UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03826
AIM Sector Funds (Invesco Sector Funds)
(Exact name of registrant as specified in charter)
11 Greenway Plaza, Suite 1000 Houston, Texas 77046
(Address of principal executive offices) (Zip code)
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: 04/30
Date of reporting period: 10/31/19
Item 1. | Reports to Stockholders. |
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Semiannual Report to Shareholders
| October 31, 2019
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Invesco American Value Fund
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Nasdaq: | ||||
A: MSAVX ∎ C: MSVCX ∎ R: MSARX ∎ Y: MSAIX ∎ R5: MSAJX ∎ R6: MSAFX |
2 | Letters to Shareholders | |||
3 | Fund Performance | |||
5 | Schedule of Investments | |||
7 | Financial Statements | |||
10 | Financial Highlights | |||
11 | Notes to Financial Statements | |||
16 | Fund Expenses | |||
17 | Approval of Investment Advisory andSub-Advisory Contracts |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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
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: 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.
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
Andrew Schlossberg | 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco American Value Fund
Fund Performance
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | -2.91 | % | ||
Class C Shares | -3.21 | |||
Class R Shares | -3.01 | |||
Class Y Shares | -2.77 | |||
Class R5 Shares | -2.74 | |||
Class R6 Shares | -2.71 | |||
S&P 500 Indexq (Broad Market Index) | 4.16 | |||
Russell Midcap Value Indexq (Style-Specific Index) | 1.66 | |||
LipperMid-Cap Value Funds Index∎(Peer Group Index) | -0.76 | |||
Source(s):▼RIMES Technologies Corp.;∎Lipper Inc. | ||||
TheS&P 500®Indexis an unmanaged index considered representative of the US stock market. |
| |||
TheRussell 1000®Value Indexis an unmanaged index considered representative oflarge-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell®is a trademark of the Frank Russell Co. |
| |||
TheLipperMid-Cap Value Funds Indexis an unmanaged index considered representative ofmid-cap value funds tracked by Lipper. |
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The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. |
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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 visitinginvesco.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, visitblog.invesco.us.com,where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 Invesco American Value Fund
Average Annual Total Returns |
| |||
As of 10/31/19, including maximum applicables sales charges
|
| |||
Class A Shares | ||||
Inception (10/18/93) | 8.63 | % | ||
10 Years | 9.59 | |||
5 Years | 2.33 | |||
1 Year | -0.64 | |||
Class C Shares |
| |||
Inception (10/18/93) | 8.57 | % | ||
10 Years | 9.42 | |||
5 Years | 2.75 | |||
1 Year | 3.55 | |||
Class R Shares |
| |||
Inception (3/20/07) | 5.85 | % | ||
10 Years | 9.94 | |||
5 Years | 3.24 | |||
1 Year | 4.92 | |||
Class Y Shares |
| |||
Inception (2/7/06) | 7.26 | % | ||
10 Years | 10.49 | |||
5 Years | 3.75 | |||
1 Year | 5.43 | |||
Class R5 Shares |
| |||
10 Years | 10.60 | % | ||
5 Years | 3.86 | |||
1 Year | 5.52 | |||
Class R6 Shares |
| |||
10 Years | 10.56 | % | ||
5 Years | 3.94 | |||
1 Year | 5.59 |
Effective June 1, 2010, Class A, Class C, Class I and Class R shares of the predecessor fund, Van Kampen American Value Fund, advised by Van Kampen Asset Management were reorganized into Class A, Class C, Class Y and Class R shares, respectively, of Invesco Van Kampen American Value Fund (renamed Invesco American Value Fund). Returns shown above, prior to June 1, 2010, for Class A, Class C, Class R and Class Y shares are blended returns of the predecessor fund and Invesco American Value Fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of the predecessor fund’s Class A shares and includes the12b-1 fees applicable to Class A shares.
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A
Average Annual Total Returns |
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (10/18/93) | 8.65 | % | ||
10 Years | 9.14 | |||
5 Years | 2.88 | |||
1 Year | -11.73 | |||
Class C Shares |
| |||
Inception (10/18/93) | 8.59 | % | ||
10 Years | 8.96 | |||
5 Years | 3.30 | |||
1 Year | -8.04 | |||
Class R Shares |
| |||
Inception (3/20/07) | 5.88 | % | ||
10 Years | 9.48 | |||
5 Years | 3.79 | |||
1 Year | -6.82 | |||
Class Y Shares |
| |||
Inception (2/7/06) | 7.29 | % | ||
10 Years | 10.03 | |||
5 Years | 4.31 | |||
1 Year | -6.35 | |||
Class R5 Shares |
| |||
10 Years | 10.15 | % | ||
5 Years | 4.41 | |||
1 Year | -6.28 | |||
Class R6 Shares |
| |||
10 Years | 10.10 | % | ||
5 Years | 4.50 | |||
1 Year | -6.21 |
shares and includes the12b-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 recentmonth-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 1.19%, 1.91%, 1.44%, 0.94%, 0.86% and 0.78%, 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 afront-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.
4 Invesco American Value Fund
Schedule of Investments(a)
October 31, 2019
(Unaudited)
Shares | Value | |||||||
| ||||||||
Common Stocks & Other Equity Interests–97.31% |
| |||||||
Aerospace & Defense–2.47% |
| |||||||
Textron, Inc. | 552,459 | $ | 25,462,835 | |||||
| ||||||||
Apparel, Accessories & Luxury Goods–2.00% |
| |||||||
Tapestry, Inc. | 798,019 | 20,636,771 | ||||||
| ||||||||
Automotive Retail–2.10% |
| |||||||
Advance Auto Parts, Inc. | 132,771 | 21,572,632 | ||||||
| ||||||||
Biotechnology–1.09% |
| |||||||
Myriad Genetics, Inc.(b) | 334,042 | 11,247,194 | ||||||
| ||||||||
Building Products–2.66% |
| |||||||
Johnson Controls International PLC | 632,742 | 27,416,711 | ||||||
| ||||||||
Communications Equipment–3.59% |
| |||||||
Ciena Corp.(b) | 685,611 | 25,449,880 | ||||||
| ||||||||
Plantronics, Inc. | 290,981 | 11,470,471 | ||||||
| ||||||||
36,920,351 | ||||||||
| ||||||||
Consumer Finance–1.88% |
| |||||||
Santander Consumer USA Holdings, Inc. | 772,253 | 19,368,105 | ||||||
| ||||||||
Copper–1.52% |
| |||||||
Freeport-McMoRan, Inc. | 1,595,078 | 15,663,666 | ||||||
| ||||||||
Distributors–2.31% |
| |||||||
LKQ Corp.(b) | 701,049 | 23,828,656 | ||||||
| ||||||||
Diversified Chemicals–1.81% |
| |||||||
Eastman Chemical Co. | 245,751 | 18,686,906 | ||||||
| ||||||||
Diversified REITs–3.16% |
| |||||||
Liberty Property Trust | 551,364 | 32,569,071 | ||||||
| ||||||||
Electric Utilities–5.77% |
| |||||||
Edison International | 284,014 | 17,864,481 | ||||||
| ||||||||
Evergy, Inc. | 325,411 | 20,797,017 | ||||||
| ||||||||
FirstEnergy Corp. | 430,332 | 20,793,642 | ||||||
| ||||||||
59,455,140 | ||||||||
| ||||||||
Electronic Equipment & Instruments–2.81% |
| |||||||
Keysight Technologies, Inc.(b) | 286,996 | 28,960,766 | ||||||
| ||||||||
Food Distributors–0.99% |
| |||||||
Performance Food Group Co.(b) | 238,470 | 10,161,207 | ||||||
| ||||||||
Food Retail–2.48% |
| |||||||
Kroger Co. (The) | 1,036,799 | 25,546,727 | ||||||
| ||||||||
Health Care Facilities–2.98% |
| |||||||
Encompass Health Corp. | 478,796 | 30,652,520 | ||||||
|
Shares | Value | |||||||
| ||||||||
Health Care Services–1.93% |
| |||||||
DaVita, Inc.(b) | 339,181 | $ | 19,876,007 | |||||
| ||||||||
Hotels, Resorts & Cruise Lines–6.69% |
| |||||||
Norwegian Cruise Line Holdings Ltd.(b) | 477,093 | 24,217,241 | ||||||
| ||||||||
Royal Caribbean Cruises Ltd. | 210,298 | 22,886,731 | ||||||
| ||||||||
Wyndham Hotels & Resorts, Inc. | 403,275 | 21,764,752 | ||||||
| ||||||||
68,868,724 | ||||||||
| ||||||||
Industrial Machinery–1.74% |
| |||||||
Kennametal, Inc. | 578,861 | 17,915,748 | ||||||
| ||||||||
Insurance Brokers–6.16% |
| |||||||
Arthur J. Gallagher & Co. | 357,152 | 32,579,406 | ||||||
| ||||||||
Willis Towers Watson PLC | 165,146 | 30,865,787 | ||||||
| ||||||||
63,445,193 | ||||||||
| ||||||||
Interactive Home Entertainment–1.54% |
| |||||||
Take-Two Interactive Software, Inc.(b) | 131,626 | 15,841,189 | ||||||
| ||||||||
Investment Banking & Brokerage–1.83% |
| |||||||
Stifel Financial Corp. | 336,266 | 18,824,171 | ||||||
| ||||||||
IT Consulting & Other Services–0.79% |
| |||||||
DXC Technology Co. | 292,433 | 8,091,621 | ||||||
| ||||||||
Life & Health Insurance–1.85% |
| |||||||
Athene Holding Ltd., Class A(b) | 438,406 | 19,004,900 | ||||||
| ||||||||
Managed Health Care–2.95% |
| |||||||
Centene Corp.(b) | 573,033 | 30,416,592 | ||||||
| ||||||||
Marine–2.22% |
| |||||||
Kirby Corp.(b) | 288,343 | 22,825,232 | ||||||
| ||||||||
Office REITs–2.58% |
| |||||||
Hudson Pacific Properties, Inc. | 740,398 | 26,595,096 | ||||||
| ||||||||
Oil & Gas Equipment & Services–1.34% |
| |||||||
TechnipFMC PLC (United Kingdom) | 698,444 | 13,780,300 | ||||||
| ||||||||
Oil & Gas Exploration & Production–3.29% |
| |||||||
Marathon Oil Corp. | 1,464,760 | 16,888,683 | ||||||
| ||||||||
Noble Energy, Inc. | 883,666 | 17,019,407 | ||||||
| ||||||||
33,908,090 | ||||||||
| ||||||||
Other Diversified Financial Services–2.12% |
| |||||||
Voya Financial, Inc. | 403,668 | 21,781,925 | ||||||
| ||||||||
Regional Banks–9.41% |
| |||||||
Comerica, Inc. | 248,351 | 16,247,122 | ||||||
| ||||||||
KeyCorp | 1,286,340 | 23,115,530 | ||||||
| ||||||||
TCF Financial Corp. | 498,465 | 19,734,229 | ||||||
| ||||||||
Wintrust Financial Corp. | 293,224 | 18,713,556 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco American Value Fund
Shares | Value | |||||||
| ||||||||
Regional Banks–(continued) | ||||||||
Zions Bancorp. N.A. | 394,442 | $ | 19,118,604 | |||||
| ||||||||
96,929,041 | ||||||||
| ||||||||
Semiconductor Equipment–2.81% |
| |||||||
KLA Corp. | 171,069 | 28,917,504 | ||||||
| ||||||||
Specialized REITs–2.32% | ||||||||
Life Storage, Inc. | 219,315 | 23,887,790 | ||||||
| ||||||||
Specialty Chemicals–2.42% | ||||||||
W.R. Grace & Co. | 375,653 | 24,962,142 | ||||||
| ||||||||
Systems Software–0.99% | ||||||||
Teradata Corp.(b) | 340,038 | 10,177,337 | ||||||
| ||||||||
Trucking–2.71% | ||||||||
Knight-Swift Transportation Holdings, Inc. | 766,256 | 27,937,694 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests |
| 1,002,135,554 | ||||||
|
Shares | Value | |||||||
| ||||||||
Money Market Funds–2.81% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(c) | 10,115,655 | $ | 10,115,655 | |||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(c) | 7,224,701 | 7,227,591 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(c) | 11,560,748 | 11,560,748 | ||||||
| ||||||||
Total Money Market Funds |
| 28,903,994 | ||||||
| ||||||||
TOTAL INVESTMENTS IN |
| 1,031,039,548 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–(0.12)% |
| (1,252,225 | ) | |||||
| ||||||||
NET ASSETS–100.00% | $ | 1,029,787,323 | ||||||
|
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) | 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 October 31, 2019. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2019
Financials | 23.25% | |||
Consumer Discretionary | 13.10 | |||
Industrials | 11.80 | |||
Information Technology | 10.99 | |||
Health Care | 8.95 | |||
Real Estate | 8.06 | |||
Utilities | 5.77 | |||
Materials | 5.75 | |||
Energy | 4.63 | |||
Consumer Staples | 3.47 | |||
Communication Services | 1.54 | |||
Money Market Funds Plus Other Assets Less Liabilities | 2.69 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco American Value Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 1,002,135,554 | ||
| ||||
Investments in affiliated money market funds, at value | 28,903,994 | |||
| ||||
Receivable for: | ||||
Investments sold | 3,030,591 | |||
| ||||
Fund shares sold | 292,026 | |||
| ||||
Dividends | 117,105 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 187,052 | |||
| ||||
Other assets | 58,307 | |||
| ||||
Total assets | 1,034,724,629 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,821,675 | |||
| ||||
Fund shares reacquired | 1,434,006 | |||
| ||||
Accrued fees to affiliates | 1,314,239 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 2,366 | |||
| ||||
Accrued other operating expenses | 160,244 | |||
| ||||
Trustee deferred compensation and retirement plans | 204,776 | |||
| ||||
Total liabilities | 4,937,306 | |||
| ||||
Net assets applicable to shares outstanding | $ | 1,029,787,323 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 862,434,801 | ||
| ||||
Distributable earnings | 167,352,522 | |||
| ||||
$ | 1,029,787,323 | |||
| ||||
Net Assets: | ||||
Class A | $ | 776,050,609 | ||
| ||||
Class C | $ | 22,203,740 | ||
| ||||
Class R | $ | 16,376,603 | ||
| ||||
Class Y | $ | 134,010,444 | ||
| ||||
Class R5 | $ | 18,631,489 | ||
| ||||
Class R6 | $ | 62,514,438 | ||
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 23,493,065 | |||
| ||||
Class C | 844,967 | |||
| ||||
Class R | 498,693 | |||
| ||||
Class Y | 4,020,652 | |||
| ||||
Class R5 | 558,415 | |||
| ||||
Class R6 | 1,872,574 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 33.03 | ||
| ||||
Maximum offering price per share | $ | 34.95 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 26.28 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 32.84 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 33.33 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 33.36 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 33.38 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco American Value Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends | $ | 9,605,975 | ||
Dividends from affiliated money market funds | 252,216 | |||
| ||||
Total investment income | 9,858,191 | |||
| ||||
Expenses: | ||||
Advisory fees | 3,840,814 | |||
| ||||
Administrative services fees | 78,343 | |||
| ||||
Custodian fees | 7,745 | |||
| ||||
Distribution fees: | ||||
Class A | 1,001,577 | |||
| ||||
Class C | 119,810 | |||
| ||||
Class R | 44,756 | |||
| ||||
Transfer agent fees – A, C, R and Y | 957,907 | |||
| ||||
Transfer agent fees – R5 | 12,280 | |||
| ||||
Transfer agent fees – R6 | 9,344 | |||
| ||||
Trustees’ and officers’ fees and benefits | 14,106 | |||
| ||||
Registration and filing fees | 51,646 | |||
| ||||
Reports to shareholders | 67,609 | |||
| ||||
Professional services fees | 28,474 | |||
| ||||
Other | 21,597 | |||
| ||||
Total expenses | 6,256,008 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (17,396 | ) | ||
| ||||
Net expenses | 6,238,612 | |||
| ||||
Net investment income | 3,619,579 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from Investment securities | 11,499,157 | |||
| ||||
Change in net unrealized appreciation (depreciation) of Investment securities | (50,249,731 | ) | ||
| ||||
Net realized and unrealized gain (loss) | (38,750,574 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (35,130,995 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco American Value Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, | April 30, | |||||||
2019 | 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 3,619,579 | $ | 5,137,226 | ||||
| ||||||||
Net realized gain | 11,499,157 | 71,007,064 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (50,249,731 | ) | (80,784,485 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (35,130,995 | ) | (4,640,195 | ) | ||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | – | (89,083,319 | ) | |||||
| ||||||||
Class C | – | (8,383,288 | ) | |||||
| ||||||||
Class R | – | (2,150,588 | ) | |||||
| ||||||||
Class Y | – | (18,637,935 | ) | |||||
| ||||||||
Class R5 | – | (3,019,574 | ) | |||||
| ||||||||
Class R6 | – | (7,656,836 | ) | |||||
| ||||||||
Total distributions from distributable earnings | – | (128,931,540 | ) | |||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (69,149,845 | ) | 23,943,978 | |||||
| ||||||||
Class C | (6,321,258 | ) | (40,803,017 | ) | ||||
| ||||||||
Class R | (2,994,774 | ) | (3,016,181 | ) | ||||
| ||||||||
Class Y | (16,608,858 | ) | (31,945,480 | ) | ||||
| ||||||||
Class R5 | (8,184,681 | ) | (32,686,919 | ) | ||||
| ||||||||
Class R6 | (4,122,296 | ) | (66,839,564 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (107,381,712 | ) | (151,347,183 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (142,512,707 | ) | (284,918,918 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,172,300,030 | 1,457,218,948 | ||||||
| ||||||||
End of period | $ | 1,029,787,323 | $ | 1,172,300,030 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco American Value Fund
Financial Highlights
(Unaudited)
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 net assets | 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 10/31/19 | $34.02 | $ | 0.10 | $ | (1.09 | ) | $ | (0.99 | ) | $ | – | $ | – | $ | – | $ | 33.03 | (2.91 | )% | $ | 776,051 | 1.21 | %(d) | 1.21 | %(d) | 0.63 | %(d) | 12 | % | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.47 | 0.13 | (0.69 | ) | (0.56 | ) | (0.14 | ) | (3.75 | ) | (3.89 | ) | 34.02 | (0.03 | ) | 871,220 | 1.19 | 1.19 | 0.37 | 38 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.52 | 0.07 | 4.37 | 4.44 | (0.24 | ) | (4.25 | ) | (4.49 | ) | 38.47 | 12.11 | 938,346 | 1.19 | 1.19 | 0.19 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.01 | 0.20 | 4.70 | 4.90 | (0.08 | ) | (0.31 | ) | (0.39 | ) | 38.52 | 14.40 | 1,031,600 | 1.21 | 1.21 | 0.53 | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.44 | 0.09 | (4.06 | ) | (3.97 | ) | (0.01 | ) | (2.45 | ) | (2.46 | ) | 34.01 | (9.62 | ) | 1,122,286 | 1.19 | 1.20 | 0.26 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 40.11 | 0.00 | 4.23 | 4.23 | (0.02 | ) | (3.88 | ) | (3.90 | ) | 40.44 | 11.27 | 1,242,480 | 1.19 | 1.20 | 0.01 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 27.15 | (0.01 | ) | (0.86 | ) | (0.87 | ) | – | – | – | 26.28 | (3.21 | )(e) | 22,204 | 1.91 | (d)(e) | 1.91 | (d)(e) | (0.07 | )(d)(e) | 12 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 31.66 | (0.11 | ) | (0.65 | ) | (0.76 | ) | – | (3.75 | ) | (3.75 | ) | 27.15 | (0.77 | )(e) | 29,562 | 1.91 | (e) | 1.91 | (e) | (0.35 | )(e) | 38 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 32.44 | (0.17 | ) | 3.64 | 3.47 | – | (4.25 | ) | (4.25 | ) | 31.66 | 11.30 | (e) | 82,217 | 1.92 | (e) | 1.92 | (e) | (0.54 | )(e) | 44 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 28.83 | (0.06 | ) | 3.98 | 3.92 | – | (0.31 | ) | (0.31 | ) | 32.44 | 13.59 | (e) | 98,096 | 1.94 | (e) | 1.94 | (e) | (0.20 | )(e) | 42 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 34.95 | (0.15 | ) | (3.52 | ) | (3.67 | ) | – | (2.45 | ) | (2.45 | ) | 28.83 | (10.28 | )(e) | 103,706 | 1.93 | (e) | 1.94 | (e) | (0.48 | )(e) | 28 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 35.41 | (0.26 | ) | 3.68 | 3.42 | – | (3.88 | ) | (3.88 | ) | 34.95 | 10.44 | (e) | 125,201 | 1.92 | (e) | 1.93 | (e) | (0.72 | )(e) | 34 | ||||||||||||||||||||||||||||||||||||||||||||||
Class R | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 33.86 | 0.06 | (1.08 | ) | (1.02 | ) | – | – | – | 32.84 | (3.01 | ) | 16,377 | 1.46 | (d) | 1.46 | (d) | 0.38 | (d) | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.24 | 0.04 | (0.67 | ) | (0.63 | ) | – | (3.75 | ) | (3.75 | ) | 33.86 | (0.28 | ) | 19,979 | 1.44 | 1.44 | 0.12 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.26 | (0.02 | ) | 4.33 | 4.31 | (0.08 | ) | (4.25 | ) | (4.33 | ) | 38.24 | 11.81 | 25,189 | 1.44 | 1.44 | (0.06 | ) | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 33.80 | 0.10 | 4.67 | 4.77 | – | (0.31 | ) | (0.31 | ) | 38.26 | 14.11 | 46,937 | 1.46 | 1.46 | 0.28 | 42 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.29 | 0.00 | (4.04 | ) | (4.04 | ) | – | (2.45 | ) | (2.45 | ) | 33.80 | (9.82 | ) | 66,207 | 1.44 | 1.45 | 0.01 | 28 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 40.06 | (0.10 | ) | 4.21 | 4.11 | – | (3.88 | ) | (3.88 | ) | 40.29 | 10.97 | 76,594 | 1.44 | 1.45 | (0.24 | ) | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 34.28 | 0.15 | (1.10 | ) | (0.95 | ) | – | – | – | 33.33 | (2.77 | ) | 134,010 | 0.96 | (d) | 0.96 | (d) | 0.88 | (d) | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.76 | 0.23 | (0.71 | ) | (0.48 | ) | (0.25 | ) | (3.75 | ) | (4.00 | ) | 34.28 | 0.21 | 155,238 | 0.94 | 0.94 | 0.62 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.80 | 0.17 | 4.40 | 4.57 | (0.36 | ) | (4.25 | ) | (4.61 | ) | 38.76 | 12.38 | 208,223 | 0.94 | 0.94 | 0.44 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.25 | 0.29 | 4.73 | 5.02 | (0.16 | ) | (0.31 | ) | (0.47 | ) | 38.80 | 14.66 | 375,626 | 0.96 | 0.96 | 0.78 | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.62 | 0.18 | (4.07 | ) | (3.89 | ) | (0.03 | ) | (2.45 | ) | (2.48 | ) | 34.25 | (9.36 | ) | 452,703 | 0.94 | 0.95 | 0.51 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 40.26 | 0.11 | 4.24 | 4.35 | (0.11 | ) | (3.88 | ) | (3.99 | ) | 40.62 | 11.55 | 545,456 | 0.94 | 0.95 | 0.26 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 34.30 | 0.16 | (1.10 | ) | (0.94 | ) | – | – | – | 33.36 | (2.74 | ) | 18,631 | 0.87 | (d) | 0.87 | (d) | 0.97 | (d) | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.80 | 0.26 | (0.73 | ) | (0.47 | ) | (0.28 | ) | (3.75 | ) | (4.03 | ) | 34.30 | 0.27 | 27,732 | 0.86 | 0.86 | 0.70 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.84 | 0.20 | 4.43 | 4.63 | (0.42 | ) | (4.25 | ) | (4.67 | ) | 38.80 | 12.53 | 62,354 | 0.86 | 0.86 | 0.52 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.29 | 0.33 | 4.74 | 5.07 | (0.21 | ) | (0.31 | ) | (0.52 | ) | 38.84 | 14.77 | 86,569 | 0.85 | 0.85 | 0.89 | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.63 | 0.22 | (4.07 | ) | (3.85 | ) | (0.04 | ) | (2.45 | ) | (2.49 | ) | 34.29 | (9.26 | ) | 128,357 | 0.82 | 0.83 | 0.63 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 40.28 | �� | 0.15 | 4.24 | 4.39 | (0.16 | ) | (3.88 | ) | (4.04 | ) | 40.63 | 11.66 | 95,082 | 0.82 | 0.83 | 0.38 | 34 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 34.31 | 0.17 | (1.10 | ) | (0.93 | ) | – | – | – | 33.38 | (2.71 | ) | 62,514 | 0.79 | (d) | 0.79 | (d) | 1.05 | (d) | 12 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.82 | 0.29 | (0.73 | ) | (0.44 | ) | (0.32 | ) | (3.75 | ) | (4.07 | ) | 34.31 | 0.37 | 68,568 | 0.78 | 0.78 | 0.78 | 38 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.88 | 0.24 | 4.42 | 4.66 | (0.47 | ) | (4.25 | ) | (4.72 | ) | 38.82 | 12.59 | 140,889 | 0.77 | 0.77 | 0.61 | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.32 | 0.37 | 4.74 | 5.11 | (0.24 | ) | (0.31 | ) | (0.55 | ) | 38.88 | 14.88 | 165,781 | 0.76 | 0.76 | 0.98 | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.64 | 0.25 | (4.07 | ) | (3.82 | ) | (0.05 | ) | (2.45 | ) | (2.50 | ) | 34.32 | (9.19 | ) | 143,003 | 0.73 | 0.74 | 0.72 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 40.28 | 0.19 | 4.25 | 4.44 | (0.20 | ) | (3.88 | ) | (4.08 | ) | 40.64 | 11.77 | 143,793 | 0.73 | 0.74 | 0.47 | 34 |
(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 $797,024, $25,071, $17,808, $139,739, $24,428 and $63,950 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.95%, 0.97%, 0.97%, 0.97%, 0.99% and 0.98% for the six months ended October 31, 2019 and the years ended April 30, 2019, 2018, 2017, 2016 and 2015, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco American Value Fund
Notes to Financial Statements
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco American Value Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 capital appreciation. Prior to October 28, 2019, the Fund’s investment objective was total return through growth of capital and current income.
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 afront-end sales charge unless certain waiver criteria are met. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco American Value Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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. |
12 Invesco American Value 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 $500 million | 0.720% | |||||
Next $535 million | 0.715% | |||||
Next $31.965 billion | 0.650% | |||||
Over $33 billion | 0.640% |
For the six months ended October 31, 2019, the effective advisory fee rate 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. (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, 2020, 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”). 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, 2020. 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.
The Adviser has contractually agreed, through at least June 30, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $13,485.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into a sub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% of Class C average daily net assets and up to 0.50% of Class R average daily net assets. The fees are accrued daily and paid monthly.
With respect to Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund. Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $50,509 in front-end sales commissions from the sale of Class A shares and $1,881 and $363 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $7,696 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
13 Invesco American Value 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 October 31, 2019, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,911.
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $127,406,522 and $236,798,271, 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 reportingperiod-end.
14 Invesco American Value Fund
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis |
| |||
| ||||
Aggregate unrealized appreciation of investments | $205,964,471 | |||
| ||||
Aggregate unrealized (depreciation) of investments | (74,139,341 | ) | ||
| ||||
Net unrealized appreciation of investments | $131,825,130 | |||
|
Cost of investments for tax purposes is $899,214,418.
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
October 31, 2019(a) | April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 674,585 | $ | 21,933,282 | 2,374,194 | $ | 84,237,878 | ||||||||||
| ||||||||||||||||
Class C | 41,011 | 1,056,088 | 143,531 | 4,246,582 | ||||||||||||
| ||||||||||||||||
Class R | 55,987 | 1,787,893 | 146,104 | 5,203,373 | ||||||||||||
| ||||||||||||||||
Class Y | 281,577 | 9,274,142 | 888,661 | 32,058,634 | ||||||||||||
| ||||||||||||||||
Class R5 | 45,511 | 1,495,582 | 170,349 | 6,146,454 | ||||||||||||
| ||||||||||||||||
Class R6 | 184,292 | 6,067,660 | 489,656 | 18,018,069 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | - | 2,825,470 | 84,340,635 | ||||||||||||
| ||||||||||||||||
Class C | - | - | 330,584 | 7,897,661 | ||||||||||||
| ||||||||||||||||
Class R | - | - | 72,283 | 2,149,682 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 488,901 | 14,691,467 | ||||||||||||
| ||||||||||||||||
Class R5 | - | - | 99,659 | 2,995,763 | ||||||||||||
| ||||||||||||||||
Class R6 | - | - | 248,801 | 7,478,944 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 57,637 | 1,888,060 | 1,046,064 | 33,068,721 | ||||||||||||
| ||||||||||||||||
Class C | (72,349 | ) | (1,888,060 | ) | (1,308,333 | ) | (33,068,721 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (2,851,275 | ) | (92,971,187 | ) | (5,025,225 | ) | (177,703,256 | ) | ||||||||
| ||||||||||||||||
Class C | (212,368 | ) | (5,489,286 | ) | (674,289 | ) | (19,878,539 | ) | ||||||||
| ||||||||||||||||
Class R | (147,374 | ) | (4,782,667 | ) | (287,002 | ) | (10,369,236 | ) | ||||||||
| ||||||||||||||||
Class Y | (789,599 | ) | (25,883,000 | ) | (2,220,865 | ) | (78,695,581 | ) | ||||||||
| ||||||||||||||||
Class R5 | (295,650 | ) | (9,680,263 | ) | (1,068,701 | ) | (41,829,136 | ) | ||||||||
| ||||||||||||||||
Class R6 | (310,442 | ) | (10,189,956 | ) | (2,369,083 | ) | (92,336,577 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (3,338,457 | ) | $ | (107,381,712 | ) | (3,629,241 | ) | $ | (151,347,183 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 53% 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. |
NOTE 10–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco Oppenheimer Mid Cap Value Fund (the “Target Fund”) in exchange for shares of the Fund.
The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of the Target Fund will receive shares of the Fund in exchange for their shares of the Target Fund, and the Target Fund will liquidate and cease operations.
15 Invesco American Value Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(05/01/19) | (10/31/19)1 | Period2 | (10/31/19) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $970.90 | $5.99 | $1,019.05 | $6.14 | 1.21% | ||||||
Class C | 1,000.00 | 967.90 | 9.45 | 1,015.53 | 9.68 | 1.91 | ||||||
Class R | 1,000.00 | 969.90 | 7.23 | 1,017.80 | 7.41 | 1.46 | ||||||
Class Y | 1,000.00 | 972.30 | 4.76 | 1,020.31 | 4.88 | 0.96 | ||||||
Class R5 | 1,000.00 | 972.60 | 4.31 | 1,020.76 | 4.42 | 0.87 | ||||||
Class R6 | 1,000.00 | 972.90 | 3.92 | 1,021.17 | 4.01 | 0.79 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
16 Invesco American Value Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco American Value Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A.Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C.Advisory andSub-Advisory Fees
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 at a common asset level. 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
17 Invesco American Value Fund
group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D.Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
18 Invesco American Value Fund
19
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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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers:811-03826 and002-85905 | Invesco Distributors, Inc. | VK-AMVA-SAR-1 |
| ||||
Semiannual Report to Shareholders
| October 31, 2019 | |||
| ||||
| ||||
Nasdaq: | ||||
A: ACSTX ∎ C: ACSYX ∎ R: ACSRX ∎ Y: ACSDX ∎ R5: ACSHX ∎ R6: ICSFX |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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
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: 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 andsub-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.
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
Andrew Schlossberg | 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Comstock Fund
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | –0.90 | % | ||
Class C Shares | –1.16 | |||
Class R Shares | –0.97 | |||
Class Y Shares | –0.74 | |||
Class R5 Shares | –0.71 | |||
Class R6 Shares | –0.67 | |||
S&P 500 Indexq(Broad Market Index) | 4.16 | |||
Russell 1000 Value Indexq(Style-Specific Index) | 3.07 | |||
LipperLarge-Cap Value Funds Index∎(Peer Group Index)
| 2.58 | |||
Source(s):qRIMES Technologies Corp.;⬛Lipper Inc.
| ||||
TheS&P 500® Indexis an unmanaged index considered representative of the US stock market. |
| |||
TheRussell 1000® Value Indexis an unmanaged index considered representative oflarge-cap value stocks. The Russell 1000 Value Index is a trademark/ service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. |
| |||
TheLipperLarge-Cap Value Funds Indexis an unmanaged index considered representative oflarge-cap value funds tracked by Lipper. |
| |||
The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. |
| |||
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 Invesco Comstock Fund
Average Annual Total Returns | ||||||
As of 10/31/19, including maximum applicable sales charges | ||||||
Class A Shares |
| |||||
Inception (10/7/68) | 10.56 | % | ||||
10 Years | 10.37 | |||||
5 Years | 5.11 | |||||
1 Year | –0.30 | |||||
Class C Shares |
| |||||
Inception (10/26/93) | 9.28 | % | ||||
10 Years | 10.17 | |||||
5 Years | 5.54 | |||||
1 Year | 3.82 | |||||
Class R Shares |
| |||||
Inception (10/1/02) | 8.73 | % | ||||
10 Years | 10.71 | |||||
5 Years | 6.05 | |||||
1 Year | 5.24 | |||||
Class Y Shares |
| |||||
Inception (10/29/04) | 7.44 | % | ||||
10 Years | 11.27 | |||||
5 Years | 6.58 | |||||
1 Year | 5.76 | |||||
Class R5 Shares |
| |||||
10 Years | 11.35 | % | ||||
5 Years | 6.66 | |||||
1 Year | 5.83 | |||||
Class R6 Shares |
| |||||
10 Years | 11.33 | % | ||||
5 Years | 6.76 | |||||
1 Year | 5.93 |
Effective June 1, 2010, Class A, Class C, Class I and Class R shares of the predecessor fund, Van Kampen Comstock Fund, advised by Van Kampen Asset Management were reorganized into Class A, Class C, Class Y and Class R shares, respectively, of Invesco Van Kampen Comstock Fund (renamed Invesco Comstock Fund). Returns shown above, prior to June 1, 2010, for Class A, Class C, Class R and Class Y shares are blended returns of the predecessor fund and InvescoCom-stock Fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of the predecessor fund’s Class A shares and includes the12b-1 fees applicable to Class A shares.
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A shares and includes the12b-1 fees applicable to Class A shares.
