual management fees and total expenses.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board noted that Invesco Advisers and the Affiliated Sub-Advisers do not manage other similarly managed mutual funds or client accounts.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services. The Board considered the methodology used for calculating profitability and noted the periodic
review of such methodology by an independent consultant. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from Invesco representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s
investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker may receive commissions for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers may use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco International Small Company Fund
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Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
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To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your house-hold, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q (or any successor Form). The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q (or any successor Form) on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q (or any successor Form) may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov. The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| | | | |
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. | |  |
| | | | | | |
SEC file numbers: 811-01540 and 002-27334 | | Invesco Distributors, Inc. | | | | ISC-SAR-1 08142018 0818 |
| | | | |
| | |
 | | Semiannual Report to Shareholders | | June 30, 2018 |
| |
| Invesco Small Cap Equity Fund |
| Nasdaq: | | |
| | A: SMEAX ∎ C: SMECX ∎ R: SMERX ∎ Y: SMEYX ∎ R5: SMEIX ∎ R6: SMEFX |

| | | | |
| | |
| | |
| | 2 | | Fund Performance |
| | 3 | | Letters to Shareholders |
| | 4 | | Schedule of Investments |
| | 7 | | Financial Statements |
| | 9 | | Notes to Financial Statements |
| | 15 | | Financial Highlights |
| | 16 | | Fund Expenses |
| | 17 | | Approval of Investment Advisory and Sub-Advisory Contracts |
| |
| | For the most current month-end Fund performance and commentary, please visit invesco.com/performance. Unless otherwise noted, all data provided by Invesco. This report must be accompanied or preceded by a currently effective Fund prospectus, which contains more complete information, including sales charges and expenses. Investors should read it carefully before investing. |
| | NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
Fund Performance
| | | | |
Performance summary | |
Fund vs. Indexes Cumulative total returns, 12/31/17 to 6/30/18, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) or front-end sales charges, which would have reduced performance. | |
| |
Class A Shares | | | 4.56 | % |
Class C Shares | | | 4.13 | |
Class R Shares | | | 4.43 | |
Class Y Shares | | | 4.67 | |
Class R5 Shares | | | 4.74 | |
Class R6 Shares | | | 4.77 | |
S&P 500 Indexq (Broad Market Index) | | | 2.65 | |
Russell 2000 Indexq (Style-Specific Index) | | | 7.66 | |
Lipper Small-Cap Core Funds Index⬛ (Peer Group Index) | | | 5.27 | |
|
Source(s): qFactSet Research Systems Inc.; ⬛ Lipper Inc. | |
| |
The S&P 500® Index is an unmanaged index considered representative of the US stock market. | | | | |
The Russell 2000® Index is an unmanaged index considered representative of small-cap stocks. The Russell 2000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. | | | | |
The Lipper Small-Cap Core Funds Index is an unmanaged index considered representative of small-cap core funds tracked by Lipper. | | | | |
The Fund is not managed to track the performance of any particular index, including the index(es) described here, and consequently, the performance of the Fund may deviate significantly from the performance of the index(es). | | | | |
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of the peer group, if applicable, reflects fund expenses; performance of a market index does not. | | | | |
Class Y shares incepted on October 3, 2008. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the 12b-1 fees applicable to Class A shares.
The performance data quoted represent past performance and cannot guarantee comparable future results; current performance may be lower or higher. Please visit invesco.com/ performance for the most recent month-end performance. Performance figures reflect reinvested distributions, changes in net asset value and the effect of the maximum sales charge unless otherwise stated. Performance figures do not reflect deduction of taxes a shareholder would pay on Fund distributions or sale of Fund shares. Investment return and principal value will fluctuate so that you may have a gain or loss when you sell shares.
The total annual Fund operating expense ratio set forth in the most recent Fund prospectus as of the date of this report for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares was 1.30%, 2.05%, 1.55%, 1.05%, 0.91% and 0.85%, respectively. The expense ratios presented above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.
Class A share performance reflects the maximum 5.50% sales charge, and Class C share performance reflects the applicable contingent deferred sales charge (CDSC) for the period involved. The CDSC on Class C shares is 1% for the first year after purchase. Class R, Class Y, Class R5 and Class R6 shares do not have a front-end sales charge or a CDSC; therefore, performance is at net asset value.
The performance of the Fund’s share classes will differ primarily due to different sales charge structures and class expenses.
| | | | | | |
| | Average Annual Total Returns | |
| | As of 6/30/18, including maximum applicable sales charges | | | | |
| | Class A Shares | |
| | Inception (8/31/00) | | | 7.12 | % |
| | 10 Years | | | 7.62 | |
| | 5 Years | | | 7.62 | |
| | 1 Year | | | 7.04 | |
| | Class C Shares | |
| | Inception (8/31/00) | | | 6.68 | % |
| | 10 Years | | | 7.42 | |
| | 5 Years | | | 8.02 | |
| | 1 Year | | | 11.44 | |
| | Class R Shares | |
| | Inception (6/3/02) | | | 7.67 | % |
| | 10 Years | | | 7.97 | |
| | 5 Years | | | 8.57 | |
| | 1 Year | | | 13.05 | |
| | Class Y Shares | |
| | 10 Years | | | 8.51 | % |
| | 5 Years | | | 9.11 | |
| | 1 Year | | | 13.54 | |
| | Class R5 Shares | |
| | Inception (4/29/05) | | | 9.23 | % |
| | 10 Years | | | 8.73 | |
| | 5 Years | | | 9.28 | |
| | 1 Year | | | 13.69 | |
| | Class R6 Shares | |
| | 10 Years | | | 8.54 | % |
| | 5 Years | | | 9.39 | |
| | 1 Year | | | 13.88 | |
Fund performance reflects any applicable fee waivers and/or expense reimbursements. Had the adviser not waived fees and/or reimbursed expenses currently or in the past, returns would have been lower. See current prospectus for more information.
For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visiting invesco.com/us. Click on “Products” and select “Mutual Funds.” Use the “Product Finder” to locate your Fund; then click on its name to access its product detail page. There, you can learn more about your Fund’s investment strategies, holdings and performance.
Also, visit blog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
2 Invesco Small Cap Equity Fund
Letters to Shareholders
| | | | | | | | | |

Bruce Crockett | | | | Dear Fellow Shareholders: As independent chair of the Invesco Funds Board, I can assure you that the members of the Board are strong advocates for the interests of investors in Invesco’s mutual funds. We work hard to represent your interests through oversight of the quality of the investment management services your funds receive and other matters important to your investment. This includes but is not limited to: ensuring that Invesco offers a diverse lineup of mutual funds that your financial adviser can use to strive to meet your financial needs as your investment goals change over time; monitoring how the portfolio management teams of the Invesco funds are performing in light of changing economic and market conditions; assessing each portfolio management team’s investment performance within the context of the investment strategy described in the fund’s prospectus; and monitoring for potential conflicts of interests that may impact the nature of the services that your funds receive. |
We believe one of the most important services we provide our fund shareholders is the annual review of the funds’ advisory and sub-advisory contracts with Invesco Advisers and its affiliates. This review is required by the Investment Company Act of 1940 and focuses on the nature and quality of the services Invesco provides as the adviser to the Invesco funds and the reasonableness of the fees that it charges for those services. Each year, we spend months carefully reviewing information received from Invesco and a variety of independent sources, such as performance and fee data prepared by Lipper, Inc. (a subsidiary of Broadridge Financial Solutions, Inc.), an independent, third-party firm widely recognized as a leader in its field. We also meet with our independent legal counsel and other independent advisers to review and help us assess the information that we have received. Our goal is to assure that you receive quality investment management services for a reasonable fee.
As always, please contact me at bruce@brucecrockett.com with any questions or concerns you may have. On behalf of the Board, we look forward to continuing to represent your interests and serving your needs.
Sincerely,

Bruce L. Crockett
Independent Chair
Invesco Funds Board of Trustees
| | | | |

Philip Taylor | | | | Dear Shareholders: This semiannual report includes information about your Fund, including performance data and a complete list of its investments as of the close of the reporting period. The investment professionals at Invesco invest with high conviction. This means that, no matter the asset class or the strategy, each investment team has a passion to exceed. We want to help investors achieve better outcomes, such as seeking higher returns, helping mitigate risk and generating income. Of course, investing with high conviction can’t guarantee a profit or ensure success; no investment strategy can. To learn more about how we invest with high conviction, visit invesco.com/HighConviction. Our website, invesco.com/us, offers a wide range of market insights and investment perspectives. On the website, you’ll find detailed information about our funds, including performance, holdings and portfolio manager commentaries. You can access information about |
your account by completing a simple, secure online registration. To do so, select “Log In” on the right side of the homepage, and then select “Register for Individual Account Access.”
Finally, I’m pleased to share with you Invesco’s commitment to both the Principles for Responsible Investment and to considering environmental, social and governance issues in our robust investment process. I invite you to learn more at invesco.com/esg.
For questions about your account, contact an Invesco client services representative at 800 959 4246. For Invesco-related questions or comments, please email me directly at phil@invesco.com.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,

Philip Taylor
Senior Managing Director, Invesco Ltd.