Average Annual Total Returns | ||||||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||||
Class A Shares |
| |||||
Inception (10/7/68) | 10.54 | % | ||||
10 Years | 10.00 | |||||
5 Years | 4.86 | |||||
1 Year | –9.23 | |||||
Class C Shares |
| |||||
Inception (10/26/93) | 9.26 | % | ||||
10 Years | 9.80 | |||||
5 Years | 5.28 | |||||
1 Year | –5.52 | % | ||||
Class R Shares |
| |||||
Inception (10/1/02) | 8.69 | % | ||||
10 Years | 10.34 | |||||
5 Years | 5.79 | |||||
1 Year | –4.20 | |||||
Class Y Shares |
| |||||
Inception (10/29/04) | 7.39 | % | ||||
10 Years | 10.90 | |||||
5 Years | 6.32 | |||||
1 Year | –3.72 | |||||
Class R5 Shares |
| |||||
10 Years | 10.98 | % | ||||
5 Years | 6.40 | |||||
1 Year | –3.67 | |||||
Class R6 Shares |
| |||||
10 Years | 10.95 | % | ||||
5 Years | 6.50 | |||||
1 Year | –3.58 |
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 recentmonth-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 0.81%, 1.55%, 1.06%, 0.56%, 0.49% and 0.40%, 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 0.82%, 1.56%, 1.07%, 0.57%, 0.50% and 0.41%, 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 afront-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, 2021. See current prospectus for more information. |
4 Invesco Comstock Fund
October 31, 2019
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–94.77% |
| |||||||
Aerospace & Defense–1.10% |
| |||||||
Textron, Inc. | 2,686,611 | $ | 123,825,901 | |||||
Agricultural Products–1.35% |
| |||||||
Archer-Daniels-Midland Co. | 3,598,147 | 151,266,100 | ||||||
Apparel Retail–0.41% |
| |||||||
Gap, Inc. (The) | 2,813,273 | 45,743,819 | ||||||
Asset Management & Custody Banks–2.82% |
| |||||||
Bank of New York Mellon Corp. (The) | 3,222,174 | 150,636,634 | ||||||
State Street Corp. | 2,509,713 | 165,816,738 | ||||||
316,453,372 | ||||||||
Automobile Manufacturers–2.05% |
| |||||||
General Motors Co. | 6,201,120 | 230,433,619 | ||||||
Automotive Retail–0.32% |
| |||||||
Advance Auto Parts, Inc. | 219,005 | 35,583,932 | ||||||
Biotechnology–1.14% |
| |||||||
Gilead Sciences, Inc. | 2,004,453 | 127,703,701 | ||||||
Broadcasting–0.55% |
| |||||||
CBS Corp., Class B | 1,728,852 | 62,307,826 | ||||||
Building Products–1.68% |
| |||||||
Johnson Controls International PLC | 4,357,540 | 188,812,208 | ||||||
Cable & Satellite–2.63% |
| |||||||
Charter Communications, Inc., Class A(b) | 345,990 | 161,874,882 | ||||||
Comcast Corp., Class A | 2,973,066 | 133,252,818 | ||||||
295,127,700 | ||||||||
Communications Equipment–1.70% |
| |||||||
Cisco Systems, Inc. | 4,018,529 | 190,920,313 | ||||||
Construction Machinery & Heavy Trucks–0.86% |
| |||||||
Caterpillar, Inc. | 701,040 | 96,603,312 | ||||||
Consumer Finance–0.68% |
| |||||||
Ally Financial, Inc. | 2,489,949 | 76,267,138 | ||||||
Diversified Banks–15.43% |
| |||||||
Bank of America Corp. | 18,143,551 | 567,348,840 | ||||||
Citigroup, Inc. | 8,204,195 | 589,553,453 | ||||||
JPMorgan Chase & Co. | 3,187,033 | 398,124,162 | ||||||
Wells Fargo & Co. | 3,414,613 | 176,296,469 | ||||||
1,731,322,924 | ||||||||
Electrical Components & Equipment–3.02% |
| |||||||
Eaton Corp. PLC | 2,064,289 | 179,820,215 |
Shares | Value | |||||||
Electrical Components & Equipment–(continued) |
| |||||||
Emerson Electric Co. | 2,264,807 | $ | 158,876,211 | |||||
338,696,426 | ||||||||
Fertilizers & Agricultural Chemicals–1.92% |
| |||||||
CF Industries Holdings, Inc. | 1,855,128 | 84,130,055 | ||||||
Corteva, Inc. | 4,998,444 | 131,858,953 | ||||||
215,989,008 | ||||||||
Health Care Distributors–1.62% |
| |||||||
Cardinal Health, Inc. | 1,821,023 | 90,049,587 | ||||||
McKesson Corp. | 694,365 | 92,350,545 | ||||||
182,400,132 | ||||||||
Health Care Equipment–0.49% |
| |||||||
Medtronic PLC | 510,247 | 55,565,898 | ||||||
Health Care Services–0.90% |
| |||||||
CVS Health Corp. | 1,513,416 | 100,475,688 | ||||||
Hotels, Resorts & Cruise Lines–1.67% |
| |||||||
Carnival Corp. | 4,359,453 | 186,976,939 | ||||||
Household Products–1.95% |
| |||||||
Kimberly-Clark Corp. | 891,637 | 118,480,725 | ||||||
Reckitt Benckiser Group PLC (United Kingdom) | 1,303,138 | 100,746,303 | ||||||
219,227,028 | ||||||||
Independent Power Producers & Energy Traders–0.58% |
| |||||||
Vistra Energy Corp. | 2,404,190 | 64,985,256 | ||||||
Industrial Conglomerates–0.90% |
| |||||||
General Electric Co. | 10,069,704 | 100,495,646 | ||||||
Industrial Machinery–0.87% |
| |||||||
Ingersoll-Rand PLC | 772,613 | 98,036,864 | ||||||
Integrated Oil & Gas–8.38% |
| |||||||
BP PLC, ADR (United Kingdom) | 6,386,569 | 242,114,831 | ||||||
Chevron Corp. | 2,124,251 | 246,710,511 | ||||||
Exxon Mobil Corp. | 389,226 | 26,300,001 | ||||||
Royal Dutch Shell PLC, Class A, ADR (United Kingdom) | 3,531,775 | 204,736,997 | ||||||
Suncor Energy, Inc. (Canada) | 7,437,825 | 220,829,024 | ||||||
940,691,364 | ||||||||
Integrated Telecommunication Services–1.76% |
| |||||||
AT&T, Inc. | 5,126,611 | 197,323,257 | ||||||
Internet & Direct Marketing Retail–1.28% |
| |||||||
eBay, Inc. | 4,068,437 | 143,412,404 | ||||||
Investment Banking & Brokerage–3.23% |
| |||||||
Goldman Sachs Group, Inc. (The) | 710,389 | 151,582,805 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Comstock Fund
Shares | Value | |||||||
Investment Banking & Brokerage–(continued) |
| |||||||
Morgan Stanley | 4,580,393 | $ | 210,927,097 | |||||
362,509,902 | ||||||||
IT Consulting & Other Services–0.98% |
| |||||||
Cognizant Technology Solutions Corp., Class A | 1,804,349 | 109,957,028 | ||||||
Life & Health Insurance–0.99% |
| |||||||
MetLife, Inc. | 2,370,185 | 110,900,956 | ||||||
Managed Health Care–1.90% |
| |||||||
Anthem, Inc. | 792,685 | 213,295,680 | ||||||
Multi-line Insurance–2.06% |
| |||||||
American International Group, Inc. | 4,362,041 | 231,013,691 | ||||||
Oil & Gas Exploration & Production–6.59% |
| |||||||
Canadian Natural Resources Ltd. (Canada) | 4,039,146 | 101,844,992 | ||||||
Devon Energy Corp. | 5,641,560 | 114,410,837 | ||||||
Encana Corp. (Canada) | 17,249,964 | 67,792,359 | ||||||
Hess Corp. | 2,720,257 | 178,856,898 | ||||||
Marathon Oil Corp. | 12,773,527 | 147,278,766 | ||||||
Noble Energy, Inc. | 5,018,000 | 96,646,680 | ||||||
Pioneer Natural Resources Co. | 266,818 | 32,823,950 | ||||||
739,654,482 | ||||||||
Paper Packaging–1.44% |
| |||||||
International Paper Co. | 3,690,422 | 161,197,633 | ||||||
Pharmaceuticals–5.05% |
| |||||||
Allergan PLC | 623,142 | 109,741,538 | ||||||
Bristol-Myers Squibb Co. | 2,632,201 | 151,009,371 | ||||||
Mylan N.V.(b) | 3,469,429 | 66,439,565 | ||||||
Novartis AG (Switzerland) | 634,978 | 55,470,190 | ||||||
Sanofi, ADR (France) | 3,992,821 | 183,989,192 | ||||||
566,649,856 | ||||||||
Property & Casualty Insurance–1.13% |
| |||||||
Allstate Corp. (The) | 1,187,344 | 126,357,149 | ||||||
Regional Banks–3.54% |
| |||||||
Citizens Financial Group, Inc. | 3,824,825 | 134,480,847 |
Shares | Value | |||||||
Regional Banks–(continued) |
| |||||||
Fifth Third Bancorp | 5,252,449 | $ | 152,741,217 | |||||
PNC Financial Services Group, Inc. (The) | 747,740 | 109,693,458 | ||||||
396,915,522 | ||||||||
Semiconductors–3.93% |
| |||||||
Intel Corp. | 3,697,813 | 209,037,369 | ||||||
NXP Semiconductors N.V. (Netherlands) | 456,996 | 51,951,305 | ||||||
QUALCOMM, Inc. | 2,236,014 | 179,864,966 | ||||||
440,853,640 | ||||||||
Systems Software–1.77% |
| |||||||
Microsoft Corp. | 1,388,683 | 199,095,482 | ||||||
Tobacco–3.48% |
| |||||||
Altria Group, Inc. | 1,890,446 | 84,673,076 | ||||||
Philip Morris International, Inc. | 3,758,398 | 306,083,933 | ||||||
390,757,009 | ||||||||
Wireless Telecommunication Services–0.62% |
| |||||||
Vodafone Group PLC (United Kingdom) | 34,291,345 | 70,151,935 | ||||||
Total Common Stocks & Other Equity Interests |
| 10,635,957,740 | ||||||
Money Market Funds–5.43% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(c) | 213,326,517 | 213,326,517 | ||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(c) | 152,383,208 | 152,444,161 | ||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(c) | 243,801,734 | 243,801,734 | ||||||
Total Money Market Funds |
| 609,572,412 | ||||||
TOTAL INVESTMENTS IN |
| 11,245,530,152 | ||||||
OTHER ASSETS LESS |
| (22,682,249 | ) | |||||
NET ASSETS–100.00% | $ | 11,222,847,903 |
Investment Abbreviations:
ADR – American Depositary Receipt
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Comstock Fund
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2019
Financials | 29.88 | % | ||
Energy |
|
14.97 |
| |
Health Care |
|
11.10 |
| |
Industrials |
|
8.43 |
| |
Information Technology |
|
8.38 |
| |
Consumer Staples |
|
6.78 |
| |
Consumer Discretionary |
|
5.73 |
| |
Communication Services |
|
5.56 |
| |
Materials |
|
3.36 |
| |
Utilities |
|
0.58 |
| |
Money Market Funds Plus Other Assets Less Liabilities |
|
5.23 |
|
Open Forward Foreign Currency Contracts | ||||||||||||||||||||||
Settlement Date | Counterparty | Contract to | Unrealized Appreciation (Depreciation) | |||||||||||||||||||
Deliver | Receive | |||||||||||||||||||||
Currency Risk | ||||||||||||||||||||||
11/01/2019 | Barclays Bank PLC | USD | 644,757 | CHF | 640,149 | $ | 4,152 | |||||||||||||||
11/01/2019 | Barclays Bank PLC | USD | 7,912,931 | GBP | 6,428,621 | 414,385 | ||||||||||||||||
11/01/2019 | Canadian Imperial Bank of Commerce | USD | 27,590,370 | CHF | 27,408,825 | 193,538 | ||||||||||||||||
11/01/2019 | Citibank N.A. | USD | 5,994,526 | EUR | 5,435,669 | 67,873 | ||||||||||||||||
11/01/2019 | Deutsche Bank AG | USD | 193,826,571 | EUR | 174,492,772 | 785,162 | ||||||||||||||||
11/01/2019 | Deutsche Bank AG | USD | 5,214,238 | GBP | 4,049,327 | 31,059 | ||||||||||||||||
12/06/2019 | Deutsche Bank AG | CAD | 1,519,827 | USD | 1,161,378 | 7,338 | ||||||||||||||||
11/01/2019 | Goldman Sachs International | USD | 5,118,526 | CAD | 6,824,623 | 63,027 | ||||||||||||||||
11/01/2019 | Goldman Sachs International | USD | 3,967,978 | CHF | 3,944,000 | 29,994 | ||||||||||||||||
11/01/2019 | Goldman Sachs International | USD | 18,202,559 | EUR | 16,574,088 | 282,516 | ||||||||||||||||
11/01/2019 | J.P. Morgan Chase Bank, N.A | USD | 8,246,983 | EUR | 7,497,925 | 115,451 | ||||||||||||||||
11/01/2019 | Royal Bank of Canada | USD | 7,788,122 | CAD | 10,361,197 | 78,553 | ||||||||||||||||
11/01/2019 | Royal Bank of Canada | USD | 204,983,037 | GBP | 159,210,126 | 1,249,833 | ||||||||||||||||
12/06/2019 | Royal Bank of Canada | CAD | 214,781,123 | USD | 163,277,020 | 188,849 | ||||||||||||||||
Subtotal–Appreciation |
| 3,511,730 | ||||||||||||||||||||
Currency Risk | ||||||||||||||||||||||
11/01/2019 | Canadian Imperial Bank of Commerce | CAD | 227,542,929 | USD | 171,725,977 | (1,034,580 | ) | |||||||||||||||
11/01/2019 | Canadian Imperial Bank of Commerce | EUR | 202,937,886 | USD | 221,661,950 | (4,674,610 | ) | |||||||||||||||
11/01/2019 | Canadian Imperial Bank of Commerce | GBP | 167,081,124 | USD | 205,902,088 | (10,526,480 | ) | |||||||||||||||
12/06/2019 | Canadian Imperial Bank of Commerce | CHF | 27,824,736 | USD | 28,080,368 | (192,492 | ) | |||||||||||||||
12/06/2019 | Deutsche Bank AG | EUR | 174,493,287 | USD | 194,265,121 | (755,107 | ) | |||||||||||||||
11/01/2019 | Goldman Sachs International | EUR | 1,062,568 | USD | 1,160,126 | (24,956 | ) | |||||||||||||||
11/01/2019 | Goldman Sachs International | GBP | 2,606,951 | USD | 3,212,383 | (164,531 | ) | |||||||||||||||
11/01/2019 | J.P. Morgan Chase Bank, N.A | CHF | 752,265 | USD | 754,833 | (7,726 | ) | |||||||||||||||
11/01/2019 | Royal Bank of Canada | CAD | 4,417,847 | USD | 3,346,623 | (7,600 | ) | |||||||||||||||
11/01/2019 | Royal Bank of Canada | CHF | 31,240,709 | USD | 31,417,685 | (250,545 | ) | |||||||||||||||
11/01/2019 | Royal Bank of Canada | USD | 163,252,475 | CAD | 214,774,957 | (185,923 | ) | |||||||||||||||
12/06/2019 | Royal Bank of Canada | EUR | 4,639,451 | USD | 5,165,041 | (20,184 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Comstock Fund
Open Forward Foreign Currency Contracts–(continued) | ||||||||||||||||||||||
Settlement Date | Counterparty | Contract to | Unrealized Appreciation (Depreciation) | |||||||||||||||||||
Deliver | Receive | |||||||||||||||||||||
12/06/2019 | Royal Bank of Canada | GBP | 159,194,798 | USD | 205,182,991 | $ | (1,238,935 | ) | ||||||||||||||
Subtotal – Depreciation |
| (19,083,669 | ) | |||||||||||||||||||
Total Forward Foreign Currency Contracts | $ | (15,571,939 | ) |
Abbreviations:
CAD – Canadian Dollar
CHF – Swiss Franc
EUR – Euro
GBP – British Pound Sterling
USD – U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Comstock Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 10,635,957,740 | ||
Investments in affiliated money market funds, at value | 609,572,412 | |||
Other investments: | ||||
Unrealized appreciation on forward foreign currency contracts outstanding | 3,511,730 | |||
Foreign currencies, at value (Cost $611) | 622 | |||
Receivable for: | ||||
Dividends | 15,068,305 | |||
Fund shares sold | 3,067,839 | |||
Investment for trustee deferred compensation and retirement plans | 938,062 | |||
Other assets | 111,332 | |||
Total assets | 11,268,228,042 | |||
Liabilities: | ||||
Other investments: | ||||
Unrealized depreciation on forward foreign currency contracts outstanding | 19,083,669 | |||
Payable for: | ||||
Fund shares reacquired | 16,458,544 | |||
Accrued fees to affiliates | 8,714,700 | |||
Accrued trustees’ and officers’ fees and benefits | 13,814 | |||
Accrued other operating expenses | 51,667 | |||
Trustee deferred compensation and retirement plans | 1,057,745 | |||
Total liabilities | 45,380,139 | |||
Net assets applicable to shares outstanding | $ | 11,222,847,903 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 8,287,388,346 | ||
Distributable earnings | 2,935,459,557 | |||
$ | 11,222,847,903 |
Net Assets: | ||||
Class A | $ | 5,962,156,252 | ||
Class C | $ | 134,324,508 | ||
Class R | $ | 186,312,863 | ||
Class Y | $ | 1,611,615,984 | ||
Class R5 | $ | 598,053,356 | ||
Class R6 | $ | 2,730,384,940 | ||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 241,145,792 | |||
Class C | 5,434,247 | |||
Class R | 7,536,566 | |||
Class Y | 65,166,391 | |||
Class R5 | 24,200,653 | |||
Class R6 | 110,507,396 | |||
Class A: | ||||
Net asset value per share | $ | 24.72 | ||
Maximum offering price per share | $ | 26.16 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 24.72 | ||
Class R: | ||||
Net asset value and offering price per share | $ | 24.72 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 24.73 | ||
Class R5: | ||||
Net asset value and offering price per share | $ | 24.71 | ||
Class R6: | ||||
Net asset value and offering price per share | $ | 24.71 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Comstock Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $3,683,181) | $ | 157,109,918 | ||
Dividends from affiliated money market funds | 8,177,270 | |||
Total investment income | 165,287,188 | |||
Expenses: | ||||
Advisory fees | 21,527,545 | |||
Administrative services fees | 809,453 | |||
Custodian fees | 10,154 | |||
Distribution fees: | ||||
Class A | 7,500,075 | |||
Class C | 636,673 | |||
Class R | 485,538 | |||
Transfer agent fees – A, C, R and Y | 6,639,248 | |||
Transfer agent fees – R5 | 313,117 | |||
Transfer agent fees – R6 | 86,305 | |||
Trustees’ and officers’ fees and benefits | 69,469 | |||
Registration and filing fees | 121,840 | |||
Reports to shareholders | 56,913 | |||
Professional services fees | 31,431 | |||
Other | 83,897 | |||
Total expenses | 38,371,658 | |||
Less: Fees waived and/or expense offset arrangement(s) | (454,206 | ) | ||
Net expenses | 37,917,452 | |||
Net investment income | 127,369,736 | |||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | 202,797,680 | |||
Foreign currencies | (29,574 | ) | ||
Forward foreign currency contracts | 23,856,341 | |||
226,624,447 | ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (454,241,068 | ) | ||
Foreign currencies | 61,341 | |||
Forward foreign currency contracts | (19,314,036 | ) | ||
(473,493,763 | ) | |||
Net realized and unrealized gain (loss) | (246,869,316 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | (119,499,580 | ) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Comstock Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
Operations: | ||||||||
Net investment income | $ | 127,369,736 | $ | 232,339,505 | ||||
Net realized gain | 226,624,447 | 720,651,130 | ||||||
Change in net unrealized appreciation (depreciation) | (473,493,763 | ) | (555,280,438 | ) | ||||
Net increase (decrease) in net assets resulting from operations | (119,499,580 | ) | 397,710,197 | |||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (57,075,871 | ) | (506,804,150 | ) | ||||
Class C | (879,766 | ) | (31,812,508 | ) | ||||
Class R | (1,615,638 | ) | (17,885,215 | ) | ||||
Class Y | (17,661,089 | ) | (155,664,704 | ) | ||||
Class R5 | (6,936,551 | ) | (59,044,636 | ) | ||||
Class R6 | (31,798,536 | ) | (249,226,391 | ) | ||||
Total distributions from distributable earnings | (115,967,451 | ) | (1,020,437,604 | ) | ||||
Share transactions–net: | ||||||||
Class A | (267,813,155 | ) | 205,489,325 | |||||
Class C | (21,103,909 | ) | (268,440,174 | ) | ||||
Class R | (22,282,808 | ) | (41,047,725 | ) | ||||
Class Y | (120,808,662 | ) | 3,974,276 | |||||
Class R5 | (52,932,295 | ) | (33,427,639 | ) | ||||
Class R6 | (171,527,327 | ) | 518,847,087 | |||||
Net increase (decrease) in net assets resulting from share transactions | (656,468,156 | ) | 385,395,150 | |||||
Net increase (decrease) in net assets | (891,935,187 | ) | (237,332,257 | ) | ||||
Net assets: | ||||||||
Beginning of period | 12,114,783,090 | 12,352,115,347 | ||||||
End of period | $ | 11,222,847,903 | $ | 12,114,783,090 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Comstock Fund
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset
| Net
| Net gains securities
| Total from
| Dividends
| Distributions
| Total
| Net asset
| Total
| Net assets,
| Ratio of fee waivers
| Ratio of average net assets without
| Ratio of net
| Portfolio
| |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $ | 25.18 | $ | 0.25 | $ | (0.48 | ) | $ | (0.23 | ) | $ | (0.23 | ) | $ | – | $ | (0.23 | ) | $ | 24.72 | (0.90 | )% | $ | 5,962,156 | 0.80 | %(d) | 0.81 | %(d) | 2.08 | %(d) | 10 | % | ||||||||||||||||||||||||
Year ended 04/30/19 | 26.67 | 0.46 | 0.23 | 0.69 | (0.41 | ) | (1.77 | ) | (2.18 | ) | 25.18 | 3.51 | 6,350,025 | 0.80 | 0.81 | 1.79 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.03 | 0.36 | 3.23 | 3.59 | (0.36 | ) | (0.59 | ) | (0.95 | ) | 26.67 | 15.09 | 6,433,646 | 0.81 | 0.81 | 1.38 | 14 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 21.86 | 0.40 | 3.61 | 4.01 | (0.49 | ) | (1.35 | ) | (1.84 | ) | 24.03 | 18.56 | 6,350,463 | 0.84 | 0.84 | 1.75 | 18 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 26.04 | 0.44 | (2.29 | ) | (1.85 | ) | (0.36 | ) | (1.97 | ) | (2.33 | ) | 21.86 | (6.90 | ) | 6,613,286 | 0.84 | 0.85 | 1.87 | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 24.29 | 0.32 | 1.84 | 2.16 | (0.41 | ) | – | (0.41 | ) | 26.04 | 8.98 | 7,698,790 | 0.82 | 0.83 | 1.30 | 17 | ||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 25.16 | 0.18 | (0.47 | ) | (0.29 | ) | (0.15 | ) | – | (0.15 | ) | 24.72 | (1.16 | )(e) | 134,325 | 1.43 | (d)(e) | 1.44 | (d)(e) | 1.45 | (d)(e) | 10 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.66 | 0.27 | 0.21 | 0.48 | (0.21 | ) | (1.77 | ) | (1.98 | ) | 25.16 | 2.68 | (e) | 158,707 | 1.54 | (e) | 1.55 | (e) | 1.05 | (e) | 23 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.02 | 0.16 | 3.24 | 3.40 | (0.17 | ) | (0.59 | ) | (0.76 | ) | 26.66 | 14.24 | (e) | 468,225 | 1.55 | (e) | 1.55 | (e) | 0.64 | (e) | 14 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 21.85 | 0.23 | 3.61 | 3.84 | (0.32 | ) | (1.35 | ) | (1.67 | ) | 24.02 | 17.70 | 511,920 | 1.59 | 1.59 | 1.00 | 18 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 26.03 | 0.27 | (2.29 | ) | (2.02 | ) | (0.19 | ) | (1.97 | ) | (2.16 | ) | 21.85 | (7.59 | )(e) | 532,230 | 1.56 | (e) | 1.57 | (e) | 1.15 | (e) | 15 | |||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 24.28 | 0.13 | 1.84 | 1.97 | (0.22 | ) | – | (0.22 | ) | 26.03 | 8.17 | 637,579 | 1.57 | 1.58 | 0.55 | 17 | ||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 25.17 | 0.22 | (0.47 | ) | (0.25 | ) | (0.20 | ) | – | (0.20 | ) | 24.72 | (0.97 | ) | 186,313 | 1.05 | (d) | 1.06 | (d) | 1.83 | (d) | 10 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.67 | 0.40 | 0.21 | 0.61 | (0.34 | ) | (1.77 | ) | (2.11 | ) | 25.17 | 3.20 | 212,843 | 1.05 | 1.06 | 1.54 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.03 | 0.29 | 3.24 | 3.53 | (0.30 | ) | (0.59 | ) | (0.89 | ) | 26.67 | 14.80 | 265,368 | 1.06 | 1.06 | 1.13 | 14 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 21.86 | 0.35 | 3.61 | 3.96 | (0.44 | ) | (1.35 | ) | (1.79 | ) | 24.03 | 18.27 | 324,055 | 1.09 | 1.09 | 1.50 | 18 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 26.04 | 0.38 | (2.29 | ) | (1.91 | ) | (0.30 | ) | (1.97 | ) | (2.27 | ) | 21.86 | (7.14 | ) | 358,835 | 1.09 | 1.10 | 1.62 | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 24.29 | 0.26 | 1.84 | 2.10 | (0.35 | ) | — | (0.35 | ) | 26.04 | 8.71 | 486,154 | 1.07 | 1.08 | 1.05 | 17 | ||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 25.18 | 0.28 | (0.47 | ) | (0.19 | ) | (0.26 | ) | – | (0.26 | ) | 24.73 | (0.74 | ) | 1,611,616 | 0.55 | (d) | 0.56 | (d) | 2.33 | (d) | 10 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.68 | 0.52 | 0.22 | 0.74 | (0.47 | ) | (1.77 | ) | (2.24 | ) | 25.18 | 3.73 | 1,765,456 | 0.55 | 0.56 | 2.04 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.03 | 0.41 | 3.25 | 3.66 | (0.42 | ) | (0.59 | ) | (1.01 | ) | 26.68 | 15.41 | 1,861,752 | 0.56 | 0.56 | 1.63 | 14 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 21.86 | 0.46 | 3.61 | 4.07 | (0.55 | ) | (1.35 | ) | (1.90 | ) | 24.03 | 18.86 | 3,334,930 | 0.59 | 0.59 | 2.00 | 18 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 26.04 | 0.49 | (2.28 | ) | (1.79 | ) | (0.42 | ) | (1.97 | ) | (2.39 | ) | 21.86 | (6.67 | ) | 3,034,620 | 0.59 | 0.60 | 2.12 | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 24.29 | 0.39 | 1.84 | 2.23 | (0.48 | ) | – | (0.48 | ) | 26.04 | 9.26 | 3,422,401 | 0.57 | 0.58 | 1.55 | 17 | ||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 25.16 | 0.29 | (0.47 | ) | (0.18 | ) | (0.27 | ) | – | (0.27 | ) | 24.71 | (0.71 | ) | 598,053 | 0.49 | (d) | 0.50 | (d) | 2.39 | (d) | 10 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.66 | 0.54 | 0.22 | 0.76 | (0.49 | ) | (1.77 | ) | (2.26 | ) | 25.16 | 3.80 | 665,081 | 0.48 | 0.49 | 2.11 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.02 | 0.44 | 3.23 | 3.67 | (0.44 | ) | (0.59 | ) | (1.03 | ) | 26.66 | 15.46 | 735,462 | 0.50 | 0.50 | 1.69 | 14 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 21.85 | 0.48 | 3.62 | 4.10 | (0.58 | ) | (1.35 | ) | (1.93 | ) | 24.02 | 18.98 | 741,550 | 0.51 | 0.51 | 2.08 | 18 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 26.04 | 0.51 | (2.29 | ) | (1.78 | ) | (0.44 | ) | (1.97 | ) | (2.41 | ) | 21.85 | (6.61 | ) | 824,228 | 0.49 | 0.50 | 2.22 | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 24.29 | 0.41 | 1.84 | 2.25 | (0.50 | ) | – | (0.50 | ) | 26.04 | 9.36 | 830,574 | 0.49 | 0.50 | 1.63 | 17 | ||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 25.16 | 0.30 | (0.47 | ) | (0.17 | ) | (0.28 | ) | – | (0.28 | ) | 24.71 | (0.67 | ) | 2,730,385 | 0.39 | (d) | 0.40 | (d) | 2.49 | (d) | 10 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.66 | 0.56 | 0.22 | 0.78 | (0.51 | ) | (1.77 | ) | (2.28 | ) | 25.16 | 3.90 | 2,962,672 | 0.39 | 0.40 | 2.20 | 23 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.01 | 0.47 | 3.24 | 3.71 | (0.47 | ) | (0.59 | ) | (1.06 | ) | 26.66 | 15.61 | 2,587,663 | 0.41 | 0.41 | 1.78 | 14 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 21.85 | 0.50 | 3.61 | 4.11 | (0.60 | ) | (1.35 | ) | (1.95 | ) | 24.01 | 19.05 | 702,678 | 0.41 | 0.41 | 2.18 | 18 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 26.03 | 0.54 | (2.29 | ) | (1.75 | ) | (0.46 | ) | (1.97 | ) | (2.43 | ) | 21.85 | (6.48 | ) | 624,206 | 0.39 | 0.40 | 2.32 | 15 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 24.28 | 0.44 | 1.83 | 2.27 | (0.52 | ) | – | (0.52 | ) | 26.03 | 9.46 | 595,160 | 0.39 | 0.40 | 1.73 | 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 $5,984,599, $143,964, $193,271, $1,645,534, $623,179 and $2,786,910 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.88%, 0.99%, 0.99% and 0.97% for the six months ended October 31, 2019 and the years ended April 30, 2019, 2018 and 2016, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
12 Invesco Comstock Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Comstock Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 total return through growth of capital and current income.
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 afront-end sales charge unless certain waiver criteria are met. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
13 Invesco Comstock Fund
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 theex-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, if any, are declared and paid quarterly and are recorded on theex-dividend date. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on theex-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 Rule12b-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 theperiod-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 the 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, |
14 Invesco Comstock Fund
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 dailymark-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 $ 1 billion | 0.500 | % | ||||
Next $1 billion | 0.450 | % | ||||
Next $1 billion | 0.400 | % | ||||
Over $3 billion | 0.350 | % |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.38%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, 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”). 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 ornon-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, 2020. 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.
The Adviser has contractually agreed, through at least June 30, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $440,364.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer agent fees.
15 Invesco Comstock Fund
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% of Class C average daily net assets and up to 0.50% of Class R average daily net assets. The fees are accrued daily and paid monthly.
With respect to Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $241,932 infront-end sales commissions from the sale of Class A shares and $9,081 and $4,089 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $116,236 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 – | Prices are determined using quoted prices in an active market for identical assets. | |||
Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |||
Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||
Investments in Securities | ||||||||||||||||||||
Common Stocks & Other Equity Interests | $ | 10,409,589,312 | $ | 226,368,428 | $ | – | $ | 10,635,957,740 | ||||||||||||
Money Market Funds | 609,572,412 | – | – | 609,572,412 | ||||||||||||||||
Total Investments in Securities | 11,019,161,724 | 226,368,428 | – | 11,245,530,152 | ||||||||||||||||
Other Investments – Assets* | ||||||||||||||||||||
Forward Foreign Currency Contracts | – | 3,511,730 | – | 3,511,730 | ||||||||||||||||
Other Investments – Liabilities* | ||||||||||||||||||||
Forward Foreign Currency Contracts | – | (19,083,669 | ) | – | (19,083,669 | ) | ||||||||||||||
Total Other Investments | – | (15,571,939 | ) | – | (15,571,939 | ) | ||||||||||||||
Total Investments | $ | 11,019,161,724 | $ | 210,796,489 | $ | – | $ | 11,229,958,213 |
* | Unrealized appreciation (depreciation). |
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 andclose-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.
16 Invesco Comstock Fund
Value of Derivative Investments atPeriod-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2019:
Value | ||||
Derivative Assets | Currency Risk | |||
Unrealized appreciation on forward foreign currency contracts outstanding | $ | 3,511,730 | ||
Derivatives not subject to master netting agreements | – | |||
Total Derivative Assets subject to master netting agreements | $ | 3,511,730 |
Value | ||||
Derivative Liabilities | Currency Risk | |||
Unrealized depreciation on forward foreign currency contracts outstanding | $ | (19,083,669 | ) | |
Derivatives not subject to master netting agreements | – | |||
Total Derivative Liabilities subject to master netting agreements | $ | (19,083,669 | ) |
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 October 31, 2019.
Financial Derivative Assets | Financial Derivative Liabilities | Collateral (Received)/Pledged | ||||||||||||||||||||||||||||
Counterparty | Forward Foreign Currency Contracts | Forward Foreign Currency Contracts | Net Value of Derivatives | Non-Cash | Cash | Net Amount | ||||||||||||||||||||||||
Barclays Bank PLC | $ | 418,537 | $ | – | $ | 418,537 | $ | – | $ | – | $ | 418,537 | ||||||||||||||||||
Canadian Imperial Bank of Commerce | 193,538 | (16,428,162 | ) | (16,234,624 | ) | – | – | (16,234,624 | ) | |||||||||||||||||||||
Citibank N.A. | 67,873 | – | 67,873 | – | – | 67,873 | ||||||||||||||||||||||||
Deutsche Bank AG | 823,559 | (755,107 | ) | 68,452 | – | – | 68,452 | |||||||||||||||||||||||
Goldman Sachs International | 375,537 | (189,487 | ) | 186,050 | – | – | 186,050 | |||||||||||||||||||||||
J.P. Morgan Chase Bank, N.A | 115,451 | (7,726 | ) | 107,725 | – | – | 107,725 | |||||||||||||||||||||||
Royal Bank of Canada | 1,517,235 | (1,703,187 | ) | (185,952 | ) | – | – | (185,952 | ) | |||||||||||||||||||||
Total | $ | 3,511,730 | $ | (19,083,669 | ) | $ | (15,571,939 | ) | $ | – | $ | – | $ | (15,571,939 | ) |
Effect of Derivative Investments for the six months ended October 31, 2019
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 | |||||
Realized Gain: | |||||
Forward foreign currency contracts | $ | 23,856,341 | |||
Change in Net Unrealized Appreciation (Depreciation): | |||||
Forward foreign currency contracts | (19,314,036 | ) | |||
Total | $ | 4,542,305 |
The table below summarizes the average notional value of derivatives held during the period.
Forward Foreign Currency Contracts | |||||
Average notional value | $ | 1,116,026,460 |
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $13,842.
17 Invesco Comstock Fund
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $1,085,992,085 and $1,493,486,578, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
Aggregate unrealized appreciation of investments | $ | 2,971,885,617 | ||
Aggregate unrealized (depreciation) of investments | (705,955,759 | ) | ||
Net unrealized appreciation of investments | $ | 2,265,929,858 |
Cost of investments for tax purposes is $8,964,028,355.
NOTE 10—Share Information
Summary of Share Activity | ||||||||||||||||||||
Six months ended | Year ended | |||||||||||||||||||
October 31, 2019(a) | April 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Sold: | ||||||||||||||||||||
Class A | 5,939,118 | $ | 143,998,259 | 19,235,509 | $ | 491,515,179 | ||||||||||||||
Class C | 331,474 | 8,027,803 | 1,534,289 | 39,146,050 | ||||||||||||||||
Class R | 457,779 | 11,091,042 | 1,192,696 | 30,493,158 | ||||||||||||||||
Class Y | 5,678,911 | 137,625,453 | 17,771,878 | 453,272,484 | ||||||||||||||||
Class R5 | 1,710,766 | 41,167,723 | 4,438,371 | 113,906,701 | ||||||||||||||||
Class R6 | 8,165,086 | 197,360,526 | 38,439,425 | 1,012,581,472 |
18 Invesco Comstock Fund
Summary of Share Activity | |||||||||||||||||||||||||
Six months ended | Year ended | ||||||||||||||||||||||||
October 31, 2019(a) | April 30, 2019 | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||
Issued as reinvestment of dividends: | |||||||||||||||||||||||||
Class A | 2,115,625 | $ | 52,007,958 | 20,775,822 | $ | 473,525,773 | |||||||||||||||||||
Class C | 32,139 | 790,716 | 1,301,913 | 29,369,529 | |||||||||||||||||||||
Class R | 65,699 | 1,615,539 | 786,138 | 17,883,529 | |||||||||||||||||||||
Class Y | 609,175 | 14,969,929 | 6,038,549 | 137,929,745 | |||||||||||||||||||||
Class R5 | 275,430 | 6,764,304 | 2,581,603 | 59,028,810 | |||||||||||||||||||||
Class R6 | 1,277,791 | 31,375,568 | 10,802,298 | 246,810,381 | |||||||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | |||||||||||||||||||||||||
Class A | 387,057 | 9,412,026 | 10,774,173 | 251,650,707 | |||||||||||||||||||||
Class C | (387,013 | ) | (9,412,026 | ) | (10,774,189 | ) | (251,650,707 | ) | |||||||||||||||||
Reacquired: | |||||||||||||||||||||||||
Class A | (19,526,658 | ) | (473,231,398 | ) | (39,747,406 | ) | (1,011,202,334 | ) | |||||||||||||||||
Class C | (849,551 | ) | (20,510,402 | ) | (3,316,074 | ) | (85,305,046 | ) | |||||||||||||||||
Class R | (1,441,782 | ) | (34,989,389 | ) | (3,473,453 | ) | (89,424,412 | ) | |||||||||||||||||
Class Y | (11,234,591 | ) | (273,404,044 | ) | (23,480,250 | ) | (587,227,953 | ) | |||||||||||||||||
Class R5 | (4,218,733 | ) | (100,864,322 | ) | (8,171,985 | ) | (206,363,150 | ) | |||||||||||||||||
Class R6 | (16,710,896 | ) | (400,263,421 | ) | (28,542,079 | ) | (740,544,766 | ) | |||||||||||||||||
Net increase (decrease) in share activity | (27,323,174 | ) | $ | (656,468,156 | ) | 18,167,228 | $ | 385,395,150 |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 51% 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. |
19 Invesco Comstock Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before expenses) | |||||||||||||||||||||||||||||
Beginning Account Value (05/01/19) | Ending Account Value (10/31/19)1 | Expenses Paid During Period2 | Ending Account Value (10/31/19) | Expenses Paid During Period2 | Annualized Expense Ratio | |||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 991.00 | $ | 4.00 | $ | 1,021.11 | $ | 4.06 | 0.80 | % | ||||||||||||||||||
Class C | 1,000.00 | 988.40 | 7.15 | 1,017.95 | 7.25 | 1.43 | ||||||||||||||||||||||||
Class R | 1,000.00 | 990.30 | 5.25 | 1,019.86 | 5.33 | 1.05 | ||||||||||||||||||||||||
Class Y | 1,000.00 | 992.60 | 2.75 | 1,022.37 | 2.80 | 0.55 | ||||||||||||||||||||||||
Class R5 | 1,000.00 | 992.90 | 2.45 | 1,022.67 | 2.49 | 0.49 | ||||||||||||||||||||||||
Class R6 | 1,000.00 | 993.30 | 1.95 | 1,023.18 | 1.98 | 0.39 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
20 Invesco Comstock Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Comstock Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-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). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. Advisory andSub-Advisory Fees
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 at a common asset level. 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
21 Invesco Comstock Fund
group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
22 Invesco Comstock Fund
23 Invesco Comstock Fund
24 Invesco Comstock Fund
25 Invesco Comstock Fund
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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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers:811-03826 and002-85905 | Invesco Distributors, Inc. | VK-COM-SAR-1 |
Semiannual Report to Shareholders
| October 31, 2019 | |||
Invesco Dividend Income Fund
| ||||
Nasdaq: | ||||
A: IAUTX ∎ C: IUTCX ∎ Y: IAUYX ∎ Investor: FSTUX ∎ R5: FSIUX ∎ R6: IFUTX |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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
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: 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 andsub-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.
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
Andrew Schlossberg |
| 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Dividend Income Fund
Performance summary
|
| |||
Fund vs. Indexes |
| |||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 2.27 | % | ||
Class C Shares | 1.87 | |||
Class Y Shares | 2.39 | |||
Investor Class Shares | 2.26 | |||
Class R5 Shares | 2.38 | |||
Class R6 Shares | 2.42 | |||
S&P 500 Indexq(Broad Market Index) | 4.16 | |||
Russell 1000 Value Indexq(Style-Specific Index) | 3.07 | |||
Dow Jones U.S. Select Dividend Index⬛(Style-Specific Index) | 2.97 | |||
Lipper Equity Income Funds Indext (Peer Group Index) | 4.01 | |||
Source(s):qRIMES Technologies Corp.;⬛FactSet Research Systems Inc.;tLipper Inc. |
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TheS&P 500® Indexis an unmanaged index considered representative of the US stock market. |
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TheDow Jones U.S. Select Dividend Indexrepresent the country’s leading stocks by dividend yield. |
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TheRussell 1000® Value Indexis an unmanaged index considered representative oflarge-cap value stocks. The Russell 1000 Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. TheLipper Equity Income Funds Indexis an unmanaged Index considered representative of equity income funds tracked by Lipper. |
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The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. |
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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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 Invesco Dividend Income Fund
Average Annual Total Returns |
| |||
As of 10/31/19, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (3/28/02) | 7.94 | % | ||
10 Years | 9.87 | |||
5 Years | 6.04 | |||
1 Year | 3.06 | |||
Class C Shares | ||||
Inception (2/14/00) | 4.02 | % | ||
10 Years | 9.66 | |||
5 Years | 6.43 | |||
1 Year | 7.30 | |||
Class Y Shares | ||||
Inception (10/3/08) | 9.19 | % | ||
10 Years | 10.77 | |||
5 Years | 7.52 | |||
1 Year | 9.34 | |||
Investor Class Shares | ||||
Inception (6/2/86) | 8.41 | % | ||
10 Years | 10.48 | |||
5 Years | 7.24 | |||
1 Year | 9.07 | |||
Class R5 Shares | ||||
Inception (10/25/05) | 8.32 | % | ||
10 Years | 10.87 | |||
5 Years | 7.55 | |||
1 Year | 9.36 | |||
Class R6 Shares | ||||
10 Years | 10.76 | % | ||
5 Years | 7.64 | |||
1 Year | 9.49 |
Class R6 shares incepted on September 24, 2012. Performance shown prior to that date is that of Class A shares and includes the12b-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 recentmonth-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,
Average Annual Total Returns |
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (3/28/02) | 8.02 | % | ||
10 Years | 9.61 | |||
5 Years | 6.90 | |||
1 Year | 1.10 | |||
Class C Shares | ||||
Inception (2/14/00) | 4.07 | % | ||
10 Years | 9.42 | |||
5 Years | 7.30 | |||
1 Year | 5.15 | |||
Class Y Shares | ||||
Inception (10/3/08) | 9.32 | % | ||
10 Years | 10.52 | |||
5 Years | 8.38 | |||
1 Year | 7.19 | |||
Investor Class Shares | ||||
Inception (6/2/86) | 8.45 | % | ||
10 Years | 10.24 | |||
5 Years | 8.10 | |||
1 Year | 6.92 | |||
Class R5 Shares | ||||
Inception (10/25/05) | 8.42 | % | ||
10 Years | 10.62 | |||
5 Years | 8.42 | |||
1 Year | 7.23 | |||
Class R6 Shares | ||||
10 Years | 10.51 | % | ||
5 Years | 8.51 | |||
1 Year | 7.32 |
Class Y, Investor Class, Class R5 and Class R6 shares was 1.07%, 1.82%, 0.82%, 1.07%, 0.78% and 0.70%, 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, Investor Class, Class R5 and Class R6 shares do not have afront-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 reim-
bursements. 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.
4 Invesco Dividend Income Fund
October 31, 2019
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–93.64% |
| |||||||
Aerospace & Defense–2.70% |
| |||||||
General Dynamics Corp. | 78,177 | $ | 13,821,694 | |||||
Lockheed Martin Corp. | 64,545 | 24,312,810 | ||||||
38,134,504 | ||||||||
Air Freight & Logistics–1.05% |
| |||||||
United Parcel Service, Inc., Class B | 128,564 | 14,806,716 | ||||||
Asset Management & Custody Banks–2.86% |
| |||||||
Federated Investors, Inc., Class B | 300,331 | 9,592,572 | ||||||
Waddell & Reed Financial, Inc., Class A | 1,857,236 | 30,755,828 | ||||||
40,348,400 | ||||||||
Brewers–1.67% |
| |||||||
Molson Coors Brewing Co., Class B | 447,238 | 23,578,387 | ||||||
Electric Utilities–7.47% |
| |||||||
American Electric Power Co., Inc. | 192,675 | 18,186,593 | ||||||
Duke Energy Corp. | 158,106 | 14,903,072 | ||||||
Exelon Corp. | 508,913 | 23,150,452 | ||||||
Pinnacle West Capital Corp. | 248,275 | 23,367,643 | ||||||
Portland General Electric Co. | 453,008 | 25,767,095 | ||||||
105,374,855 | ||||||||
Electrical Components & Equipment–1.96% |
| |||||||
ABB Ltd. (Switzerland) | 881,298 | 18,496,541 | ||||||
Emerson Electric Co. | 131,275 | 9,208,941 | ||||||
27,705,482 | ||||||||
Fertilizers & Agricultural Chemicals–0.59% |
| |||||||
Nutrien Ltd. (Canada) | 173,531 | 8,301,715 | ||||||
Food Distributors–1.36% |
| |||||||
Sysco Corp. | 240,020 | 19,170,398 | ||||||
Gas Utilities–3.77% |
| |||||||
National Fuel Gas Co. | 680,806 | 30,847,320 | ||||||
Southwest Gas Holdings, Inc. | 256,673 | 22,407,553 | ||||||
53,254,873 | ||||||||
General Merchandise Stores–1.46% |
| |||||||
Target Corp. | 193,207 | 20,655,760 | ||||||
Household Products–5.75% |
| |||||||
Kimberly-Clark Corp. | 267,885 | 35,596,559 | ||||||
Procter & Gamble Co. (The) | 365,682 | 45,531,066 | ||||||
81,127,625 | ||||||||
Industrial Machinery–1.06% |
| |||||||
Kennametal, Inc. | 482,734 | 14,940,617 | ||||||
Integrated Oil & Gas–5.45% |
| |||||||
Exxon Mobil Corp. | 360,490 | 24,358,309 |
Shares | Value | |||||||
Integrated Oil & Gas–(continued) |
| |||||||
Royal Dutch Shell PLC, Class B (United Kingdom) | 216,205 | $ | 6,226,721 | |||||
Suncor Energy, Inc. (Canada) | 608,506 | 18,092,093 | ||||||
TOTAL S.A. (France) | 536,988 | 28,304,022 | ||||||
76,981,145 | ||||||||
Integrated Telecommunication Services–7.37% |
| |||||||
AT&T, Inc. | 919,622 | 35,396,251 | ||||||
BT Group PLC (United Kingdom) | 5,000,048 | 13,262,726 | ||||||
Deutsche Telekom AG (Germany) | 878,950 | 15,457,579 | ||||||
Verizon Communications, Inc. | 660,254 | 39,925,559 | ||||||
104,042,115 | ||||||||
IT Consulting & Other Services–0.46% |
| |||||||
International Business Machines Corp. | 48,284 | 6,457,019 | ||||||
Motorcycle Manufacturers–1.39% |
| |||||||
Harley-Davidson, Inc. | 502,454 | 19,550,485 | ||||||
Multi-Utilities–10.07% |
| |||||||
CMS Energy Corp. | 351,801 | 22,487,120 | ||||||
Dominion Energy, Inc. | 589,456 | 48,659,593 | ||||||
National Grid PLC (United Kingdom) | 2,503,220 | 29,263,415 | ||||||
Public Service Enterprise Group, Inc. | 196,076 | 12,413,572 | ||||||
Sempra Energy | 202,698 | 29,291,888 | ||||||
142,115,588 | ||||||||
Packaged Foods & Meats–9.40% |
| |||||||
Campbell Soup Co. | 612,726 | 28,375,341 | ||||||
Danone S.A. (France) | 118,995 | 9,882,233 | ||||||
General Mills, Inc. | 859,567 | 43,717,578 | ||||||
Kraft Heinz Co. (The) | 384,989 | 12,446,694 | ||||||
Nestle S.A. (Switzerland) | 358,848 | 38,316,703 | ||||||
132,738,549 | ||||||||
Paper Packaging–2.83% |
| |||||||
International Paper Co. | 387,053 | 16,906,475 | ||||||
Sonoco Products Co. | 398,590 | 22,998,643 | ||||||
39,905,118 | ||||||||
Pharmaceuticals–8.85% |
| |||||||
Bayer AG (Germany) | 287,079 | 22,272,894 | ||||||
Bristol-Myers Squibb Co. | 385,914 | 22,139,886 | ||||||
Eli Lilly and Co. | 192,433 | 21,927,740 | ||||||
GlaxoSmithKline PLC (United Kingdom) | 507,167 | 11,623,901 | ||||||
Johnson & Johnson | 147,909 | 19,529,905 | ||||||
Merck & Co., Inc. | 316,024 | 27,386,640 | ||||||
124,880,966 | ||||||||
Property & Casualty Insurance–3.83% |
| |||||||
Chubb Ltd. | 167,330 | 25,504,439 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Dividend Income Fund
Shares | Value | |||||||
Property & Casualty Insurance–(continued) |
| |||||||
Travelers Cos., Inc. (The) | 217,830 | $ | 28,548,800 | |||||
54,053,239 | ||||||||
Regional Banks–4.29% |
| |||||||
Cullen/Frost Bankers, Inc. | 166,617 | 15,008,859 | ||||||
M&T Bank Corp. | 291,251 | 45,589,519 | ||||||
60,598,378 | ||||||||
Restaurants–2.88% |
| |||||||
Darden Restaurants, Inc. | 56,007 | 6,287,906 | ||||||
McDonald’s Corp. | 175,029 | 34,428,204 | ||||||
40,716,110 | ||||||||
Semiconductors–0.58% |
| |||||||
Microchip Technology, Inc. | 87,500 | 8,250,375 | ||||||
Soft Drinks–2.89% |
| |||||||
Coca-Cola Co. (The) | 749,116 | 40,774,384 |
Shares | Value | |||||||
Specialized REITs–1.65% |
| |||||||
Weyerhaeuser Co. | 797,706 | $ | 23,300,992 | |||||
Total Common Stocks & Other Equity Interests |
| 1,321,763,795 | ||||||
Money Market Funds–6.30% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(b) | 31,124,718 | 31,124,718 | ||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(b) | 22,231,209 | 22,240,101 | ||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(b) | 35,571,106 | 35,571,106 | ||||||
Total Money Market Funds (Cost $88,930,447) |
| 88,935,925 | ||||||
TOTAL INVESTMENTS IN SECURITIES–99.94% |
| 1,410,699,720 | ||||||
OTHER ASSETS LESS LIABILITIES–0.06% |
| 842,195 | ||||||
NET ASSETS–100.00% | $ | 1,411,541,915 |
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) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2019
Utilities | 21.31 | % | ||
Consumer Staples |
|
21.07 |
| |
Financials |
|
10.98 |
| |
Health Care |
|
8.85 |
| |
Communication Services |
|
7.37 |
| |
Industrials |
|
6.77 |
| |
Consumer Discretionary |
|
5.73 |
| |
Energy |
|
5.45 |
| |
Materials |
|
3.42 |
| |
Other Sectors, Each Less than 2% of Net Assets |
|
2.68 |
| |
Money Market Funds Plus Other Assets Less Liabilities |
|
6.37 |
|
Open Forward Foreign Currency Contracts | ||||||||||||||||||||||
Settlement Date | Counterparty | Contract to | Unrealized Appreciation (Depreciation) | |||||||||||||||||||
Deliver | Receive | |||||||||||||||||||||
Currency Risk | ||||||||||||||||||||||
12/16/2019 | Goldman Sachs International | EUR | 13,385,622 | USD | 14,935,677 | $(36,502) |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Dividend Income Fund
Open Forward Foreign Currency Contracts–(continued) | ||||||||||||||||||||
Settlement Date | Counterparty | Contract to | Unrealized Appreciation (Depreciation) | |||||||||||||||||
Deliver | Receive | |||||||||||||||||||
12/16/2019 |
JP Morgan Chase Bank, N.A. |
|
EUR |
|
|
13,409,048 |
|
|
USD |
|
|
14,959,187 |
|
$(39,195) | ||||||
Subtotal–Depreciation |
(75,697) | |||||||||||||||||||
Total Forward Foreign Currency Contracts |
$(75,697) |
Abbreviations:
EUR – Euro
USD – U.S. Dollar
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Dividend Income Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 1,321,763,795 | ||
Investments in affiliated money market funds, at value | 88,935,925 | |||
Foreign currencies, at value (Cost $153,795) | 153,975 | |||
Receivable for: | ||||
Dividends | 3,567,826 | |||
Investments sold | 1,296,792 | |||
Fund shares sold | 868,192 | |||
Investment for trustee deferred compensation and retirement plans | 139,106 | |||
Other assets | 61,922 | |||
Total assets | 1,416,787,533 | |||
Liabilities: | ||||
Other investments: | ||||
Unrealized depreciation on forward foreign currency contracts outstanding | 75,697 | |||
Payable for: | ||||
Investments purchased | 1,582,809 | |||
Fund shares reacquired | 1,814,819 | |||
Accrued fees to affiliates | 1,488,904 | |||
Accrued trustees’ and officers’ fees and benefits | 5,755 | |||
Accrued other operating expenses | 124,444 | |||
Trustee deferred compensation and retirement plans | 153,190 | |||
Total liabilities | 5,245,618 | |||
Net assets applicable to shares outstanding | $ | 1,411,541,915 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,129,802,258 | ||
Distributable earnings | 281,739,657 | |||
$ | 1,411,541,915 |
Net Assets: | ||||
Class A | $ | 731,589,088 | ||
Class C | $ | 133,774,781 | ||
Class Y | $ | 223,651,430 | ||
Investor Class | $ | 74,722,372 | ||
Class R5 | $ | 2,625,596 | ||
Class R6 | $ | 245,178,648 | ||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 31,937,694 | |||
Class C | 5,761,145 | |||
Class Y | 9,661,299 | |||
Investor Class | 3,229,258 | |||
Class R5 | 114,581 | |||
Class R6 | 10,691,326 | |||
Class A: | ||||
Net asset value per share | $ | 22.91 | ||
Maximum offering price per share | $ | 24.24 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 23.22 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 23.15 | ||
Investor Class: | ||||
Net asset value and offering price per share | $ | 23.14 | ||
Class R5: | ||||
Net asset value and offering price per share | $ | 22.91 | ||
Class R6: | ||||
Net asset value and offering price per share | $ | 22.93 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Dividend Income Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $358,881) | $ | 23,149,668 | ||
| ||||
Dividends from affiliated money market funds | 893,767 | |||
| ||||
Total investment income | 24,043,435 | |||
| ||||
Expenses: | ||||
Advisory fees | 4,489,749 | |||
| ||||
Administrative services fees | 102,493 | |||
| ||||
Custodian fees | 14,791 | |||
| ||||
Distribution fees: | ||||
Class A | 926,799 | |||
| ||||
Class C | 708,008 | |||
| ||||
Investor Class | 93,916 | |||
| ||||
Transfer agent fees – A, C, Y and Investor Class | 969,877 | |||
| ||||
Transfer agent fees – R5 | 1,225 | |||
| ||||
Transfer agent fees – R6 | 19,680 | |||
| ||||
Trustees’ and officers’ fees and benefits | 14,346 | |||
| ||||
Registration and filing fees | 54,547 | |||
| ||||
Reports to shareholders | 43,528 | |||
| ||||
Professional services fees | 28,573 | |||
| ||||
Other | 13,917 | |||
| ||||
Total expenses | 7,481,449 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (52,560 | ) | ||
| ||||
Net expenses | 7,428,889 | |||
| ||||
Net investment income | 16,614,546 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (1,743,315 | ) | ||
| ||||
Foreign currencies | 160,464 | |||
| ||||
Forward foreign currency contracts | 568,213 | |||
| ||||
(1,014,638 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | 15,465,788 | |||
| ||||
Foreign currencies | 32,529 | |||
| ||||
Forward foreign currency contracts | (95,677 | ) | ||
| ||||
15,402,640 | ||||
| ||||
Net realized and unrealized gain | 14,388,002 | |||
| ||||
Net increase in net assets resulting from operations | $ | 31,002,548 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Dividend Income Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 16,614,546 | $ | 42,483,660 | ||||
| ||||||||
Net realized gain (loss) | (1,014,638 | ) | 81,631,057 | |||||
| ||||||||
Change in net unrealized appreciation | 15,402,640 | 23,993,308 | ||||||
| ||||||||
Net increase in net assets resulting from operations | 31,002,548 | 148,108,025 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (9,754,264 | ) | (74,789,875 | ) | ||||
| ||||||||
Class C | (1,338,528 | ) | (17,234,355 | ) | ||||
| ||||||||
Class Y | (3,362,755 | ) | (29,436,119 | ) | ||||
| ||||||||
Investor Class | (988,345 | ) | (7,473,172 | ) | ||||
| ||||||||
Class R5 | (36,098 | ) | (221,095 | ) | ||||
| ||||||||
Class R6 | (3,718,536 | ) | (27,738,032 | ) | ||||
| ||||||||
Total distributions from distributable earnings | (19,198,526 | ) | (156,892,648 | ) | ||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (38,663,757 | ) | (96,000,409 | ) | ||||
| ||||||||
Class C | (20,224,759 | ) | (80,484,324 | ) | ||||
| ||||||||
Class Y | (26,742,538 | ) | (194,241,151 | ) | ||||
| ||||||||
Investor Class | (2,373,689 | ) | (2,168,933 | ) | ||||
| ||||||||
Class R5 | 709,605 | (17,802 | ) | |||||
| ||||||||
Class R6 | (9,109,016 | ) | (69,423,267 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (96,404,154 | ) | (442,335,886 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (84,600,132 | ) | (451,120,509 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,496,142,047 | 1,947,262,556 | ||||||
| ||||||||
End of period | $ | 1,411,541,915 | $ | 1,496,142,047 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Dividend Income Fund
(Unaudited)
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 on securities | Total from investment operations | Dividends from net investment income | Distributions realized | Total distributions | Net asset 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 | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $ | 22.70 | $ | 0.26 | $ | 0.25 | $ | 0.51 | $ | (0.30 | ) | $ | – | $ | (0.30 | ) | $ | 22.91 | 2.27 | % | $ | 731,589 | 1.06 | %(d) | 1.07 | %(d) | 2.28 | %(d) | 2 | % | ||||||||||||||||||||||||||
Year ended 04/30/19 | 22.98 | 0.58 | 1.45 | 2.03 | (0.60 | ) | (1.71 | ) | (2.31 | ) | 22.70 | 9.51 | 764,037 | 1.06 | 1.06 | 2.54 | 4 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 23.96 | 0.51 | (0.42 | ) | 0.09 | (0.47 | ) | (0.60 | ) | (1.07 | ) | 22.98 | 0.21 | 862,915 | 1.01 | 1.02 | 2.12 | 11 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 22.32 | 0.41 | 1.80 | 2.21 | (0.41 | ) | (0.16 | ) | (0.57 | ) | 23.96 | 10.00 | 1,143,946 | 1.03 | 1.05 | 1.74 | 6 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 21.03 | 0.40 | 1.77 | 2.17 | (0.41 | ) | (0.47 | ) | (0.88 | ) | 22.32 | 10.72 | 867,596 | 1.13 | 1.17 | 1.91 | 9 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 19.88 | 0.41 | 1.37 | 1.78 | (0.42 | ) | (0.21 | ) | (0.63 | ) | 21.03 | 9.07 | 413,896 | 1.12 | 1.22 | 1.99 | 4 | |||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 23.01 | 0.17 | 0.26 | 0.43 | (0.22 | ) | – | (0.22 | ) | 23.22 | 1.87 | 133,775 | 1.81 | (d) | 1.82 | (d) | 1.53 | (d) | 2 | |||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 23.28 | 0.42 | 1.46 | 1.88 | (0.44 | ) | (1.71 | ) | (2.15 | ) | 23.01 | 8.65 | 152,988 | 1.81 | 1.81 | 1.79 | 4 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.26 | 0.33 | (0.42 | ) | (0.09 | ) | (0.29 | ) | (0.60 | ) | (0.89 | ) | 23.28 | (0.52 | ) | 236,168 | 1.76 | 1.77 | 1.37 | 11 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 22.60 | 0.24 | 1.82 | 2.06 | (0.24 | ) | (0.16 | ) | (0.40 | ) | 24.26 | 9.16 | 311,194 | 1.78 | 1.80 | 0.99 | 6 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 21.28 | 0.25 | 1.80 | 2.05 | (0.26 | ) | (0.47 | ) | (0.73 | ) | 22.60 | 9.94 | 154,584 | 1.88 | 1.92 | 1.16 | 9 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 20.11 | 0.26 | 1.39 | 1.65 | (0.27 | ) | (0.21 | ) | (0.48 | ) | 21.28 | 8.29 | 61,818 | 1.87 | 1.97 | 1.24 | 4 | |||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 22.94 | 0.29 | 0.25 | 0.54 | (0.33 | ) | – | (0.33 | ) | 23.15 | 2.39 | 223,651 | 0.81 | (d) | 0.82 | (d) | 2.53 | (d) | 2 | |||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 23.21 | 0.65 | 1.46 | 2.11 | (0.67 | ) | (1.71 | ) | (2.38 | ) | 22.94 | 9.76 | 248,641 | 0.81 | 0.81 | 2.79 | 4 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.19 | 0.58 | (0.43 | ) | 0.15 | (0.53 | ) | (0.60 | ) | (1.13 | ) | 23.21 | 0.48 | 444,633 | 0.76 | 0.77 | 2.37 | 11 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 22.53 | 0.47 | 1.82 | 2.29 | (0.47 | ) | (0.16 | ) | (0.63 | ) | 24.19 | 10.28 | 860,105 | 0.78 | 0.80 | 1.99 | 6 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 21.22 | 0.47 | 1.78 | 2.25 | (0.47 | ) | (0.47 | ) | (0.94 | ) | 22.53 | 11.01 | 249,625 | 0.88 | 0.92 | 2.16 | 9 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 20.06 | 0.47 | 1.37 | 1.84 | (0.47 | ) | (0.21 | ) | (0.68 | ) | 21.22 | 9.34 | 53,878 | 0.87 | 0.97 | 2.24 | 4 | |||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 22.93 | 0.26 | 0.25 | 0.51 | (0.30 | ) | – | (0.30 | ) | 23.14 | 2.26 | 74,722 | 1.06 | (d) | 1.07 | (d) | 2.28 | (d) | 2 | |||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 23.20 | 0.59 | 1.46 | 2.05 | (0.61 | ) | (1.71 | ) | (2.32 | ) | 22.93 | 9.49 | 76,436 | 1.06 | 1.06 | 2.54 | 4 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.18 | 0.51 | (0.42 | ) | 0.09 | (0.47 | ) | (0.60 | ) | (1.07 | ) | 23.20 | 0.23 | 79,103 | 1.01 | 1.02 | 2.12 | 11 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 22.52 | 0.41 | 1.82 | 2.23 | (0.41 | ) | (0.16 | ) | (0.57 | ) | 24.18 | 10.01 | 97,228 | 1.03 | 1.05 | 1.74 | 6 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 21.22 | 0.41 | 1.78 | 2.19 | (0.42 | ) | (0.47 | ) | (0.89 | ) | 22.52 | 10.69 | 88,691 | 1.13 | 1.17 | 1.91 | 9 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 20.05 | 0.41 | 1.39 | 1.80 | (0.42 | ) | (0.21 | ) | (0.63 | ) | 21.22 | 9.11 | 74,957 | 1.12 | 1.22 | 1.99 | 4 | |||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 22.71 | 0.29 | 0.24 | 0.53 | (0.33 | ) | – | (0.33 | ) | 22.91 | 2.38 | 2,626 | 0.75 | (d) | 0.76 | (d) | 2.59 | (d) | 2 | |||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 22.99 | 0.65 | 1.45 | 2.10 | (0.67 | ) | (1.71 | ) | (2.38 | ) | 22.71 | 9.82 | 1,863 | 0.77 | 0.77 | 2.83 | 4 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 23.97 | 0.58 | (0.42 | ) | 0.16 | (0.54 | ) | (0.60 | ) | (1.14 | ) | 22.99 | 0.51 | 1,914 | 0.72 | 0.73 | 2.41 | 11 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 22.32 | 0.48 | 1.81 | 2.29 | (0.48 | ) | (0.16 | ) | (0.64 | ) | 23.97 | 10.38 | 2,376 | 0.72 | 0.74 | 2.05 | 6 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 21.04 | 0.47 | 1.75 | 2.22 | (0.47 | ) | (0.47 | ) | (0.94 | ) | 22.32 | 10.98 | 551 | 0.84 | 0.85 | 2.20 | 9 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 19.88 | 0.46 | 1.39 | 1.85 | (0.48 | ) | (0.21 | ) | (0.69 | ) | 21.04 | 9.44 | 21 | 0.82 | 0.83 | 2.29 | 4 | |||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 22.73 | 0.30 | 0.24 | 0.54 | (0.34 | ) | – | (0.34 | ) | 22.93 | 2.42 | 245,179 | 0.67 | (d) | 0.68 | (d) | 2.67 | (d) | 2 | |||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 23.00 | 0.67 | 1.46 | 2.13 | (0.69 | ) | (1.71 | ) | (2.40 | ) | 22.73 | 9.96 | 252,176 | 0.69 | 0.69 | 2.91 | 4 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 23.98 | 0.60 | (0.42 | ) | 0.18 | (0.56 | ) | (0.60 | ) | (1.16 | ) | 23.00 | 0.59 | 322,530 | 0.64 | 0.65 | 2.49 | 11 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 22.34 | 0.50 | 1.80 | 2.30 | (0.50 | ) | (0.16 | ) | (0.66 | ) | 23.98 | 10.42 | 83,352 | 0.64 | 0.66 | 2.13 | 6 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 21.05 | 0.49 | 1.77 | 2.26 | (0.50 | ) | (0.47 | ) | (0.97 | ) | 22.34 | 11.13 | 63,000 | 0.74 | 0.75 | 2.30 | 9 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 19.89 | 0.48 | 1.38 | 1.86 | (0.49 | ) | (0.21 | ) | (0.70 | ) | 21.05 | 9.49 | 51,080 | 0.78 | 0.79 | 2.33 | 4 |
(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 $737,685, $140,885, $232,338, $74,753 , $2,431 and $244,762 for Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Dividend Income Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Dividend Income Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 current income and long-term growth of capital.
The Fund currently consists of six different classes of shares: Class A, Class C, Class Y, Investor Class, Class R5 and Class R6. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with afront-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
12 Invesco Dividend Income Fund
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 theex-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, if any, are declared and paid monthly. Distributions from net realized capital gain, if any, are generally declared and paid annually and recorded on theex-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 Rule12b-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 theperiod-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 the 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, |
13 Invesco Dividend Income Fund
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 dailymark-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 $ 350 million | 0.750% | |||
Next $350 million | 0.650% | |||
Next $1.3 billion | 0.550% | |||
Next $2 billion | 0.450% | |||
Next $2 billion | 0.400% | |||
Next $2 billion | 0.375% | |||
Over $8 billion | 0.350% |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.62%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, 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, Investor Class, Class R5 and Class R6 shares to 2.00%, 2.75%, 1.75%, 2.00%, 1.75% and 1.75%, respectively, of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary ornon-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, 2020. 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.
The Adviser has contractually agreed, through at least June 30, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $47,949.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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
14 Invesco Dividend Income Fund
networking services. All fees payable by IIS to intermediaries that provide omnibus account services orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer 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, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant to the Investor Class Plan, reimburses IDI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. 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 October 31, 2019, expenses incurred under the Plans are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $62,043 infront-end sales commissions from the sale of Class A shares and $2,593 and $2,283 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $3,138 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 – | Prices are determined using quoted prices in an active market for identical assets. |
Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. |
Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stocks & Other Equity Interests | $ | 1,128,657,060 | $ | 193,106,735 | $ | – | $ | 1,321,763,795 | ||||||||
Money Market Funds | 88,935,925 | – | – | 88,935,925 | ||||||||||||
Total Investments in Securities | 1,217,592,985 | 193,106,735 | – | 1,410,699,720 | ||||||||||||
Other Investments – Liabilities* | ||||||||||||||||
Forward Foreign Currency Contracts | – | (75,697 | ) | – | (75,697 | ) | ||||||||||
Total Investments | $ | 1,217,592,985 | $ | 193,031,038 | $ | – | $ | 1,410,624,023 |
* | Unrealized appreciation (depreciation). |
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 andclose-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.
15 Invesco Dividend Income Fund
Value of Derivative Investments atPeriod-End
The table below summarizes the value of the Fund’s derivative investments, detailed by primary risk exposure, held as of October 31, 2019:
Value | ||||
Derivative Liabilities | Currency Risk | |||
Unrealized depreciation on forward foreign currency contracts outstanding | $ | (75,697 | ) | |
Derivatives not subject to master netting agreements | – | |||
Total Derivative Liabilities subject to master netting agreements | $ | (75,697 | ) |
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 October 31, 2019.
Financial Derivative Assets | Financial Derivative Liabilities | Collateral (Received)/Pledged | ||||||||||
Counterparty | Forward Foreign Currency Contracts | Forward Foreign Currency Contracts | Net Value of Derivatives | Non-Cash | Cash | Net Amount | ||||||
Goldman Sachs International | $– | $(36,502) | $(36,502) | $– | $– | $(36,502) | ||||||
JP Morgan Chase Bank, N.A. | – | (39,195) | (39,195) | (39,195) | ||||||||
Total | $– | $(75,697) | $(75,697) | $– | $– | $(75,697) |
Effect of Derivative Investments for the six months ended October 31, 2019
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 | ||||
Realized Gain: | ||||
Forward foreign currency contracts | $568,213 | |||
Change in Net Unrealized Appreciation (Depreciation): | ||||
Forward foreign currency contracts | (95,677) | |||
Total | $472,536 |
The table below summarizes the average notional value of derivatives held during the period.
Forward Foreign Currency Contracts | ||
Average notional value | $32,475,878 |
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $4,611.
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable
captionAmount 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
16 Invesco Dividend Income Fund
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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $31,557,694 and $141,430,603, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
Aggregate unrealized appreciation of investments | $ | 327,035,016 | ||
Aggregate unrealized (depreciation) of investments | (59,381,635 | ) | ||
Net unrealized appreciation of investments | $ | 267,653,381 |
Cost of investments for tax purposes is $1,142,970,642.
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Sold: | ||||||||||||||||||||
Class A | 1,339,492 | $ | 30,155,469 | 3,006,748 | $ | 67,390,608 | ||||||||||||||
Class C | 159,202 | 3,642,990 | 595,243 | 13,241,679 | ||||||||||||||||
Class Y | 975,716 | 22,208,859 | 2,611,346 | 60,093,396 | ||||||||||||||||
Investor Class | 39,681 | 906,538 | 83,246 | 1,921,271 | ||||||||||||||||
Class R5 | 35,581 | 777,114 | 35,747 | 823,196 | ||||||||||||||||
Class R6 | 817,027 | 18,448,110 | 1,842,834 | 41,639,938 | ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||||||
Class A | 380,701 | 8,583,730 | 3,138,017 | 68,181,648 | ||||||||||||||||
Class C | 49,623 | 1,134,268 | 698,345 | 15,319,004 | ||||||||||||||||
Class Y | 117,647 | 2,679,732 | 1,140,934 | 25,088,792 | ||||||||||||||||
Investor Class | 38,658 | 880,407 | 319,556 | 7,008,383 | ||||||||||||||||
Class R5 | 1,599 | 36,075 | 10,141 | 220,586 | ||||||||||||||||
Class R6 | 160,921 | 3,631,626 | 1,252,991 | 27,304,918 | ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||||||
Class A | 109,994 | 2,512,704 | 1,243,209 | 26,467,883 | ||||||||||||||||
Class C | (108,491 | ) | (2,512,704 | ) | (1,226,483 | ) | (26,467,883 | ) |
17 Invesco Dividend Income Fund
Summary of Share Activity | ||||||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Reacquired: | ||||||||||||||||||||
Class A | (3,547,073 | ) | $ | (79,915,660 | ) | (11,281,409 | ) | $ | (258,040,548 | ) | ||||||||||
Class C | (986,840 | ) | (22,489,313 | ) | (3,566,288 | ) | (82,577,124 | ) | ||||||||||||
Class Y | (2,269,848 | ) | (51,631,129 | ) | (12,074,171 | ) | (279,423,339 | ) | ||||||||||||
Investor Class | (182,171 | ) | (4,160,634 | ) | (479,561 | ) | (11,098,587 | ) | ||||||||||||
Class R5 | (4,647 | ) | (103,584 | ) | (47,112 | ) | (1,061,584 | ) | ||||||||||||
Class R6 | (1,382,349 | ) | (31,188,752 | ) | (6,020,160 | ) | (138,368,123 | ) | ||||||||||||
Net increase (decrease) in share activity | (4,255,577 | ) | $ | (96,404,154 | ) | (18,716,827 | ) | $ | (442,335,886 | ) |
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 39% 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. |
NOTE 11–Subsequent Events
Effective December 10, 2019, the Fund began offering Class R shares.
Additionally, the Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco Oppenheimer Equity Income Fund and Invesco Oppenheimer Dividend Opportunity Fund (the “Target Funds”) in exchange for shares of the Fund.
The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of each Target Fund will receive shares of the Fund in exchange for their shares of the corresponding Target Fund, and the Target Funds will liquidate and cease operations.
18 Invesco Dividend Income Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
Beginning | ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Ratio | |||||||||
Ending Account Value | Expenses Paid During | Ending Account Value | Expenses Paid During | |||||||||
Class A | $1,000.00 | $1,022.70 | $5.39 | $1,019.81 | $5.38 | 1.06% | ||||||
Class C | 1,000.00 | 1,018.70 | 9.18 | 1,016.04 | 9.17 | 1.81 | ||||||
Class Y | 1,000.00 | 1,023.90 | 4.12 | 1,021.06 | 4.12 | 0.81 | ||||||
Investor Class | 1,000.00 | 1,022.60 | 5.39 | 1,019.81 | 5.38 | 1.06 | ||||||
Class R5 | 1,000.00 | 1,023.80 | 3.82 | 1,021.37 | 3.81 | 0.75 | ||||||
Class R6 | 1,000.00 | 1,024.20 | 3.41 | 1,021.77 | 3.40 | 0.67 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
19 Invesco Dividend Income Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Dividend Income Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-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). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
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 advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. Advisory and Sub–Advisory Fees
The Board compared the Fund’s contractual management fee rate to the contractual management fee rates of funds in the Fund’s Broadridge expense
20 Invesco Dividend Income Fund
group at a common asset level. 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 administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
21 Invesco Dividend Income Fund
Correction notice
The following table sets forth on a per share basis the distribution that was paid in September 2019. Included in the table is a written statement of the sources of the distribution on a generally accepted accounting principles (“GAAP”) basis.
Net Income | Gain from Sale of Securities | Return of Principal | Total Distribution | |||||||||
09/19/2019 | Class A | $0.0411 | $0.000 | $0.0071 | $0.0482 | |||||||
09/19/2019 | Class C | $0.0275 | $0.000 | $0.0071 | $0.0346 | |||||||
09/19/2019 | Class Y | $0.0463 | $0.000 | $0.0071 | $0.0534 | |||||||
09/19/2019 | Investor Class | $0.0416 | $0.000 | $0.0071 | $0.0487 | |||||||
09/19/2019 | Class R5 | $0.0470 | $0.000 | $0.0071 | $0.0541 | |||||||
09/19/2019 | Class R6 | $0.0486 | $0.000 | $0.0071 | $0.0557 |
Please note that the information in the preceding chart is for financial accounting purposes only. Shareholders should be aware that the tax treatment of distributions likely differs from GAAP treatment. Form1099-DIV for the calendar year will report distributions for federal income tax purposes. This Notice is sent to comply with certain Securities and Exchange Commission requirements.
22 Invesco Dividend Income Fund
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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
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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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This 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: 811-03826 and 002-85905 | Invesco Distributors, Inc. | I-DIVI-SAR-1 |
Semiannual Report to Shareholders
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October 31, 2019
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Invesco Energy Fund | ||||
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Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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 |
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: 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 andsub-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.
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
Andrew Schlossberg | 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. | ||
Invesco’s efforts to help investors achieve their financial objectives include providing |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Energy Fund
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | -20.19 | % | ||
Class C Shares | -20.51 | |||
Class Y Shares | -20.10 | |||
Investor Class Shares | -20.23 | |||
Class R5 Shares | -20.01 | |||
Class R6 Shares | -19.98 | |||
S&P 500 Indexq (Broad Market Index) | 4.16 | |||
MSCI World Energy Indexq (Style-Specific Index) | -9.10 | |||
Lipper Natural Resource Funds Index⬛ (Peer Group Index) | -16.87 | |||
Source(s):qRIMES Technologies Corp.;⬛Lipper Inc. | ||||
TheS&P 500® Indexis an unmanaged index considered representative of the US stock market. TheMSCI World Energy Indexis designed to capture the performance of energy stocks across developed market countries. The index is computed using the net return, which withholds applicable taxes fornon-resident investors. TheLipper Natural Resource Funds Indexis an unmanaged index considered representative of natural resource funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
|
3 Invesco Energy Fund
Average Annual Total Returns |
| |||
As of 10/31/19, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (3/28/02) | 2.71 | % | ||
10 Years | -5.07 | |||
5 Years | -14.85 | |||
1 Year | -28.12 | |||
Class C Shares | ||||
Inception (2/14/00) | 4.31 | % | ||
10 Years | -5.25 | |||
5 Years | -14.53 | |||
1 Year | -25.27 | |||
Class Y Shares | ||||
Inception (10/3/08) | -3.13 | % | ||
10 Years | -4.29 | |||
5 Years | -13.67 | |||
1 Year | -23.77 | |||
Investor Class Shares | ||||
Inception (1/19/84) | 5.82 | % | ||
10 Years | -4.53 | |||
5 Years | -13.88 | |||
1 Year | -23.96 | |||
Class R5 Shares | ||||
Inception (1/31/06) | -2.53 | % | ||
10 Years | -4.14 | |||
5 Years | -13.51 | |||
1 Year | -23.60 | |||
Class R6 Shares | ||||
10 Years | -4.42 | % | ||
5 Years | -13.67 | |||
1 Year | -23.59 | |||
Performance includes litigation proceeds. Had these proceeds not been received, total returns would have been lower. |
|
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares and includes the12b-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 recentmonth-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.