3 Invesco Small Cap Equity Fund
Schedule of Investments(a)
June 30, 2018
(Unaudited)
| | | | | | | | |
| | Shares | | | Value | |
Common Stocks & Other Equity Interests–97.28% | |
Aerospace & Defense–1.90% | |
BWX Technologies, Inc. | | | 165,971 | | | $ | 10,343,313 | |
Cubic Corp. | | | 175,290 | | | | 11,253,618 | |
| | | | | | | 21,596,931 | |
|
Air Freight & Logistics–1.09% | |
Forward Air Corp. | | | 210,478 | | | | 12,435,040 | |
|
Alternative Carriers–1.71% | |
Iridium Communications Inc.(b) | | | 1,210,506 | | | | 19,489,147 | |
|
Apparel Retail–1.21% | |
American Eagle Outfitters, Inc. | | | 592,596 | | | | 13,777,857 | |
|
Application Software–1.61% | |
Blackbaud, Inc. | | | 178,565 | | | | 18,293,984 | |
RingCentral, Inc.–Class A(b) | | | 406 | | | | 28,562 | |
| | | | | | | 18,322,546 | |
|
Auto Parts & Equipment–1.30% | |
Visteon Corp.(b) | | | 114,247 | | | | 14,765,282 | |
|
Biotechnology–3.69% | |
Array BioPharma Inc.(b) | | | 916,393 | | | | 15,377,075 | |
Neurocrine Biosciences, Inc.(b) | | | 178,623 | | | | 17,547,923 | |
Retrophin, Inc.(b) | | | 332,080 | | | | 9,052,501 | |
| | | | | | | 41,977,499 | |
|
Building Products–2.12% | |
Apogee Enterprises, Inc. | | | 224,719 | | | | 10,824,714 | |
Trex Co., Inc.(b) | | | 212,972 | | | | 13,329,918 | |
| | | | | | | 24,154,632 | |
|
Casinos & Gaming–2.18% | |
Boyd Gaming Corp. | | | 334,644 | | | | 11,598,761 | |
Penn National Gaming, Inc.(b) | | | 392,966 | | | | 13,199,728 | |
| | | | | | | 24,798,489 | |
|
Communications Equipment–0.99% | |
Lumentum Holdings Inc.(b) | | | 194,248 | | | | 11,246,959 | |
|
Construction & Engineering–1.81% | |
Dycom Industries, Inc.(b) | | | 110,021 | | | | 10,398,085 | |
Primoris Services Corp. | | | 373,915 | | | | 10,181,705 | |
| | | | | | | 20,579,790 | |
|
Construction Materials–0.95% | |
Eagle Materials Inc. | | | 102,998 | | | | 10,811,700 | |
|
Consumer Finance–0.95% | |
SLM Corp.(b) | | | 945,724 | | | | 10,828,540 | |
|
Data Processing & Outsourced Services–2.85% | |
Euronet Worldwide, Inc.(b) | | | 124,774 | | | | 10,452,318 | |
Genpact Ltd. | | | 291,585 | | | | 8,435,554 | |
| | | | | | | | |
| | Shares | | | Value | |
Data Processing & Outsourced Services–(continued) | |
Jack Henry & Associates, Inc. | | | 104,445 | | | $ | 13,615,450 | |
| | | | | | | 32,503,322 | |
|
Diversified Support Services–1.16% | |
Mobile Mini, Inc. | | | 282,204 | | | | 13,235,368 | |
|
Education Services–0.92% | |
Strayer Education, Inc. | | | 92,349 | | | | 10,436,360 | |
|
Electrical Components & Equipment–0.99% | |
EnerSys | | | 150,475 | | | | 11,231,454 | |
|
Electronic Components–0.75% | |
Belden Inc. | | | 140,208 | | | | 8,569,513 | |
|
Electronic Equipment & Instruments–4.13% | |
Coherent, Inc.(b) | | | 51,765 | | | | 8,097,081 | |
FLIR Systems, Inc. | | | 258,929 | | | | 13,456,540 | |
National Instruments Corp. | | | 275,448 | | | | 11,563,307 | |
Zebra Technologies Corp.–Class A(b) | | | 97,080 | | | | 13,906,710 | |
| | | | | | | 47,023,638 | |
|
Environmental & Facilities Services–1.71% | |
ABM Industries Inc. | | | 275,589 | | | | 8,041,687 | |
Waste Connections, Inc. | | | 151,227 | | | | 11,384,369 | |
| | | | | | | 19,426,056 | |
|
Footwear–1.23% | |
Wolverine World Wide, Inc. | | | 402,932 | | | | 14,009,946 | |
|
General Merchandise Stores–0.72% | |
Big Lots, Inc.(c) | | | 196,517 | | | | 8,210,480 | |
|
Health Care Equipment–3.92% | |
Hill-Rom Holdings, Inc. | | | 136,634 | | | | 11,933,614 | |
Nevro Corp.(b) | | | 120,381 | | | | 9,612,423 | |
STERIS PLC | | | 129,349 | | | | 13,582,938 | |
Wright Medical Group N.V.(b) | | | 364,590 | | | | 9,464,756 | |
| | | | | | | 44,593,731 | |
|
Health Care Facilities–0.67% | |
Acadia Healthcare Co., Inc.(b) | | | 185,404 | | | | 7,584,878 | |
|
Health Care REITs–0.77% | |
Healthcare Trust of America, Inc.–Class A | | | 325,297 | | | | 8,770,007 | |
|
Health Care Supplies–0.68% | |
Lantheus Holdings, Inc.(b) | | | 531,798 | | | | 7,737,661 | |
|
Home Entertainment Software–1.74% | |
Take-Two Interactive Software, Inc.(b) | | | 167,252 | | | | 19,795,947 | |
|
Industrial Machinery–2.97% | |
Albany International Corp.–Class A | | | 212,495 | | | | 12,781,574 | |
SPX Corp.(b) | | | 600,797 | | | | 21,057,935 | |
| | | | | | | 33,839,509 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
4 Invesco Small Cap Equity Fund
| | | | | | | | |
| | Shares | | | Value | |
Internet Software & Services–1.27% | |
Instructure Inc.(b) | | | 340,104 | | | $ | 14,471,425 | |
|
Investment Banking & Brokerage–3.48% | |
E*TRADE Financial Corp.(b) | | | 268,027 | | | | 16,392,531 | |
Lazard Ltd.–Class A | | | 251,574 | | | | 12,304,484 | |
Piper Jaffray Cos. | | | 142,175 | | | | 10,926,149 | |
| | | | | | | 39,623,164 | |
|
Life & Health Insurance–0.74% | |
CNO Financial Group, Inc. | | | 444,016 | | | | 8,454,065 | |
|
Life Sciences Tools & Services–0.86% | |
Cambrex Corp.(b) | | | 186,928 | | | | 9,776,334 | |
|
Managed Health Care–1.45% | |
HealthEquity, Inc.(b) | | | 220,271 | | | | 16,542,352 | |
|
Multi-Line Insurance–2.05% | |
American Financial Group, Inc. | | | 107,047 | | | | 11,489,355 | |
Horace Mann Educators Corp. | | | 267,104 | | | | 11,912,838 | |
| | | | | | | 23,402,193 | |
|
Office REITs–0.92% | |
Highwoods Properties, Inc. | | | 207,768 | | | | 10,540,071 | |
|
Oil & Gas Equipment & Services–1.67% | |
Core Laboratories N.V.(c) | | | 99,008 | | | | 12,495,800 | |
Forum Energy Technologies, Inc.(b) | | | 524,838 | | | | 6,481,749 | |
| | | | | | | 18,977,549 | |
|
Oil & Gas Exploration & Production–4.17% | |
Energen Corp.(b) | | | 215,822 | | | | 15,716,158 | |
Newfield Exploration Co.(b) | | | 276,309 | | | | 8,358,347 | |
Parsley Energy, Inc.–Class A(b) | | | 295,735 | | | | 8,954,856 | |
RSP Permian, Inc.(b) | | | 328,001 | | | | 14,438,604 | |
| | | | | | | 47,467,965 | |
|
Packaged Foods & Meats–1.01% | |
Pinnacle Foods Inc. | | | 176,322 | | | | 11,471,509 | |
|
Paper Packaging–0.91% | |
Graphic Packaging Holding Co. | | | 717,139 | | | | 10,405,687 | |
|
Pharmaceuticals–2.38% | |
Phibro Animal Health Corp.–Class A | | | 289,571 | | | | 13,334,745 | |
Supernus Pharmaceuticals Inc.(b) | | | 229,460 | | | | 13,733,181 | |
| | | | | | | 27,067,926 | |
|
Property & Casualty Insurance–3.26% | |
Argo Group International Holdings, Ltd. | | | 211,871 | | | | 12,320,299 | |
Aspen Insurance Holdings Ltd. (Bermuda) | | | 218,986 | | | | 8,912,730 | |
Hanover Insurance Group Inc. (The) | | | 133,107 | | | | 15,914,273 | |
| | | | | | | 37,147,302 | |
|
Real Estate Operating Companies–0.78% | |
Kennedy-Wilson Holdings, Inc. | | | 421,737 | | | | 8,919,738 | |
| | | | | | | | |
| | Shares | | | Value | |
Regional Banks–9.74% | |
Bank of the Ozarks, Inc. | | | 252,918 | | | $ | 11,391,427 | |
BankUnited, Inc. | | | 290,576 | | | | 11,870,029 | |
Great Western Bancorp, Inc. | | | 322,568 | | | | 13,544,630 | |
IBERIABANK Corp. | | | 159,038 | | | | 12,055,080 | |
Pinnacle Financial Partners, Inc. | | | 184,200 | | | | 11,300,670 | |
Synovus Financial Corp. | | | 298,554 | | | | 15,772,608 | |
UMB Financial Corp. | | | 36,981 | | | | 2,819,062 | |
Webster Financial Corp. | | | 270,266 | | | | 17,215,944 | |
Western Alliance Bancorp(b) | | | 265,042 | | | | 15,004,028 | |
| | | | | | | 110,973,478 | |
|
Restaurants–1.66% | |
Papa John’s International, Inc.(c) | | | 139,155 | | | | 7,057,942 | |
Wendy’s Co. (The) | | | 692,694 | | | | 11,900,483 | |
| | | | | | | 18,958,425 | |
|
Semiconductor Equipment–1.78% | |
Brooks Automation, Inc. | | | 266,049 | | | | 8,678,518 | |
Teradyne, Inc. | | | 303,250 | | | | 11,544,728 | |
| | | | | | | 20,223,246 | |
|
Semiconductors–0.54% | |
Power Integrations, Inc. | | | 84,004 | | | | 6,136,492 | |
|
Specialized Consumer Services–1.50% | |
ServiceMaster Global Holdings, Inc.(b) | | | 287,217 | | | | 17,080,795 | |
|
Specialized REITs–1.19% | |
CubeSmart | | | 421,413 | | | | 13,577,927 | |
|
Specialty Chemicals–2.99% | |
Minerals Technologies Inc. | | | 159,511 | | | | 12,019,154 | |
PolyOne Corp. | | | 290,513 | | | | 12,555,972 | |
Sensient Technologies Corp. | | | 132,216 | | | | 9,460,055 | |
| | | | | | | 34,035,181 | |
|
Specialty Stores–0.80% | |
Michaels Cos., Inc. (The)(b) | | | 473,150 | | | | 9,070,285 | |
|
Systems Software–1.07% | |
CommVault Systems, Inc.(b) | | | 185,785 | | | | 12,233,942 | |
|
Technology Distributors–0.76% | |
Tech Data Corp.(b) | | | 105,228 | | | | 8,641,323 | |
|
Tires & Rubber–0.62% | |
Cooper Tire & Rubber Co. | | | 268,865 | | | | 7,071,149 | |
|
Trading Companies & Distributors–0.90% | |
Univar Inc.(b) | | | 390,097 | | | | 10,236,145 | |
|
Trucking–2.06% | |
Knight-Swift Transportation Holdings Inc. | | | 287,970 | | | | 11,003,334 | |
Old Dominion Freight Line, Inc. | | | 83,603 | | | | 12,453,503 | |
| | | | | | | 23,456,837 | |
Total Common Stocks & Other Equity Interests (Cost $816,068,830) | | | | 1,107,714,787 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Small Cap Equity Fund
| | | | | | | | |
| | Shares | | | Value | |
Money Market Funds–2.41% | |
Invesco Government & Agency Portfolio–Institutional Class, 1.80%(d) | | | 9,476,837 | | | $ | 9,476,837 | |
Invesco Liquid Assets Portfolio–Institutional Class, 2.02%(d) | | | 7,164,385 | | | | 7,166,535 | |
Invesco Treasury Portfolio–Institutional Class, 1.76%(d) | | | 10,830,671 | | | | 10,830,671 | |
Total Money Market Funds (Cost $27,472,560) | | | | 27,474,043 | |
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities on loan)–99.69% (Cost $843,541,390) | | | | 1,135,188,830 | |
| | | | | | | | |
| | Shares | | | Value | |
Investments Purchased with Cash Collateral from Securities on Loan | | | | | |
Money Market Funds–1.06% | | | | | | | | |
Invesco Government & Agency Portfolio–Institutional Class, 1.80% (Cost $12,014,170)(d)(e) | | | 12,014,170 | | | $ | 12,014,170 | |
TOTAL INVESTMENTS IN SECURITIES–100.75% (Cost $855,555,560) | | | | 1,147,203,000 | |
OTHER ASSETS LESS LIABILITIES–(0.75)% | | | | (8,509,855 | ) |
NET ASSETS–100.00% | | | $ | 1,138,693,145 | |
Investment Abbreviations:
| | |
REIT | | – Real Estate Investment Trust |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | All or a portion of this security was out on loan at June 30, 2018. |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the 7-day SEC standardized yield as of June 30, 2018. |
(e) | The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. See Note 1I. |
Portfolio Composition
By sector, based on Net Assets
as of June 30, 2018
| | | | |
Financials | | | 20.2 | % |
Information Technology | | | 17.5 | |
Industrials | | | 16.7 | |
Health Care | | | 13.7 | |
Consumer Discretionary | | | 12.1 | |
Energy | | | 5.8 | |
Materials | | | 4.9 | |
Real Estate | | | 3.7 | |
Telecommunication Services | | | 1.7 | |
Consumer Staples | | | 1.0 | |
Money Market Funds Plus Other Assets Less Liabilities | | | 2.7 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Small Cap Equity Fund
Statement of Assets and Liabilities
June 30, 2018
(Unaudited)
| | | | |
Assets: | | | | |
Investments in securities, at value (Cost $816,068,830)* | | $ | 1,107,714,787 | |
Investments in affiliated money market funds, at value (Cost $39,486,730) | | | 39,488,213 | |
Receivable for: | | | | |
Investments sold | | | 7,187,889 | |
Fund shares sold | | | 1,003,078 | |
Dividends | | | 709,457 | |
Investment for trustee deferred compensation and retirement plans | | | 196,969 | |
Other assets | | | 54,068 | |
Total assets | | | 1,156,354,461 | |
| |
Liabilities: | | | | |
Payable for: | | | | |
Investments purchased | | | 3,362,667 | |
Collateral upon return of securities loaned | | | 12,014,170 | |
Fund shares reacquired | | | 1,294,077 | |
Accrued fees to affiliates | | | 607,665 | |
Accrued trustees’ and officers’ fees and benefits | | | 6,370 | |
Accrued other operating expenses | | | 159,338 | |
Trustee deferred compensation and retirement plans | | | 217,029 | |
Total liabilities | | | 17,661,316 | |
Net assets applicable to shares outstanding | | $ | 1,138,693,145 | |
| |
Net assets consist of: | | | | |
Shares of beneficial interest | | $ | 744,166,561 | |
Undistributed net investment income (loss) | | | (1,105,985 | ) |
Undistributed net realized gain | | | 103,985,129 | |
Net unrealized appreciation | | | 291,647,440 | |
| | $ | 1,138,693,145 | |
| | | | |
Net Assets: | | | | |
Class A | | $ | 561,232,485 | |
Class C | | $ | 50,768,818 | |
Class R | | $ | 66,918,951 | |
Class Y | | $ | 105,718,267 | |
Class R5 | | $ | 35,241,349 | |
Class R6 | | $ | 318,813,275 | |
|
Shares outstanding, no par value, with an unlimited number of shares authorized: | |
Class A | | | 34,972,884 | |
Class C | | | 3,947,688 | |
Class R | | | 4,438,655 | |
Class Y | | | 6,368,243 | |
Class R5 | | | 1,992,990 | |
Class R6 | | | 17,912,044 | |
Class A: | | | | |
Net asset value per share | | $ | 16.05 | |
Maximum offering price per share | | | | |
(Net asset value of $16.05 ¸ 94.50%) | | $ | 16.98 | |
Class C: | | | | |
Net asset value and offering price per share | | $ | 12.86 | |
Class R: | | | | |
Net asset value and offering price per share | | $ | 15.08 | |
Class Y: | | | | |
Net asset value and offering price per share | | $ | 16.60 | |
Class R5: | | | | |
Net asset value and offering price per share | | $ | 17.68 | |
Class R6: | | | | |
Net asset value and offering price per share | | $ | 17.80 | |
* | At June 30, 2018, securities with an aggregate value of $11,762,000 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Small Cap Equity Fund
Statement of Operations
For the six months ended June 30, 2018
(Unaudited)
| | | | |
Investment income: | | | | |
Dividends (net of foreign withholding taxes of $14,514) | | $ | 5,606,855 | |
Dividends from affiliated money market funds (includes securities lending income of $26,685) | | | 197,961 | |
Total investment income | | | 5,804,816 | |
| |
Expenses: | | | | |
Advisory fees | | | 4,184,730 | |
Administrative services fees | | | 145,975 | |
Custodian fees | | | 12,924 | |
Distribution fees: | | | | |
Class A | | | 689,349 | |
Class B | | | 914 | |
Class C | | | 254,404 | |
Class R | | | 170,231 | |
Transfer agent fees — A, B, C, R and Y | | | 1,037,869 | |
Transfer agent fees — R5 | | | 19,789 | |
Transfer agent fees — R6 | | | 14,775 | |
Trustees’ and officers’ fees and benefits | | | 17,948 | |
Registration and filing fees | | | 71,292 | |
Reports to shareholders | | | 76,421 | |
Professional services fees | | | 27,255 | |
Other | | | 12,691 | |
Total expenses | | | 6,736,567 | |
Less: Fees waived and expense offset arrangement(s) | | | (16,425 | ) |
Net expenses | | | 6,720,142 | |
Net investment income (loss) | | | (915,326 | ) |
| |
Realized and unrealized gain (loss) from: | | | | |
Net realized gain from investment securities | | | 83,291,508 | |
Change in net unrealized appreciation (depreciation) of investment securities | | | (24,667,748 | ) |
Net realized and unrealized gain | | | 58,623,760 | |
Net increase in net assets resulting from operations | | $ | 57,708,434 | |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Small Cap Equity Fund
Statement of Changes in Net Assets
For the six months ended June 30, 2018 and the year ended December 31, 2017
(Unaudited)
| | | | | | | | |
| | June 30, 2018 | | | December 31, 2017 | |
Operations: | | | | | | | | |
Net investment income (loss) | | $ | (915,326 | ) | | $ | (3,181,224 | ) |
Net realized gain | | | 83,291,508 | | | | 81,173,288 | |
Change in net unrealized appreciation (depreciation) | | | (24,667,748 | ) | | | 84,204,008 | |
Net increase in net assets resulting from operations | | | 57,708,434 | | | | 162,196,072 | |
| | |
Distributions to shareholders from net realized gains: | | | | | | | | |
Class A | | | — | | | | (28,064,769 | ) |
Class B | | | — | | | | (85,003 | ) |
Class C | | | — | | | | (3,250,570 | ) |
Class R | | | — | | | | (3,870,949 | ) |
Class Y | | | — | | | | (11,357,077 | ) |
Class R5 | | | — | | | | (2,659,854 | ) |
Class R6 | | | — | | | | (14,144,673 | ) |
Total distributions from net realized gains | | | — | | | | (63,432,895 | ) |
| | |
Share transactions–net: | | | | | | | | |
Class A | | | (12,319,203 | ) | | | (49,629,810 | ) |
Class B | | | (1,326,391 | ) | | | (1,885,008 | ) |
Class C | | | (2,667,988 | ) | | | (8,651,902 | ) |
Class R | | | (7,038,755 | ) | | | (8,339,176 | ) |
Class Y | | | (134,485,860 | ) | | | (210,366,194 | ) |
Class R5 | | | (16,669,932 | ) | | | (69,798,640 | ) |
Class R6 | | | (868,290 | ) | | | 231,322,050 | |
Net increase (decrease) in net assets resulting from share transactions | | | (175,376,419 | ) | | | (117,348,680 | ) |
Net increase (decrease) in net assets | | | (117,667,985 | ) | | | (18,585,503 | ) |
| | |
Net assets: | | | | | | | | |
Beginning of period | | | 1,256,361,130 | | | | 1,274,946,633 | |
End of period (includes undistributed net investment income (loss) of $(1,105,985) and $(190,659), respectively) | | $ | 1,138,693,145 | | | $ | 1,256,361,130 | |
Notes to Financial Statements
June 30, 2018
(Unaudited)
NOTE 1—Significant Accounting Policies
Invesco Small Cap Equity Fund (the “Fund”) is a series portfolio of AIM Funds Group (Invesco Funds Group) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of the Fund or each class.