Average Annual Total Returns |
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (3/28/02) | 2.99 | % | ||
10 Years | -4.72 | |||
5 Years | -15.39 | |||
1 Year | -35.02 | |||
Class C Shares | ||||
Inception (2/14/00) | 4.56 | % | ||
10 Years | -4.90 | |||
5 Years | -15.07 | |||
1 Year | -32.42 | |||
Class Y Shares | ||||
Inception (10/3/08) | -2.76 | % | ||
10 Years | -3.94 | |||
5 Years | -14.21 | |||
1 Year | -31.06 | |||
Investor Class Shares | ||||
Inception (1/19/84) | 5.97 | % | ||
10 Years | -4.19 | |||
5 Years | -14.43 | |||
1 Year | -31.26 | |||
Class R5 Shares | ||||
Inception (1/31/06) | -2.22 | % | ||
10 Years | -3.80 | |||
5 Years | -14.05 | |||
1 Year | -30.89 | |||
Class R6 Shares | ||||
10 Years | -4.08 | % | ||
5 Years | -14.23 | |||
1 Year | -30.93 | |||
Performance includes litigation proceeds. Had these proceeds not been received, total returns would have been lower. |
|
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, Investor Class, Class R5 and Class R6 shares was 1.32%, 2.07%, 1.07%, 1.32%, 0.90% and 0.89%, 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, Investor Class, Class R5 and Class R6 shares do not have afront-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.
4 Invesco Energy Fund
October 31, 2019
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests-99.47% |
| |||||||
Commodity Chemicals-1.46% | ||||||||
LG Chem Ltd. (South Korea) | 16,701 | $ | 4,409,539 | |||||
| ||||||||
Diversified Metals & Mining-2.50% |
| |||||||
Glencore PLC (Switzerland) | 1,675,400 | 5,054,925 | ||||||
| ||||||||
Turquoise Hill Resources Ltd. (Mongolia)(b) | 5,938,084 | 2,479,744 | ||||||
| ||||||||
7,534,669 | ||||||||
| ||||||||
Integrated Oil & Gas-37.48% |
| |||||||
BP PLC, ADR (United Kingdom) | 495,612 | 18,788,651 | ||||||
| ||||||||
Chevron Corp. | 154,342 | 17,925,280 | ||||||
| ||||||||
Exxon Mobil Corp. | 194,655 | 13,152,838 | ||||||
| ||||||||
Galp Energia SGPS S.A. (Portugal) | 312,767 | 4,989,157 | ||||||
| ||||||||
Occidental Petroleum Corp. | 251,341 | 10,179,310 | ||||||
| ||||||||
Royal Dutch Shell PLC, Class A, ADR (United Kingdom) | 311,863 | 18,078,698 | ||||||
| ||||||||
Suncor Energy, Inc. (Canada) | 610,242 | 18,143,707 | ||||||
| ||||||||
TOTAL S.A. (France) | 220,631 | 11,629,208 | ||||||
| ||||||||
112,886,849 | ||||||||
| ||||||||
Oil & Gas Drilling-2.99% |
| |||||||
Helmerich & Payne, Inc. | 210,734 | 7,902,525 | ||||||
| ||||||||
Valaris PLC | 269,080 | 1,105,919 | ||||||
| ||||||||
9,008,444 | ||||||||
| ||||||||
Oil & Gas Equipment & Services-11.92% |
| |||||||
Baker Hughes Co. | 378,079 | 8,090,891 | ||||||
| ||||||||
Core Laboratories N.V. | 73,039 | 3,216,637 | ||||||
| ||||||||
Halliburton Co. | 508,745 | 9,793,341 | ||||||
| ||||||||
Oceaneering International, Inc.(b) | 276,235 | 3,911,488 | ||||||
| ||||||||
Schlumberger Ltd. | 134,440 | 4,394,844 | ||||||
| ||||||||
Superior Energy Services, Inc.(b) | 1,111,691 | 444,676 | ||||||
| ||||||||
Tenaris S.A., ADR (Luxembourg) | 295,114 | 5,990,814 | ||||||
| ||||||||
Tidewater, Inc., Series A, Wts. expiring 07/31/2023(b) | 24,724 | 29,669 | ||||||
| ||||||||
Tidewater, Inc., Series B, Wts. expiring 07/31/2023(b) | 26,728 | 29,850 | ||||||
| ||||||||
35,902,210 | ||||||||
| ||||||||
Oil & Gas Exploration & Production-32.58% |
| |||||||
Cabot Oil & Gas Corp. | 582,734 | 10,862,162 | ||||||
|
Shares | Value | |||||||
Oil & Gas Exploration & Production-(continued) |
| |||||||
Canadian Natural Resources Ltd. (Canada) | 677,928 | $ | 17,093,607 | |||||
| ||||||||
Cobalt International Energy, | 526,022 | 0 | ||||||
| ||||||||
Concho Resources, Inc. | 75,864 | 5,122,337 | ||||||
| ||||||||
Devon Energy Corp. | 417,465 | 8,466,190 | ||||||
| ||||||||
Hess Corp. | 224,845 | 14,783,559 | ||||||
| ||||||||
Laredo Petroleum, Inc.(b) | 799,604 | 1,887,065 | ||||||
| ||||||||
Matador Resources Co.(b) | 240,048 | 3,339,068 | ||||||
| ||||||||
Noble Energy, Inc. | 817,522 | 15,745,474 | ||||||
| ||||||||
PrairieSky Royalty Ltd. (Canada) | 1,252,317 | 12,227,467 | ||||||
| ||||||||
Range Resources Corp. | 1,728,280 | 6,964,968 | ||||||
| ||||||||
Tullow Oil PLC (Ghana) | 608,414 | 1,627,745 | ||||||
| ||||||||
98,119,642 | ||||||||
| ||||||||
Oil & Gas Refining & Marketing-4.58% |
| |||||||
Phillips 66 | 118,087 | 13,794,923 | ||||||
| ||||||||
Oil & Gas Storage & Transportation-3.43% |
| |||||||
Plains All American Pipeline, L.P. | 424,245 | 7,691,562 | ||||||
| ||||||||
Western Midstream Partners, L.P. | 123,306 | 2,621,485 | ||||||
| ||||||||
10,313,047 | ||||||||
| ||||||||
Specialty Chemicals-2.53% |
| |||||||
Albemarle Corp. | 125,405 | 7,617,100 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests | 299,586,423 | |||||||
| ||||||||
Money Market Funds-1.17% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(d) | 1,234,016 | 1,234,016 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(d) | 881,411 | 881,764 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(d) | 1,410,304 | 1,410,304 | ||||||
| ||||||||
Total Money Market Funds | 3,526,084 | |||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES-100.64% | 303,112,507 | |||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES-(0.64)% | (1,940,719 | ) | ||||||
| ||||||||
NET ASSETS-100.00% | $ | 301,171,788 | ||||||
|
Investment Abbreviations:
ADR - American Depositary Receipt
Wts. - Warrants
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Energy Fund
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
Portfolio Composition
By industry, based on Net Assets
as of October 31, 2019
Integrated Oil & Gas | 37.48 | % | ||
Oil & Gas Exploration & Production | 32.58 | |||
Oil & Gas Equipment & Services | 11.92 | |||
Oil & Gas Refining & Marketing | 4.58 | |||
Oil & Gas Storage & Transportation | 3.43 | |||
Oil & Gas Drilling | 2.99 | |||
Specialty Chemicals | 2.53 | |||
Diversified Metals & Mining | 2.50 | |||
Commodity Chemicals | 1.46 | |||
Money Market Funds Plus Other Assets Less Liabilities | 0.53 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 �� Invesco Energy Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 299,586,423 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $3,526,084) | 3,526,084 | |||
| ||||
Foreign currencies, at value (Cost $106,246) | 106,574 | |||
| ||||
Receivable for: | ||||
Dividends | 327,687 | |||
| ||||
Fund shares sold | 97,244 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 255,690 | |||
| ||||
Other assets | 39,537 | |||
| ||||
Total assets | 303,939,239 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,247,159 | |||
| ||||
Fund shares reacquired | 601,598 | |||
| ||||
Accrued fees to affiliates | 551,528 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 1,245 | |||
| ||||
Accrued other operating expenses | 87,162 | |||
| ||||
Trustee deferred compensation and retirement plans | 278,759 | |||
| ||||
Total liabilities | 2,767,451 | |||
| ||||
Net assets applicable to shares outstanding | $ | 301,171,788 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 731,313,530 | ||
| ||||
Distributable earnings (loss) | (430,141,742 | ) | ||
| ||||
$ | 301,171,788 | |||
| ||||
Net Assets: | ||||
Class A | $ | 177,211,108 | ||
| ||||
Class C | $ | 21,111,541 | ||
| ||||
Class Y | $ | 26,393,168 | ||
| ||||
Investor Class | $ | 72,289,278 | ||
| ||||
Class R5 | $ | 3,671,133 | ||
| ||||
Class R6 | $ | 495,560 | ||
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 10,547,732 | |||
| ||||
Class C | 1,475,661 | |||
| ||||
Class Y | 1,569,695 | |||
| ||||
Investor Class | 4,321,909 | |||
| ||||
Class R5 | 213,009 | |||
| ||||
Class R6 | 28,774 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 16.80 | ||
| ||||
Maximum offering price per share | $ | 17.78 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 14.31 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 16.81 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 16.73 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 17.23 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 17.22 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Energy Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $361,908) | $ | 6,421,059 | ||
| ||||
Dividends from affiliated money market funds | 27,639 | |||
| ||||
Total investment income | 6,448,698 | |||
| ||||
Expenses: | ||||
Advisory fees | 1,321,201 | |||
| ||||
Administrative services fees | 28,319 | |||
| ||||
Custodian fees | 7,964 | |||
| ||||
Distribution fees: | ||||
Class A | 258,555 | |||
| ||||
Class C | 132,697 | |||
| ||||
Investor Class | 103,417 | |||
| ||||
Transfer agent fees – A, C, Y and Investor Class | 569,098 | |||
| ||||
Transfer agent fees – R5 | 2,450 | |||
| ||||
Transfer agent fees – R6 | 244 | |||
| ||||
Trustees’ and officers’ fees and benefits | 10,090 | |||
| ||||
Registration and filing fees | 41,628 | |||
| ||||
Reports to shareholders | 44,436 | |||
| ||||
Professional services fees | 28,209 | |||
| ||||
Other | 12,039 | |||
| ||||
Total expenses | 2,560,347 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (6,812 | ) | ||
| ||||
Net expenses | 2,553,535 | |||
| ||||
Net investment income | 3,895,163 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from: | ||||
Investment securities | 808,417 | |||
| ||||
Foreign currencies | 3,481 | |||
| ||||
811,898 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (87,358,032 | ) | ||
| ||||
Foreign currencies | 3,428 | |||
| ||||
(87,354,604 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (86,542,706 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (82,647,543 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Energy Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income | $ | 3,895,163 | $ | 6,087,231 | ||||
| ||||||||
Net realized gain (loss) | 811,898 | (33,229,827 | ) | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (87,354,604 | ) | (68,984,373 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (82,647,543 | ) | (96,126,969 | ) | ||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | – | (6,036,516 | ) | |||||
| ||||||||
Class C | – | (1,224,241 | ) | |||||
| ||||||||
Class Y | – | (1,152,559 | ) | |||||
| ||||||||
Investor Class | – | (2,607,774 | ) | |||||
| ||||||||
Class R5 | – | (184,086 | ) | |||||
| ||||||||
Class R6 | – | (11,017 | ) | |||||
| ||||||||
Total distributions from distributable earnings | – | (11,216,193 | ) | |||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (22,806,626 | ) | (20,349,179 | ) | ||||
| ||||||||
Class C | (5,543,018 | ) | (42,670,624 | ) | ||||
| ||||||||
Class Y | (4,799,864 | ) | (6,390,142 | ) | ||||
| ||||||||
Investor Class | (6,169,222 | ) | (14,783,040 | ) | ||||
| ||||||||
Class R5 | (1,214,809 | ) | (665,191 | ) | ||||
| ||||||||
Class R6 | 129,332 | 350,070 | ||||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (40,404,207 | ) | (84,508,106 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (123,051,750 | ) | (191,851,268 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 424,223,538 | 616,074,806 | ||||||
| ||||||||
End of period | $ | 301,171,788 | $ | 424,223,538 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Energy Fund
(Unaudited)
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 on securities | Total from investment operations | Dividends income | Distributions from net realized gains | Total distributions | Net asset value, end of period | Total return (b) | Net assets, (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 to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $21.05 | $ 0.21 | $ (4.46 | ) | $ (4.25 | ) | $ – | $ – | $ – | $16.80 | (20.19 | )% | $177,211 | 1.43 | %(d) | 1.43 | %(d) | 2.23 | %(d) | 8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 25.91 | 0.29 | (4.61 | ) | (4.32 | ) | (0.54) | – | (0.54 | ) | 21.05 | (16.48 | ) | 248,396 | 1.32 | 1.32 | 1.25 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.54 | 0.49 | (e) | 1.44 | 1.93 | (0.56) | – | (0.56 | ) | 25.91 | 8.08 | 323,247 | 1.33 | 1.33 | 2.07 | (e) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 27.04 | 0.22 | (2.41 | ) | (2.19 | ) | (0.31) | – | (0.31 | ) | 24.54 | (8.29 | ) | 393,998 | 1.27 | 1.27 | 0.84 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 35.41 | 0.27 | (8.28 | )(f) | (8.01 | ) | (0.15) | (0.21 | ) | (0.36 | ) | 27.04 | (22.45 | )(f) | 521,910 | 1.26 | 1.27 | 1.05 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 49.87 | 0.29 | (10.33 | ) | (10.04 | ) | (0.13) | (4.29 | ) | (4.42 | ) | 35.41 | (18.60 | ) | 628,443 | 1.16 | 1.17 | 0.69 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 17.99 | 0.12 | (3.80 | ) | (3.68 | ) | – | – | – | 14.31 | (20.46 | ) | 21,112 | 2.18 | (d) | 2.18 | (d) | 1.48 | (d) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 22.17 | 0.10 | (3.93 | ) | (3.83 | ) | (0.35) | – | (0.35 | ) | 17.99 | (17.14 | ) | 33,036 | 2.07 | 2.07 | 0.50 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 20.88 | 0.26 | (e) | 1.24 | 1.50 | (0.21) | – | (0.21 | ) | 22.17 | 7.29 | 92,349 | 2.08 | 2.08 | 1.32 | (e) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 23.05 | 0.02 | (2.07 | ) | (2.05 | ) | (0.12) | – | (0.12 | ) | 20.88 | (8.97 | ) | 120,722 | 2.02 | 2.02 | 0.09 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 30.39 | 0.06 | (7.11 | )(f) | (7.05 | ) | (0.08) | (0.21 | ) | (0.29 | ) | 23.05 | (23.03 | )(f) | 156,964 | 2.01 | 2.02 | 0.30 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 43.83 | (0.02 | ) | (9.13 | ) | (9.15 | ) | – | (4.29 | ) | (4.29 | ) | 30.39 | (19.21 | ) | 194,893 | 1.91 | 1.92 | (0.06 | ) | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 21.04 | 0.23 | (4.46 | ) | (4.23 | ) | – | – | – | 16.81 | (20.10 | ) | 26,393 | 1.18 | (d) | 1.18 | (d) | 2.48 | (d) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 25.93 | 0.35 | (4.63 | ) | (4.28 | ) | (0.61) | – | (0.61 | ) | 21.04 | (16.29 | ) | 38,550 | 1.07 | 1.07 | 1.50 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.63 | 0.55 | (e) | 1.43 | 1.98 | (0.68) | – | (0.68 | ) | 25.93 | 8.34 | 56,061 | 1.08 | 1.08 | 2.32 | (e) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 27.12 | 0.29 | (2.41 | ) | (2.12 | ) | (0.37) | – | (0.37 | ) | 24.63 | (8.03 | ) | 63,783 | 1.02 | 1.02 | 1.09 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 35.47 | 0.34 | (8.31 | )(f) | (7.97 | ) | (0.17) | (0.21 | ) | (0.38 | ) | 27.12 | (22.28 | )(f) | 50,706 | 1.01 | 1.02 | 1.30 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 50.00 | 0.38 | (10.37 | ) | (9.99 | ) | (0.25) | (4.29 | ) | (4.54 | ) | 35.47 | (18.38 | ) | 78,476 | 0.91 | 0.92 | 0.94 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 20.96 | 0.21 | (4.44 | ) | (4.23 | ) | – | – | – | 16.73 | (20.18 | ) | 72,289 | 1.43 | (d) | 1.43 | (d) | 2.23 | (d) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 25.80 | 0.29 | (4.59 | ) | (4.30 | ) | (0.54) | – | (0.54 | ) | 20.96 | (16.47 | ) | 97,716 | 1.32 | 1.32 | 1.25 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 24.44 | 0.49 | (e) | 1.43 | 1.92 | (0.56) | – | (0.56 | ) | 25.80 | 8.07 | 136,141 | 1.33 | 1.33 | 2.07 | (e) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 26.93 | 0.22 | (2.40 | ) | (2.18 | ) | (0.31) | – | (0.31 | ) | 24.44 | (8.29 | ) | 159,402 | 1.27 | 1.27 | 0.84 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 35.27 | 0.27 | (8.25 | )(f) | (7.98 | ) | (0.15) | (0.21 | ) | (0.36 | ) | 26.93 | (22.45 | )(f) | 210,374 | 1.26 | 1.27 | 1.05 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 49.69 | 0.29 | (10.29 | ) | (10.00 | ) | (0.13) | (4.29 | ) | (4.42 | ) | 35.27 | (18.59 | ) | 295,318 | 1.16 | 1.17 | 0.69 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 21.54 | 0.26 | (4.57 | ) | (4.31 | ) | – | – | – | 17.23 | (20.01 | ) | 3,671 | 0.95 | (d) | 0.95 | (d) | 2.71 | (d) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.53 | 0.40 | (4.73 | ) | (4.33 | ) | (0.66) | – | (0.66 | ) | 21.54 | (16.12 | ) | 6,052 | 0.90 | 0.90 | 1.67 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 25.23 | 0.61 | (e) | 1.46 | 2.07 | (0.77) | – | (0.77 | ) | 26.53 | 8.51 | 8,092 | 0.91 | 0.91 | 2.49 | (e) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 27.77 | 0.34 | (2.46 | ) | (2.12 | ) | (0.42) | – | (0.42 | ) | 25.23 | (7.88 | ) | 8,871 | 0.86 | 0.86 | 1.25 | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 36.24 | 0.40 | (8.48 | )(f) | (8.08 | ) | (0.18) | (0.21 | ) | (0.39 | ) | 27.77 | (22.10 | )(f) | 22,298 | 0.84 | 0.85 | 1.47 | 22 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 50.97 | 0.44 | (10.57 | ) | (10.13 | ) | (0.31) | (4.29 | ) | (4.60 | ) | 36.24 | (18.30 | ) | 32,046 | 0.79 | 0.80 | 1.06 | 27 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 21.53 | 0.25 | (4.56 | ) | (4.31 | ) | – | – | – | 17.22 | (20.02 | ) | 496 | 0.95 | (d) | 0.95 | (d) | 2.71 | (d) | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 26.52 | 0.39 | (4.72 | ) | (4.33 | ) | (0.66) | – | (0.66 | ) | 21.53 | (16.11 | ) | 473 | 0.89 | 0.89 | 1.68 | 17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 25.23 | 0.62 | (e) | 1.46 | 2.08 | (0.79) | – | (0.79 | ) | 26.52 | 8.55 | 185 | 0.90 | 0.90 | 2.50 | (e) | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17(g) | 26.31 | 0.03 | (1.11 | ) | (1.08 | ) | – | – | – | 25.23 | (4.11 | ) | 10 | 0.81 | (h) | 0.81 | (h) | 1.30 | (h) | 22 |
(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 $205,435, $26,356, $31,114, $82,171 , $4,903 and $488 for Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
(e) | Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets includes significant dividends received during the period. Net investment income (loss) per share and the ratio of net investment income (loss) to average net assets excluding the significant dividends are $0.32 and 0.87%, $0.09 and 0.12%, $0.38 and 1.12%, $0.32 and 0.87%, $0.44 and 1.29% and $0.45 and 1.30% for Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
(f) | Includes litigation proceeds received during the period. Had these litigation proceeds not been received, Net gains (losses) on securities (both realized and unrealized) per share would have been $(8.35), $(7.18), $(8.38), $(8.32) and $(8.55) for Class A, Class C, Class Y, Investor Class and Class R5 shares, respectively. Total returns would have been lower. |
(g) | Commencement date of April 4, 2017. |
(h) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Energy Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Energy Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 six different classes of shares: Class A, Class C, Class Y, Investor Class, Class R5 and Class R6. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with afront-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco Energy Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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 the 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, |
12 Invesco Energy Fund
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 dailymark-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.
K. | Other Risks– The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
The businesses in which the Fund invests may be adversely affected by foreign, federal or state regulations governing energy production, distribution and sale. Although individual security selection drives the performance of the Fund, short-term fluctuations in commodity prices may cause price fluctuations in its shares.
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 $350 million | 0.750 | % | ||
| ||||
Next $350 million | 0.650 | % | ||
| ||||
Next $1.3 billion | 0.550 | % | ||
| ||||
Next $2 billion | 0.450 | % | ||
| ||||
Next $2 billion | 0.400 | % | ||
| ||||
Next $2 billion | 0.375 | % | ||
| ||||
Over $8 billion | 0.350 | % | ||
|
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.75%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, 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, Investor Class, Class R5 and Class R6 shares to 2.00%, 2.75%, 1.75%, 2.00%, 1.75% and 1.75%, respectively, of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary ornon-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, 2020. 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.
The Adviser has contractually agreed, through at least June 30, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $1,652.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration
13 Invesco Energy Fund
agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer 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, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant to the Investor Class Plan, reimburses IDI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. 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 October 31, 2019, expenses incurred under the Plans are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $13,976 infront-end sales commissions from the sale of Class A shares and $802 and $497 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $884 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 - | Prices are determined using quoted prices in an active market for identical assets. | |||
Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |||
Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | $271,875,849 | $27,710,574 | $0 | $299,586,423 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 3,526,084 | – | – | 3,526,084 | ||||||||||||
| ||||||||||||||||
Total Investments | $275,401,933 | $27,710,574 | $0 | $303,112,507 | ||||||||||||
|
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $5,160.
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, andTrustees’ 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
14 Invesco Energy 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 6–Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 had a capital loss carryforward as of April 30, 2019, as follows:
Capital Loss Carryforward* | ||||||||||||||
| ||||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||||
| ||||||||||||||
Not subject to expiration | $ | 12,291,622 | $ | 156,911,809 | $ | 169,203,431 | ||||||||
|
* | Capital loss carryforward as of the date listed above is reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
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 October 31, 2019 was $29,464,002 and $64,695,910, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 12,991,552 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (279,412,042 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (266,420,490 | ) | |
| ||||
Cost of investments for tax purposes is $569,532,997. |
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
|
|
|
| |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 569,852 | $ | 10,321,479 | 1,464,416 | $ | 34,132,389 | ||||||||||
| ||||||||||||||||
Class C | 220,415 | 3,432,602 | 236,293 | 4,670,105 | ||||||||||||
| ||||||||||||||||
Class Y | 167,510 | 3,065,886 | 1,091,434 | 26,784,693 | ||||||||||||
| ||||||||||||||||
Investor Class | 203,619 | 3,691,999 | 565,514 | 13,139,156 | ||||||||||||
| ||||||||||||||||
Class R5 | 27,963 | 519,526 | 100,263 | 2,443,016 | ||||||||||||
| ||||||||||||||||
Class R6 | 11,355 | 215,651 | 26,104 | 585,421 | ||||||||||||
|
15 Invesco Energy Fund
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | $ | - | 291,586 | $ | 5,645,072 | ||||||||||
| ||||||||||||||||
Class C | - | - | 65,943 | 1,094,000 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 47,535 | 918,856 | ||||||||||||
| ||||||||||||||||
Investor Class | - | - | 129,930 | 2,503,751 | ||||||||||||
| ||||||||||||||||
Class R5 | - | - | 9,257 | 183,021 | ||||||||||||
| ||||||||||||||||
Class R6 | - | - | 545 | 10,764 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 109,467 | 1,993,045 | 1,275,937 | 25,590,990 | ||||||||||||
| ||||||||||||||||
Class C | (128,330 | ) | (1,993,045 | ) | (1,489,808 | ) | (25,590,990 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (1,931,539 | ) | (35,121,150 | ) | (3,705,917 | ) | (85,717,630 | ) | ||||||||
| ||||||||||||||||
Class C | (452,510 | ) | (6,982,575 | ) | (1,142,265 | ) | (22,843,739 | ) | ||||||||
| ||||||||||||||||
Class Y | (429,977 | ) | (7,865,750 | ) | (1,468,924 | ) | (34,093,691 | ) | ||||||||
| ||||||||||||||||
Investor Class | (544,385 | ) | (9,861,221 | ) | (1,309,220 | ) | (30,425,947 | ) | ||||||||
| ||||||||||||||||
Class R5 | (95,864 | ) | (1,734,335 | ) | (133,548 | ) | (3,291,228 | ) | ||||||||
| ||||||||||||||||
Class R6 | (4,538 | ) | (86,319 | ) | (11,686 | ) | (246,115 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (2,276,962 | ) | $ | (40,404,207 | ) | (3,956,611 | ) | $ | (84,508,106 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 23% 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. |
16 Invesco Energy Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before expenses) | |||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||
(05/01/19) | (10/31/19)1 | Period | (10/31/19)2 | Period2 | Ratio | |||||||||||||||||
Class A | $1,000.00 | $798.10 | $6.46 | $1,017.95 | $7.25 | 1.43% | ||||||||||||||||
Class C | 1,000.00 | 795.40 | 9.79 | 1,014.23 | 10.99 | 2.17 | ||||||||||||||||
Class Y | 1,000.00 | 799.00 | 5.34 | 1,019.20 | 5.99 | 1.18 | ||||||||||||||||
Investor Class | 1,000.00 | 798.20 | 6.46 | 1,017.95 | 7.25 | 1.43 | ||||||||||||||||
Class R5 | 1,000.00 | 799.90 | 4.30 | 1,020.36 | 4.82 | 0.95 | ||||||||||||||||
Class R6 | 1,000.00 | 799.80 | 4.30 | 1,020.36 | 4.82 | 0.95 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
17 Invesco Energy Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Energy Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. Advisory andSub-Advisory Fees
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 at a common asset level. 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
18 Invesco Energy Fund
group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco Energy Fund
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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers:811-03826 and002-85905 | Invesco Distributors, Inc. | I-ENE-SAR-1 |
Semiannual Report to Shareholders
|
October 31, 2019
| |||
Invesco Gold & Precious Metals Fund | ||||
Nasdaq: | ||||
A: IGDAX∎ C: IGDCX∎ Y: IGDYX∎ Investor: FGLDX∎ R6: IGDSX |
2 | ||||
3 | ||||
5 | ||||
7 | ||||
10 | ||||
11 | ||||
17 | ||||
18 | ||||
20 | ||||
21 |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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 |
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: 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 andsub-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.
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
Andrew Schlossberg | 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. | ||
Invesco’s efforts to help investors achieve their financial objectives include providing |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Gold & Precious Metals Fund
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 24.92 | % | ||
Class C Shares | 24.40 | |||
Class Y Shares | 25.22 | |||
Investor Class Shares | 24.78 | |||
Class R6 Shares | 25.15 | |||
S&P 500 Indexq(Broad Market Index) | 4.16 | |||
Philadelphia Gold & Silver Index (price only)∎(Style-Specific Index) | 34.37 | |||
Lipper Precious Metals Equity Funds Index◆(Peer Group Index) | 30.85 | |||
Source(s):qRIMES Technologies Corp.;∎FactSet Research Systems Inc.;◆Lipper Inc.
| ||||
TheS&P 500®Indexis an unmanaged index considered representative of the US stock market. ThePhiladelphia Gold & Silver Index(price only) is a capitalization-weighted, price-only index on the Philadelphia Stock Exchange that includes the leading companies involved in mining gold and silver. TheLipper Precious Metals Equity Funds Indexis an unmanaged index considered representative of precious metals funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
|
3 Invesco Gold & Precious Metals Fund
Average Annual Total Returns
|
| |||
As of 10/31/19, including maximum applicable sales charges
|
| |||
Class A Shares | ||||
Inception (3/28/02) | 5.07 | % | ||
10 Years | -3.67 | |||
5 Years | 3.81 | |||
1 Year | 28.00 | |||
Class C Shares | ||||
Inception (2/14/00) | 6.41 | % | ||
10 Years | -3.86 | |||
5 Years | 4.15 | |||
1 Year | 33.09 | |||
Class Y Shares | ||||
Inception (10/3/08) | 0.78 | % | ||
10 Years | -2.90 | |||
5 Years | 5.25 | |||
1 Year | 35.99 | |||
Investor Class Shares | ||||
Inception (1/19/84) | 0.41 | % | ||
10 Years | -3.14 | |||
5 Years | 4.95 | |||
1 Year | 35.28 | |||
Class R6 Shares | ||||
10 Years | -3.02 | % | ||
5 Years | 5.20 | |||
1 Year | 35.87 |
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares and includes the12b-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 recentmonth-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 Y, Investor Class and Class R6 shares was 1.49%, 2.24%, 1.24%, 1.49% and 1.00%, respectively. The expense ratios presented above may vary from the expense ratios presented
Average Annual Total Returns
|
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (3/28/02) | 4.85 | % | ||
10 Years | -4.50 | |||
5 Years | -0.83 | |||
1 Year | 19.10 | |||
Class C Shares | ||||
Inception (2/14/00) | 6.22 | % | ||
10 Years | -4.67 | |||
5 Years | -0.47 | |||
1 Year | 24.24 | |||
Class Y Shares | ||||
Inception (10/3/08) | 0.39 | % | ||
10 Years | -3.74 | |||
5 Years | 0.51 | |||
1 Year | 26.23 | |||
Investor Class Shares | ||||
Inception (1/19/84) | 0.30 | % | ||
10 Years | -3.94 | |||
5 Years | 0.32 | |||
1 Year | 26.02 | |||
Class R6 Shares | ||||
10 Years | -3.84 | % | ||
5 Years | 0.50 | |||
1 Year | 26.85 |
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, Investor Class and Class R6 shares do not have afront-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.