The Fund’s primary investment objective is long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with a front-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class R, Class Y, Class R5 and Class R6 shares are sold at net asset value. Effective November 30, 2010, new or additional investments in Class B shares are no longer permitted. Existing shareholders of Class B shares were permitted to continue to reinvest dividends and capital gains distributions in Class B shares until their conversion to Class A shares. Also, shareholders in Class B shares were able to exchange those shares for Class B shares of other Invesco Funds offering such shares until they converted to Class A shares. Generally, Class B shares automatically converted to Class A shares on or about the month-end, which was at least eight years after the date of purchase. Redemptions of Class B shares prior to the conversion date were subject to a CDSC. Effective January 26, 2018, all of the Fund’s outstanding Class B shares were converted to Class A shares, in advance of their normally scheduled conversion. No CDSC was paid in connection with this early conversion.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 946, Financial Services — Investment Companies.
9 Invesco Small Cap Equity Fund
The following is a summary of the significant accounting policies followed by the Fund in the preparation of its financial statements.
A. | Security Valuations — Securities, including restricted securities, are valued according to the following policy. |
A security listed or traded on an exchange (except convertible securities) is valued at its last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded, or lacking any sales or official closing price on a particular day, the security may be valued at the closing bid price on that day. Securities traded in the over-the-counter market are valued based on prices furnished by independent pricing services or market makers. When such securities are valued by an independent pricing service they may be considered fair valued. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and asked prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and asked prices. For purposes of determining net asset value (“NAV”) per share, futures and option contracts generally are valued 15 minutes after the close of the customary trading session of the New York Stock Exchange (“NYSE”).
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end-of-day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
Debt obligations (including convertible securities) and unlisted equities are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to specific securities, dividend rate (for unlisted equities), yield (for debt obligations), quality, type of issue, coupon rate (for debt obligations), maturity (for debt obligations), individual trading characteristics and other market data. Pricing services generally value debt obligations assuming orderly transactions of institutional round lot size, but a fund may hold or transact in the same securities in smaller, odd lot sizes. Odd lots often trade at lower prices than institutional round lots. Debt obligations are subject to interest rate and credit risks. In addition, all debt obligations involve some risk of default with respect to interest and/or principal payments.
Foreign securities’ (including foreign exchange contracts) prices are converted into U.S. dollar amounts using the applicable exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange-traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that the investment adviser determines are significant and make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process of an independent pricing service to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current value as of the close of the NYSE. Foreign securities’ prices meeting the approved degree of certainty that the price is not reflective of current value will be priced at the indication of fair value from the independent pricing service. Multiple factors may be considered by the independent pricing service in determining adjustments to reflect fair value and may include information relating to sector indices, American Depositary Receipts and domestic and foreign index futures. Foreign securities may have additional risks including exchange rate changes, potential for sharply devalued currencies and high inflation, political and economic upheaval, the relative lack of issuer information, relatively low market liquidity and the potential lack of strict financial and accounting controls and standards.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources. The last bid price may be used to value equity securities. The mean between the last bid and asked prices is used to value debt obligations, including corporate loans.
Securities for which market quotations are not readily available or became unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust’s officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/asked quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security’s fair value.
The Fund may invest in securities that are subject to interest rate risk, meaning the risk that the prices will generally fall as interest rates rise and, conversely, the prices will generally rise as interest rates fall. Specific securities differ in their sensitivity to changes in interest rates depending on their individual characteristics. Changes in interest rates may result in increased market volatility, which may affect the value and/or liquidity of certain Fund investments.
Valuations change in response to many factors including the historical and prospective earnings of the issuer, the value of the issuer’s assets, general economic conditions, interest rates, investor perceptions and market liquidity. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
B. | Securities Transactions and Investment Income — Securities transactions are accounted for on a trade date basis. Realized gains or losses on sales are computed on the basis of specific identification of the securities sold. Interest income (net of withholding tax, if any) is recorded on the accrual basis from settlement date. Dividend income (net of withholding tax, if any) is recorded on the ex-dividend date. |
The Fund may periodically participate in litigation related to Fund investments. As such, the Fund may receive proceeds from litigation settlements. Any proceeds received are included in the Statement of Operations as realized gain (loss) for investments no longer held and as unrealized gain (loss) for investments still held.
Brokerage commissions and mark ups are considered transaction costs and are recorded as an increase to the cost basis of securities purchased and/or a reduction of proceeds on a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment securities reported in the Statement of Operations and the Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Financial Highlights. Transaction costs are included in the calculation of the Fund’s net asset value and, accordingly, they reduce the Fund’s total returns. These transaction costs are not considered operating expenses and are not reflected in net investment income reported in the Statement of Operations and the Statement of Changes in Net Assets, or the net investment income per share and the ratios of expenses and net investment income reported in the Financial Highlights, nor are they limited by any expense limitation arrangements between the Fund and the investment adviser.
10 Invesco Small Cap Equity Fund
The Fund allocates income and realized and unrealized capital gains and losses to a class based on the relative net assets of each class.
C. | Country Determination — For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the issuer’s securities, as well as other criteria. Among the other criteria that may be evaluated for making this determination are the country in which the issuer maintains 50% or more of its assets, the type of security, financial guarantees and enhancements, the nature of the collateral and the sponsor organization. Country of issuer and/or credit risk exposure has been determined to be the United States of America, unless otherwise noted. |
D. | Distributions — Distributions from net investment income and net realized capital gain, if any, are generally declared and paid annually and recorded on the ex-dividend date. The Fund may elect to treat a portion of the proceeds from redemptions as distributions for federal income tax purposes. |
E. | Federal Income Taxes — The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), necessary to qualify as a regulated investment company and to distribute substantially all of the Fund’s taxable earnings to shareholders. As such, the Fund will not be subject to federal income taxes on otherwise taxable income (including net realized capital gain) that is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. |
The Fund recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained. Management has analyzed the Fund’s uncertain tax positions and concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions. Management is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.
The Fund files tax returns in the U.S. Federal jurisdiction and certain other jurisdictions. Generally, the Fund is subject to examinations by such taxing authorities for up to three years after the filing of the return for the tax period.
F. | Expenses — Fees provided for under the Rule 12b-1 plan of a particular class of the Fund are charged to the operations of such class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses attributable to Class R5 and Class R6 are allocated to each share class based on relative net assets. Sub-accounting fees attributable to Class R5 are charged to the operations of the class. Transfer agency fees and expenses and other shareholder recordkeeping fees and expenses relating to all other classes are allocated among those classes based on relative net assets. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after the period-end date and before the date the financial statements are released to print. |
H. | Indemnifications — Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
I. | Securities Lending — The Fund may lend portfolio securities having a market value up to one-third of the Fund’s total assets. Such loans are secured by collateral equal to no less than the market value of the loaned securities determined daily by the securities lending provider. Such collateral will be cash or debt securities issued or guaranteed by the U.S. Government or any of its sponsored agencies. Cash collateral received in connection with these loans is invested in short-term money market instruments or affiliated money market funds and is shown as such on the Schedule of Investments. The Fund bears the risk of loss with respect to the investment of collateral. It is the Fund’s policy to obtain additional collateral from or return excess collateral to the borrower by the end of the next business day, following the valuation date of the securities loaned. Therefore, the value of the collateral held may be temporarily less than the value of the securities on loan. When loaning securities, the Fund retains certain benefits of owning the securities, including the economic equivalent of dividends or interest generated by the security. Lending securities entails a risk of loss to the Fund if, and to the extent that, the market value of the securities loaned were to increase and the borrower did not increase the collateral accordingly, and the borrower failed to return the securities. The securities loaned are subject to termination at the option of the borrower or the Fund. Upon termination, the borrower will return to the Fund the securities loaned and the Fund will return the collateral. Upon the failure of the borrower to return the securities, collateral may be liquidated and the securities may be purchased on the open market to replace the loaned securities. The Fund could experience delays and costs in gaining access to the collateral and the securities may lose value during the delay which could result in potential losses to the Fund. Some of these losses may be indemnified by the lending agent. The Fund bears the risk of any deficiency in the amount of the collateral available for return to the borrower due to any loss on the collateral invested. Dividends received on cash collateral investments for securities lending transactions, which are net of compensation to counterparties, are included in Dividends from affiliated money market funds on the Statement of Operations. The aggregate value of securities out on loan, if any, is shown as a footnote on the Statement of Assets and Liabilities. |
11 Invesco Small Cap Equity Fund
NOTE 2—Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund accrues daily and pays monthly an advisory fee to the Adviser based on the annual rate of the Fund’s average daily net assets as follows:
| | | | | | | | |
Average Daily Net Assets | | Rate | |
First $250 million | | | 0 | .745% | | | | |
Next $250 million | | | 0 | .73% | | | | |
Next $500 million | | | 0 | .715% | | | | |
Next $1.5 billion | | | 0 | .70% | | | | |
Next $2.5 billion | | | 0 | .685% | | | | |
Next $2.5 billion | | | 0 | .67% | | | | |
Next $2.5 billion | | | 0 | .655% | | | | |
Over $10 billion | | | 0 | .64% | | | | |
For the six months ended June 30, 2018, the effective advisory fees incurred by the Fund was 0.72%.
Under the terms of a master sub-advisory agreement between the Adviser and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc. and Invesco Canada Ltd. and separate sub-advisory agreements with Invesco Capital Management LLC, formerly Invesco PowerShares Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “Affiliated Sub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such Affiliated Sub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such Affiliated Sub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2019, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) of Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 2.00%, 2.75%, 2.25%, 1.75%, 1.75% and 1.75%, respectively, of average daily net assets (the “expense limits”). Prior to their conversion to Class A shares, the expense limit for Class B shares was 2.75% of average daily net assets. In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waiver and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary or non-routine items, including litigation expenses; and (5) expenses that the Fund has incurred but did not actually pay because of an expense offset arrangement. Unless Invesco continues the fee waiver agreement, it will terminate on June 30, 2019. During its term, the fee waiver agreement cannot be terminated or amended to increase the expense limits or reduce the advisory fee waiver without approval of the Board of Trustees. The Adviser did not waive fees and/or reimburse expenses during the period under these expense limits.
Further, the Adviser has contractually agreed, through at least June 30, 2020, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended June 30, 2018, the Adviser waived advisory fees of $9,225.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees.
The Trust has entered into a transfer agency and service agreement with Invesco Investment Services, Inc. (“IIS”) pursuant to which the Fund has agreed to pay IIS a fee for providing transfer agency and shareholder services to the Fund and reimburse IIS for certain expenses incurred by IIS in the course of providing such services. IIS may make payments to intermediaries that provide omnibus account services, sub-accounting services and/or networking services. All fees payable by IIS to intermediaries that provide omnibus account services or sub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. For the six months ended June 30, 2018, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for the Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.50% of the average daily net assets of Class R shares. Prior to their conversion to Class A shares, the Fund paid an annual rate of 1.00% of the average daily net assets of Class B shares. The fees are accrued daily and paid monthly. Of the Plan payments, up to 0.25% of the average daily net assets of each class of shares may be paid to furnish continuing personal shareholder services to customers who purchase and own shares of such classes. Any amounts not paid as a service fee under the Plans would constitute an asset-based sales charge. Rules of the Financial Industry Regulatory Authority (“FINRA”) impose a cap on the total sales charges, including asset-based sales charges, that may be paid by any class of shares of the Fund. For the six months ended June 30, 2018, expenses incurred under the Plans are shown in the Statement of Operations as Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended June 30, 2018, IDI advised the Fund that IDI retained $72,052 in front-end sales commissions from the sale of Class A shares and $8,717 and $655 from Class A and Class C shares, respectively, for CDSC imposed on redemptions by shareholders.
For the six months ended June 30, 2018, the Fund incurred $9,468 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
12 Invesco Small Cap Equity Fund
NOTE 3—Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
| Level 1 — | Prices are determined using quoted prices in an active market for identical assets. |
| Level 2 — | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
| Level 3 — | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of June 30, 2018, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
The Fund’s policy is to recognize transfers in and out of the valuation levels as of the end of the reporting period. During the six months ended June 30, 2018, there were no material transfers between valuation levels.
NOTE 4—Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended June 30, 2018, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $7,200.
NOTE 5—Trustees’ and Officers’ Fees and Benefits
Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to pay remuneration to certain Trustees and Officers of the Fund. Trustees have the option to defer compensation payable by the Fund, and Trustees’ and Officers’ Fees and Benefits also include amounts accrued by the Fund to fund such deferred compensation amounts. Those Trustees who defer compensation have the option to select various Invesco Funds in which their deferral accounts shall be deemed to be invested. Finally, certain current Trustees were eligible to participate in a retirement plan that provided for benefits to be paid upon retirement to Trustees over a period of time based on the number of years of service. The Fund may have certain former Trustees who also participate in a retirement plan and receive benefits under such plan. Trustees’ and Officers’ Fees and Benefits include amounts accrued by the Fund to fund such retirement benefits. Obligations under the deferred compensation and retirement plans represent unsecured claims against the general assets of the Fund.
NOTE 6—Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with State Street Bank and Trust Company, the custodian bank. Such balances, if any at period-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due custodian. To compensate the custodian bank for such overdrafts, the overdrawn Fund may either (1) leave funds as a compensating balance in the account so the custodian bank can be compensated by earning the additional interest; or (2) compensate by paying the custodian bank at a rate agreed upon by the custodian bank and Invesco, not to exceed the contractually agreed upon rate.
NOTE 7—Tax Information
The amount and character of income and gains to be distributed are determined in accordance with income tax regulations, which may differ from GAAP. Reclassifications are made to the Fund’s capital accounts to reflect income and gains available for distribution (or available capital loss carryforward) under income tax regulations. The tax character of distributions paid during the year and the tax components of net assets will be reported at the Fund’s fiscal year-end.
Capital loss carryforward is calculated and reported as of a specific date. Results of transactions and other activity after that date may affect the amount of capital loss carryforward actually available for the Fund to utilize. Capital losses generated in years beginning after December 22, 2010 can be carried forward for an unlimited period, whereas previous losses expire in eight tax years. Capital losses with an expiration period may not be used to offset capital gains until all net capital losses without an expiration date have been utilized. Capital loss carryforwards with no expiration date will retain their character as either short-term or long-term capital losses instead of as short-term capital losses as under prior law. The ability to utilize capital loss carryforwards in the future may be limited under the Internal Revenue Code and related regulations based on the results of future transactions.
The Fund did not have a capital loss carryforward as of December 31, 2017.
13 Invesco Small Cap Equity Fund
NOTE 8—Investment Transactions
The aggregate amount of investment securities (other than short-term securities, U.S. Treasury obligations and money market funds, if any) purchased and sold by the Fund during the six months ended June 30, 2018 was $72,941,099 and $276,830,058, respectively. Cost of investments, including any derivatives, on a tax basis includes the adjustments for financial reporting purposes as of the most recently completed federal income tax reporting period-end.
| | | | |
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | |
Aggregate unrealized appreciation of investments | | $ | 326,852,905 | |
Aggregate unrealized (depreciation) of investments | | | (35,624,473 | ) |
Net unrealized appreciation of investments | | $ | 291,228,432 | |
Cost of investments for tax purposes is $855,974,568.
NOTE 9—Share Information
| | | | | | | | | | | | | | | | |
| | Summary of Share Activity | |
| | Six months ended June 30, 2018(a) | | | Year ended December 31, 2017 | |
| | Shares | | | Amount | | | Shares | | | Amount | |
Sold: | | | | | | | | | | | | | | | | |
Class A | | | 2,831,690 | | | $ | 44,658,382 | | | | 6,985,727 | | | $ | 104,085,068 | |
Class B(b) | | | — | | | | — | | | | 12,223 | | | | 147,623 | |
Class C | | | 299,675 | | | | 3,806,043 | | | | 612,827 | | | | 7,469,083 | |
Class R | | | 352,413 | | | | 5,230,972 | | | | 1,028,834 | | | | 14,495,473 | |
Class Y | | | 601,736 | | | | 9,807,055 | | | | 9,361,531 | | | | 142,310,390 | |
Class R5 | | | 220,219 | | | | 3,871,189 | | | | 903,595 | | | | 14,684,328 | |
Class R6 | | | 2,007,784 | | | | 35,224,171 | | | | 15,825,629 | | | | 262,055,142 | |
| | | | |
Issued as reinvestment of dividends: | | | | | | | | | | | | | | | | |
Class A | | | — | | | | — | | | | 1,777,225 | | | | 26,978,269 | |
Class B(b) | | | — | | | | — | | | | 6,857 | | | | 83,801 | |
Class C | | | — | | | | — | | | | 258,499 | | | | 3,158,870 | |
Class R | | | — | | | | — | | | | 271,008 | | | | 3,869,987 | |
Class Y | | | — | | | | — | | | | 621,268 | | | | 9,741,484 | |
Class R5 | | | — | | | | — | | | | 158,284 | | | | 2,641,763 | |
Class R6 | | | — | | | | — | | | | 838,122 | | | | 14,072,070 | |
| | | | |
Automatic conversion of Class B shares to Class A shares:(c) | | | | | | | | | | | | | | | | |
Class A | | | 69,676 | | | | 1,134,325 | | | | 108,203 | | | | 1,623,419 | |
Class B | | | (86,590 | ) | | | (1,134,325 | ) | | | (132,372 | ) | | | (1,623,419 | ) |
| | | | |
Reacquired: | | | | | | | | | | | | | | | | |
Class A | | | (3,686,665 | ) | | | (58,111,910 | ) | | | (12,221,173 | ) | | | (182,316,566 | ) |
Class B(b) | | | (14,688 | ) | | | (192,066 | ) | | | (40,715 | ) | | | (493,013 | ) |