4 Invesco Gold & Precious Metals Fund
October 31, 2019
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests-98.63% |
| |||||||
Australia-2.92% | ||||||||
Bellevue Gold Ltd.(a) | 1,470,518 | $ | 558,357 | |||||
| ||||||||
Boart Longyear Ltd.(a) | 8,083,336 | 36,186 | ||||||
| ||||||||
Boart Longyear Ltd., Wts., expiring 09/13/2024(a) | 11,188,146 | 15,425 | ||||||
| ||||||||
Cardinal Resources Ltd.(a) | 7,651,032 | 2,004,105 | ||||||
| ||||||||
Gold Road Resources Ltd.(a) | 2,621,055 | 2,073,204 | ||||||
| ||||||||
New Century Resources Ltd.(a) | 2,386,263 | 614,054 | ||||||
| ||||||||
OceanaGold Corp. | 514,925 | 1,235,413 | ||||||
| ||||||||
6,536,744 | ||||||||
| ||||||||
Canada-73.54% |
| |||||||
Agnico Eagle Mines Ltd. | 181,239 | 11,140,761 | ||||||
| ||||||||
Alamos Gold, Inc., Class A | 1,041,306 | 5,668,639 | ||||||
| ||||||||
B2Gold Corp.(a) | 2,674,614 | 9,402,067 | ||||||
| ||||||||
Barkerville Gold Mines Ltd.(a) | 3,104,400 | 1,072,433 | ||||||
| ||||||||
Barrick Gold Corp. | 615,586 | 10,686,573 | ||||||
| ||||||||
Belo Sun Mining Corp.(a) | 1,072,612 | 399,043 | ||||||
| ||||||||
Chesapeake Gold Corp.(a) | 632,320 | 1,579,480 | ||||||
| ||||||||
Continental Gold, Inc.(a) | 3,846,545 | 12,265,955 | ||||||
| ||||||||
Detour Gold Corp.(a) | 400,237 | 6,645,800 | ||||||
| ||||||||
Franco-Nevada Corp. | 103,801 | 10,071,952 | ||||||
| ||||||||
Guyana Goldfields, Inc.(a) | 2,429,714 | 977,715 | ||||||
| ||||||||
INV Metals, Inc.(a) | 2,621,042 | 815,904 | ||||||
| ||||||||
Ivanhoe Mines Ltd., Class A(a) | 2,596,982 | 6,447,598 | ||||||
| ||||||||
Kinross Gold Corp.(a) | 2,515,782 | 12,224,588 | ||||||
| ||||||||
Lundin Gold, Inc.(a) | 1,622,331 | 9,730,784 | ||||||
| ||||||||
Osisko Mining, Inc.(a) | 1,099,753 | 2,329,596 | ||||||
| ||||||||
Premier Gold Mines Ltd.(a) | 3,350,839 | 5,749,674 | ||||||
| ||||||||
Pretium Resources, Inc.(a) | 614,939 | 6,195,612 | ||||||
| ||||||||
Progress Minerals, Inc., (Acquired 06/26/2018; | 6,474,020 | 440,416 | ||||||
| ||||||||
Reunion Gold Corp.(a) | 6,496,007 | 937,090 | ||||||
| ||||||||
Roxgold, Inc.(a) | 3,010,234 | 2,216,936 | ||||||
| ||||||||
Rubicon Minerals Corp.(a) | 2,500,956 | 1,838,203 | ||||||
| ||||||||
Sabina Gold & Silver Corp.(a) | 947,968 | 1,281,135 | ||||||
| ||||||||
Sandstorm Gold Ltd.(a) | 1,568,662 | 11,195,371 | ||||||
| ||||||||
SEMAFO, Inc.(a) | 2,010,080 | 6,486,098 | ||||||
| ||||||||
TMAC Resources, Inc.(a) | 775,267 | 2,395,670 | ||||||
|
Shares | Value | |||||||
Canada-(continued) | ||||||||
Torex Gold Resources, Inc.(a) | 1,018,386 | $ | 14,899,627 | |||||
| ||||||||
Wheaton Precious Metals Corp. | 340,155 | 9,548,151 | ||||||
| ||||||||
164,642,871 | ||||||||
| ||||||||
Egypt-0.98% |
| |||||||
Centamin PLC | 1,445,992 | 2,186,804 | ||||||
| ||||||||
Ivory Coast-3.23% |
| |||||||
Endeavour Mining Corp.(a) | 399,606 | 7,236,051 | ||||||
| ||||||||
Mexico-2.36% |
| |||||||
Fresnillo PLC | 573,672 | 5,284,606 | ||||||
| ||||||||
Mongolia-1.84% |
| |||||||
Turquoise Hill Resources Ltd.(a) | 10,042,724 | 4,117,433 | ||||||
| ||||||||
Switzerland-0.79% |
| |||||||
Glencore PLC | 584,165 | 1,762,511 | ||||||
| ||||||||
United States-12.18% |
| |||||||
iShares®Gold Trust - ETF(a) | 564,600 | 8,164,116 | ||||||
| ||||||||
Newmont Goldcorp Corp. | 272,727 | 10,835,444 | ||||||
| ||||||||
SPDR® Gold Trust-ETF(a) | 58,000 | 8,260,940 | ||||||
| ||||||||
27,260,500 | ||||||||
| ||||||||
Zambia-0.79% |
| |||||||
First Quantum Minerals Ltd. | 209,381 | 1,769,350 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests | 220,796,870 | |||||||
| ||||||||
Money Market Funds-0.83% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(e) | 653,430 | 653,430 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(e) | 466,887 | 467,074 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(e) | 746,777 | 746,777 | ||||||
| ||||||||
Total Money Market Funds (Cost $1,867,271) | 1,867,281 | |||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–99.46% | 222,664,151 | |||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES-0.54% | 1,199,694 | |||||||
| ||||||||
NET ASSETS-100.00% | $ | 223,863,845 | ||||||
|
Investment Abbreviations:
ETF | - Exchange-Traded Fund | |
SPDR | - Standard & Poor’s Depositary Receipt | |
Wts. | - Warrants |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Gold & Precious Metals Fund
Notes to Schedule of Investments:
(a) | Non-income producing security. |
(b) | Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The value of this security at October 31, 2019 represented less than 1% of the Fund’s Net Assets. |
(c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(d) | 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 October 31, 2019 represented less than 1% of the Fund’s Net Assets. |
Value 04/30/19 | Purchases at Cost | Proceeds from Sales | Change in Unrealized Appreciation (Depreciation) | Realized Gain | Value 10/31/19 | Dividend Income | ||||||||||
Progress Minerals, Inc. | $1,208,110 | $- | $- | $(767,694) | $- | $440,416 | $- |
(e) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
Portfolio Composition
By industry, based on Net Assets
as of October 31, 2019
Gold | 79.46 | % | ||
Diversified Metals & Mining | 6.37 | |||
Silver | 4.26 | |||
Precious Metals & Minerals | 4.10 | |||
Exchange-Traded Fund | 3.65 | |||
Industry Type Each Less Than 1% of Net Assets | 0.79 | |||
Money Market Funds Plus Other Assets Less Liabilities | 1.37 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Gold & Precious Metals Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 220,356,454 | ||
| ||||
Investments in affiliates, at value | 2,307,697 | |||
| ||||
Foreign currencies, at value | 310 | |||
| ||||
Receivable for: | ||||
Investments sold | 2,962,191 | |||
| ||||
Fund shares sold | 151,808 | |||
| ||||
Dividends | 1,749 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 102,951 | |||
| ||||
Other assets | 31,242 | |||
| ||||
Total assets | 225,914,402 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 1,138,466 | |||
| ||||
Fund shares reacquired | 255,664 | |||
| ||||
Accrued fees to affiliates | 402,226 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 805 | |||
| ||||
Accrued other operating expenses | 141,566 | |||
| ||||
Trustee deferred compensation and retirement plans | 111,830 | |||
| ||||
Total liabilities | 2,050,557 | |||
| ||||
Net assets applicable to shares outstanding | $ | 223,863,845 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 449,745,807 | ||
| ||||
Distributable earnings (loss) | (225,881,962 | ) | ||
| ||||
$ | 223,863,845 | |||
|
Net Assets: | ||||
Class A | $ | 110,718,970 | ||
| ||||
Class C | $ | 17,449,093 | ||
| ||||
Class Y | $ | 35,104,556 | ||
| ||||
Investor Class | $ | 60,387,623 | ||
| ||||
Class R6 | $ | 203,603 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 26,640,814 | |||
| ||||
Class C | 4,227,185 | |||
| ||||
Class Y | 8,234,276 | |||
| ||||
Investor Class | 14,441,375 | |||
| ||||
Class R6 | 47,555 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 4.16 | ||
| ||||
Maximum offering price per share | $ | 4.40 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 4.13 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 4.26 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 4.18 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 4.28 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Gold & Precious Metals Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $44,966) | $ 452,925 | |||
| ||||
Dividends from affiliated money market funds | 15,119 | |||
| ||||
Total investment income | 468,044 | |||
| ||||
Expenses: | ||||
Advisory fees | 808,390 | |||
| ||||
Administrative services fees | 13,190 | |||
| ||||
Custodian fees | 21,502 | |||
| ||||
Distribution fees: | ||||
| ||||
Class A | 132,229 | |||
| ||||
Class C | 82,879 | |||
| ||||
Investor Class | 73,436 | |||
| ||||
Transfer agent fees – A, C, Y and Investor | 382,345 | |||
| ||||
Transfer agent fees – R6 | 79 | |||
| ||||
Trustees’ and officers’ fees and benefits | 8,864 | |||
| ||||
Registration and filing fees | 32,459 | |||
| ||||
Reports to shareholders | 53,425 | |||
| ||||
Professional services fees | 35,838 | |||
| ||||
Other | 14,398 | |||
| ||||
Total expenses | 1,659,034 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (4,162 | ) | ||
| ||||
Net expenses | 1,654,872 | |||
| ||||
Net investment income (loss) | (1,186,828 | ) | ||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (4,219,802 | ) | ||
| ||||
Foreign currencies | 363 | |||
| ||||
(4,219,439 | ) | |||
| ||||
Change in net unrealized appreciation of: | ||||
Investment securities | 50,419,340 | |||
| ||||
Foreign currencies | 1,456 | |||
| ||||
50,420,796 | ||||
| ||||
Net realized and unrealized gain | 46,201,357 | |||
| ||||
Net increase in net assets resulting from operations | $45,014,529 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Gold & Precious Metals Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | (1,186,828) | $ | (1,741,586) | ||||
| ||||||||
Net realized gain (loss) | (4,219,439 | ) | (11,112,617 | ) | ||||
| ||||||||
Change in net unrealized appreciation (depreciation) | 50,420,796 | (14,843,386 | ) | |||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | 45,014,529 | (27,697,589 | ) | |||||
| ||||||||
Share transactions-net: | ||||||||
Class A | (2,602,970 | ) | (9,719,980 | ) | ||||
| ||||||||
Class C | (248,500 | ) | (7,585,965 | ) | ||||
| ||||||||
Class Y | (2,270,852 | ) | (3,145,358 | ) | ||||
| ||||||||
Investor Class | (2,747,160 | ) | (8,693,917 | ) | ||||
| ||||||||
Class R6 | 45,035 | (388,489 | ) | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (7,824,447 | ) | (29,533,709 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | 37,190,082 | (57,231,298 | ) | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 186,673,763 | 243,905,061 | ||||||
| ||||||||
End of period | $ | 223,863,845 | $ | 186,673,763 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Gold & Precious Metals Fund
(Unaudited)
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 | Net asset value, end of period | Total return (b) | Net assets, (000’s omitted) | Ratio of net assets | Ratio of fee waivers | Ratio of net investment to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $ | 3.33 | $ | (0.02 | ) | $ | 0.85 | $ | 0.83 | $ | – | $ | 4.16 | 24.92 | % | $ | 110,719 | 1.52 | %(d) | 1.52 | %(d) | (1.09 | )%(d) | 9 | % | |||||||||||||||||||||||
Year ended 04/30/19 | 3.78 | (0.03 | ) | (0.42 | ) | (0.45 | ) | – | 3.33 | (11.90 | ) | 91,266 | 1.47 | 1.47 | (0.82 | ) | 16 | |||||||||||||||||||||||||||||||
Year ended 04/30/18 | 4.16 | (0.04 | ) | (0.27 | ) | (0.31 | ) | (0.07 | ) | 3.78 | (7.55 | ) | 113,737 | 1.43 | 1.43 | (1.00 | ) | 20 | ||||||||||||||||||||||||||||||
Year ended 04/30/17 | 5.05 | (0.05 | ) | (0.46 | ) | (0.51 | ) | (0.38 | ) | 4.16 | (9.90 | ) | 145,269 | 1.41 | 1.42 | (1.00 | ) | 28 | ||||||||||||||||||||||||||||||
Year ended 04/30/16 | 4.00 | (0.03 | ) | 1.08 | 1.05 | – | 5.05 | 26.25 | 160,494 | 1.54 | 1.54 | (0.90 | ) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 4.75 | (0.04 | ) | (0.71 | ) | (0.75 | ) | – | 4.00 | (15.79 | ) | 113,862 | 1.45 | 1.46 | (0.89 | ) | 35 | |||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 3.32 | (0.04 | ) | 0.85 | 0.81 | – | 4.13 | 24.40 | 17,449 | 2.27 | (d) | 2.27 | (d) | (1.84 | )(d) | 9 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 3.79 | (0.05 | ) | (0.42 | ) | (0.47 | ) | – | 3.32 | (12.40 | ) | 14,345 | 2.22 | 2.22 | (1.57 | ) | 16 | |||||||||||||||||||||||||||||||
Year ended 04/30/18 | 4.20 | (0.07 | ) | (0.29 | ) | (0.36 | ) | (0.05 | ) | 3.79 | (8.51 | ) | 24,859 | 2.18 | 2.18 | (1.75 | ) | 20 | ||||||||||||||||||||||||||||||
Year ended 04/30/17 | 5.07 | (0.09 | ) | (0.45 | ) | (0.54 | ) | (0.33 | ) | 4.20 | (10.53 | ) | 31,563 | 2.16 | 2.17 | (1.75 | ) | 28 | ||||||||||||||||||||||||||||||
Year ended 04/30/16 | 4.05 | (0.06 | ) | 1.08 | 1.02 | – | 5.07 | 25.19 | 36,157 | 2.29 | 2.29 | (1.65 | ) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 4.84 | (0.07 | ) | (0.72 | ) | (0.79 | ) | – | 4.05 | (16.32 | ) | 27,351 | 2.20 | 2.21 | (1.64 | ) | 35 | |||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 3.41 | (0.02 | ) | 0.87 | 0.85 | – | 4.26 | 24.93 | 35,105 | 1.27 | (d) | 1.27 | (d) | (0.84 | )(d) | 9 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 3.86 | (0.02 | ) | (0.43 | ) | (0.45 | ) | – | 3.41 | (11.66 | ) | 30,122 | 1.22 | 1.22 | (0.57 | ) | 16 | |||||||||||||||||||||||||||||||
Year ended 04/30/18 | 4.24 | (0.03 | ) | (0.28 | ) | (0.31 | ) | (0.07 | ) | 3.86 | (7.30 | ) | 37,373 | 1.18 | 1.18 | (0.75 | ) | 20 | ||||||||||||||||||||||||||||||
Year ended 04/30/17 | 5.15 | (0.04 | ) | (0.47 | ) | (0.51 | ) | (0.40 | ) | 4.24 | (9.75 | ) | 45,797 | 1.16 | 1.17 | (0.75 | ) | 28 | ||||||||||||||||||||||||||||||
Year ended 04/30/16 | 4.07 | (0.02 | ) | 1.10 | 1.08 | – | 5.15 | 26.54 | 42,446 | 1.29 | 1.29 | (0.65 | ) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 4.82 | (0.03 | ) | (0.72 | ) | (0.75 | ) | – | 4.07 | (15.56 | ) | 19,530 | 1.20 | 1.21 | (0.64 | ) | 35 | |||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 3.35 | (0.02 | ) | 0.85 | 0.83 | – | 4.18 | 24.78 | 60,388 | 1.52 | (d) | 1.52 | (d) | (1.09 | )(d) | 9 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 3.80 | (0.03 | ) | (0.42 | ) | (0.45 | ) | – | 3.35 | (11.84 | ) | 50,815 | 1.47 | 1.47 | (0.82 | ) | 16 | |||||||||||||||||||||||||||||||
Year ended 04/30/18 | 4.19 | (0.04 | ) | (0.28 | ) | (0.32 | ) | (0.07 | ) | 3.80 | (7.73 | ) | 67,393 | 1.43 | 1.43 | (1.00 | ) | 20 | ||||||||||||||||||||||||||||||
Year ended 04/30/17 | 5.08 | (0.05 | ) | (0.46 | ) | (0.51 | ) | (0.38 | ) | 4.19 | (9.84 | ) | 78,703 | 1.41 | 1.42 | (1.00 | ) | 28 | ||||||||||||||||||||||||||||||
Year ended 04/30/16 | 4.02 | (0.03 | ) | 1.09 | 1.06 | – | 5.08 | 26.37 | 97,678 | 1.54 | 1.54 | (0.90 | ) | 23 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 4.77 | (0.04 | ) | (0.71 | ) | (0.75 | ) | – | 4.02 | (15.72 | ) | 82,486 | 1.45 | 1.46 | (0.89 | ) | 35 | |||||||||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 3.42 | (0.01 | ) | 0.87 | 0.86 | – | 4.28 | 25.15 | 204 | 1.01 | (d) | 1.01 | (d) | (0.58 | )(d) | 9 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 3.86 | (0.01 | ) | (0.43 | ) | (0.44 | ) | – | 3.42 | (11.40 | ) | 126 | 0.98 | 0.98 | (0.33 | ) | 16 | |||||||||||||||||||||||||||||||
Year ended 04/30/18 | 4.25 | (0.02 | ) | (0.29 | ) | (0.31 | ) | (0.08 | ) | 3.86 | (7.45 | ) | 543 | 0.99 | 0.99 | (0.56 | ) | 20 | ||||||||||||||||||||||||||||||
Year ended 04/30/17(e) | 4.57 | (0.00 | ) | (0.32 | ) | (0.32 | ) | – | 4.25 | (7.00 | ) | 9 | 0.97 | (f) | 0.97 | (f) | (0.56 | )(f) | 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 $105,319, $16,501, $33,921, $58,490 and $168 for Class A, Class C, Class Y, Investor Class and Class R6 shares, respectively. |
(e) | Commencement date of April 4, 2017. |
(f) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Gold & Precious Metals Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Gold & Precious Metals Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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, Investor Class and Class R6. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with afront-end sales charge unless certain waiver criteria are met. Under certain circumstances, load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Investor Class and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco Gold & Precious Metals Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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 the 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, |
12 Invesco Gold & Precious Metals Fund
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 dailymark-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.
K. | Other Risks- The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
The Fund may invest a large percentage of its assets in a limited number of securities or other instruments, which could negatively affect the value of the Fund.
Fluctuations in the price of gold and precious metals may affect the profitability of companies in the gold and precious metals sector. Changes in the political or economic conditions of countries where companies in the gold and precious metals sector are located may have a direct effect on the price of gold and precious metals.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund 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 $350 million | 0.750% | |||
Next $350 million | 0.650% | |||
Next $1.3 billion | 0.550% | |||
Next $2 billion | 0.450% | |||
Next $2 billion | 0.400% | |||
Next $2 billion | 0.375% | |||
Over $8 billion | 0.350% |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.75%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, 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, Investor Class and Class R6 shares to 2.00%, 2.75%, 1.75%, 2.00% and 1.75%, respectively, of average daily net assets (the “expense limits”). In determining the Adviser’s obligation to waive advisory fees and/or reimburse expenses, the following expenses are not taken into account, and could cause the total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expense on short sales; (4) extraordinary ornon-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, 2020. 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.
The Adviser has contractually agreed, through at least June 30, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $906.
13 Invesco Gold & Precious Metals Fund
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer 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, Investor Class and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares, 1.00% of the average daily net assets of Class C shares and 0.25% of the average daily net assets of Investor Class 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 thesix-month period ended October 31, 2019, expenses incurred under the Plan are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $15,189 infront-end sales commissions from the sale of Class A shares and $32 and $736 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 - | Prices are determined using quoted prices in an active market for identical assets. | |||
Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |||
Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Australia | $ 3,254,943 | $ 3,281,801 | $ – | $ 6,536,744 | ||||||||||||
Canada | 164,202,455 | – | 440,416 | 164,642,871 | ||||||||||||
Egypt | – | 2,186,804 | – | 2,186,804 | ||||||||||||
Ivory Coast | 7,236,051 | – | – | 7,236,051 | ||||||||||||
Mexico | – | 5,284,606 | – | 5,284,606 | ||||||||||||
Mongolia | 4,117,433 | – | – | 4,117,433 | ||||||||||||
Switzerland | – | 1,762,511 | – | 1,762,511 | ||||||||||||
United States | 27,260,500 | – | – | 27,260,500 | ||||||||||||
Zambia | 1,769,350 | – | – | 1,769,350 | ||||||||||||
Money Market Funds | 1,867,281 | – | – | 1,867,281 | ||||||||||||
Total Investments | $209,708,013 | $12,515,722 | $440,416 | $222,664,151 |
14 Invesco Gold & Precious Metals Fund
NOTE 4–Expense Offset Arrangement(s)
The expense offset arrangement is comprised of transfer agency credits which result from balances in demand deposit accounts used by the transfer agent for clearing shareholder transactions. For the six months ended October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $3,256.
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 had a capital loss carryforward as of April 30, 2019, as follows:
Capital Loss Carryforward* |
| |||||||||||
| ||||||||||||
Expiration | Short-Term | Long-Term | Total | |||||||||
| ||||||||||||
Not subject to expiration | $ | 2,429,863 | $ | 194,659,389 | $ | 197,089,252 | ||||||
|
* | Capital loss carryforwards as of the date listed above are reduced for limitations, if any, to the extent required by the Internal Revenue Code and may be further limited depending upon a variety of factors, including the realization of net unrealized gains or losses as of the date of any reorganization. |
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 October 31, 2019 was $19,964,865 and $30,897,936, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis |
| |||
| ||||
Aggregate unrealized appreciation of investments | $ | 41,177,449 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (64,471,395 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (23,293,946 | ) | |
|
Cost of investments for tax purposes is $245,958,097.
15 Invesco Gold & Precious Metals Fund
NOTE 9–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 3,320,603 | $ | 13,546,762 | 5,324,677 | $ | 18,031,730 | ||||||||||
| ||||||||||||||||
Class C | 554,219 | 2,308,768 | 611,475 | 2,096,303 | ||||||||||||
| ||||||||||||||||
Class Y | 1,139,318 | 4,689,401 | 3,860,343 | 13,317,900 | ||||||||||||
| ||||||||||||||||
Investor Class | 621,215 | 2,533,707 | 1,434,168 | 4,820,782 | ||||||||||||
| ||||||||||||||||
Class R6 | 14,708 | 62,141 | 40,702 | 150,620 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 108,822 | 445,286 | 1,024,704 | 3,456,388 | ||||||||||||
| ||||||||||||||||
Class C | (109,381 | ) | (445,286 | ) | (1,024,817 | ) | (3,456,388 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (4,199,891 | ) | (16,595,018 | ) | (9,062,490 | ) | (31,208,098 | ) | ||||||||
| ||||||||||||||||
Class C | (539,224 | ) | (2,111,982 | ) | (1,817,475 | ) | (6,225,880 | ) | ||||||||
| ||||||||||||||||
Class Y | (1,735,778 | ) | (6,960,253 | ) | (4,714,293 | ) | (16,463,258 | ) | ||||||||
| ||||||||||||||||
Investor Class | (1,349,506 | ) | (5,280,867 | ) | (4,005,931 | ) | (13,514,699 | ) | ||||||||
| ||||||||||||||||
Class R6 | (4,128 | ) | (17,106 | ) | (144,275 | ) | (539,109 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (2,179,023 | ) | $ | (7,824,447 | ) | (8,473,212 | ) | $ | (29,533,709 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 26% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 10–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco Oppenheimer Gold & Special Minerals Fund (the “Acquiring Fund”).
The Agreement requires approval of the Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2020. The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of the Fund will receive shares of the Acquiring Fund in exchange for their shares of the Fund, and the Fund will liquidate and cease operations.
16 Invesco Gold & Precious Metals Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(05/01/19) | (10/31/19)1 | Period2 | (10/31/19) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $1,249.20 | $8.59 | $1,017.50 | $7.71 | 1.52% | ||||||
Class C | 1,000.00 | 1,244.00 | 12.80 | 1,013.72 | 11.49 | 2.27 | ||||||
Class Y | 1,000.00 | 1,249.30 | 7.18 | 1,018.75 | 6.44 | 1.27 | ||||||
Investor Class | 1,000.00 | 1,247.80 | 8.59 | 1,017.50 | 7.71 | 1.52 | ||||||
Class R6 | 1,000.00 | 1,251.50 | 5.72 | 1,020.06 | 5.13 | 1.01 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
17 Invesco Gold & Precious Metals Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Gold & Precious Metals Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-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). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C.Advisory andSub-Advisory Fees
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 at a common asset level. 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
18 Invesco Gold & Precious Metals Fund
group. The Board noted that the term
“contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco Gold & Precious Metals Fund
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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 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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers:811-03826 and002-85905 | Invesco Distributors, Inc. | I-GPM-SAR-1 |
| ||||
Semiannual Report to Shareholders
| October 31, 2019
| |||
| ||||
Invesco Mid Cap Growth Fund | ||||
Nasdaq: | ||||
A: VGRAX ∎ C: VGRCX ∎ R: VGRRX ∎ Y: VGRDX ∎ R5: VGRJX ∎ R6: VGRFX |
2 | Letters to Shareholders | |||
3 | Fund Performance | |||
5 | Schedule of Investments | |||
8 | Financial Statements | |||
11 | Financial Highlights | |||
12 | Notes to Financial Statements | |||
18 | Fund Expenses | |||
19 | Approval of Investment Advisory andSub-Advisory Contracts |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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 |
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: 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.
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
Andrew Schlossberg | 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Mid Cap Growth Fund
Fund Performance
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 3.24 | % | ||
Class C Shares | 2.88 | |||
Class R Shares | 3.12 | |||
Class Y Shares | 3.37 | |||
Class R5 Shares | 3.42 | |||
Class R6 Shares | 3.45 | |||
S&P 500 Index▼(Broad Market Index) | 4.16 | |||
Russell Midcap Growth Index▼(Style-Specific Index) | 2.04 | |||
LipperMid-Cap Growth Funds Index∎(Peer Group Index) | 1.65 | |||
Source(s):▼RIMES Technologies Corp.;∎Lipper Inc. | ||||
TheS&P 500®Indexis an unmanaged index considered representative of the US stock market. TheRussell Midcap®Growth Indexis an unmanaged index considered representative ofmid-cap growth stocks. The Russell Midcap Growth Index is a trademark/service mark of the Frank Russell Co. Russell®is a trademark of the Frank Russell Co. TheLipperMid-Cap Growth Funds Indexis an unmanaged index considered representative ofmid-cap growth funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com,where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 Invesco Mid Cap Growth Fund
Average Annual Total Returns |
| |||
As of 10/31/19, including maximum applicable sales charges
|
| |||
Class A Shares |
| |||
Inception (12/27/95) | 11.24 | % | ||
10 Years | 11.32 | |||
5 Years | 7.49 | |||
1 Year | 8.43 | |||
Class C Shares |
| |||
Inception (12/27/95) | 11.17 | % | ||
10 Years | 11.14 | |||
5 Years | 7.94 | |||
1 Year | 12.97 | |||
Class R Shares |
| |||
Inception (7/11/08) | 9.16 | % | ||
10 Years | 11.67 | |||
5 Years | 8.44 | |||
1 Year | 14.44 | |||
Class Y Shares |
| |||
Inception (8/12/05) | 9.11 | % | ||
10 Years | 12.23 | |||
5 Years | 8.98 | |||
1 Year | 15.01 | |||
Class R5 Shares |
| |||
10 Years | 12.33 | % | ||
5 Years | 9.10 | |||
1 Year | 15.13 | |||
Class R6 Shares |
| |||
10 Years | 12.26 | % | ||
5 Years | 9.20 | |||
1 Year | 15.22 |
Effective June 1, 2010, Class A, Class C, Class R and Class I shares of the predecessor fund, Van Kampen Mid Cap Growth Fund, advised by Van Kampen Asset Management were reorganized into Class A, Class C, Class R and Class Y shares, respectively, of Invesco Van Kampen Mid Cap Growth Fund (renamed Invesco Mid Cap Growth). Returns shown above, prior to June 1, 2010, for Class A, Class C, Class R and Class Y shares are blended returns of the predecessor fund and Invesco Mid Cap Growth Fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R5 shares incepted on June 1, 2010. Performance shown prior to that date is that of the predecessor fund’s Class A shares and includes the12b-1 fees applicable to Class A shares.
Class R6 shares incepted on July 15, 2013. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A shares and
Average Annual Total Returns |
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares |
| |||
Inception (12/27/95) | 11.20 | % | ||
10 Years | 10.62 | |||
5 Years | 7.69 | |||
1 Year | –2.92 | |||
Class C Shares |
| |||
Inception (12/27/95) | 11.14 | % | ||
10 Years | 10.45 | |||
5 Years | 8.14 | |||
1 Year | 1.18 | |||
Class R Shares |
| |||
Inception (7/11/08) | 9.07 | % | ||
10 Years | 10.98 | |||
5 Years | 8.64 | |||
1 Year | 2.48 | |||
Class Y Shares |
| |||
Inception (8/12/05) | 9.03 | % | ||
10 Years | 11.53 | |||
5 Years | 9.18 | |||
1 Year | 2.98 | |||
Class R5 Shares |
| |||
10 Years | 11.62 | % | ||
5 Years | 9.30 | |||
1 Year | 3.09 | |||
Class R6 Shares |
| |||
10 Years | 11.55 | % | ||
5 Years | 9.40 | |||
1 Year | 3.19 |
includes the12b-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 recentmonth-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 1.16%, 1.87%, 1.41%, 0.91%, 0.82% and 0.73%, 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 afront-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.
4 Invesco Mid Cap Growth Fund
Schedule of Investments(a)
October 31, 2019
(Unaudited)
Shares | Value | |||||||
| ||||||||
Common Stocks & Other Equity Interests–98.51% |
| |||||||
Aerospace & Defense–3.22% |
| |||||||
HEICO Corp. | 321,412 | $ | 39,642,956 | |||||
| ||||||||
TransDigm Group, Inc. | 103,446 | 54,441,561 | ||||||
| ||||||||
94,084,517 | ||||||||
| ||||||||
Apparel Retail–0.37% |
| |||||||
Burlington Stores, Inc.(b) | 55,752 | 10,713,862 | ||||||
| ||||||||
Apparel, Accessories & Luxury Goods–2.08% |
| |||||||
lululemon athletica, Inc.(b) | 266,928 | 54,525,382 | ||||||
| ||||||||
VF Corp. | 78,244 | 6,438,699 | ||||||
| ||||||||
60,964,081 | ||||||||
| ||||||||
Application Software–9.63% |
| |||||||
ANSYS, Inc.(b) | 109,582 | 24,124,477 | ||||||
| ||||||||
Aspen Technology, Inc.(b) | 175,169 | 20,163,704 | ||||||
| ||||||||
Atlassian Corp. PLC, Class A(b) | 288,155 | 34,806,242 | ||||||
| ||||||||
Coupa Software, Inc.(b) | 169,061 | 23,244,197 | ||||||
| ||||||||
Fair Isaac Corp.(b) | 19,509 | 5,931,516 | ||||||
| ||||||||
Paycom Software, Inc.(b) | 94,775 | 20,047,756 | ||||||
| ||||||||
RingCentral, Inc., Class A(b) | 342,942 | 55,391,992 | ||||||
| ||||||||
Splunk, Inc.(b) | 175,568 | 21,061,137 | ||||||
| ||||||||
Synopsys, Inc.(b) | 433,512 | 58,849,254 | ||||||
| ||||||||
Trade Desk, Inc. (The), Class A(b) | 90,462 | 18,164,770 | ||||||
| ||||||||
281,785,045 | ||||||||
| ||||||||
Asset Management & Custody Banks–0.62% |
| |||||||
KKR & Co., Inc., Class A | 624,441 | 18,002,634 | ||||||
| ||||||||
Automotive Retail–3.08% |
| |||||||
CarMax, Inc.(b) | 230,076 | 21,436,181 | ||||||
| ||||||||
O’Reilly Automotive, Inc.(b) | 157,493 | 68,589,776 | ||||||
| ||||||||
90,025,957 | ||||||||
| ||||||||
Biotechnology–0.53% |
| |||||||
Exact Sciences Corp.(b) | 177,813 | 15,469,731 | ||||||
| ||||||||
Building Products–0.94% |
| |||||||
Masco Corp. | 592,448 | 27,400,720 | ||||||
| ||||||||
Cable & Satellite–1.56% |
| |||||||
Altice USA, Inc., Class A(b) | 631,671 | 19,550,218 | ||||||
| ||||||||
Cable One, Inc. | 19,752 | 26,178,708 | ||||||
| ||||||||
45,728,926 | ||||||||
| ||||||||
Communications Equipment–1.53% |
| |||||||
Motorola Solutions, Inc. | 268,571 | 44,668,729 | ||||||
| ||||||||
Construction Materials–0.92% |
| |||||||
Martin Marietta Materials, Inc. | 103,012 | 26,979,873 | ||||||
| ||||||||
Data Processing & Outsourced Services–3.86% |
| |||||||
Black Knight, Inc.(b) | 246,026 | 15,794,869 | ||||||
|
Shares | Value | |||||||
| ||||||||
Data Processing & Outsourced Services–(continued) |
| |||||||
Euronet Worldwide, Inc.(b) | 191,505 | $ | 26,824,105 | |||||
| ||||||||
Global Payments, Inc. | 221,150 | 37,414,157 | ||||||
| ||||||||
WEX, Inc.(b) | 174,254 | 32,965,372 | ||||||
| ||||||||
112,998,503 | ||||||||
| ||||||||
Distributors–1.92% |
| |||||||
Pool Corp. | 270,312 | 56,062,709 | ||||||
| ||||||||
Diversified Chemicals–0.23% |
| |||||||
Huntsman Corp. | 302,620 | 6,696,981 | ||||||
| ||||||||
Diversified Support Services–2.80% |
| |||||||
Cintas Corp. | 172,006 | 46,212,852 | ||||||
| ||||||||
Copart, Inc.(b) | 433,438 | 35,819,316 | ||||||
| ||||||||
82,032,168 | ||||||||
| ||||||||
Education Services–1.82% |
| |||||||
Bright Horizons Family Solutions, Inc.(b) | 358,886 | 53,301,749 | ||||||
| ||||||||
Electrical Components & Equipment–0.94% |
| |||||||
AMETEK, Inc. | 301,353 | 27,619,002 | ||||||
| ||||||||
Electronic Equipment & Instruments–1.81% |
| |||||||
Keysight Technologies, Inc.(b) | 525,369 | 53,014,986 | ||||||
| ||||||||
Environmental & Facilities Services–2.56% |
| |||||||
Republic Services, Inc. | 483,568 | 42,317,036 | ||||||
| ||||||||
Waste Connections, Inc. | 351,438 | 32,472,871 | ||||||
| ||||||||
74,789,907 | ||||||||
| ||||||||
Financial Exchanges & Data–3.09% |
| |||||||
MarketAxess Holdings, Inc. | 69,665 | 25,677,822 | ||||||
| ||||||||
MSCI, Inc. | 211,294 | 49,561,121 | ||||||
| ||||||||
Tradeweb Markets, Inc., Class A | 359,378 | 15,004,032 | ||||||
| ||||||||
90,242,975 | ||||||||
| ||||||||
Health Care Equipment–6.75% |
| |||||||
DexCom, Inc.(b) | 287,088 | 44,280,453 | ||||||
| ||||||||
Edwards Lifesciences Corp.(b) | 163,473 | 38,968,694 | ||||||
| ||||||||
IDEXX Laboratories, Inc.(b) | 163,254 | 46,529,022 | ||||||
| ||||||||
Masimo Corp.(b) | 204,887 | 29,870,476 | ||||||
| ||||||||
Novocure Ltd.(b) | 129,708 | 9,292,281 | ||||||
| ||||||||
STERIS PLC | 201,768 | 28,564,296 | ||||||
| ||||||||
197,505,222 | ||||||||
| ||||||||
Health Care Supplies–2.00% |
| |||||||
Cooper Cos., Inc. (The) | 100,589 | 29,271,399 | ||||||
| ||||||||
West Pharmaceutical Services, Inc. | 202,659 | 29,150,471 | ||||||
| ||||||||
58,421,870 | ||||||||
| ||||||||
Health Care Technology–0.89% |
| |||||||
Veeva Systems, Inc., Class A(b) | 184,245 | 26,131,468 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Mid Cap Growth Fund
Shares | Value | |||||||
| ||||||||
Hotels, Resorts & Cruise Lines–0.79% |
| |||||||
Hilton Worldwide Holdings, Inc. | 237,178 | $ | 22,996,779 | |||||
| ||||||||
Household Products–1.13% |
| |||||||
Church & Dwight Co., Inc. | 474,395 | 33,179,186 | ||||||
| ||||||||
Industrial Conglomerates–2.22% |
| |||||||
Carlisle Cos., Inc. | 91,785 | 13,976,102 | ||||||
| ||||||||
Roper Technologies, Inc. | 151,262 | 50,969,243 | ||||||
| ||||||||
64,945,345 | ||||||||
| ||||||||
Industrial Machinery–1.76% |
| |||||||
IDEX Corp. | 237,791 | 36,983,634 | ||||||
| ||||||||
Woodward, Inc. | 136,930 | 14,604,954 | ||||||
| ||||||||
51,588,588 | ||||||||
| ||||||||
Industrial REITs–0.55% |
| |||||||
Americold Realty Trust | 401,515 | 16,096,736 | ||||||
| ||||||||
Insurance Brokers–1.53% |
| |||||||
Arthur J. Gallagher & Co. | 489,637 | 44,664,687 | ||||||
| ||||||||
Interactive Media & Services–1.64% |
| |||||||
IAC/InterActiveCorp.(b) | 210,854 | 47,916,572 | ||||||
| ||||||||
Internet Services & Infrastructure–0.76% |
| |||||||
Twilio, Inc., Class A(b) | 231,741 | 22,376,911 | ||||||
| ||||||||
Investment Banking & Brokerage–0.25% |
| |||||||
LPL Financial Holdings, Inc. | 90,915 | 7,349,569 | ||||||
| ||||||||
IT Consulting & Other Services–1.84% |
| |||||||
Booz Allen Hamilton Holding Corp. | 508,838 | 35,806,930 | ||||||
| ||||||||
EPAM Systems, Inc.(b) | 101,573 | 17,872,785 | ||||||
| ||||||||
53,679,715 | ||||||||
| ||||||||
Leisure Facilities–0.69% |
| |||||||
Planet Fitness, Inc., Class A(b) | 315,260 | 20,069,452 | ||||||
| ||||||||
Life Sciences Tools & Services–4.43% |
| |||||||
Bio-Rad Laboratories, Inc., Class A(b) | 76,870 | 25,491,630 | ||||||
| ||||||||
Bio-Techne Corp. | 111,253 | 23,159,537 | ||||||
| ||||||||
ICON PLC (Ireland)(b) | 246,208 | 36,167,955 | ||||||
| ||||||||
IQVIA Holdings, Inc.(b) | 310,657 | 44,865,084 | ||||||
| ||||||||
129,684,206 | ||||||||
| ||||||||
Metal & Glass Containers–1.27% |
| |||||||
Ball Corp. | 530,968 | 37,151,831 | ||||||
| ||||||||
Movies & Entertainment–2.28% |
| |||||||
Live Nation Entertainment, Inc.(b) | 669,146 | 47,174,793 | ||||||
| ||||||||
Roku, Inc.(b) | 133,056 | 19,585,843 | ||||||
| ||||||||
66,760,636 | ||||||||
| ||||||||
Office REITs–0.88% |
| |||||||
Alexandria Real Estate Equities, Inc. | 162,830 | 25,849,263 | ||||||
| ||||||||
Oil & Gas Exploration & Production–0.49% |
| |||||||
Diamondback Energy, Inc. | 166,059 | 14,241,220 | ||||||
|
Shares | Value | |||||||
| ||||||||
Oil & Gas Storage & Transportation–0.47% |
| |||||||
Cheniere Energy, Inc.(b) | 224,584 | $ | 13,823,145 | |||||
| ||||||||
Packaged Foods & Meats–1.46% |
| |||||||
McCormick & Co., Inc. | 224,918 | 36,142,073 | ||||||
| ||||||||
Simply Good Foods Co. | 265,231 | 6,508,769 | ||||||
| ||||||||
42,650,842 | ||||||||
| ||||||||
Paper Packaging–0.52% |
| |||||||
Avery Dennison Corp. | 120,059 | 15,350,744 | ||||||
| ||||||||
Railroads–0.96% |
| |||||||
Kansas City Southern | 199,167 | 28,038,730 | ||||||
| ||||||||
Real Estate Services–1.04% |
| |||||||
CBRE Group, Inc., Class A(b) | 566,115 | 30,315,458 | ||||||
| ||||||||
Regional Banks–0.66% |
| |||||||
First Republic Bank | 181,366 | 19,290,088 | ||||||
| ||||||||
Research & Consulting Services–4.03% |
| |||||||
CoStar Group, Inc.(b) | 98,753 | 54,266,749 | ||||||
| ||||||||
IHS Markit Ltd.(b) | 413,773 | 28,972,385 | ||||||
| ||||||||
TransUnion | 419,777 | 34,681,976 | ||||||
| ||||||||
117,921,110 | ||||||||
| ||||||||
Restaurants–1.43% |
| |||||||
Chipotle Mexican Grill, Inc.(b) | 53,637 | 41,738,168 | ||||||
| ||||||||
Semiconductor Equipment–3.93% |
| |||||||
KLA Corp. | 359,910 | 60,839,186 | ||||||
| ||||||||
Lam Research Corp. | 200,068 | 54,226,431 | ||||||
| ||||||||
115,065,617 | ||||||||
| ||||||||
Semiconductors–3.13% |
| |||||||
Advanced Micro Devices, | 1,093,683 | 37,108,664 | ||||||
| ||||||||
Marvell Technology Group Ltd. | 894,482 | 21,816,416 | ||||||
| ||||||||
Monolithic Power Systems, Inc. | 217,043 | 32,539,087 | ||||||
| ||||||||
91,464,167 | ||||||||
| ||||||||
Specialized REITs–1.53% |
| |||||||
SBA Communications Corp., Class A | 186,499 | 44,880,984 | ||||||
| ||||||||
Specialty Stores–1.06% |
| |||||||
Tractor Supply Co. | 326,020 | 30,978,420 | ||||||
| ||||||||
Technology Distributors–1.71% |
| |||||||
CDW Corp. | 390,453 | 49,942,843 | ||||||
| ||||||||
Trucking–0.92% | ||||||||
Old Dominion Freight Line, Inc. | 148,331 | 27,008,108 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests |
| 2,881,660,735 | ||||||
| ||||||||
Money Market Funds–1.39% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(c) | 14,195,729 | 14,195,729 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(c) | 10,139,282 | 10,143,338 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Mid Cap Growth Fund
Shares | Value | |||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(c) | 16,223,691 | $ | 16,223,690 | |||||
| ||||||||
Total Money Market Funds (Cost $40,561,743) | 40,562,757 | |||||||
| ||||||||
TOTAL INVESTMENTS IN |
| 2,922,223,492 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES–0.10% |
| 2,931,379 | ||||||
| ||||||||
NET ASSETS–100.00% | $ | 2,925,154,871 | ||||||
|
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) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2019
Information Technology | 28.20% | |||
| ||||
Industrials | 20.35 | |||
| ||||
Health Care | 14.60 | |||
| ||||
Consumer Discretionary | 13.24 | |||
| ||||
Financials | 6.15 | |||
| ||||
Communication Services | 5.48 | |||
| ||||
Real Estate | 4.00 | |||
| ||||
Materials | 2.94 | |||
| ||||
Consumer Staples | 2.59 | |||
| ||||
Energy | 0.96 | |||
| ||||
Money Market Funds Plus Other Assets Less Liabilities | 1.49 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Mid Cap Growth Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 2,881,660,735 | ||
| ||||
Investments in affiliated money market funds, at value | 40,562,757 | |||
| ||||
Receivable for: | ||||
Investments sold | 12,688,031 | |||
| ||||
Fund shares sold | 770,645 | |||
| ||||
Dividends | 406,089 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 618,809 | |||
| ||||
Other assets | 58,751 | |||
| ||||
Total assets | 2,936,765,817 | |||
| ||||
Liabilities: |
| |||
Payable for: | ||||
Investments purchased | 5,218,632 | |||
| ||||
Fund shares reacquired | 1,807,533 | |||
| ||||
Accrued fees to affiliates | 3,682,798 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 2,822 | |||
| ||||
Accrued other operating expenses | 220,667 | |||
| ||||
Trustee deferred compensation and retirement plans | 678,494 | |||
| ||||
Total liabilities | 11,610,946 | |||
| ||||
Net assets applicable to shares outstanding | $ | 2,925,154,871 | ||
| ||||
Net assets consist of: |
| |||
Shares of beneficial interest | $ | 2,032,156,169 | ||
| ||||
Distributable earnings | 892,998,702 | |||
| ||||
$ | 2,925,154,871 | |||
| ||||
Net Assets: |
| |||
Class A | $ | 2,491,943,943 | ||
| ||||
Class C | $ | 48,883,567 | ||
| ||||
Class R | $ | 25,179,953 | ||
| ||||
Class Y | $ | 142,512,505 | ||
| ||||
Class R5 | $ | 111,186,246 | ||
| ||||
Class R6 | $ | 105,448,657 | ||
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 63,028,515 | |||
| ||||
Class C | 1,754,424 | |||
| ||||
Class R | 662,841 | |||
| ||||
Class Y | 3,414,078 | |||
| ||||
Class R5 | 2,627,940 | |||
| ||||
Class R6 | 2,475,338 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 39.54 | ||
| ||||
Maximum offering price per share (Net asset value of $39.54 ÷ 94.50%) | $ | 41.84 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 27.86 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 37.99 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 41.74 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 42.31 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 42.60 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Mid Cap Growth Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $10,601) | $ | 10,929,284 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $168,473) | 610,030 | |||
| ||||
Total investment income | 11,539,314 | |||
| ||||
Expenses: | ||||
Advisory fees | 10,062,581 | |||
| ||||
Administrative services fees | 199,509 | |||
| ||||
Custodian fees | 28,087 | |||
| ||||
Distribution fees: | ||||
Class A | 3,166,305 | |||
| ||||
Class C | 235,729 | |||
| ||||
Class R | 66,416 | |||
| ||||
Transfer agent fees – A, C, R and Y | 2,646,744 | |||
| ||||
Transfer agent fees – R5 | 57,127 | |||
| ||||
Transfer agent fees – R6 | 5,975 | |||
| ||||
Trustees’ and officers’ fees and benefits | 22,359 | |||
| ||||
Registration and filing fees | 67,162 | |||
| ||||
Reports to shareholders | 166,164 | |||
| ||||
Professional services fees | 44,851 | |||
| ||||
Other | 50,364 | |||
| ||||
Total expenses | 16,819,373 | |||
| ||||
Less: Fees waived and/or expense offset arrangement(s) | (39,940 | ) | ||
| ||||
Net expenses | 16,779,433 | |||
| ||||
Net investment income (loss) | (5,240,119 | ) | ||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities (includes net gains from securities sold to affiliates of $5,564,586) | 517,551,458 | |||
| ||||
Foreign currencies | (12,318 | ) | ||
| ||||
517,539,140 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (417,543,158 | ) | ||
| ||||
Foreign currencies | 3,007 | |||
| ||||
(417,540,151 | ) | |||
| ||||
Net realized and unrealized gain | 99,998,989 | |||
| ||||
Net increase in net assets resulting from operations | $ | 94,758,870 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Mid Cap Growth Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | (5,240,119 | ) | $ | (14,234,493 | ) | ||
| ||||||||
Net realized gain | 517,539,140 | 234,796,378 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (417,540,151 | ) | 93,695,120 | |||||
| ||||||||
Net increase in net assets resulting from operations | 94,758,870 | 314,257,005 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | – | (254,259,756 | ) | |||||
| ||||||||
Class C | – | (18,703,991 | ) | |||||
| ||||||||
Class R | – | (3,128,673 | ) | |||||
| ||||||||
Class Y | – | (15,190,359 | ) | |||||
| ||||||||
Class R5 | – | (11,426,078 | ) | |||||
| ||||||||
Class R6 | – | (9,896,881 | ) | |||||
| ||||||||
Total distributions from distributable earnings | – | (312,605,738 | ) | |||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (98,372,534 | ) | 167,289,296 | |||||
| ||||||||
Class C | (7,201,357 | ) | (63,321,086 | ) | ||||
| ||||||||
Class R | (3,102,495 | ) | (639,069 | ) | ||||
| ||||||||
Class Y | (10,117,323 | ) | 13,990,046 | |||||
| ||||||||
Class R5 | (10,620,897 | ) | 7,183,187 | |||||
| ||||||||
Class R6 | 1,048,305 | 10,495,555 | ||||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (128,366,301 | ) | 134,997,929 | |||||
| ||||||||
Net increase (decrease) in net assets | (33,607,431 | ) | 136,649,196 | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 2,958,762,302 | 2,822,113,106 | ||||||
| ||||||||
End of period | $ | 2,925,154,871 | $ | 2,958,762,302 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Mid Cap Growth Fund
Financial Highlights
(Unaudited)
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 | Ratio of expenses | Ratio of net (loss) to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $ | 38.30 | $ | (0.07 | ) | $ | 1.31 | $ | 1.24 | $ | – | $ | 39.54 | 3.24 | % | $ | 2,491,944 | 1.15 | %(d) | 1.16 | %(d) | (0.38 | )%(d) | 93 | % | |||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.92 | (0.20 | ) | 3.97 | 3.77 | (4.39 | ) | 38.30 | 11.83 | 2,509,975 | 1.16 | 1.16 | (0.51 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 37.12 | (0.21 | ) | 5.29 | 5.08 | (3.28 | ) | 38.92 | 14.06 | 2,329,236 | 1.17 | 1.17 | (0.54 | ) | 51 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 33.16 | (0.20 | ) | 5.08 | 4.88 | (0.92 | ) | 37.12 | 14.94 | 2,221,949 | 1.21 | 1.21 | (0.57 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 38.74 | (0.18 | ) | (2.66 | ) | (2.84 | ) | (2.74 | ) | 33.16 | (7.43 | ) | 2,177,520 | 1.20 | 1.21 | (0.49 | ) | 60 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 37.30 | (0.15 | ) | 5.18 | 5.03 | (3.59 | ) | 38.74 | 14.39 | 2,482,328 | 1.14 | 1.19 | (0.38 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 27.08 | (0.14 | ) | 0.92 | 0.78 | – | 27.86 | 2.88 | (e) | 48,884 | 1.81 | (d)(e) | 1.81 | (d)(e) | (1.04 | )(d)(e) | 93 | |||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 29.09 | (0.35 | ) | 2.73 | 2.38 | (4.39 | ) | 27.08 | 11.00 | (e) | 54,609 | 1.87 | (e) | 1.87 | (e) | (1.22 | )(e) | 53 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 28.69 | (0.37 | ) | 4.05 | 3.68 | (3.28 | ) | 29.09 | 13.27 | (e) | 131,905 | 1.88 | (e) | 1.88 | (e) | (1.25 | )(e) | 51 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 26.01 | (0.35 | ) | 3.95 | 3.60 | (0.92 | ) | 28.69 | 14.11 | (e) | 139,950 | 1.93 | (e) | 1.93 | (e) | (1.29 | )(e) | 53 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 31.24 | (0.35 | ) | (2.14 | ) | (2.49 | ) | (2.74 | ) | 26.01 | (8.12 | )(e) | 148,892 | 1.92 | (e) | 1.93 | (e) | (1.21 | )(e) | 60 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 30.95 | (0.35 | ) | 4.23 | 3.88 | (3.59 | ) | 31.24 | 13.59 | (e) | 176,447 | 1.86 | (e) | 1.91 | (e) | (1.10 | )(e) | 61 | ||||||||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 36.84 | (0.12 | ) | 1.27 | 1.15 | – | 37.99 | 3.12 | 25,180 | 1.40 | (d) | 1.41 | (d) | (0.63 | )(d) | 93 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 37.71 | (0.28 | ) | 3.80 | 3.52 | (4.39 | ) | 36.84 | 11.53 | 27,458 | 1.41 | 1.41 | (0.76 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 36.15 | (0.30 | ) | 5.14 | 4.84 | (3.28 | ) | 37.71 | 13.76 | 28,265 | 1.42 | 1.42 | (0.79 | ) | 51 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 32.39 | (0.28 | ) | 4.96 | 4.68 | (0.92 | ) | 36.15 | 14.67 | 27,975 | 1.46 | 1.46 | (0.82 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 38.01 | (0.26 | ) | (2.62 | ) | (2.88 | ) | (2.74 | ) | 32.39 | (7.69 | ) | 29,547 | 1.45 | 1.46 | (0.74 | ) | 60 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 36.74 | (0.24 | ) | 5.10 | 4.86 | (3.59 | ) | 38.01 | 14.14 | 34,942 | 1.39 | 1.44 | (0.63 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 40.38 | (0.03 | ) | 1.39 | 1.36 | – | 41.74 | 3.37 | 142,513 | 0.90 | (d) | 0.91 | (d) | (0.13 | )(d) | 93 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 40.69 | (0.10 | ) | 4.18 | 4.08 | (4.39 | ) | 40.38 | 12.09 | 147,816 | 0.91 | 0.91 | (0.26 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.58 | (0.12 | ) | 5.51 | 5.39 | (3.28 | ) | 40.69 | 14.33 | 134,312 | 0.92 | 0.92 | (0.29 | ) | 51 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.34 | (0.12 | ) | 5.28 | 5.16 | (0.92 | ) | 38.58 | 15.24 | 132,925 | 0.96 | 0.96 | (0.32 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 39.92 | (0.09 | ) | (2.75 | ) | (2.84 | ) | (2.74 | ) | 34.34 | (7.21 | ) | 76,291 | 0.95 | 0.96 | (0.24 | ) | 60 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 38.23 | (0.05 | ) | 5.33 | 5.28 | (3.59 | ) | 39.92 | 14.70 | 80,736 | 0.89 | 0.94 | (0.13 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 40.91 | (0.01 | ) | 1.41 | 1.40 | – | 42.31 | 3.42 | 111,186 | 0.81 | (d) | 0.81 | (d) | (0.04 | )(d) | 93 | ||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 41.13 | (0.07 | ) | 4.24 | 4.17 | (4.39 | ) | 40.91 | 12.18 | 118,048 | 0.82 | 0.82 | (0.17 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 38.92 | (0.08 | ) | 5.57 | 5.49 | (3.28 | ) | 41.13 | 14.47 | 109,122 | 0.82 | 0.82 | (0.19 | ) | 51 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.59 | (0.07 | ) | 5.32 | 5.25 | (0.92 | ) | 38.92 | 15.39 | 106,223 | 0.83 | 0.83 | (0.19 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.14 | (0.04 | ) | (2.77 | ) | (2.81 | ) | (2.74 | ) | 34.59 | (7.08 | ) | 91,700 | 0.82 | 0.82 | (0.11 | ) | 60 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 38.39 | (0.02 | ) | 5.36 | 5.34 | (3.59 | ) | 40.14 | 14.80 | 86,090 | 0.81 | 0.81 | (0.05 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 41.17 | 0.01 | 1.42 | 1.43 | – | 42.60 | 3.48 | 105,449 | 0.72 | (d) | 0.73 | (d) | 0.05 | (d) | 93 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 41.33 | (0.03 | ) | 4.26 | 4.23 | (4.39 | ) | 41.17 | 12.27 | 100,856 | 0.73 | 0.73 | (0.08 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 39.06 | (0.04 | ) | 5.59 | 5.55 | (3.28 | ) | 41.33 | 14.58 | 89,273 | 0.73 | 0.73 | (0.10 | ) | 51 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 34.68 | (0.04 | ) | 5.34 | 5.30 | (0.92 | ) | 39.06 | 15.50 | 54,568 | 0.75 | 0.75 | (0.11 | ) | 53 | |||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 40.21 | (0.01 | ) | (2.78 | ) | (2.79 | ) | (2.74 | ) | 34.68 | (7.02 | ) | 49,485 | 0.73 | 0.73 | (0.02 | ) | 60 | ||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 38.41 | 0.02 | 5.37 | 5.39 | (3.59 | ) | 40.21 | 14.93 | 61,029 | 0.72 | 0.72 | 0.04 | 61 |
(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 $2,519,695, $51,729, $26,427, $148,525, $113,673 and $103,918 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.91%, 0.96%, 0.96%, 0.97%, 0.98% and 0.97% for the six months ended October 31, 2019 and the years ended April 30, 2019, 2018, 2017, 2016 and 2015, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
11 Invesco Mid Cap Growth Fund
Notes to Financial Statements
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Mid Cap Growth Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 to seek capital growth.