Class C | | | (510,325 | ) | | | (6,474,031 | ) | | | (1,575,245 | ) | | | (19,279,855 | ) |
Class R | | | (830,508 | ) | | | (12,269,727 | ) | | | (1,890,096 | ) | | | (26,704,636 | ) |
Class Y | | | (8,618,879 | ) | | | (144,292,915 | ) | | | (23,529,583 | ) | | | (362,418,068 | ) |
Class R5 | | | (1,201,556 | ) | | | (20,541,121 | ) | | | (5,272,169 | ) | | | (87,124,731 | ) |
Class R6 | | | (2,071,184 | ) | | | (36,092,461 | ) | | | (2,697,058 | ) | | | (44,805,162 | ) |
Net increase (decrease) in share activity | | | (10,637,202 | ) | | $ | (175,376,419 | ) | | | (8,588,579 | ) | | $ | (117,348,680 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 47% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
(b) | Class B shares activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
(c) | Effective as of the close of business January 26, 2018, all outstanding Class B shares were converted to Class A shares. |
14 Invesco Small Cap Equity Fund
NOTE 10—Financial Highlights
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Net asset value, beginning of period | | | Net investment income (loss)(a) | | | Net gains (losses) on securities (both realized and unrealized) | | | Total from investment operations | | | Distributions from net realized gains | | | Net asset value, end of period | | | Total return(b) | | | Net assets, end of period (000’s omitted) | | | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | | | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | | | Ratio of net investment income (loss) to average net assets | | | Portfolio turnover(c) | |
Class A | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | $ | 15.35 | | | $ | (0.02 | ) | | $ | 0.72 | | | $ | 0.70 | | | $ | — | | | $ | 16.05 | | | | 4.56 | % | | $ | 561,232 | | | | 1.29 | %(d) | | | 1.29 | %(d) | | | (0.29 | )%(d) | | | 6 | % |
Year ended 12/31/17 | | | 14.25 | | | | (0.05 | ) | | | 1.98 | | | | 1.93 | | | | (0.83 | ) | | | 15.35 | | | | 13.58 | | | | 549,010 | | | | 1.30 | | | | 1.30 | | | | (0.36 | ) | | | 21 | |
Year ended 12/31/16 | | | 13.43 | | | | (0.02 | ) | | | 1.61 | | | | 1.59 | | | | (0.77 | ) | | | 14.25 | | | | 11.72 | | | | 557,205 | | | | 1.31 | | | | 1.31 | | | | (0.18 | ) | | | 35 | |
Year ended 12/31/15 | | | 15.16 | | | | (0.04 | ) | | | (0.82 | ) | | | (0.86 | ) | | | (0.87 | ) | | | 13.43 | | | | (5.61 | ) | | | 543,187 | | | | 1.29 | | | | 1.29 | | | | (0.23 | ) | | | 29 | |
Year ended 12/31/14 | | | 17.00 | | | | (0.08 | ) | | | 0.37 | | | | 0.29 | | | | (2.13 | ) | | | 15.16 | | | | 2.17 | | | | 561,244 | | | | 1.29 | | | | 1.29 | | | | (0.49 | ) | | | 45 | |
Year ended 12/31/13 | | | 13.24 | | | | (0.06 | ) | | | 4.87 | | | | 4.81 | | | | (1.05 | ) | | | 17.00 | | | | 36.68 | | | | 586,779 | | | | 1.29 | | | | 1.29 | | | | (0.38 | ) | | | 28 | |
Class B | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18(e) | | | 12.36 | | | | (0.01 | ) | | | 0.75 | | | | 0.74 | | | | — | | | | 13.10 | | | | 5.99 | | | | — | | | | 2.04 | (d) | | | 2.04 | (d) | | | (1.04 | )(d) | | | 6 | |
Year ended 12/31/17 | | | 11.70 | | | | (0.13 | ) | | | 1.62 | | | | 1.49 | | | | (0.83 | ) | | | 12.36 | | | | 12.78 | | | | 1,251 | | | | 2.05 | | | | 2.05 | | | | (1.11 | ) | | | 21 | |
Year ended 12/31/16 | | | 11.23 | | | | (0.10 | ) | | | 1.34 | | | | 1.24 | | | | (0.77 | ) | | | 11.70 | | | | 10.89 | | | | 2,986 | | | | 2.06 | | | | 2.06 | | | | (0.93 | ) | | | 35 | |
Year ended 12/31/15 | | | 12.92 | | | | (0.13 | ) | | | (0.69 | ) | | | (0.82 | ) | | | (0.87 | ) | | | 11.23 | | | | (6.28 | ) | | | 5,189 | | | | 2.04 | | | | 2.04 | | | | (0.98 | ) | | | 29 | |
Year ended 12/31/14 | | | 14.92 | | | | (0.18 | ) | | | 0.31 | | | | 0.13 | | | | (2.13 | ) | | | 12.92 | | | | 1.39 | | | | 8,624 | | | | 2.04 | | | | 2.04 | | | | (1.24 | ) | | | 45 | |
Year ended 12/31/13 | | | 11.81 | | | | (0.15 | ) | | | 4.31 | | | | 4.16 | | | | (1.05 | ) | | | 14.92 | | | | 35.61 | | | | 12,723 | | | | 2.04 | | | | 2.04 | | | | (1.13 | ) | | | 28 | |
Class C | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 12.35 | | | | (0.07 | ) | | | 0.58 | | | | 0.51 | | | | — | | | | 12.86 | | | | 4.13 | | | | 50,769 | | | | 2.04 | (d) | | | 2.04 | (d) | | | (1.04 | )(d) | | | 6 | |
Year ended 12/31/17 | | | 11.69 | | | | (0.13 | ) | | | 1.62 | | | | 1.49 | | | | (0.83 | ) | | | 12.35 | | | | 12.79 | | | | 51,355 | | | | 2.05 | | | | 2.05 | | | | (1.11 | ) | | | 21 | |
Year ended 12/31/16 | | | 11.22 | | | | (0.11 | ) | | | 1.35 | | | | 1.24 | | | | (0.77 | ) | | | 11.69 | | | | 10.90 | | | | 56,845 | | | | 2.06 | | | | 2.06 | | | | (0.93 | ) | | | 35 | |
Year ended 12/31/15 | | | 12.92 | | | | (0.13 | ) | | | (0.70 | ) | | | (0.83 | ) | | | (0.87 | ) | | | 11.22 | | | | (6.36 | ) | | | 59,546 | | | | 2.04 | | | | 2.04 | | | | (0.98 | ) | | | 29 | |
Year ended 12/31/14 | | | 14.92 | | | | (0.18 | ) | | | 0.31 | | | | 0.13 | | | | (2.13 | ) | | | 12.92 | | | | 1.40 | | | | 64,348 | | | | 2.04 | | | | 2.04 | | | | (1.24 | ) | | | 45 | |
Year ended 12/31/13 | | | 11.81 | | | | (0.15 | ) | | | 4.31 | | | | 4.16 | | | | (1.05 | ) | | | 14.92 | | | | 35.62 | | | | 72,662 | | | | 2.04 | | | | 2.04 | | | | (1.13 | ) | | | 28 | |
Class R | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 14.44 | | | | (0.04 | ) | | | 0.68 | | | | 0.64 | | | | — | | | | 15.08 | | | | 4.43 | | | | 66,919 | | | | 1.54 | (d) | | | 1.54 | (d) | | | (0.54 | )(d) | | | 6 | |
Year ended 12/31/17 | | | 13.48 | | | | (0.09 | ) | | | 1.88 | | | | 1.79 | | | | (0.83 | ) | | | 14.44 | | | | 13.32 | | | | 71,008 | | | | 1.55 | | | | 1.55 | | | | (0.61 | ) | | | 21 | |
Year ended 12/31/16 | | | 12.77 | | | | (0.06 | ) | | | 1.54 | | | | 1.48 | | | | (0.77 | ) | | | 13.48 | | | | 11.46 | | | | 74,227 | | | | 1.56 | | | | 1.56 | | | | (0.43 | ) | | | 35 | |
Year ended 12/31/15 | | | 14.50 | | | | (0.07 | ) | | | (0.79 | ) | | | (0.86 | ) | | | (0.87 | ) | | | 12.77 | | | | (5.87 | ) | | | 82,078 | | | | 1.54 | | | | 1.54 | | | | (0.48 | ) | | | 29 | |
Year ended 12/31/14 | | | 16.40 | | | | (0.12 | ) | | | 0.35 | | | | 0.23 | | | | (2.13 | ) | | | 14.50 | | | | 1.89 | | | | 99,241 | | | | 1.54 | | | | 1.54 | | | | (0.74 | ) | | | 45 | |
Year ended 12/31/13 | | | 12.83 | | | | (0.09 | ) | | | 4.71 | | | | 4.62 | | | | (1.05 | ) | | | 16.40 | | | | 36.38 | | | | 114,041 | | | | 1.54 | | | | 1.54 | | | | (0.63 | ) | | | 28 | |
Class Y | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 15.86 | | | | (0.00 | ) | | | 0.74 | �� | | | 0.74 | | | | — | | | | 16.60 | | | | 4.67 | | | | 105,718 | | | | 1.04 | (d) | | | 1.04 | (d) | | | (0.04 | )(d) | | | 6 | |
Year ended 12/31/17 | | | 14.66 | | | | (0.02 | ) | | | 2.05 | | | | 2.03 | | | | (0.83 | ) | | | 15.86 | | | | 13.88 | | | | 228,176 | | | | 1.05 | | | | 1.05 | | | | (0.11 | ) | | | 21 | |
Year ended 12/31/16 | | | 13.76 | | | | 0.01 | | | | 1.66 | | | | 1.67 | | | | (0.77 | ) | | | 14.66 | | | | 12.02 | | | | 409,479 | | | | 1.06 | | | | 1.06 | | | | 0.07 | | | | 35 | |
Year ended 12/31/15 | | | 15.47 | | | | 0.00 | | | | (0.84 | ) | | | (0.84 | ) | | | (0.87 | ) | | | 13.76 | | | | (5.37 | ) | | | 386,369 | | | | 1.04 | | | | 1.04 | | | | 0.02 | | | | 29 | |
Year ended 12/31/14 | | | 17.27 | | | | (0.04 | ) | | | 0.37 | | | | 0.33 | | | | (2.13 | ) | | | 15.47 | | | | 2.36 | | | | 354,121 | | | | 1.04 | | | | 1.04 | | | | (0.24 | ) | | | 45 | |
Year ended 12/31/13 | | | 13.40 | | | | (0.02 | ) | | | 4.94 | | | | 4.92 | | | | (1.05 | ) | | | 17.27 | | | | 37.07 | | | | 269,044 | | | | 1.04 | | | | 1.04 | | | | (0.13 | ) | | | 28 | |
Class R5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.88 | | | | 0.01 | | | | 0.79 | | | | 0.80 | | | | — | | | | 17.68 | | | | 4.74 | | | | 35,241 | | | | 0.88 | (d) | | | 0.88 | (d) | | | 0.12 | (d) | | | 6 | |
Year ended 12/31/17 | | | 15.54 | | | | 0.00 | | | | 2.17 | | | | 2.17 | | | | (0.83 | ) | | | 16.88 | | | | 14.00 | | | | 50,217 | | | | 0.91 | | | | 0.91 | | | | 0.03 | | | | 21 | |
Year ended 12/31/16 | | | 14.52 | | | | 0.04 | | | | 1.75 | | | | 1.79 | | | | (0.77 | ) | | | 15.54 | | | | 12.22 | | | | 111,621 | | | | 0.87 | | | | 0.87 | | | | 0.26 | | | | 35 | |
Year ended 12/31/15 | | | 16.24 | | | | 0.03 | | | | (0.88 | ) | | | (0.85 | ) | | | (0.87 | ) | | | 14.52 | | | | (5.18 | ) | | | 152,486 | | | | 0.88 | | | | 0.88 | | | | 0.18 | | | | 29 | |
Year ended 12/31/14 | | | 17.99 | | | | (0.01 | ) | | | 0.39 | | | | 0.38 | | | | (2.13 | ) | | | 16.24 | | | | 2.55 | | | | 168,876 | | | | 0.87 | | | | 0.87 | | | | (0.07 | ) | | | 45 | |
Year ended 12/31/13 | | | 13.91 | | | | 0.01 | | | | 5.12 | | | | 5.13 | | | | (1.05 | ) | | | 17.99 | | | | 37.22 | | | | 200,674 | | | | 0.88 | | | | 0.88 | | | | 0.03 | | | | 28 | |
Class R6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Six months ended 06/30/18 | | | 16.99 | | | | 0.02 | | | | 0.79 | | | | 0.81 | | | | — | | | | 17.80 | | | | 4.77 | | | | 318,813 | | | | 0.79 | (d) | | | 0.79 | (d) | | | 0.21 | (d) | | | 6 | |
Year ended 12/31/17 | | | 15.61 | | | | 0.02 | | | | 2.19 | | | | 2.21 | | | | (0.83 | ) | | | 16.99 | | | | 14.19 | | | | 305,344 | | | | 0.85 | | | | 0.85 | | | | 0.09 | | | | 21 | |
Year ended 12/31/16 | | | 14.57 | | | | 0.05 | | | | 1.76 | | | | 1.81 | | | | (0.77 | ) | | | 15.61 | | | | 12.31 | | | | 62,583 | | | | 0.79 | | | | 0.79 | | | | 0.34 | | | | 35 | |
Year ended 12/31/15 | | | 16.28 | | | | 0.05 | | | | (0.89 | ) | | | (0.84 | ) | | | (0.87 | ) | | | 14.57 | | | | (5.10 | ) | | | 92,803 | | | | 0.79 | | | | 0.79 | | | | 0.27 | | | | 29 | |
Year ended 12/31/14 | | | 18.02 | | | | 0.00 | | | | 0.39 | | | | 0.39 | | | | (2.13 | ) | | | 16.28 | | | | 2.60 | | | | 114,981 | | | | 0.78 | | | | 0.78 | | | | 0.02 | | | | 45 | |
Year ended 12/31/13 | | | 13.92 | | | | 0.02 | | | | 5.13 | | | | 5.15 | | | | (1.05 | ) | | | 18.02 | | | | 37.34 | | | | 119,633 | | | | 0.80 | | | | 0.80 | | | | 0.11 | | | | 28 | |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Ratios are annualized and based on average daily net assets (000’s omitted) of $556,048, $1,287, $51,302, $68,657, $136,977, $42,372 and $312,505 for Class A, Class B, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | Reflects activity for the period January 1, 2018 through January 26, 2018 (date of conversion). |
15 Invesco Small Cap Equity Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period January 1, 2018 through June 30, 2018.
Actual expenses
The table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled “Actual Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes
The table below also provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return.
The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any. Therefore, the hypothetical information is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | | | | | | | | |
Class | | Beginning Account Value (01/01/18) | | | ACTUAL | | | HYPOTHETICAL (5% annual return before expenses) | | | Annualized Expense Ratio | |
| Ending Account Value (06/30/18)1 | | | Expenses Paid During Period2 | | | Ending Account Value (06/30/18) | | | Expenses Paid During Period2 | |
A | | $ | 1,000.00 | | | $ | 1,045.60 | | | $ | 6.54 | | | $ | 1,018.40 | | | $ | 6.46 | | | | 1.29 | % |
C | | | 1,000.00 | | | | 1,041.30 | | | | 10.33 | | | | 1,014.68 | | | | 10.19 | | | | 2.04 | |
R | | | 1,000.00 | | | | 1,044.30 | | | | 7.81 | | | | 1,017.16 | | | | 7.70 | | | | 1.54 | |
Y | | | 1,000.00 | | | | 1,046.70 | | | | 5.28 | | | | 1,019.64 | | | | 5.21 | | | | 1.04 | |
R5 | | | 1,000.00 | | | | 1,047.40 | | | | 4.47 | | | | 1,020.43 | | | | 4.41 | | | | 0.88 | |
R6 | | | 1,000.00 | | | | 1,047.70 | | | | 4.01 | | | | 1,020.88 | | | | 3.96 | | | | 0.79 | |
1 | The actual ending account value is based on the actual total return of the Fund for the period January 1, 2018 through June 30, 2018, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 181/365 to reflect the most recent fiscal half year. |
16 Invesco Small Cap Equity Fund
Approval of Investment Advisory and Sub-Advisory Contracts
At meetings held on June 5-6, 2018, the Board of Trustees (the Board or the Trustees) of AIM Funds Group (Invesco Funds Group) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Invesco Small Cap Equity Fund’s (the Fund) Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master Intergroup Sub-Advisory Contract for Mutual Funds with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc., Invesco Canada Ltd. and separate Sub-Advisory Contracts with Invesco Capital Management LLC and Invesco Asset Management (India) Private Limited (collectively, the Affiliated Sub-Advisers and the sub-advisory contracts) for another year, effective July 1, 2018. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and the sub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the Affiliated Sub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established three Sub-Committees, which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review detailed information about investment performance and portfolio attributes of these funds. The Board took into account evaluations and reports that it received from the Investments Committee and Sub-Committees, as well as the information provided to such committees and the Board throughout the year, in considering whether to approve each Invesco Fund’s investment advisory agreement and sub-advisory contracts.
As part of the contract renewal process, the Board reviews and considers information provided in response to detailed requests for information submitted to management by the independent Trustees with assistance from legal counsel to the independent Trustees. The Board receives comparative investment performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Broadridge Financial Solutions, Inc. (Broadridge), an independent mutual fund data provider. The Board also receives an independent written evaluation from the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. The Senior Officer’s
evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. In addition to meetings with Invesco Advisers and fund counsel throughout the year, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
The discussion below is a summary of the Senior Officer’s independent written evaluation with respect to the Fund’s investment advisory agreement, as well as a discussion of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement and sub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them during the course of the year and in prior years and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee. This information is current as of June 6, 2018.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. | Nature, Extent and Quality of Services Provided by Invesco Advisers and the Affiliated Sub-Advisers |
The Board reviewed the nature, extent and quality of the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager(s). The Board’s review included consideration of Invesco Advisers’ investment process oversight and structure, credit analysis and investment risk management. The Board also considered non-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also reviewed and considered the benefits to shareholders of investing in a fund that is part of the Invesco family of funds under the umbrella of Invesco Ltd., Invesco Advisers’ parent company, and noted Invesco Ltd.’s depth and experience in conducting an investment management business, as well as its commitment of financial and other resources to such business. The Board concluded that the nature, extent and quality of the services provided to the Fund by
Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the Affiliated Sub-Advisers under the sub-advisory contracts and the credentials and experience of the officers and employees of the Affiliated Sub-Advisers who provide these services. The Board noted the Affiliated Sub-Advisers’ expertise with respect to certain asset classes and that the Affiliated Sub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the Affiliated Sub-Advisers can provide research and investment analysis on the markets and economies of various countries in which the Fund may invest, make recommendations regarding securities and assist with security trades. The Board concluded that the sub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the Affiliated Sub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the Affiliated Sub-Advisers are appropriate and satisfactory.
B. | Fund Investment Performance |
The Board considered Fund investment performance as a relevant factor in considering whether to approve the investment advisory agreement. The Board did not view Fund investment performance as a relevant factor in considering whether to approve the sub-advisory contracts for the Fund, as no Affiliated Sub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2017 to the performance of funds in the Broadridge performance universe and against the Lipper Small-Cap Core Funds Index. The Board noted that performance of Class A shares of the Fund was in the second quintile of its performance universe for the one year period and the fifth quintile for the three and five year periods (the first quintile being the best performing funds and the fifth quintile being the worst performing funds). The Board noted that performance of Class A shares of the Fund was reasonably comparable to the performance of the Index for the one year period, and below the performance of the Index for the three and five year periods. The Board discussed detractors to Fund performance and noted that underperformance during 2016 and the outperformance of low quality names negatively impacted the Fund’s longer-term performance. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
17 Invesco Small Cap Equity Fund
C. | Advisory and Sub-Advisory Fees and Fund Expenses |
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense group. The Board noted that the contractual management fee rate for Class A shares of the Fund was below the median contractual management fee rate of funds in its expense group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain non-portfolio management administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board also reviewed the methodology used by Broadridge in providing expense group information, which includes using each fund’s contractual management fee schedule (including any applicable breakpoints) as reported in the most recent prospectus or statement of additional information for each fund in the expense group. The Board also considered comparative information regarding the Fund’s total expense ratio and its various components.
The Board noted that Invesco Advisers has contractually agreed to waive fees and/or limit expenses of the Fund in an amount necessary to limit total annual operating expenses to a specified percentage of average daily net assets for each class of the Fund.
The Board also considered the fees charged by Invesco Advisers and the Affiliated Sub-Advisers to other similarly managed client accounts. The Board noted that Invesco Advisers or the Affiliated Sub-Advisers may charge lower fees to large institutional clients. Invesco Advisers reviewed with the Board differences in the scope of services it provides to the Invesco Funds relative to certain other types of client accounts, including management of cash flows as a result of redemptions and purchases, necessary infrastructure such as officers, office space, technology, legal and distribution, oversight of service providers, costs and business risks associated with launching new funds and sponsoring and maintaining the product line, preparation of annual registration statement updates and financial information and compliance with federal and state laws and regulations.
The Board also compared the Fund’s effective advisory fee rate (the advisory fee rate after advisory fee waivers and before other expense limitations/waivers) to the effective advisory fee rates of other similarly managed third-party mutual funds advised or sub-advised by Invesco Advisers and its affiliates, based on asset balances as of December 31, 2017.
The Board also considered the services that may be provided by the Affiliated Sub-Advisers pursuant to the sub-advisory contracts, as well as the fees payable by Invesco Advisers to the Affiliated Sub-Advisers pursuant to the sub-advisory contracts.