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 afront-end sales charge unless certain waiver criteria are met. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
12 Invesco Mid Cap Growth Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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 toone-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 |
13 Invesco Mid Cap Growth Fund
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 inDividends 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 the 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 dailymark-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 $500 million | 0.750% | |||
Next $500 million | 0.700% | |||
Over $1 billion | 0.650% |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.68%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed above) of Class A, Class 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”). 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 ornon-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, 2020. During its term, the fee waiver agreement cannot be
14 Invesco Mid Cap Growth Fund
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.
The Adviser has contractually agreed, through at least June 30, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $22,435.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% of Class C average daily net assets and up to 0.50% of Class R average daily net assets. The fees are accrued daily and paid monthly.
With respect to Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $151,709 infront-end sales commissions from the sale of Class A shares and $2,126 and $993 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $2,701 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 – | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of October 31, 2019, all of the securities in this Fund were valued based on Level 1 inputs (see the Schedule of Investments for security categories). The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule17a-7 of the 1940 Act. Further, as defined under the procedures, each
15 Invesco Mid Cap Growth Fund
transaction is effected at the current market price. Pursuant to these procedures, for thesix-month period ended October 31, 2019, the Fund engaged in securities purchases of $97,640,698 and securities sales of $39,754,663, which resulted in net realized gains of $5,564,586.
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $17,505.
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $2,710,980,461 and $2,832,859,013, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $367,157,837 | |||
| ||||
Aggregate unrealized (depreciation) of investments | (61,738,275 | ) | ||
| ||||
Net unrealized appreciation of investments | $305,419,562 | |||
|
Cost of investments for tax purposes is $2,616,803,930.
16 Invesco Mid Cap Growth Fund
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 1,857,476 | $ | 72,705,282 | 5,293,960 | $ | 202,811,605 | ||||||||||
| ||||||||||||||||
Class C | 135,633 | 3,739,218 | 549,888 | 15,462,432 | ||||||||||||
| ||||||||||||||||
Class R | 76,853 | 2,863,050 | 140,001 | 5,253,940 | ||||||||||||
| ||||||||||||||||
Class Y | 463,443 | 19,079,818 | 1,110,051 | 45,092,144 | ||||||||||||
| ||||||||||||||||
Class R5 | 186,725 | 7,890,293 | 583,744 | 23,421,457 | ||||||||||||
| ||||||||||||||||
Class R6 | 237,847 | 9,986,573 | 462,424 | 19,096,267 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | - | 7,549,869 | 242,879,270 | ||||||||||||
| ||||||||||||||||
Class C | - | - | 780,942 | 17,813,390 | ||||||||||||
| ||||||||||||||||
Class R | - | - | 100,990 | 3,127,656 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 372,715 | 12,631,297 | ||||||||||||
| ||||||||||||||||
Class R5 | - | - | 332,018 | 11,394,869 | ||||||||||||
| ||||||||||||||||
Class R6 | - | - | 283,765 | 9,798,392 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 87,577 | 3,423,257 | 1,966,180 | 67,063,265 | ||||||||||||
| ||||||||||||||||
Class C | (124,084 | ) | (3,423,257 | ) | (2,775,239 | ) | (67,063,265 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (4,457,620 | ) | (174,501,073 | ) | (9,109,199 | ) | (345,464,844 | ) | ||||||||
| ||||||||||||||||
Class C | (273,815 | ) | (7,517,318 | ) | (1,073,590 | ) | (29,533,643 | ) | ||||||||
| ||||||||||||||||
Class R | (159,277 | ) | (5,965,545 | ) | (245,158 | ) | (9,020,665 | ) | ||||||||
| ||||||||||||||||
Class Y | (709,817 | ) | (29,197,141 | ) | (1,123,010 | ) | (43,733,395 | ) | ||||||||
| ||||||||||||||||
Class R5 | (444,224 | ) | (18,511,190 | ) | (683,592 | ) | (27,633,139 | ) | ||||||||
| ||||||||||||||||
Class R6 | (211,996 | ) | (8,938,268 | ) | (456,886 | ) | (18,399,104 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (3,335,279 | ) | $ | (128,366,301 | ) | 4,059,873 | $ | 134,997,929 | ||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 32% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco Oppenheimer Discovery Mid Cap Growth Fund (the “Acquiring Fund”).
The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of the Fund will receive shares of the Acquiring Fund in exchange for their shares of the Fund, and the Fund will liquidate and cease operations.
17 Invesco Mid Cap Growth Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
HYPOTHETICAL | ||||||||||||
(5% annual return before | ||||||||||||
ACTUAL | expenses) | |||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||
(05/01/19) | (10/31/19)1 | Period2 | (10/31/19) | Period2 | Ratio | |||||||
Class A | $1,000.00 | $1,032.40 | $5.88 | $1,019.36 | $5.84 | 1.15% | ||||||
Class C | 1,000.00 | 1,028.80 | 9.23 | 1,016.04 | 9.17 | 1.81 | ||||||
Class R | 1,000.00 | 1,031.20 | 7.15 | 1,018.10 | 7.10 | 1.40 | ||||||
Class Y | 1,000.00 | 1,033.70 | 4.60 | 1,020.61 | 4.57 | 0.90 | ||||||
Class R5 | 1,000.00 | 1,034.20 | 4.14 | �� 1,021.06 | 4.12 | 0.81 | ||||||
Class R6 | 1,000.00 | 1,034.80 | 3.68 | 1,021.52 | 3.66 | 0.72 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
18 Invesco Mid Cap Growth Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Mid Cap Growth Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C.Advisory andSub-Advisory Fees
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 at a common asset level. 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
19 Invesco Mid Cap Growth Fund
group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D.Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
20 Invesco Mid Cap Growth Fund
21 Invesco Mid Cap Growth Fund
22 Invesco Mid Cap Growth Fund
23
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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
|
SEC file numbers: 811-03826 and 002-85905 Invesco Distributors, Inc. VK-MCG-SAR-1
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Semiannual Report to Shareholders
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October 31, 2019 | |||
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Invesco Small Cap Value Fund
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Nasdaq: | ||||
A: VSCAX ∎ C: VSMCX ∎ Y: VSMIX ∎ R6: SMVSX |
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2 | Letters to Shareholders | |||
3 | Fund Performance | |||
5 | Schedule of Investments | |||
7 | Financial Statements | |||
10 | Financial Highlights | |||
11 | Notes to Financial Statements | |||
17 | Fund Expenses | |||
18 | Approval of Investment Advisory andSub-Advisory Contracts |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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
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: 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 andsub-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.
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
Andrew Schlossberg | 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Small Cap Value Fund
Fund Performance
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | -4.54 | % | ||
Class C Shares | -4.82 | |||
Class Y Shares | -4.35 | |||
Class R6 Shares | -4.33 | |||
S&P 500 Indexq(Broad Market Index) | 4.16 | |||
Russell 2000 Value Indexq (Style-Specific Index) | -0.53 | |||
LipperSmall-Cap Value Funds Index⬛(Peer Group Index) | -2.21 | |||
Source(s):qRIMES Technologies Corp.;⬛Lipper Inc. | ||||
TheS&P 500®Indexis an unmanaged index considered representative of the US stock market. |
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TheRussell 2000®Value Indexis an unmanaged index considered representative ofsmall-cap value stocks. The Russell 2000 Value Index is a trademark/service mark of the Frank Russell Co. Russell®is a trademark of the Frank Russell Co. |
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TheLipperSmall-Cap Value Funds Indexis an unmanaged index considered representative ofsmall-cap value funds tracked by Lipper. |
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The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. |
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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.
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For more information about your Fund
Read the most recent quarterly commentary from your Fund’s portfolio managers by visitinginvesco.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, visitblog.invesco.us.com,where many of Invesco’s investment professionals share their insights about market and economic news and trends.
3 Invesco Small Cap Value Fund
Average Annual Total Returns |
| |||
As of 10/31/19, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (6/21/99) | 9.22 | % | ||
10 Years | 10.21 | |||
5 Years | 2.80 | |||
1 Year | -1.60 | |||
Class C Shares | ||||
Inception (6/21/99) | 9.12 | % | ||
10 Years | 10.01 | |||
5 Years | 3.19 | |||
1 Year | 2.65 | |||
Class Y Shares | ||||
Inception (8/12/05) | 8.55 | % | ||
10 Years | 11.11 | |||
5 Years | 4.22 | |||
1 Year | 4.40 | |||
Class R6 Shares | ||||
10 Years | 10.95 | % | ||
5 Years | 4.18 | |||
1 Year | 4.52 |
Effective June 1, 2010, Class A, Class C and Class I shares of the predecessor fund, Van Kampen Small Cap Value Fund, advised by Van Kampen Asset Management were reorganized into Class A, Class C and Class Y shares, respectively, of Invesco Van Kampen Small Cap Value Fund (renamed Invesco Small Cap Value Fund). Returns shown above, prior to June 1, 2010, for Class A, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Small Cap Value Fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R6 shares incepted on February 7, 2017. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A shares and includes the12b-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 recentmonth-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.
Average Annual Total Returns |
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (6/21/99) | 9.22 | % | ||
10 Years | 9.62 | |||
5 Years | 2.81 | |||
1 Year | -13.84 | |||
Class C Shares | ||||
Inception (6/21/99) | 9.11 | % | ||
10 Years | 9.40 | |||
5 Years | 3.20 | |||
1 Year | -10.19 | |||
Class Y Shares | ||||
Inception (8/12/05) | 8.53 | % | ||
10 Years | 10.50 | |||
5 Years | 4.22 | |||
1 Year | -8.64 | |||
Class R6 Shares | ||||
10 Years | 10.35 | % | ||
5 Years | 4.19 | |||
1 Year | -8.49 |
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 Y and Class R6 shares was 1.12%, 1.87%, 0.87% and 0.71%, 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 afront-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.
4 Invesco Small Cap Value Fund
Schedule of Investments(a)
October 31, 2019
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–97.40% |
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Agricultural & Farm Machinery–2.56% |
| |||||||
AGCO Corp. | 437,594 | $ | 33,559,084 | |||||
Auto Parts & Equipment–6.11% |
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Dana, Inc. | 2,092,140 | 33,955,432 | ||||||
Delphi Technologies PLC | 2,470,668 | 30,166,856 | ||||||
Motorcar Parts of America, Inc.(b) | 788,109 | 15,021,358 | ||||||
Visteon Corp.(b) | 9,400 | 874,388 | ||||||
80,018,034 | ||||||||
Building Products–8.07% |
| |||||||
Builders FirstSource, Inc.(b) | 1,041,712 | 23,553,108 | ||||||
JELD-WEN Holding, Inc.(b) | 1,090,600 | 18,638,354 | ||||||
Masco Corp. | 322,451 | 14,913,359 | ||||||
Masonite International Corp.(b) | 54,300 | 3,334,563 | ||||||
Owens Corning | 679,900 | 41,664,272 | ||||||
PGT Innovations, Inc.(b) | 198,140 | 3,499,153 | ||||||
105,602,809 | ||||||||
Construction & Engineering–5.88% |
| |||||||
AECOM(b) | 1,121,689 | 44,878,777 | ||||||
Fluor Corp. | 831,200 | 13,390,632 | ||||||
Valmont Industries, Inc. | 136,500 | 18,726,435 | ||||||
76,995,844 | ||||||||
Construction Machinery & Heavy Trucks–1.50% |
| |||||||
Astec Industries, Inc. | 63,967 | 2,244,602 | ||||||
REV Group, Inc. | 1,393,369 | 17,333,510 | ||||||
19,578,112 | ||||||||
Consumer Finance–0.87% | ||||||||
SLM Corp. | 1,345,300 | 11,354,332 | ||||||
Distributors–3.11% | ||||||||
LKQ Corp.(b) | 1,199,500 | 40,771,005 | ||||||
Diversified Chemicals–3.88% | ||||||||
Chemours Co. (The) | 1,120,804 | 18,392,394 | ||||||
Huntsman Corp. | 1,463,300 | 32,382,829 | ||||||
50,775,223 | ||||||||
Diversified Metals & Mining–0.00% |
| |||||||
Ferroglobe Representation & Warranty Insurance Trust(b)(c) | 1,203,948 | 0 | ||||||
Electronic Manufacturing Services–3.47% |
| |||||||
Flex Ltd.(b) | 3,730,939 | 43,838,533 | ||||||
Sanmina Corp.(b) | 49,971 | 1,535,609 | ||||||
45,374,142 | ||||||||
Environmental & Facilities Services–2.39% |
| |||||||
Stericycle, Inc.(b) | 250,440 | 14,425,344 |
Shares | Value | |||||||
Environmental & Facilities Services–(continued) |
| |||||||
Team, Inc.(b) | 931,007 | $ | 16,907,087 | |||||
31,332,431 | ||||||||
Health Care Distributors–1.39% |
| |||||||
McKesson Corp. | 136,400 | 18,141,200 | ||||||
Health Care Facilities–2.81% |
| |||||||
Brookdale Senior Living, Inc.(b) | 4,426,803 | 32,537,002 | ||||||
Capital Senior Living Corp.(b) | 993,100 | 4,081,641 | ||||||
Hanger, Inc.(b) | 6,500 | 146,965 | ||||||
36,765,608 | ||||||||
Home Furnishings–0.59% | ||||||||
Ethan Allen Interiors, Inc. | 392,900 | 7,744,059 | ||||||
Homebuilding–1.15% | ||||||||
TopBuild Corp.(b) | 145,400 | 15,111,422 | ||||||
Household Products–5.98% |
| |||||||
Energizer Holdings, Inc. | 1,126,600 | 47,869,234 | ||||||
Spectrum Brands Holdings, Inc. | 605,744 | 30,414,406 | ||||||
78,283,640 | ||||||||
Human Resource & Employment Services–0.11% |
| |||||||
ManpowerGroup, Inc. | 7,933 | 721,268 | ||||||
TrueBlue, Inc.(b) | 31,554 | 722,587 | ||||||
1,443,855 | ||||||||
Industrial Conglomerates–2.11% |
| |||||||
Carlisle Cos., Inc. | 181,800 | 27,682,686 | ||||||
Industrial Machinery–3.25% |
| |||||||
Hillenbrand, Inc. | 564,400 | 17,377,876 | ||||||
Timken Co. (The) | 514,600 | 25,215,400 | ||||||
42,593,276 | ||||||||
Investment Banking & Brokerage–0.87% |
| |||||||
Greenhill & Co., Inc. | 30,222 | 489,596 | ||||||
Stifel Financial Corp. | 195,100 | 10,921,699 | ||||||
11,411,295 | ||||||||
Life & Health Insurance–2.68% |
| |||||||
CNO Financial Group, Inc. | 2,241,318 | 35,076,627 | ||||||
Metal & Glass Containers–3.17% | ||||||||
Crown Holdings, Inc.(b) | 570,300 | 41,540,652 | ||||||
Oil & Gas Equipment & Services–1.79% |
| |||||||
Forum Energy Technologies, Inc.(b) | 401,800 | 466,088 | ||||||
Helix Energy Solutions Group, Inc.(b) | 2,080,800 | 17,874,072 | ||||||
NexTier Oilfield Solutions, Inc.(b) | 1,180,977 | 5,101,818 | ||||||
23,441,978 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Small Cap Value Fund
Shares | Value | |||||||
Oil & Gas Exploration & Production–4.41% |
| |||||||
Noble Energy, Inc. | 732,800 | $ | 14,113,728 | |||||
Northern Oil and Gas, Inc.(b) | 5,126,398 | 10,047,740 | ||||||
Parsley Energy, Inc., Class A | 1,827,900 | 28,899,099 | ||||||
QEP Resources, Inc. | 1,405,400 | 4,679,982 | ||||||
57,740,549 | ||||||||
Paper Packaging–3.04% | ||||||||
Sealed Air Corp. | 953,200 | 39,815,164 | ||||||
Pharmaceuticals–2.27% | ||||||||
Mylan N.V.(b) | 1,550,200 | 29,686,330 | ||||||
Regional Banks–2.43% | ||||||||
First Horizon National Corp. | 1,993,767 | 31,840,459 | ||||||
Research & Consulting Services–0.56% |
| |||||||
Resources Connection, Inc. | 502,260 | 7,358,109 | ||||||
Semiconductor Equipment–2.29% |
| |||||||
Kulicke & Soffa Industries, Inc. (Singapore) | 1,260,200 | 29,923,449 | ||||||
Specialty Chemicals–1.45% | ||||||||
Flotek Industries, Inc.(b) | 2,176,500 | 4,157,115 | ||||||
Kraton Corp.(b) | 660,107 | 14,799,599 | ||||||
18,956,714 | ||||||||
Steel–5.10% |
| |||||||
Allegheny Technologies, Inc.(b) | 1,313,516 | 27,596,971 | ||||||
Carpenter Technology Corp. | 799,404 | 39,186,784 | ||||||
66,783,755 |
Shares | Value | |||||||
Thrifts & Mortgage Finance–7.43% |
| |||||||
Axos Financial, Inc.(b) | 907,312 | $ | 26,357,414 | |||||
MGIC Investment Corp. | 2,937,413 | 40,271,932 | ||||||
Radian Group, Inc. | 1,222,586 | 30,686,908 | ||||||
97,316,254 | ||||||||
Trading Companies & Distributors–4.68% |
| |||||||
Beacon Roofing Supply, Inc.(b) | 658,137 | 20,428,573 | ||||||
BMC Stock Holdings, Inc.(b) | 128,195 | 3,459,983 | ||||||
DXP Enterprises, Inc.(b) | 160,600 | 5,543,912 | ||||||
WESCO International, Inc.(b) | 635,900 | 31,890,385 | ||||||
61,322,853 | ||||||||
Total Common Stocks & Other Equity Interests |
| 1,275,340,950 | ||||||
Money Market Funds–2.60% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(d) | 11,898,595 | 11,898,595 | ||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(d) | 8,498,253 | 8,501,653 | ||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(d) | 13,598,394 | 13,598,394 | ||||||
Total Money Market Funds |
| 33,998,642 | ||||||
TOTAL INVESTMENTS IN SECURITIES-100.00% |
| 1,309,339,592 | ||||||
OTHER ASSETS LESS LIABILITIES–0.00% |
| 26,151 | ||||||
NET ASSETS-100.00% | $ | 1,309,365,743 |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | Security valued using significant unobservable inputs (Level 3). See Note 3. |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2019
Industrials | 31.11 | % | ||
Materials | 16.64 | |||
Financials | 14.28 | |||
Consumer Discretionary | 10.96 | |||
Health Care | 6.47 | |||
Energy | 6.20 | |||
Consumer Staples | 5.98 | |||
Information Technology | 5.76 | |||
Money Market Funds Plus Other Assets Less Liabilities | 2.60 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Small Cap Value Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 1,275,340,950 | ||
Investments in affiliated money market funds, at value | 33,998,642 | |||
Receivable for: | ||||
Investments sold | 7,910,349 | |||
Fund shares sold | 500,676 | |||
Dividends | 469,717 | |||
Investment for trustee deferred compensation and retirement plans | 263,403 | |||
Other assets | 37,698 | |||
Total assets | 1,318,521,435 | |||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 4,784,868 | |||
Fund shares reacquired | 2,222,329 | |||
Accrued fees to affiliates | 1,707,077 | |||
Accrued trustees’ and officers’ fees and benefits | 3,098 | |||
Accrued other operating expenses | 146,460 | |||
Trustee deferred compensation and retirement plans | 291,860 | |||
Total liabilities | 9,155,692 | |||
Net assets applicable to shares outstanding | $ | 1,309,365,743 | ||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 1,307,102,284 | ||
Distributable earnings | 2,263,459 | |||
$ | 1,309,365,743 |
Net Assets: | ||||
Class A | $ | 546,386,500 | ||
Class C | $ | 13,966,364 | ||
Class Y | $ | 679,086,013 | ||
Class R6 | $ | 69,926,866 | ||
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 40,589,824 | |||
Class C | 1,642,908 | |||
Class Y | 47,489,309 | |||
Class R6 | 4,864,183 | |||
Class A: | ||||
Net asset value per share | $ | 13.46 | ||
Maximum offering price per share (Net asset value of $13.46 ÷ 94.50%) | $ | 14.24 | ||
Class C: | ||||
Net asset value and offering price per share | $ | 8.50 | ||
Class Y: | ||||
Net asset value and offering price per share | $ | 14.30 | ||
Class R6: | ||||
Net asset value and offering price per share | $ | 14.38 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Small Cap Value Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends | $ | 7,836,620 | ||
| ||||
Dividends from affiliated money market funds | 425,155 | |||
| ||||
Total investment income | 8,261,775 | |||
| ||||
Expenses: | ||||
Advisory fees | 4,537,350 | |||
| ||||
Administrative services fees | 109,222 | |||
| ||||
Custodian fees | 11,533 | |||
| ||||
Distribution fees: | ||||
Class A | 726,589 | |||
| ||||
Class C | 84,553 | |||
| ||||
Transfer agent fees - A, C and Y | 1,253,097 | |||
| ||||
Transfer agent fees - R6 | 6,867 | |||
| ||||
Trustees’ and officers’ fees and benefits | 16,515 | |||
| ||||
Registration and filing fees | 39,922 | |||
| ||||
Reports to shareholders | 78,699 | |||
| ||||
Professional services fees | 31,110 | |||
| ||||
Other | 40,599 | |||
| ||||
Total expenses | 6,936,056 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (25,056 | ) | ||
| ||||
Net expenses | 6,911,000 | |||
| ||||
Net investment income | 1,350,775 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from Investment securities (includes net gains from securities sold to affiliates of $ 2,531,127) | 36,990,274 | |||
| ||||
Change in net unrealized appreciation (depreciation) of Investment securities | (118,191,402 | ) | ||
| ||||
Net realized and unrealized gain (loss) | (81,201,128 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (79,850,353 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Small Cap Value Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | 1,350,775 | $ | (1,779,758 | ) | |||
| ||||||||
Net realized gain | 36,990,274 | 85,150,289 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (118,191,402 | ) | (198,347,184 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (79,850,353 | ) | (114,976,653 | ) | ||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | - | (132,802,646 | ) | |||||
| ||||||||
Class C | - | (14,194,064 | ) | |||||
| ||||||||
Class Y | - | (177,702,688 | ) | |||||
| ||||||||
Class R6 | - | (7,472,773 | ) | |||||
| ||||||||
Total distributions from distributable earnings | - | (332,172,171 | ) | |||||
| ||||||||
Share transactions-net: | ||||||||
Class A | (82,693,793 | ) | (101,574,893 | ) | ||||
| ||||||||
Class C | (6,913,803 | ) | (34,019,574 | ) | ||||
| ||||||||
Class Y | (153,646,183 | ) | (276,425,272 | ) | ||||
| ||||||||
Class R6 | 7,011,092 | 49,772,898 | ||||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (236,242,687 | ) | (362,246,841 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (316,093,040 | ) | (809,395,665 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 1,625,458,783 | 2,434,854,448 | ||||||
| ||||||||
End of period | $ | 1,309,365,743 | $ | 1,625,458,783 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Small Cap Value Fund
Financial Highlights
(Unaudited)
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 on | Total from | Dividends net | Distributions net realized | Total distributions | Net of period | Total return (b) | Net of period | Ratio of | Ratio of | Ratio of investment | Portfolio turnover (c) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $14.10 | $ | 0.00 | $ | (0.64 | ) | $ | (0.64 | ) | $ | – | $ | – | $ | – | $ | 13.46 | (4.54 | )% | $ | 546,387 | 1.13 | %(d) | 1.13 | %(d) | 0.05 | %(d) | 13 | % | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 18.53 | (0.04 | ) | (1.22 | ) | (1.26 | ) | – | (3.17 | ) | (3.17 | ) | 14.10 | (3.16 | ) | 662,115 | 1.12 | 1.12 | (0.22 | ) | 43 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 19.44 | (0.06 | ) | 2.31 | 2.25 | – | (3.16 | ) | (3.16 | ) | 18.53 | 11.32 | 933,986 | 1.12 | 1.12 | (0.31 | ) | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 16.21 | (0.02 | ) | 3.60 | 3.58 | (0.03 | ) | (0.32 | ) | (0.35 | ) | 19.44 | 22.14 | 1,094,070 | 1.10 | 1.11 | (0.12 | ) | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 20.33 | 0.04 | (2.37 | ) | (2.33 | ) | (0.01 | ) | (1.78 | ) | (1.79 | ) | 16.21 | (11.43 | ) | 1,320,826 | 1.11 | 1.11 | 0.24 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 22.75 | (0.00 | ) | 0.95 | 0.95 | – | (3.37 | ) | (3.37 | ) | 20.33 | 5.59 | 1,751,109 | 1.13 | 1.13 | (0.02 | ) | 44 | |||||||||||||||||||||||||||||||||||||||||||||||||
Class C | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 8.93 | (0.03 | ) | (0.40 | ) | (0.43 | ) | – | – | – | 8.50 | (4.82 | )(e) | 13,966 | 1.82 | (d)(e) | 1.82 | (d)(e) | (0.64 | )(d)(e) | 13 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 13.29 | (0.11 | ) | (1.08 | ) | (1.19 | ) | – | (3.17 | ) | (3.17 | ) | 8.93 | (3.98 | ) | 22,059 | 1.87 | 1.87 | (0.97 | ) | 43 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 14.83 | (0.15 | ) | 1.77 | 1.62 | – | (3.16 | ) | (3.16 | ) | 13.29 | 10.53 | (e) | 76,302 | 1.86 | (e) | 1.86 | (e) | (1.05 | )(e) | 28 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 12.50 | (0.12 | ) | 2.76 | 2.65 | – | (0.32 | ) | (0.32 | ) | 14.83 | 21.23 | (e) | 95,892 | 1.84 | (e) | 1.85 | (e) | (0.86 | )(e) | 32 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 16.25 | (0.07 | ) | (1.90 | ) | (1.97 | ) | – | (1.78 | ) | (1.78 | ) | 12.50 | (12.11 | ) | 107,647 | 1.86 | 1.86 | (0.51 | ) | 45 | ||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 19.02 | (0.13 | ) | 0.73 | 0.60 | – | (3.37 | ) | (3.37 | ) | 16.25 | 4.80 | (e) | 151,196 | 1.86 | (e) | 1.86 | (e) | (0.75 | )(e) | 44 | ||||||||||||||||||||||||||||||||||||||||||||||
Class Y | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 14.95 | 0.02 | (0.67 | ) | (0.65 | ) | – | – | – | 14.30 | (4.35 | ) | 679,086 | 0.88 | (d) | 0.88 | (d) | 0.30 | (d) | 13 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 19.37 | 0.01 | (1.26 | ) | (1.25 | ) | – | (3.17 | ) | (3.17 | ) | 14.95 | (2.97 | ) | 875,875 | 0.87 | 0.87 | 0.03 | 43 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 20.15 | (0.01 | ) | 2.39 | 2.38 | – | (3.16 | ) | (3.16 | ) | 19.37 | 11.58 | 1,397,754 | 0.87 | 0.87 | (0.06 | ) | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 16.79 | 0.02 | 3.74 | 3.76 | (0.08 | ) | (0.32 | ) | (0.40 | ) | 20.15 | 22.45 | 1,445,051 | 0.85 | 0.86 | 0.13 | 32 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 20.97 | 0.09 | (2.45 | ) | (2.36 | ) | (0.04 | ) | (1.78 | ) | (1.82 | ) | 16.79 | (11.19 | ) | 1,329,637 | 0.86 | 0.86 | 0.49 | 45 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 23.31 | 0.05 | 0.98 | 1.03 | – | (3.37 | ) | (3.37 | ) | 20.97 | 5.81 | 1,614,118 | 0.88 | 0.88 | 0.23 | 44 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Class R6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 15.02 | 0.03 | (0.67 | ) | (0.64 | ) | – | – | – | 14.38 | (4.26 | ) | 69,927 | 0.72 | (d) | 0.72 | (d) | 0.46 | (d) | 13 | |||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 19.41 | 0.03 | (1.25 | ) | (1.22 | ) | – | (3.17 | ) | (3.17 | ) | 15.02 | (2.80 | ) | 65,409 | 0.71 | 0.71 | 0.19 | 43 | ||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 20.16 | 0.02 | 2.39 | 2.41 | – | (3.16 | ) | (3.16 | ) | 19.41 | 11.73 | 26,813 | 0.69 | 0.69 | 0.12 | 28 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17(f) | 20.29 | 0.01 | (0.14 | ) | (0.13 | ) | – | – | – | 20.16 | (0.64 | ) | 469 | 0.72 | (g) | 0.72 | (g) | 0.26 | (g) | 32 |
(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 $578,284, $17,775, $735,812 and $63,351 for Class A, Class C, Class Y and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.95% for the six months ended October 31, 2019 and 0.99% for the years ended April 30, 2018, 2017 and 2015, respectively. |
(f) | Commencement date of February 7, 2017. (g) Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Small Cap Value Fund
Notes to Financial Statements
October 31, 2019
(Unaudited)
NOTE 1 – Significant Accounting Policies
Invesco Small Cap Value Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 afront-end sales charge unless certain waiver criteria are met. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco Small Cap Value Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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 the 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 |
12 Invesco Small Cap Value Fund
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 dailymark-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 $ 500 million | 0.670 | % | ||||
Next $500 million | 0.645 | % | ||||
Over $1 billion | 0.620 | % |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.65%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waivers and/or expense reimbursements (excluding certain items discussed below) of Class A, Class C, Class Y and Class R6 shares to 2.00%, 2.75%, 1.75% and 1.75%, respectively, of average daily net assets (the “expense limits”). 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 ornon-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, 2020. 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, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $23,711.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations as Administrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations as Transfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A shares and Class C shares to compensate IDI for the sale, distribution, shareholder
13 Invesco Small Cap Value Fund
servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets and up to 1.00% of Class C average daily net assets. The fees are accrued daily and paid monthly.