D. | Economies of Scale and Breakpoints |
The Board considered the extent to which there may be economies of scale in the provision of advisory services to the Fund. The Board also considered that the Fund benefits from economies of scale through contractual breakpoints in the Fund’s advisory fee schedule, which generally operate to reduce the Fund’s expense ratio as it grows in size. The Board noted that the Fund shares directly in economies of scale through lower fees charged by third party service providers based on the combined size of the Invesco Funds. The Board noted that the Fund may also benefit from economies of scale through initial fee setting, fee waivers and expense reimbursements.
E. | Profitability and Financial Resources |
The Board reviewed information from Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to the Fund and the Invesco Funds and the profitability of Invesco Advisers and its affiliates in providing these services. The Board considered the methodology used for calculating profitability and noted the periodic review of such methodology by an independent consultant. The Board noted that Invesco Advisers continues to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds and the Fund. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Fund to be excessive given the nature, extent and quality of the services provided. The Board received information from Invesco Advisers demonstrating that Invesco Advisers and the Affiliated Sub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement and sub-advisory contracts.
F. | Collateral Benefits to Invesco Advisers and its Affiliates |
The Board considered various other benefits received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees received for providing administrative, transfer agency and distribution services to the Fund. The Board considered comparative information regarding fees charged for these services, including information provided by Broadridge and other independent sources. The Board considered the performance of Invesco Advisers and its affiliates in providing these services and the organizational structure employed to provide these services. The Board also considered that these services are provided to the Fund pursuant to written contracts that are reviewed and approved on an annual basis by the Board; and that the services are required for the operation of the Fund.
The Board considered the benefits realized by Invesco Advisers and the Affiliated Sub-Advisers as a result of portfolio brokerage transactions executed through “soft dollar” arrangements. The Board noted that soft dollar arrangements may result in the Fund bearing costs to purchase research that may be used by Invesco
Advisers or the Affiliated Sub-Advisers with other clients and may reduce Invesco Advisers’ or the Affiliated Sub-Advisers’ expenses. The Board also considered that it receives periodic reports from Invesco representing that these arrangements are consistent with regulatory requirements. The Board did not deem the soft dollar arrangements to be inappropriate.
The Board considered that the Fund’s uninvested cash and cash collateral from any securities lending arrangements may be invested in money market funds advised by Invesco Advisers pursuant to procedures approved by the Board. The Board noted that Invesco Advisers receives advisory fees from these affiliated money market funds attributable to such investments, although Invesco Advisers has contractually agreed to waive through varying periods the advisory fees payable by the Invesco Funds with respect to certain investments in the affiliated money market funds. The waiver is in an amount equal to 100% of the net advisory fee Invesco Advisers receives from the affiliated money market funds with respect to the Fund’s investment in the affiliated money market funds of uninvested cash, but not cash collateral. The Board concluded that the amount of advisory fees received by Invesco Advisers from the Fund’s investment of cash collateral from any securities lending arrangements in the affiliated money market funds is fair and reasonable.
The Board also considered that an affiliated broker receives commissions for executing certain trades for the Fund. Invesco Advisers and the Affiliated Sub-Advisers use the affiliated broker to, among other things, control order routing and minimize information leakage, and the Board was advised that such trades are executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
18 Invesco Small Cap Equity Fund
Explore High-Conviction Investing with Invesco

Go paperless with eDelivery
Visit invesco.com/edelivery to enjoy the convenience and security of anytime electronic access to your investment documents.
With eDelivery, you can elect to have any or all of the following materials delivered straight to your inbox to download, save and print from your own computer:
∎ Fund reports and prospectuses
∎ Quarterly statements
∎ Daily confirmations
∎ Tax forms
Invesco mailing information
Send general correspondence to Invesco Investment Services, Inc., P.O. Box 219078, Kansas City, MO 64121-9078.
Important notice regarding delivery of security holder documents
To reduce Fund expenses, only one copy of most shareholder documents may be mailed to shareholders with multiple accounts at the same address (Householding). Mailing of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact Invesco Investment Services, Inc. at 800 959 4246 or contact your financial institution. We will begin sending you individual copies for each account within 30 days after receiving your request.
Fund holdings and proxy voting information
The Fund provides a complete list of its holdings four times in each fiscal year, at the quarter ends. For the second and fourth quarters, the lists appear in the Fund’s semiannual and annual reports to shareholders. For the first and third quarters, the Fund files the lists with the Securities and Exchange Commission (SEC) on Form N-Q (or any successor Form). The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s Forms N-Q (or any successor Form) on the SEC website at sec.gov. Copies of the Fund’s Forms N-Q (or any successor Form) may be reviewed and copied at the SEC Public Reference Room in Washington, D.C. You can obtain information on the operation of the Public Reference Room, including information about duplicating fee charges, by calling 202 551 8090 or 800 732 0330, or by electronic request at the following email address: publicinfo@sec.gov.
The SEC file numbers for the Fund are shown below.
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, from our Client Services department at 800 959 4246 or at invesco.com/proxyguidelines. The information is also available on the SEC website, sec.gov.
| | |
Information regarding how the Fund voted proxies related to its portfolio securities during the most recent 12-month period ended June 30 is available at invesco.com/proxysearch. The information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. | |  |
| | | | | | |
SEC file numbers: 811-01540 and 002-27334 | | Invesco Distributors, Inc. | | SCE-SAR-1 | | 08142018 0816 |
Not required for a semi-annual report.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not applicable.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
PricewaterhouseCoopers LLP informed the Trust that it has identified an issue related to its independence under Rule 2-01(c)(1)(ii)(A) of Regulation S-X (referred to as the Loan Rule). The Loan Rule prohibits accounting firms, such as PricewaterhouseCoopers LLP, from being deemed independent if they have certain financial relationships with their audit clients or certain affiliates of those clients. The Trust is required under various securities laws to have its financial statements audited by an independent accounting firm.
The Loan Rule specifically provides that an accounting firm would not be independent if it or certain affiliates and covered persons receives a loan from a lender that is a record or beneficial owner of more than ten percent of an audit client’s equity securities (referred to as a “more than ten percent owner”). For purposes of the Loan Rule, audit clients include the Funds as well as all registered investment companies advised by the Adviser and its affiliates, including other subsidiaries of the Adviser’s parent company, Invesco Ltd. (collectively, the Invesco Fund Complex). PricewaterhouseCoopers LLP informed the Trust it and certain affiliates and covered persons have relationships with lenders who hold, as record owner, more than ten percent of the shares of certain funds within the Invesco Fund Complex, which may implicate the Loan Rule.
On June 20, 2016, the SEC Staff issued a “no-action” letter to another mutual fund complex (see Fidelity Management & Research Company et al., No-Action Letter) related to the audit independence issue described above. In that letter, the SEC confirmed that it would not recommend enforcement action against a fund that relied on audit services performed by an audit firm that was not in compliance with the Loan Rule in certain specified circumstances. In connection with prior independence determinations, PricewaterhouseCoopers LLP communicated, as contemplated by the no-action letter, that it believes that it remains objective and impartial and that a reasonable investor possessing all the facts would conclude that PricewaterhouseCoopers LLP is able to exhibit the requisite objectivity and impartiality to report on the Funds’ financial statements as the independent registered public accounting firm. PricewaterhouseCoopers LLP also represented that it has complied with PCAOB Rule 3526(b)(1) and (2), which are conditions to the Funds relying on the no action letter, and affirmed that it is an independent accountant within the meaning of PCAOB Rule 3520. Therefore, the Adviser, the Funds and PricewaterhouseCoopers LLP concluded that PricewaterhouseCoopers LLP could continue as the Funds’ independent registered public accounting firm. The Invesco Fund Complex relied upon the no-action letter in reaching this conclusion.
If in the future the independence of PricewaterhouseCoopers LLP is called into question under the Loan Rule by circumstances that are not addressed in the SEC’s no-action letter, the Funds will need to take other action in order for the Funds’ filings with the SEC containing financial statements to be deemed compliant with applicable securities laws. Such additional actions could result in additional costs, impair the ability of the
Funds to issue new shares or have other material adverse effects on the Funds. The SEC no-action relief was initially set to expire 18 months from issuance but has been extended by the SEC without an expiration date, except the no-action letter will be withdrawn upon the effectiveness of any amendments to the Loan Rule designed to express the concerns expressed in the letter.
ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
Not applicable.
ITEM 6. | SCHEDULE OF INVESTMENTS. |
Investments in securities of unaffiliated issuers is included as part of the reports to stockholders filed under Item 1 of this Form.
ITEM 7. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 8. | PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None.
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) | As of August 13, 2018, an evaluation was performed under the supervision and with the participation of the officers of the Registrant, including the Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to assess the effectiveness of the Registrant’s disclosure controls and procedures, as that term is defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of August 13, 2018, the Registrant’s disclosure controls and procedures were reasonably designed to ensure: (1) that information required to be disclosed by the Registrant on Form N-CSR is recorded, processed, summarized and reported within the time periods specified by the rules and forms of the Securities and Exchange Commission; and (2) that material information relating to the Registrant is made known to the PEO and PFO as appropriate to allow timely decisions regarding required disclosure. |
(b) | There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by the report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES |
Not applicable.
13(a) (2) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. |
13(b) | Certifications of principal executive officer and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Funds Group (Invesco Funds Group)
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By: | | /s/ Sheri Morris |
| | Sheri Morris |
| | Principal Executive Officer |
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Date: | | September 7, 2018 |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
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By: | | /s/ Sheri Morris |
| | Sheri Morris |
| | Principal Executive Officer |
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Date: | | September 7, 2018 |
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By: | | /s/ Kelli Gallegos |
| | Kelli Gallegos |
| | Principal Financial Officer |
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Date: | | September 7, 2018 |
EXHIBIT INDEX
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13(a) (1) | | Not applicable. |
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13(a) (2) | | Certifications of principal executive officer and Principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940. |
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13(a) (3) | | Not applicable. |
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13(a) (4) | | Not applicable. |