With respect to Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For thesix-month period ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations as
Distribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $14,557 infront-end sales commissions from the sale of Class A shares and $6 and $8 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $7,195 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3 – Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 - | Prices are determined using quoted prices in an active market for identical assets. | |||
Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |||
Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | $1,275,340,950 | $– | $0 | $1,275,340,950 | ||||||||||||
| ||||||||||||||||
Money Market Funds | 33,998,642 | – | – | 33,998,642 | ||||||||||||
| ||||||||||||||||
Total Investments | $1,309,339,592 | $– | $0 | $1,309,339,592 | ||||||||||||
|
NOTE 4 – Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for thesix-month period ended October 31, 2019, the Fund engaged in securities purchases of $0 and securities sales of $3,293,460, which resulted in net realized gains of $2,531,127.
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $1,345.
NOTE 6 – Trustees’ and Officers’ Fees and Benefits
Trustees’ andOfficers’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, andTrustees’ 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
14 Invesco Small Cap Value Fund
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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $183,630,491 and $384,690,467, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 193,200,322 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (225,162,845 | ) | ||
| ||||
Net unrealized appreciation (depreciation) of investments | $ | (31,962,523 | ) | |
|
Cost of investments for tax purposes is $1,341,302,115.
NOTE 10 – Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
October 31, 2019(a) | April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 2,214,272 | $ | 29,212,610 | 6,438,723 | $ | 99,781,448 | ||||||||||
| ||||||||||||||||
Class C | 78,015 | 649,800 | 291,115 | 2,707,631 | ||||||||||||
| ||||||||||||||||
Class Y | 3,802,640 | 53,074,114 | 12,975,591 | 209,325,329 | ||||||||||||
| ||||||||||||||||
Class R6 | 985,870 | 13,620,165 | 4,523,594 | 75,108,753 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | - | 10,919,128 | 126,771,080 | ||||||||||||
| ||||||||||||||||
Class C | - | - | 1,808,563 | 13,347,193 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 12,834,262 | 157,989,771 | ||||||||||||
| ||||||||||||||||
Class R6 | - | - | 601,408 | 7,433,399 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 313,524 | 4,125,172 | 2,045,445 | 26,511,273 | ||||||||||||
| ||||||||||||||||
Class C | (495,785 | ) | (4,125,172 | ) | (3,220,634 | ) | (26,511,273 | ) | ||||||||
|
15 Invesco Small Cap Value Fund
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended | Year ended | |||||||||||||||
October 31, 2019(a) | April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (8,910,352 | ) | $ | (116,031,575 | ) | (22,831,931 | ) | $ | (354,638,694 | ) | ||||||
| ||||||||||||||||
Class C | (408,775 | ) | (3,438,431 | ) | (2,151,563 | ) | (23,563,125 | ) | ||||||||
| ||||||||||||||||
Class Y | (14,881,752 | ) | (206,720,297 | ) | (39,393,058 | ) | (643,740,372 | ) | ||||||||
| ||||||||||||||||
Class R6 | (475,967 | ) | (6,609,073 | ) | (2,151,890 | ) | (32,769,254 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (17,778,310 | ) | $ | (236,242,687 | ) | (17,311,247 | ) | $ | (362,246,841 | ) | ||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 29% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
NOTE 11–Subsequent Events
Effective December 10, 2019, the Fund began offering Class R shares.
Additionally, the Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco Oppenheimer Small Cap Value Fund (the “Target Fund”) in exchange for shares of the Fund.
The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of the Target Fund will receive shares of the Fund in exchange for their shares of the Target Fund, and the Target Fund will liquidate and cease operations.
16 Invesco Small Cap Value Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before expenses) | Annualized Expense Ratio | ||||||||||||||||||||||||||||
Beginning Account Value (05/01/19) | Ending Account Value (10/31/19)1 | Expenses Paid During Period2 | Ending Account Value (10/31/19) | Expenses Paid During Period2 | ||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 954.60 | $ | 5.55 | $ | 1,019.46 | $ | 5.74 | 1.13 | % | ||||||||||||||||||
Class C | 1,000.00 | 951.80 | 8.93 | 1,015.99 | 9.22 | 1.82 | ||||||||||||||||||||||||
Class Y | 1,000.00 | 956.50 | 4.33 | 1,020.71 | 4.47 | 0.88 | ||||||||||||||||||||||||
Class R6 | 1,000.00 | 957.40 | 3.54 | 1,021.52 | 3.66 | 0.72 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
17 Invesco Small Cap Value Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Small Cap Value Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. Advisory andSub-Advisory Fees
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 at a common asset level. 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
18 Invesco Small Cap Value Fund
group. The Board noted that the term
“contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D.Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco Small Cap Value Fund
20
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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
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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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers:811-03826 and002-85905 | Invesco Distributors, Inc. | VK-SCV-SAR-1 |
Semiannual Report to Shareholders
|
October 31, 2019
| |||
Invesco Technology Fund | ||||
Nasdaq: | ||||
A: ITYAX∎ C: ITHCX∎ Y: ITYYX∎ Investor: FTCHX∎ R5: FTPIX∎ R6: FTPSX |
2 | ||||
3 | ||||
5 | ||||
7 | ||||
10 | ||||
11 | ||||
17 | ||||
18 |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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 |
| ||
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: 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 andsub-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. | ||
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 |
Andrew Schlossberg | 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. | ||
Invesco’s efforts to help investors achieve their financial objectives include providing | ||
In addition to the resources accessible on our website, you can obtain timely updates to | ||
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246. | ||
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us. | ||
Sincerely, | ||
Andrew Schlossberg | ||
Head of the Americas, | ||
Senior Managing Director, Invesco Ltd. |
2 Invesco Technology Fund
Performance summary
| ||||
Fund vs. Indexes | ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares | 2.44 | % | ||
Class C Shares | 2.04 | |||
Class Y Shares | 2.53 | |||
Investor Class Shares | 2.45 | |||
Class R5 Shares | 2.62 | |||
Class R6 Shares | 2.65 | |||
Nasdaq Composite Indexq(Broad Market/Style-Specific Index) | 3.00 | |||
Lipper Science & Technology Funds Index∎(Peer Group Index) | 0.79 | |||
Source(s):qBloomberg LP;⬛Lipper Inc.
| ||||
TheNasdaq Composite Indexis a broad-based, market index of the common stocks and similar securities listed on the Nasdaq stock market. TheLipper Science & Technology Funds Indexis an unmanaged index considered representative of science and technology funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
|
3 Invesco Technology Fund
Average Annual Total Returns |
| |||
As of 10/31/19, including maximum applicable sales charges
|
| |||
Class A Shares | ||||
Inception (3/28/02) | 5.72 | % | ||
10 Years | 12.95 | |||
5 Years | 11.16 | |||
1 Year | 8.62 | |||
Class C Shares | ||||
Inception (2/14/00) | -0.78 | % | ||
10 Years | 12.75 | |||
5 Years | 11.57 | |||
1 Year | 13.09 | |||
Class Y Shares | ||||
Inception (10/3/08) | 13.74 | % | ||
10 Years | 13.87 | |||
5 Years | 12.70 | |||
1 Year | 15.22 | |||
Investor Class Shares |
| |||
Inception (1/19/84) | 10.30 | % | ||
10 Years | 13.68 | |||
5 Years | 12.52 | |||
1 Year | 15.03 | |||
Class R5 Shares | ||||
Inception (12/21/98) | 5.68 | % | ||
10 Years | 14.23 | |||
5 Years | 12.93 | |||
1 Year | 15.41 | |||
Class R6 Shares | ||||
10 Years | 13.72 | % | ||
5 Years | 12.67 | |||
1 Year | 15.46 |
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of Class A shares and includes the12b-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 recentmonth-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,
Average Annual Total Returns |
| |||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (3/28/02) | 5.51 | % | ||
10 Years | 12.09 | |||
5 Years | 10.90 | |||
1 Year | -7.37 | |||
Class C Shares | ||||
Inception (2/14/00) | -0.98 | % | ||
10 Years | 11.89 | |||
5 Years | 11.31 | |||
1 Year | -3.60 | |||
Class Y Shares | ||||
Inception (10/3/08) | 13.46 | % | ||
10 Years | 13.01 | |||
5 Years | 12.43 | |||
1 Year | -1.73 | |||
Investor Class Shares |
| |||
Inception (1/19/84) | 10.20 | % | ||
10 Years | 12.82 | |||
5 Years | 12.26 | |||
1 Year | -1.88 | |||
Class R5 Shares |
| |||
Inception (12/21/98) | 5.50 | % | ||
10 Years | 13.36 | |||
5 Years | 12.67 | |||
1 Year | -1.58 | |||
Class R6 Shares | ||||
10 Years | 12.85 | % | ||
5 Years | 12.40 | |||
1 Year | -1.55 |
Class Y, Investor Class, Class R5 and Class R6 shares was 1.23%, 1.98%, 0.98%, 1.11%, 0.81% and 0.80%, 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, Investor Class, Class R5 and Class R6 shares do not have afront-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 reim-
bursements. 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.
4 Invesco Technology Fund
October 31, 2019
(Unaudited)
Shares
| Value
| |||||||
Common Stocks & Other Equity Interests–99.26% |
| |||||||
Alternative Carriers–2.53% | ||||||||
Intelsat S.A.(b) | 980,653 | $ | 24,898,780 | |||||
| ||||||||
Application Software–5.12% |
| |||||||
Adobe, Inc.(b) | 38,887 | 10,807,864 | ||||||
| ||||||||
salesforce.com, inc.(b) | 165,352 | 25,875,934 | ||||||
| ||||||||
Splunk, Inc.(b) | 113,549 | 13,621,338 | ||||||
| ||||||||
50,305,136 | ||||||||
| ||||||||
Consumer Electronics–1.70% |
| |||||||
Sony Corp. (Japan) | 274,200 | 16,707,830 | ||||||
| ||||||||
Data Processing & Outsourced Services–8.62% |
| |||||||
Fidelity National Information Services, Inc. | 57,974 | 7,638,654 | ||||||
| ||||||||
Fiserv, Inc.(b) | 139,748 | 14,832,853 | ||||||
| ||||||||
Mastercard, Inc., Class A | 61,730 | 17,087,481 | ||||||
| ||||||||
PayPal Holdings, Inc.(b) | 144,199 | 15,011,116 | ||||||
| ||||||||
Visa, Inc., Class A | 168,718 | 30,176,902 | ||||||
| ||||||||
84,747,006 | ||||||||
| ||||||||
Health Care Equipment–5.00% |
| |||||||
Abbott Laboratories | 153,485 | 12,832,881 | ||||||
| ||||||||
Boston Scientific Corp.(b) | 293,313 | 12,231,152 | ||||||
| ||||||||
Intuitive Surgical, Inc.(b) | 15,083 | 8,340,145 | ||||||
| ||||||||
Teleflex, Inc. | 45,466 | 15,795,343 | ||||||
| ||||||||
49,199,521 | ||||||||
| ||||||||
Interactive Home Entertainment–9.60% |
| |||||||
Activision Blizzard, Inc. | 536,306 | 30,049,225 | ||||||
| ||||||||
Electronic Arts, Inc.(b) | 134,932 | 13,007,445 | ||||||
| ||||||||
Nintendo Co., Ltd. (Japan) | 82,200 | 29,319,020 | ||||||
| ||||||||
Sea Ltd., ADR (Taiwan)(b) | 458,679 | 13,650,287 | ||||||
| ||||||||
Take-Two Interactive Software, | 69,027 | 8,307,399 | ||||||
| ||||||||
94,333,376 | ||||||||
| ||||||||
Interactive Media & Services–12.65% |
| |||||||
Alphabet, Inc., Class A(b) | 41,794 | 52,610,287 | ||||||
| ||||||||
Alphabet, Inc., Class C(b) | 8,630 | 10,874,749 | ||||||
| ||||||||
Facebook, Inc., Class A(b) | 257,641 | 49,376,898 | ||||||
| ||||||||
Match Group, Inc.(c) | 157,961 | 11,529,574 | ||||||
| ||||||||
124,391,508 | ||||||||
| ||||||||
Internet & Direct Marketing Retail–13.99% |
| |||||||
Alibaba Group Holding Ltd., ADR (China)(b) | 273,483 | 48,316,242 | ||||||
| ||||||||
Amazon.com, Inc.(b) | 44,202 | 78,531,925 | ||||||
| ||||||||
Booking Holdings, Inc.(b) | 5,212 | 10,678,189 | ||||||
| ||||||||
137,526,356 | ||||||||
| ||||||||
Life Sciences Tools & Services–6.05% |
| |||||||
10X Genomics, Inc., Class A(b) | 98,793 | 5,729,994 | ||||||
|
Shares
| Value
| |||||||
Life Sciences Tools & Services–(continued) |
| |||||||
Illumina, Inc.(b) | 102,909 | $ | 30,411,668 | |||||
| ||||||||
IQVIA Holdings, Inc.(b) | 83,708 | 12,089,109 | ||||||
| ||||||||
Thermo Fisher Scientific, Inc. | 37,164 | 11,222,785 | ||||||
| ||||||||
59,453,556 | ||||||||
| ||||||||
Managed Health Care–0.24% |
| |||||||
UnitedHealth Group, Inc. | 9,169 | 2,317,006 | ||||||
| ||||||||
Movies & Entertainment–1.50% |
| |||||||
Netflix, Inc.(b) | 51,259 | 14,732,349 | ||||||
| ||||||||
Semiconductor Equipment–5.40% |
| |||||||
Applied Materials, Inc. | 617,089 | 33,483,249 | ||||||
| ||||||||
ASML Holding N.V., New York Shares (Netherlands) | 74,933 | 19,630,198 | ||||||
| ||||||||
53,113,447 | ||||||||
| ||||||||
Semiconductors–11.78% |
| |||||||
Broadcom, Inc. | 130,971 | 38,354,857 | ||||||
| ||||||||
NVIDIA Corp. | 60,856 | 12,233,273 | ||||||
| ||||||||
QUALCOMM, Inc. | 243,138 | 19,558,021 | ||||||
| ||||||||
Semtech Corp.(b) | 471,207 | 23,777,105 | ||||||
| ||||||||
Silicon Motion Technology Corp., ADR (Taiwan) | 521,655 | 21,935,593 | ||||||
| ||||||||
115,858,849 | ||||||||
| ||||||||
Systems Software–9.39% |
| |||||||
Microsoft Corp. | 433,048 | 62,086,092 | ||||||
| ||||||||
Palo Alto Networks, Inc.(b) | 59,142 | 13,448,299 | ||||||
| ||||||||
ServiceNow, Inc.(b) | 67,910 | 16,791,427 | ||||||
| ||||||||
92,325,818 | ||||||||
| ||||||||
Technology Hardware, Storage & Peripherals–5.34% |
| |||||||
Apple, Inc. | 211,161 | 52,528,410 | ||||||
| ||||||||
Trucking–0.35% |
| |||||||
Lyft, Inc., Class A(b) | 82,518 | 3,419,546 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests |
| 975,858,494 | ||||||
| ||||||||
Money Market Funds–1.08% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(d) | 3,727,123 | 3,727,123 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(d) | 2,662,036 | 2,663,101 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(d) | 4,259,569 | 4,259,569 | ||||||
| ||||||||
Total Money Market Funds |
| 10,649,793 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES |
| 986,508,287 | ||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Technology Fund
Shares | Value | |||||||
| ||||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–1.06% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, | 7,852,286 | $ | 7,852,286 | |||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(d)(e) | 2,616,382 | 2,617,429 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan |
| 10,469,715 | ||||||
| ||||||||
TOTAL INVESTMENTS IN |
| 996,978,002 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES-(1.40)% | (13,801,370 | ) | ||||||
| ||||||||
NET ASSETS-100.00% | $ | 983,176,632 | ||||||
|
Investment Abbreviations:
ADR – American Depositary Receipt
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | All or a portion of this security was out on loan at October 31, 2019. |
(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 October 31, 2019. |
(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 October 31, 2019
Information Technology | 45.65 | % | ||
Communication Services | 26.28 | |||
Consumer Discretionary | 15.69 | |||
Health Care | 11.29 | |||
Industrials | 0.35 | |||
Money Market Funds Plus Other Assets Less Liabilities | 0.74 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Technology Fund
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 8,744,688 | |||
| ||||
Class C | 693,499 | |||
| ||||
Class Y | 757,187 | |||
| ||||
Investor Class | 9,291,210 | |||
| ||||
Class R5 | 4,602 | |||
| ||||
Class R6 | 9,618 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 50.87 | ||
| ||||
Maximum offering price per share | $ | 53.83 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 40.01 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 51.83 | ||
| ||||
Investor Class: | ||||
Net asset value and offering price per share | $ | 50.64 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 60.72 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 60.75 | ||
|
* | At October 31, 2019, securities with an aggregate value of $10,258,202 were on loan to brokers. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Technology Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $24,919) | $ | 2,417,601 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $202,772) | 341,949 | |||
| ||||
Total investment income | 2,759,550 | |||
| ||||
Expenses: | ||||
Advisory fees | 3,179,041 | |||
| ||||
Administrative services fees | 64,763 | |||
| ||||
Custodian fees | 7,877 | |||
| ||||
Distribution fees: | ||||
Class A | 545,327 | |||
| ||||
Class C | 137,341 | |||
| ||||
Investor Class | 487,518 | |||
| ||||
Transfer agent fees– A, C, Y and Investor | 1,203,330 | |||
| ||||
Transfer agent fees – R5 | 132 | |||
| ||||
Transfer agent fees – R6 | 181 | |||
| ||||
Trustees’ and officers’ fees and benefits | 12,569 | |||
| ||||
Registration and filing fees | 44,052 | |||
| ||||
Reports to shareholders | 96,386 | |||
| ||||
Professional services fees | 40,496 | |||
| ||||
Other | 27,342 | |||
| ||||
Total expenses | 5,846,355 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (21,231 | ) | ||
| ||||
Net expenses | 5,825,124 | |||
| ||||
Net investment income (loss) | (3,065,574 | ) | ||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from: | ||||
Investment securities (includes net gains from securities sold to affiliates of $1,241,733) | 34,139,322 | |||
| ||||
Foreign currencies | 45,196 | |||
| ||||
34,184,518 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (8,260,220 | ) | ||
| ||||
Foreign currencies | (20,689 | ) | ||
| ||||
(8,280,909 | ) | |||
| ||||
Net realized and unrealized gain | 25,903,609 | |||
| ||||
Net increase in net assets resulting from operations | $ | 22,838,035 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Technology Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | (3,065,574 | ) | $ | (6,282,149 | ) | ||
| ||||||||
Net realized gain | 34,184,518 | 81,193,597 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (8,280,909 | ) | 51,310,916 | |||||
| ||||||||
Net increase in net assets resulting from operations | 22,838,035 | 126,222,364 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | – | (29,341,022 | ) | |||||
| ||||||||
Class C | – | (4,044,783 | ) | |||||
| ||||||||
Class Y | – | (2,636,792 | ) | |||||
| ||||||||
Investor Class | – | (33,562,031 | ) | |||||
| ||||||||
Class R5 | – | (14,556 | ) | |||||
| ||||||||
Class R6 | – | (2,866 | ) | |||||
| ||||||||
Total distributions from distributable earnings | – | (69,602,050 | ) | |||||
| ||||||||
Share transactions–net: | ||||||||
Class A | (8,460,744 | ) | 38,822,626 | |||||
| ||||||||
Class C | (1,007,770 | ) | (10,928,886 | ) | ||||
| ||||||||
Class Y | 5,568,361 | 4,471,260 | ||||||
| ||||||||
Investor Class | (16,386,940 | ) | (1,318,955 | ) | ||||
| ||||||||
Class R5 | 9,032 | 79,006 | ||||||
| ||||||||
Class R6 | 89,729 | 357,314 | ||||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (20,188,332 | ) | 31,482,365 | |||||
| ||||||||
Net increase in net assets | 2,649,703 | 88,102,679 | ||||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 980,526,929 | 892,424,250 | ||||||
| ||||||||
End of period | $ | 983,176,632 | $ | 980,526,929 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Technology Fund
(Unaudited)
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, (000’s omitted) | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of fee waivers | Ratio of net investment to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $49.68 | $(0.16 | ) | $ 1.35 | $ 1.19 | $ – | $50.87 | 2.40 | % | $444,855 | 1.22 | %(d) | 1.22 | %(d) | (0.65 | )%(d) | 20 | % | ||||||||||||||||||||||||||||||
Year ended 04/30/19 | 46.98 | (0.34 | ) | 6.66 | 6.32 | (3.62 | ) | 49.68 | 14.87 | 443,050 | 1.23 | 1.23 | (0.71 | ) | 48 | |||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 39.78 | (0.29 | ) | 9.31 | 9.02 | (1.82 | ) | 46.98 | 22.94 | 377,444 | 1.27 | 1.28 | (0.63 | ) | 47 | |||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 32.99 | (0.23 | ) | 9.39 | 9.16 | (2.37 | ) | 39.78 | 28.80 | 310,505 | 1.43 | 1.43 | (0.65 | ) | 49 | |||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 37.86 | (0.26 | ) | (2.09 | ) | (2.35 | ) | (2.52 | ) | 32.99 | (6.83 | ) | 279,234 | 1.39 | 1.39 | (0.70 | ) | 46 | ||||||||||||||||||||||||||||||
Year ended 04/30/15 | 37.61 | (0.35 | ) | 5.88 | 5.53 | (5.28 | ) | 37.86 | 15.27 | 311,682 | 1.40 | 1.40 | (0.89 | ) | 67 | |||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 39.21 | (0.27 | ) | 1.07 | 0.80 | – | 40.01 | 2.04 | 27,744 | 1.97 | (d) | 1.97 | (d) | (1.40 | )(d) | 20 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 38.15 | (0.57 | ) | 5.25 | 4.68 | (3.62 | ) | 39.21 | 13.98 | 28,217 | 1.98 | 1.98 | (1.46 | ) | 48 | |||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 32.84 | (0.51 | ) | 7.64 | 7.13 | (1.82 | ) | 38.15 | 22.02 | 39,954 | 2.02 | 2.03 | (1.38 | ) | 47 | |||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 27.80 | (0.42 | ) | 7.83 | 7.41 | (2.37 | ) | 32.84 | 27.85 | 29,930 | 2.18 | 2.18 | (1.40 | ) | 49 | |||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 32.53 | (0.45 | ) | (1.76 | ) | (2.21 | ) | (2.52 | ) | 27.80 | (7.53 | ) | 27,898 | 2.14 | 2.14 | (1.45 | ) | 46 | ||||||||||||||||||||||||||||||
Year ended 04/30/15 | 33.22 | (0.56 | ) | 5.15 | 4.59 | (5.28 | ) | 32.53 | 14.40 | 30,645 | 2.15 | 2.15 | (1.64 | ) | 67 | |||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 50.55 | (0.10 | ) | 1.38 | 1.28 | – | 51.83 | 2.53 | 39,243 | 0.97 | (d) | 0.97 | (d) | (0.40 | )(d) | 20 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 47.62 | (0.22 | ) | 6.77 | 6.55 | (3.62 | ) | 50.55 | 15.16 | 32,658 | 0.98 | 0.98 | (0.46 | ) | 48 | |||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 40.21 | (0.18 | ) | 9.41 | 9.23 | (1.82 | ) | 47.62 | 23.22 | 27,364 | 1.02 | 1.03 | (0.38 | ) | 47 | |||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 33.24 | (0.14 | ) | 9.48 | 9.34 | (2.37 | ) | 40.21 | 29.13 | 17,205 | 1.18 | 1.18 | (0.40 | ) | 49 | |||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 38.04 | (0.17 | ) | (2.11 | ) | (2.28 | ) | (2.52 | ) | 33.24 | (6.61 | ) | 9,256 | 1.14 | 1.14 | (0.45 | ) | 46 | ||||||||||||||||||||||||||||||
Year ended 04/30/15 | 37.67 | (0.25 | ) | 5.90 | 5.65 | (5.28 | ) | 38.04 | 15.58 | 9,013 | 1.15 | 1.15 | (0.64 | ) | 67 | |||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 49.44 | (0.15 | ) | 1.35 | 1.20 | – | 50.64 | 2.43 | (e) | 470,471 | 1.18 | (d)(e) | 1.18 | (d)(e) | (0.61 | )(d)(e) | 20 | |||||||||||||||||||||||||||||||
Year ended 04/30/19 | 46.71 | (0.28 | ) | 6.63 | 6.35 | (3.62 | ) | 49.44 | 15.02 | (e) | 475,857 | 1.11 | (e) | 1.11 | (e) | (0.59 | )(e) | 48 | ||||||||||||||||||||||||||||||
Year ended 04/30/18 | 39.53 | (0.25 | ) | 9.25 | 9.00 | (1.82 | ) | 46.71 | 23.03 | (e) | 447,456 | 1.19 | (e) | 1.20 | (e) | (0.55 | )(e) | 47 | ||||||||||||||||||||||||||||||
Year ended 04/30/17 | 32.78 | (0.21 | ) | 9.33 | 9.12 | (2.37 | ) | 39.53 | 28.86 | (e) | 384,283 | 1.35 | (e) | 1.35 | (e) | (0.57 | )(e) | 49 | ||||||||||||||||||||||||||||||
Year ended 04/30/16 | 37.60 | (0.22 | ) | (2.08 | ) | (2.30 | ) | (2.52 | ) | 32.78 | (6.73 | )(e) | 330,298 | 1.30 | (e) | 1.30 | (e) | (0.61 | )(e) | 46 | ||||||||||||||||||||||||||||
Year ended 04/30/15 | 37.34 | (0.31 | ) | 5.85 | 5.54 | (5.28 | ) | 37.60 | 15.41 | (e) | 383,681 | 1.30 | (e) | 1.30 | (e) | (0.78 | )(e) | 67 | ||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 59.18 | (0.07 | ) | 1.61 | 1.54 | – | 60.72 | 2.60 | 279 | 0.82 | (d) | 0.82 | (d) | (0.25 | )(d) | 20 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 55.03 | (0.16 | ) | 7.93 | 7.77 | (3.62 | ) | 59.18 | 15.34 | 263 | 0.81 | 0.81 | (0.29 | ) | 48 | |||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 46.14 | (0.11 | ) | 10.82 | 10.71 | (1.82 | ) | 55.03 | 23.44 | 163 | 0.85 | 0.85 | (0.21 | ) | 47 | |||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 37.74 | (0.05 | ) | 10.82 | 10.77 | (2.37 | ) | 46.14 | 29.45 | 132 | 0.92 | 0.92 | (0.14 | ) | 49 | |||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 42.75 | (0.08 | ) | (2.41 | ) | (2.49 | ) | (2.52 | ) | 37.74 | (6.36 | ) | 465 | 0.87 | 0.87 | (0.18 | ) | 46 | ||||||||||||||||||||||||||||||
Year ended 04/30/15 | 41.63 | (0.16 | ) | 6.56 | 6.40 | (5.28 | ) | 42.75 | 15.91 | 965 | 0.87 | 0.87 | (0.36 | ) | 67 | |||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 59.20 | (0.06 | ) | 1.61 | 1.55 | – | 60.75 | 2.62 | 584 | 0.79 | (d) | 0.79 | (d) | (0.22 | )(d) | 20 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 55.04 | (0.15 | ) | 7.93 | 7.78 | (3.62 | ) | 59.20 | 15.36 | 483 | 0.80 | 0.80 | (0.28 | ) | 48 | |||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 46.14 | (0.11 | ) | 10.83 | 10.72 | (1.82 | ) | 55.04 | 23.47 | 42 | 0.85 | 0.85 | (0.21 | ) | 47 | |||||||||||||||||||||||||||||||||
Year ended 04/30/17(f) | 44.75 | (0.00 | ) | 1.39 | 1.39 | – | 46.14 | 3.10 | 10 | 0.89 | (g) | 0.89 | (g) | (0.11 | )(g) | 49 |
(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 $433,809, $27,313, $33,537, $463,371 , $265 and $529 for Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.21%, 0.13%, 0.17%, 0.17% 0.16% and 0.15% for the six months ending October 31, 2019 and years ended April 30, 2019, 2018, 2017, 2016 and 2015, respectively. |
(f) | Commencement date of April 4, 2017. |
(g) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Technology Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Technology Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 six different classes of shares: Class A, Class C, Class Y, Investor Class, Class R5 and Class R6. Class Y and Investor Class shares are available only to certain investors. Class A shares are sold with afront-end sales charge unless certain waiver criteria are met and under certain circumstances load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y, Investor Class, Class R5 and Class R6 shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco Technology Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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 toone-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 |
12 Invesco Technology Fund
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 inDividends 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 the 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 dailymark-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. | Other Risks- The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers in this sector.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund 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 $350 million | 0.750% | |
Next $350 million | 0.650% | |
Next $1.3 billion | 0.550% | |
Next $2 billion | 0.450% | |
Next $2 billion | 0.400% | |
Next $2 billion | 0.375% | |
Over $8 billion | 0.350% |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.66%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
13 Invesco Technology Fund
The Adviser has contractually agreed, through at least June 30, 2020, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed above) of Class A, Class C, Class Y, Investor Class, Class R5 and Class R6 shares to 2.00%, 2.75%, 1.75%, 2.00%, 1.75% and 1.75%, respectively, of average daily net assets (the “expense limits”). 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 nonroutine 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, 2020. 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, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $7,150.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer 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, Investor Class, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Investor Class shares (collectively, the “Plans”). The Fund, pursuant to the Plans, pays IDI compensation at the annual rate of 0.25% of the Fund’s average daily net assets of Class A shares and 1.00% of the average daily net assets of Class C shares. The Fund, pursuant to the Investor Class Plan, reimburses IDI for its allocated share of expenses incurred pursuant to the Investor Class Plan for the period, up to a maximum annual rate of 0.25% of the average daily net assets of Investor Class shares. 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 October 31, 2019, expenses incurred under the Plans are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $35,368 infront-end sales commissions from the sale of Class A shares and $0 and $1,691 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $1,481 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 - | Prices are determined using quoted prices in an active market for identical assets. | |||
Level 2 - | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |||
Level 3 - | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. 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.
14 Invesco Technology Fund
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stocks & Other Equity Interests | $929,831,644 | $46,026,850 | $– | $975,858,494 | ||||||||||||
Money Market Funds | 21,119,508 | – | – | 21,119,508 | ||||||||||||
Total Investments | $950,951,152 | $46,026,850 | $– | $996,978,002 |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for thesix-month period ended October 31, 2019, the Fund engaged in securities purchases of $0 and securities sales of $2,124,915, which resulted in net realized gains of $1,254,733.
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $14,081.
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $188,117,480 and $193,813,106, 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 reportingperiod-end.
15 Invesco Technology Fund
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 446,996,641 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (2,573,778 | ) | ||
| ||||
Net unrealized appreciation of investments | $ | 444,422,863 | ||
| ||||
Cost of investments for tax purposes is $552,555,139. |
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 400,542 | $19,794,147 | 1,165,594 | $ | 57,202,175 | |||||||||||
| ||||||||||||||||
Class C | 92,073 | 3,573,292 | 304,477 | 12,186,625 | ||||||||||||
| ||||||||||||||||
Class Y | 233,844 | 11,725,302 | 345,911 | 17,105,926 | ||||||||||||
| ||||||||||||||||
Investor Class | 123,195 | 6,014,694 | 352,388 | 17,112,863 | ||||||||||||
| ||||||||||||||||
Class R5 | 266 | 15,233 | 1,638 | 92,014 | ||||||||||||
| ||||||||||||||||
Class R6 | 1,654 | 101,008 | 7,888 | 384,606 | ||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | - | 669,047 | 28,086,552 | ||||||||||||
| ||||||||||||||||
Class C | - | - | 115,840 | 3,849,363 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 57,091 | 2,436,631 | ||||||||||||
| ||||||||||||||||
Investor Class | - | - | 774,274 | 32,333,688 | ||||||||||||
| ||||||||||||||||
Class R5 | - | - | 268 | 13,395 | ||||||||||||
| ||||||||||||||||
Class R6 | - | - | 41 | 2,057 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 21,149 | 1,048,306 | 374,011 | 16,430,312 | ||||||||||||
| ||||||||||||||||
Class C | (26,859 | ) | (1,048,306 | ) | (472,845 | ) | (16,430,312 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (595,871 | ) | (29,303,197 | ) | (1,324,107 | ) | (62,896,413 | ) | ||||||||
| ||||||||||||||||
Class C | (91,290 | ) | (3,532,756 | ) | (275,231 | ) | (10,534,562 | ) | ||||||||
| ||||||||||||||||
Class Y | (122,736 | ) | (6,156,941 | ) | (331,510 | ) | (15,071,297 | ) | ||||||||
| ||||||||||||||||
Investor Class | (457,827 | ) | (22,401,634 | ) | (1,079,268 | ) | (50,765,506 | ) | ||||||||
| ||||||||||||||||
Class R5 | (104 | ) | (6,201 | ) | (436 | ) | (26,403 | ) | ||||||||
| ||||||||||||||||
Class R6 | (189 | ) | (11,279 | ) | (544 | ) | (29,349 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (422,153 | ) | $ | (20,188,332 | ) | 684,527 | $ | 31,482,365 | ||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 13% of the outstanding shares of the Fund. 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. |
NOTE 11–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would acquire all of the assets and liabilities of Invesco Technology Sector Fund (the “Target Fund”) in exchange for shares of the Fund.
The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of the Target Fund will receive shares of the Fund in exchange for their shares of the Target Fund, and the Target Fund will liquidate and cease operations.
16 Invesco Technology Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
Beginning | ACTUAL |
HYPOTHETICAL | Annualized | |||||||||
Ending Account Value (10/31/19)1 | Expenses Paid During Period2 | Ending Account Value (10/31/19) | Expenses Paid During Period2 | |||||||||
Class A | $1,000.00 | $1,024.00 | $6.23 | $1,019.06 | $6.21 | 1.22% | ||||||
Class C | 1,000.00 | 1,020.40 | 10.03 | 1,015.27 | 10.01 | 1.97 | ||||||
Class Y | 1,000.00 | 1,025.30 | 4.95 | 1,020.32 | 4.94 | 0.97 | ||||||
Investor Class | 1,000.00 | 1,024.50 | 6.02 | 1,019.26 | 6.01 | 1.18 | ||||||
Class R5 | 1,000.00 | 1,026.20 | 4.19 | 1,021.07 | 4.18 | 0.82 | ||||||
Class R6 | 1,000.00 | 1,026.50 | 4.04 | 1,021.22 | 4.02 | 0.79 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
17 Invesco Technology Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Technology Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-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). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A.Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C.Advisory andSub-Advisory Fees
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 at a common asset level. 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
18 Invesco Technology Fund
group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D.Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco Technology Fund
20 Invesco Technology Fund
21 Invesco Technology Fund
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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
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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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers:811-03826 and002-85905 | Invesco Distributors, Inc. | I-TEC-SAR-1 |
| ||||
Semiannual Report to Shareholders
| October 31, 2019
| |||
| ||||
Invesco Technology Sector Fund | ||||
Nasdaq: | ||||
A: IFOAX∎ C: IFOCX∎ Y: IFODX |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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 |
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: 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 andsub-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.
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
Andrew Schlossberg | 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Technology Sector Fund
Performance summary
| ||||||||
Fund vs. Indexes | ||||||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. | ||||||||
Class A Shares | 2.29% | |||||||
Class C Shares | 2.01 | |||||||
Class Y Shares | 2.46 | |||||||
Nasdaq Composite Indexq(Broad Market/Style-Specific Index) | 3.00 | |||||||
Lipper Science & Technology Funds Index⬛(Peer Group Index) | 0.79 | |||||||
Source(s):qBloomberg LP.;⬛Lipper Inc. | ||||||||
TheNasdaq Composite Indexis a broad-based, market index of the common stocks and similar securities listed on the Nasdaq stock market. |
| |||||||
TheLipper Science & Technology Funds Indexis an unmanaged index considered representative of science and technology funds tracked by Lipper. |
| |||||||
The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. |
| |||||||
A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
|
3 Invesco Technology Sector Fund
Average Annual Total Returns | ||||
As of 10/31/19, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (7/28/97) | 6.07 | % | ||
10 Years | 11.51 | |||
5 Years | 11.03 | |||
1 Year | 8.34 | |||
Class C Shares | ||||
Inception (7/28/97) | 5.98 | % | ||
10 Years | 11.31 | |||
5 Years | 11.46 | |||
1 Year | 12.88 | |||
Class Y Shares | ||||
Inception (7/28/97) | 6.59 | % | ||
10 Years | 12.41 | |||
5 Years | 12.55 | |||
1 Year | 14.96 |
Average Annual Total Returns | ||||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges |
| |||
Class A Shares | ||||
Inception (7/28/97) | 5.91 | % | ||
10 Years | 10.74 | |||
5 Years | 10.76 | |||
1 Year | –7.66 | |||
Class C Shares | ||||
Inception (7/28/97) | 5.82 | % | ||
10 Years | 10.56 | |||
5 Years | 11.21 | |||
1 Year | –3.79 | |||
Class Y Shares | ||||
Inception (7/28/97) | 6.43 | % | ||
10 Years | 11.65 | |||
5 Years | 12.30 | |||
1 Year | –2.01 |
Effective June 1, 2010, Class A, Class C and Class I shares of the predecessor fund, Morgan Stanley Technology Fund, advised by Morgan Stanley Investment Advisors Inc. were reorganized into Class A, Class C and Class Y shares, respectively, of Invesco Technology Sector Fund. Returns shown above, prior to June 1, 2010, for Class A, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Technology Sector Fund. Share class returns will differ from the predecessor fund because of different expenses.
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 recentmonth-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 and Class Y shares was 1.28%, 2.03% and 1.03%, 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 shares do not have afront-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.
4 Invesco Technology Sector Fund
October 31, 2019
(Unaudited)
Shares | Value | |||||||
| ||||||||
Common Stocks & Other Equity Interests-99.56% |
| |||||||
Alternative Carriers-2.55% | ||||||||
Intelsat S.A.(b) | 98,393 | $ | 2,498,198 | |||||
| ||||||||
Application Software-5.14% | ||||||||
Adobe, Inc.(b) | 3,886 | 1,080,036 | ||||||
| ||||||||
salesforce.com, inc.(b) | 16,484 | 2,579,581 | ||||||
| ||||||||
Splunk, Inc.(b) | 11,354 | 1,362,026 | ||||||
| ||||||||
5,021,643 | ||||||||
| ||||||||
Consumer Electronics-1.73% | ||||||||
Sony Corp. (Japan) | 27,700 | 1,687,844 | ||||||
| ||||||||
Data Processing & Outsourced Services-8.67% |
| |||||||
Fidelity National Information Services, Inc. | 5,820 | 766,843 | ||||||
| ||||||||
Fiserv, Inc.(b) | 13,943 | 1,479,910 | ||||||
| ||||||||
Mastercard, Inc., Class A | 6,173 | 1,708,748 | ||||||
| ||||||||
PayPal Holdings, Inc.(b) | 14,388 | 1,497,791 | ||||||
| ||||||||
Visa, Inc., Class A | 16,900 | 3,022,734 | ||||||
| ||||||||
8,476,026 | ||||||||
| ||||||||
Health Care Equipment-5.02% | ||||||||
Abbott Laboratories | 15,327 | 1,281,490 | ||||||
| ||||||||
Boston Scientific Corp.(b) | 29,349 | 1,223,853 | ||||||
| ||||||||
Intuitive Surgical, Inc.(b) | 1,505 | 832,190 | ||||||
| ||||||||
Teleflex, Inc. | 4,536 | 1,575,852 | ||||||
| ||||||||
4,913,385 | ||||||||
| ||||||||
Interactive Home Entertainment-9.68% |
| |||||||
Activision Blizzard, Inc. | 53,488 | 2,996,933 | ||||||
| ||||||||
Electronic Arts, Inc.(b) | 13,526 | 1,303,906 | ||||||
| ||||||||
Nintendo Co., Ltd. (Japan) | 8,300 | 2,960,436 | ||||||
| ||||||||
Sea Ltd., ADR (Taiwan)(b) | 46,067 | 1,370,954 | ||||||
| ||||||||
Take-Two Interactive Software, Inc.(b) | 6,919 | 832,702 | ||||||
| ||||||||
9,464,931 | ||||||||
| ||||||||
Interactive Media & Services-12.76% |
| |||||||
Alphabet, Inc., Class A(b) | 4,213 | 5,303,324 | ||||||
| ||||||||
Alphabet, Inc., Class C(b) | 862 | 1,086,215 | ||||||
| ||||||||
Facebook, Inc., Class A(b) | 25,751 | 4,935,179 | ||||||
| ||||||||
Match Group, Inc.(c) | 15,853 | 1,157,111 | ||||||
| ||||||||
12,481,829 | ||||||||
| ||||||||
Internet & Direct Marketing Retail-14.07% |
| |||||||
Alibaba Group Holding Ltd., ADR (China)(b) | 27,396 | 4,840,051 | ||||||
| ||||||||
Amazon.com, Inc.(b) | 4,413 | 7,840,401 | ||||||
| ||||||||
Booking Holdings, Inc.(b) | 525 | 1,075,604 | ||||||
| ||||||||
13,756,056 | ||||||||
| ||||||||
Life Sciences Tools & Services-6.08% |
| |||||||
10X Genomics, Inc., Class A(b) | 9,896 | 573,968 | ||||||
|
Shares | Value | |||||||
| ||||||||
Life Sciences Tools & Services-(continued) |
| |||||||
Illumina, Inc.(b) | 10,291 | $ | 3,041,196 | |||||
| ||||||||
IQVIA Holdings, Inc.(b) | 8,359 | 1,207,207 | ||||||
| ||||||||
Thermo Fisher Scientific, Inc. | 3,724 | 1,124,574 | ||||||
| ||||||||
5,946,945 | ||||||||
| ||||||||
Managed Health Care-0.24% | ||||||||
UnitedHealth Group, Inc. | 919 | 232,231 | ||||||
| ||||||||
Movies & Entertainment-1.49% | ||||||||
Netflix, Inc.(b) | 5,073 | 1,458,031 | ||||||
| ||||||||
Semiconductor Equipment-5.11% | ||||||||
Applied Materials, Inc. | 55,911 | 3,033,731 | ||||||
| ||||||||
ASML Holding N.V., New York Shares (Netherlands) | 7,483 | 1,960,321 | ||||||
| ||||||||
4,994,052 | ||||||||
| ||||||||
Semiconductors-11.84% | ||||||||
Broadcom, Inc. | 13,029 | 3,815,543 | ||||||
| ||||||||
NVIDIA Corp. | 6,072 | 1,220,593 | ||||||
| ||||||||
QUALCOMM, Inc. | 24,259 | 1,951,394 | ||||||
| ||||||||
Semtech Corp.(b) | 47,204 | 2,381,914 | ||||||
| ||||||||
Silicon Motion Technology Corp., ADR (Taiwan) | 52,410 | 2,203,841 | ||||||
| ||||||||
11,573,285 | ||||||||
| ||||||||
Systems Software-9.45% | ||||||||
Microsoft Corp. | 43,281 | 6,205,197 | ||||||
| ||||||||
Palo Alto Networks, Inc.(b) | 5,924 | 1,347,058 | ||||||
| ||||||||
ServiceNow, Inc.(b) | 6,810 | 1,683,841 | ||||||
| ||||||||
9,236,096 | ||||||||
| ||||||||
Technology Hardware, Storage & Peripherals-5.38% |
| |||||||
Apple, Inc. | 21,163 | 5,264,508 | ||||||
| ||||||||
Trucking-0.35% | ||||||||
Lyft, Inc., Class A(b) | 8,265 | 342,502 | ||||||
| ||||||||
Total Common Stocks & Other Equity Interests (Cost $55,907,187) | 97,347,562 | |||||||
| ||||||||
Money Market Funds-0.79% |
| |||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(d) | 272,636 | 272,636 | ||||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(d) | 194,696 | 194,774 | ||||||
| ||||||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(d) | 311,584 | 311,584 | ||||||
| ||||||||
Total Money Market Funds | 778,994 | |||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES (excluding investments purchased with cash collateral from securities onloan)-100.35% | 98,126,556 | |||||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Technology Sector Fund
Shares | Value | |||||||
Investments Purchased with Cash Collateral from Securities on Loan |
| |||||||
Money Market Funds–0.90% | ||||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(d)(e) | 575,740 | $ | 575,740 | |||||
| ||||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(d)(e) | 303,362 | 303,484 | ||||||
| ||||||||
Total Investments Purchased with Cash Collateral from Securities on Loan (Cost $879,219) |
| 879,224 | ||||||
| ||||||||
TOTAL INVESTMENTS IN SECURITIES–101.25% |
| 99,005,780 | ||||||
| ||||||||
OTHER ASSETS LESS LIABILITIES-(1.25)% |
| (1,226,073 | ) | |||||
| ||||||||
NET ASSETS–100.00% | $ | 97,779,707 | ||||||
|
Investment Abbreviations:
ADR - American Depositary Receipt
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | All or a portion of this security was out on loan at October 31, 2019. |
(d) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
(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 October 31, 2019
Information Technology | 45.59% | |||
| ||||
Communication Services | 26.48 | |||
| ||||
Consumer Discretionary | 15.80 | |||
| ||||
Health Care | 11.34 | |||
| ||||
Industrials | 0.35 | |||
| ||||
Money Market Funds Plus Other Assets Less Liabilities | 0.44 | |||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Technology Sector Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 97,347,562 | ||
| ||||
Investments in affiliated money market funds, at value (Cost $1,658,194) | 1,658,218 | |||
| ||||
Foreign currencies, at value (Cost $299) | 301 | |||
| ||||
Receivable for: | ||||
Investments sold | 402,225 | |||
| ||||
Dividends | 33,389 | |||
| ||||
Fund shares sold | 21,373 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 36,956 | |||
| ||||
Other assets | 25,839 | |||
| ||||
Total assets | 99,525,863 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Investments purchased | 607,229 | |||
| ||||
Fund shares reacquired | 51,356 | |||
| ||||
Collateral upon return of securities loaned | 879,219 | |||
| ||||
Accrued fees to affiliates | 76,005 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 713 | |||
| ||||
Accrued other operating expenses | 91,982 | |||
| ||||
Trustee deferred compensation and retirement plans | 39,652 | |||
| ||||
Total liabilities | 1,746,156 | |||
| ||||
Net assets applicable to shares outstanding | $ | 97,779,707 | ||
|
Net assets consist of: | ||||
Shares of beneficial interest | $ | 47,426,417 | ||
| ||||
Distributable earnings | 50,353,290 | |||
| ||||
$ | 97,779,707 | |||
| ||||
Net Assets: | ||||
Class A | $ | 92,413,135 | ||
| ||||
Class C | $ | 1,137,321 | ||
| ||||
Class Y | $ | 4,229,251 | ||
| ||||
Shares outstanding, no par value, with an unlimited number of shares authorized: | ||||
Class A | 3,632,200 | |||
| ||||
Class C | 54,546 | |||
| ||||
Class Y | 156,360 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 25.44 | ||
| ||||
Maximum offering price per share | $ | 26.92 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 20.85 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 27.05 | ||
| ||||
* At October 31, 2019, securities with an aggregate value of $861,461 were on loan to brokers. |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Technology Sector Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends (net of foreign withholding taxes of $2,498) | $ | 245,829 | ||
| ||||
Dividends from affiliated money market funds (includes securities lending income of $16,681) | 27,550 | |||
| ||||
Total investment income | 273,379 | |||
| ||||
Expenses: | ||||
Advisory fees | 326,029 | |||
| ||||
Administrative services fees | 6,666 | |||
| ||||
Custodian fees | 3,775 | |||
| ||||
Distribution fees: | ||||
Class A | 114,815 | |||
| ||||
Class C | 5,127 | |||
| ||||
Transfer agent fees- A, C and Y | 76,010 | |||
| ||||
Trustees’ and officers’ fees and benefits | 8,297 | |||
| ||||
Registration and filing fees | 18,307 | |||
| ||||
Reports to shareholders | 18,002 | |||
| ||||
Professional services fees | 24,586 | |||
| ||||
Other | 5,607 | |||
| ||||
Total expenses | 607,221 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (822 | ) | ||
| ||||
Net expenses | 606,399 | |||
| ||||
Net investment income (loss) | (333,020 | ) | ||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain from: | ||||
Investment securities (includes net gains from securities sold to affiliates of $114,692) | 4,093,419 | |||
| ||||
Foreign currencies | 2,595 | |||
| ||||
4,096,014 | ||||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (1,640,510 | ) | ||
| ||||
Foreign currencies | (2,142 | ) | ||
| ||||
(1,642,652 | ) | |||
| ||||
Net realized and unrealized gain | 2,453,362 | |||
| ||||
Net increase in net assets resulting from operations | $ | 2,120,342 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Technology Sector Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | (333,020 | ) | $ | (793,423 | ) | ||
| ||||||||
Net realized gain | 4,096,014 | 9,342,879 | ||||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (1,642,652 | ) | 4,830,784 | |||||
| ||||||||
Net increase in net assets resulting from operations | 2,120,342 | 13,380,240 | ||||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | – | (6,004,053 | ) | |||||
| ||||||||
Class C | – | (675,683 | ) | |||||
| ||||||||
Class Y | – | (300,931 | ) | |||||
| ||||||||
Total distributions from distributable earnings | – | (6,980,667 | ) | |||||
| ||||||||
Share transactions-net: | ||||||||
Class A | (5,570,964 | ) | 3,403,836 | |||||
| ||||||||
Class C | (193,171 | ) | (6,301,314 | ) | ||||
| ||||||||
Class Y | (182,303 | ) | 388,433 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (5,946,438 | ) | (2,509,045 | ) | ||||
| ||||||||
Net increase (decrease) in net assets | (3,826,096 | ) | 3,890,528 | |||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 101,605,803 | 97,715,275 | ||||||
| ||||||||
End of period | $ | 97,779,707 | $ | 101,605,803 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Technology Sector Fund
(Unaudited)
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 on securities | 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 to average | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $24.87 | $(0.09) | $0.66 | $ 0.57 | $ – | $25.44 | 2.29 | % | $92,413 | 1.25 | %(d) | 1.25 | %(d) | (0.69 | )%(d) | 20 | % | |||||||||||||||||||||||||||||||
Year ended 04/30/19 | 23.49 | (0.18) | 3.30 | 3.12 | (1.74) | 24.87 | 14.65 | 95,986 | 1.28 | 1.28 | (0.77 | ) | 44 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 19.53 | (0.15) | 4.61 | 4.46 | (0.50) | 23.49 | 22.99 | 85,929 | 1.33 | 1.33 | (0.69 | ) | 46 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 15.58 | (0.16) | 4.54 | 4.38 | (0.43) | 19.53 | 28.52 | 78,058 | 1.67 | 1.67 | (0.90 | ) | 49 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 16.73 | (0.15) | (1.00) | (1.15 | ) | – | 15.58 | (6.87 | ) | 70,256 | 1.58 | 1.58 | (0.89 | ) | 44 | |||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 14.49 | (0.17) | 2.41 | 2.24 | – | 16.73 | 15.46 | 86,451 | 1.58 | 1.58 | (1.07 | ) | 66 | |||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 20.44 | (0.13) | 0.54 | 0.41 | – | 20.85 | 2.01 | (e) | 1,137 | 1.81 | (d)(e) | 1.81 | (d)(e) | (1.25 | )(d)(e) | 20 | ||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 19.77 | (0.31) | 2.72 | 2.41 | (1.74) | 20.44 | 13.79 | 1,309 | 2.03 | 2.03 | (1.52 | ) | 44 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 16.64 | (0.27) | 3.90 | 3.63 | (0.50) | 19.77 | 21.98 | (e) | 8,087 | 2.07 | (e) | 2.07 | (e) | (1.43 | )(e) | 46 | ||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 13.42 | (0.24) | 3.89 | 3.65 | (0.43) | 16.64 | 27.66 | (e) | 7,635 | 2.39 | (e) | 2.39 | (e) | (1.62 | )(e) | 49 | ||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 14.52 | (0.24) | (0.86) | (1.10 | ) | – | 13.42 | (7.58 | ) | 6,759 | 2.33 | 2.33 | (1.64 | ) | 44 | |||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 12.67 | (0.25) | 2.10 | 1.85 | – | 14.52 | 14.60 | (e) | 8,087 | 2.32 | (e) | 2.32 | (e) | (1.81 | )(e) | 66 | ||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 26.40 | (0.06) | 0.71 | 0.65 | – | 27.05 | 2.46 | 4,229 | 1.00 | (d) | 1.00 | (d) | (0.44 | )(d) | 20 | |||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 24.77 | (0.13) | 3.50 | 3.37 | (1.74) | 26.40 | 14.91 | 4,310 | 1.03 | 1.03 | (0.52 | ) | 44 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 20.53 | (0.10) | 4.84 | 4.74 | (0.50) | 24.77 | 23.23 | 3,699 | 1.08 | 1.08 | (0.44 | ) | 46 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 16.32 | (0.12) | 4.76 | 4.64 | (0.43) | 20.53 | 28.82 | 2,291 | 1.42 | 1.42 | (0.65 | ) | 49 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 17.49 | (0.11) | (1.06) | (1.17 | ) | – | 16.32 | (6.69 | ) | 1,299 | 1.33 | 1.33 | (0.64 | ) | 44 | |||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 15.10 | (0.14) | 2.53 | 2.39 | – | 17.49 | 15.83 | 909 | 1.33 | 1.33 | (0.82 | ) | 66 |
(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 $91,339, $1,262 and $4,192 for Class A, Class C and Class Y, respectively. |
(e) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.81%, 0.99%, 0.97% and 0.99% for the six months ended October 31, 2019, and for the years ended April 30, 2018, 2017 and 2015, respectively. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Technology Sector Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Technology Sector Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 three different classes of shares: Class A, Class C and Class Y. Class Y shares are available only to certain investors. Class A shares are sold with afront-end sales charge unless certain waiver criteria are met. Under certain circumstances, load waived shares may be subject to contingent deferred sales charges (“CDSC”). Class C shares are sold with a CDSC. Class Y shares are sold at net asset value. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco Technology Sector Fund
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 theex-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 theex-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 Rule12b-1 plan of a particular class of the Fund and which are directly attributable to that class are charged to the operations of such class. All other expenses are allocated among the classes based on relative net assets. |
G. | Accounting Estimates –The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period including estimates and assumptions related to taxation. Actual results could differ from those estimates by a significant amount. In addition, the Fund monitors for material events or transactions that may occur or become known after theperiod-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 toone-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 |
12 Invesco Technology Sector Fund
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 inDividends 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 the 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 dailymark-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. | Other Risks– The Fund’s investments are concentrated in a comparatively narrow segment of the economy, which may make the Fund more volatile. |
Many products and services offered in technology-related industries are subject to rapid obsolescence, which may lower the value of the issuers in this sector.
NOTE 2–Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund 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 $500 million | 0.670% | |
Next $2.5 billion | 0.645% | |
Over $3 billion | 0.620% |
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.67%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, 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, and Class Y shares to 2.00%, 2.75%, and 1.75%, respectively, of average daily net assets (the “expense limits”). 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 ornon-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
13 Invesco Technology Sector Fund
on June 30, 2020. 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, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $553.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”), an affiliate of the Adviser. The Fund has adopted a Plan of Distribution (the “Plan”) pursuant to Rule12b-1 under the 1940 Act. The Plan provides that the Fund will reimburse IDI for distribution related expenses that IDI incurs up to a maximum of the following annual rates: (1) Class A – up to 0.25% of the average daily net assets of Class A shares; and (2) Class C – up to 1.00% of the average daily net assets of Class C shares. The fees are accrued daily and paid monthly.
For thesix-month period ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $322 infront-end sales commissions from the sale of Class A shares and $0 and $29 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $275 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 | – | Prices are determined using quoted prices in an active market for identical assets. | ||||
Level 2 | – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | ||||
Level 3 | – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
The following is a summary of the tiered valuation input levels, as of October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Investments in Securities | ||||||||||||||||
Common Stocks & Other Equity Interests | $ | 92,699,282 | $ | 4,648,280 | $ | – | $ | 97,347,562 | ||||||||
Money Market Funds | 1,658,218 | – | – | 1,658,218 | ||||||||||||
Total Investments | $ | 94,357,500 | $ | 4,648,280 | $ | – | $ | 99,005,780 |
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule17a-7 of the 1940 Act. Further, as defined under the procedures, each
14 Invesco Technology Sector Fund
transaction is effected at the current market price. Pursuant to these procedures, for thesix-month period ended October 31, 2019, the Fund engaged in securities purchases of $0 and securities sales of $200,037, which resulted in net realized gains of $114,892.
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $269.
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $18,739,671 and $23,005,874, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
Aggregate unrealized appreciation of investments | $ | 41,365,210 | ||
Aggregate unrealized (depreciation) of investments | (265,957 | ) | ||
Net unrealized appreciation of investments | $ | 41,099,253 | ||
Cost of investments for tax purposes is $57,906,527. |
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||
Six months ended |
Year ended April 30, 2019 | |||||||||||||
Shares |
Amount |
Shares |
Amount | |||||||||||
Sold: | ||||||||||||||
Class A | 11,770 | $ | 289,533 | 181,758 | $ 4,345,007 | |||||||||
Class C | 4,710 | 95,308 | 14,852 | 291,493 | ||||||||||
Class Y | 13,645 | 357,412 | 61,164 | 1,592,764 |
15 Invesco Technology Sector Fund
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | $ | - | 251,334 | $ | 5,288,077 | ||||||||||
| ||||||||||||||||
Class C | - | - | 35,448 | 615,010 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 10,134 | 226,194 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: | ||||||||||||||||
Class A | 10,486 | 259,360 | 286,777 | 6,295,142 | ||||||||||||
| ||||||||||||||||
Class C | (12,784 | ) | (259,360 | ) | (348,198 | ) | (6,295,142 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (249,817 | ) | (6,119,857 | ) | (518,544 | ) | (12,524,390 | ) | ||||||||
| ||||||||||||||||
Class C | (1,437 | ) | (29,119 | ) | (47,017 | ) | (912,675 | ) | ||||||||
| ||||||||||||||||
Class Y | (20,526 | ) | (539,715 | ) | (57,370 | ) | (1,430,525 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (243,953 | ) | $ | (5,946,438 | ) | (129,662 | ) | $ | (2,509,045 | ) | ||||||
|
(a) | There is an entity that is a record owner of more than 5% of the outstanding shares of the Fund and owns 68% 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. |
NOTE 11–Subsequent Event
The Board of Trustees of the Fund unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which the Fund would transfer all of its assets and liabilities to Invesco Technology Fund (the “Acquiring Fund”).
The reorganization is expected to be consummated in or around April or May 2020. Upon closing of the reorganization, shareholders of the Fund will receive shares of the Acquiring Fund in exchange for their shares of the Fund, and the Fund will liquidate and cease operations.
16 Invesco Technology Sector Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
ACTUAL | HYPOTHETICAL (5% annual return before expenses) | |||||||||||||||||||||
Beginning | Ending | Expenses | Ending | Expenses | Annualized | |||||||||||||||||
Account Value | Account Value | Paid During | Account Value | Paid During | Expense | |||||||||||||||||
(05/01/19) | (10/31/19)1 | Period2 | (10/31/19) | Period2 | Ratio | |||||||||||||||||
Class A | $1,000.00 | $1,022.90 | $6.36 | $1,018.85 | $6.34 | 1.25% | ||||||||||||||||
Class C | 1,000.00 | 1,020.10 | 9.19 | 1,016.04 | 9.17 | 1.81 | ||||||||||||||||
Class Y | 1,000.00 | 1,024.60 | 5.09 | 1,020.11 | 5.08 | 1.00 |
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1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
17 Invesco Technology Sector Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Technology Sector Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C.Advisory andSub-Advisory Fees
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 at a common asset level. 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
18 Invesco Technology Sector Fund
group. The Board noted that the term
“contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco Technology Sector Fund
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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 |
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∎ | 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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-03826 and 002-85905 | Invesco Distributors, Inc. | MS-TECH-SAR-1 |
| ||||
Semiannual Report to Shareholders
| October 31, 2019 | |||
| ||||
Invesco Value Opportunities Fund | ||||
Nasdaq: | ||||
A: VVOAX ∎ C: VVOCX ∎ R: VVORX ∎ Y: VVOIX ∎ R5: VVONX ∎ R6: VVOSX |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call (800)959-4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
For the most currentmonth-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 and variable product prospectus, which contain more complete information, including sales charges and expenses. Investors should read each carefully before investing.
|
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE |
|
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: 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 andsub-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.
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
Andrew Schlossberg | 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. Invesco’s efforts to help investors achieve their financial objectives include providing timely information about the markets, the economy and investing. 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.” |
In addition to the resources accessible on our website, you can obtain timely updates to help you stay informed by connecting with Invesco on Twitter, LinkedIn or Facebook. You can access our blog at blog.invesco.us.com. Our goal is to provide you with information you want, when and where you want it.
For questions about your account, feel free to contact an Invesco client services representative at 800 959 4246.
All of us at Invesco look forward to serving your investment management needs. Thank you for investing with us.
Sincerely,
Andrew Schlossberg
Head of the Americas,
Senior Managing Director, Invesco Ltd.
2 Invesco Value Opportunities Fund
|
Performance summary
| ||||
Fund vs. Indexes
| ||||
Cumulative total returns, April 30, 2019 to October 31, 2019, at net asset value (NAV). Performance shown does not include applicable contingent deferred sales charges (CDSC) orfront-end sales charges, which would have reduced performance. |
| |||
Class A Shares |
| -3.35% |
| |
Class C Shares | -3.66 | |||
Class R Shares | -3.47 | |||
Class Y Shares | -3.19 | |||
Class R5 Shares | -3.09 | |||
Class R6 Shares | -3.08 | |||
S&P 500 Index▼ (Broad Market Index) | 4.16 | |||
S&P 1500 Value Index▼(Style-Specific Index) | 4.90 | |||
LipperMulti-Cap Value Funds Index⬛(Peer Group Index) | 1.26 | |||
Source(s):▼RIMES Technologies Corp.;⬛Lipper Inc.
| ||||
TheS&P 500®Indexis an unmanaged index considered representative of the US stock market. TheS&P 1500 Value Indextracks the performance of US large-,mid- andsmall-cap value stocks. TheLipperMulti-Cap Value Funds Indexis an unmanaged index considered representative of multicap value funds tracked by Lipper. The Fund is not managed to track the performance of any particular index, including the indexes described here, and consequently, the performance of the Fund may deviate significantly from the performance of the indexes. A direct investment cannot be made in an index. Unless otherwise indicated, index results include reinvested dividends, and they do not reflect sales charges. Performance of 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 visitinginvesco.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, visitblog.invesco.us.com, where many of Invesco’s investment professionals share their insights about market and economic news and trends.
|
3 Invesco Value Opportunities Fund
Average Annual Total Returns | ||||
As of 10/31/19, including maximum applicable sales charges
|
| |||
Class A Shares | ||||
Inception (6/25/01) | 4.85 | % | ||
10 Years | 8.18 | |||
5 Years | 2.91 | |||
1 Year | 0.96 | |||
Class C Shares | ||||
Inception (6/25/01) | 4.76 | % | ||
10 Years | 8.04 | |||
5 Years | 3.34 | |||
1 Year | 5.21 | |||
Class R Shares | ||||
10 Years | 8.54 | % | ||
5 Years | 3.82 | |||
1 Year | 6.60 | |||
Class Y Shares | ||||
Inception (3/23/05) | 5.17 | % | ||
10 Years | 9.06 | |||
5 Years | 4.34 | |||
1 Year | 7.11 | |||
Class R5 Shares | ||||
10 Years | 9.22 | |||
5 Years | 4.49 | |||
1 Year | 7.33 | |||
Class R6 Shares | ||||
10 Years | 8.93 | % | ||
5 Years | 4.32 | |||
1 Year | 7.32 |
Effective June 1, 2010, Class A, Class C and Class I shares of the predecessor fund, Van Kampen Value Opportunities Fund, advised by Van Kampen Asset Management were reorganized into Class A, Class C and Class Y shares, respectively, of In-vesco Van Kampen Value Opportunities Fund (renamed Invesco Value Opportunities Fund). Returns shown above, prior to June 1, 2010, for Class A, Class C and Class Y shares are blended returns of the predecessor fund and Invesco Value Opportunities Fund. Share class returns will differ from the predecessor fund because of different expenses.
Class R shares incepted on May 23, 2011. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A shares, restated to reflect the higher12b-1 fees applicable to Class R shares.
Class R5 shares incepted on May 23, 2011. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A shares and
Average Annual Total Returns | ||||
As of 9/30/19, the most recent calendar quarter end, including maximum applicable sales charges
|
| |||
Class A Shares | ||||
Inception (6/25/01) | 4.70 | % | ||
10 Years | 7.66 | |||
5 Years | 2.36 | |||
1 Year | -10.96 | |||
Class C Shares | ||||
Inception (6/25/01) | 4.60 | % | ||
10 Years | 7.52 | |||
5 Years | 2.80 | |||
1 Year | -7.20 | |||
Class R Shares | ||||
10 Years | 8.00 | % | ||
5 Years | 3.28 | |||
1 Year | -5.94 | |||
Class Y Shares | ||||
Inception (3/23/05) | 4.97 | % | ||
10 Years | 8.54 | |||
5 Years | 3.79 | |||
1 Year | -5.50 | |||
Class R5 Shares | ||||
10 Years | 8.67 | % | ||
5 Years | 3.94 | |||
1 Year | -5.38 | |||
Class R6 Shares | ||||
10 Years | 8.38 | % | ||
5 Years | 3.76 | |||
1 Year | -5.31 |
includes the12b-1 fees applicable to Class A shares.
Class R6 shares incepted on April 4, 2017. Performance shown prior to that date is that of the Fund’s and the predecessor fund’s Class A shares and includes the12b-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 recentmonth-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 1.22%, 1.93%, 1.47%, 0.97%, 0.85% and 0.80%, 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 afront-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.
4 Invesco Value Opportunities Fund
October 31, 2019
(Unaudited)
Shares | Value | |||||||
Common Stocks & Other Equity Interests–95.82% |
| |||||||
Advertising–0.19% | ||||||||
Interpublic Group of Cos., Inc. (The) | 31,000 | $ | 674,250 | |||||
Omnicom Group, Inc. | 8,655 | 668,079 | ||||||
1,342,329 | ||||||||
Agricultural & Farm Machinery–2.44% |
| |||||||
AGCO Corp. | 219,504 | 16,833,762 | ||||||
Auto Parts & Equipment–4.91% | ||||||||
Dana, Inc. | 1,086,068 | 17,626,884 | ||||||
Delphi Technologies PLC | 1,333,830 | 16,286,064 | ||||||
33,912,948 | ||||||||
Building Products–8.60% | ||||||||
Masco Corp. | 604,136 | 27,941,290 | ||||||
Owens Corning | 514,800 | 31,546,944 | ||||||
59,488,234 | ||||||||
Construction & Engineering–5.05% |
| |||||||
AECOM(b) | 714,473 | 28,586,065 | ||||||
Fluor Corp. | 394,800 | 6,360,228 | ||||||
34,946,293 | ||||||||
Consumer Finance–1.10% | ||||||||
SLM Corp. | 899,500 | 7,591,780 | ||||||
Distributors–4.07% | ||||||||
LKQ Corp.(b) | 828,400 | 28,157,316 | ||||||
Diversified Banks–5.41% | ||||||||
Bank of America Corp. | 383,294 | 11,985,603 | ||||||
Citigroup, Inc. | 325,321 | 23,377,567 | ||||||
JPMorgan Chase & Co. | 16,105 | 2,011,837 | ||||||
37,375,007 | ||||||||
Diversified Chemicals–4.24% | ||||||||
Chemours Co. (The) | 614,575 | 10,085,176 | ||||||
Huntsman Corp. | 867,700 | 19,202,201 | ||||||
29,287,377 | ||||||||
Electronic Manufacturing Services–3.44% |
| |||||||
Flex Ltd.(b) | 2,024,280 | 23,785,290 | ||||||
Environmental & Facilities Services–1.58% |
| |||||||
Stericycle, Inc.(b) | 190,068 | 10,947,917 | ||||||
Health Care Distributors–2.15% | ||||||||
McKesson Corp. | 111,700 | 14,856,100 | ||||||
Health Care Facilities–2.04% | ||||||||
Brookdale Senior Living, Inc.(b) | 1,918,485 | 14,100,865 |
Shares | Value | |||||||
Health Care Services–1.50% | ||||||||
Cigna Corp. | 58,000 | $ | 10,350,680 | |||||
Homebuilding–0.24% | ||||||||
D.R. Horton, Inc. | 31,600 | 1,654,892 | ||||||
Hotels, Resorts & Cruise Lines–0.33% |
| |||||||
Norwegian Cruise Line Holdings Ltd.(b) | 44,500 | 2,258,820 | ||||||
Household Products–3.08% | ||||||||
Spectrum Brands Holdings, Inc. | 423,471 | 21,262,479 | ||||||
Industrial Conglomerates–3.59% | ||||||||
Carlisle Cos., Inc. | 163,200 | 24,850,464 | ||||||
Industrial Machinery–0.53% | ||||||||
Timken Co. (The) | 75,200 | 3,684,800 | ||||||
Investment Banking & Brokerage–2.93% |
| |||||||
Goldman Sachs Group, Inc. (The) | 94,900 | 20,249,762 | ||||||
Life & Health Insurance–0.05% | ||||||||
MetLife, Inc. | 8,000 | 374,320 | ||||||
Managed Health Care–2.19% | ||||||||
Anthem, Inc. | 56,200 | 15,122,296 | ||||||
Metal & Glass Containers–4.68% | ||||||||
Crown Holdings, Inc.(b) | 444,200 | 32,355,528 | ||||||
Oil & Gas Exploration & Production–7.75% |
| |||||||
Apache Corp. | 122,000 | 2,642,520 | ||||||
Diamondback Energy, Inc. | 146,000 | 12,520,960 | ||||||
Noble Energy, Inc. | 670,300 | 12,909,978 | ||||||
Parsley Energy, Inc., Class A | 798,300 | 12,621,123 | ||||||
Pioneer Natural Resources Co. | 104,600 | 12,867,892 | ||||||
53,562,473 | ||||||||
Oil & Gas Refining & Marketing–2.61% |
| |||||||
Marathon Petroleum Corp. | 281,800 | 18,021,110 | ||||||
Other Diversified Financial Services–1.97% |
| |||||||
AXA Equitable Holdings, Inc. | 632,000 | 13,651,200 | ||||||
Paper Packaging–3.78% | ||||||||
Sealed Air Corp. | 625,900 | 26,143,843 | ||||||
Pharmaceuticals–3.21% | ||||||||
Mylan N.V.(b) | 827,500 | 15,846,625 | ||||||
Novartis AG (Switzerland) | 72,900 | 6,368,373 | ||||||
22,214,998 | ||||||||
Steel–2.37% | ||||||||
Allegheny Technologies, Inc.(b) | 781,321 | 16,415,554 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
5 Invesco Value Opportunities Fund
Shares | Value | |||||||
Systems Software–3.30% | ||||||||
Oracle Corp. | 419,200 | $ | 22,842,208 | |||||
Thrifts & Mortgage Finance–6.49% |
| |||||||
MGIC Investment Corp. | 1,942,616 | 26,633,265 | ||||||
Radian Group, Inc. | 725,449 | 18,208,770 | ||||||
44,842,035 | ||||||||
Total Common Stocks & Other Equity Interests (Cost $637,154,531) |
| 662,482,680 | ||||||
Money Market Funds–3.16% | ||||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%(c) | 7,648,739 | 7,648,739 |
Shares | Value | |||||||
Invesco Liquid Assets Portfolio, Institutional Class, 1.90%(c) | 5,462,994 | $ | 5,465,180 | |||||
Invesco Treasury Portfolio, Institutional Class, 1.66%(c) | 8,741,417 | 8,741,416 | ||||||
Total Money Market Funds |
| 21,855,335 | ||||||
TOTAL INVESTMENTS IN SECURITIES–98.98% (Cost $659,008,278) |
| 684,338,015 | ||||||
OTHER ASSETS LESS LIABILITIES–1.02% |
| 7,082,942 | ||||||
NET ASSETS–100.00% | $ | 691,420,957 |
Notes to Schedule of Investments:
(a) | Industry and/or sector classifications used in this report are generally according to the Global Industry Classification Standard, which was developed by and is the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. |
(b) | Non-income producing security. |
(c) | The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019. |
Portfolio Composition
By sector, based on Net Assets
as of October 31, 2019
Industrials | 21.79 | % | ||
Financials | 17.95 | |||
Materials | 15.07 | |||
Health Care | 11.09 | |||
Energy | 10.36 | |||
Consumer Discretionary | 9.55 | |||
Information Technology | 6.74 | |||
Consumer Staples | 3.08 | |||
Communication Services | 0.19 | |||
Money Market Funds Plus Other Assets Less Liabilities | 4.18 |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
6 Invesco Value Opportunities Fund
Statement of Assets and Liabilities
October 31, 2019
(Unaudited)
Assets: | ||||
Investments in securities, at value | $ | 662,482,680 | ||
| ||||
Investments in affiliated money market funds, at value | 21,855,335 | |||
| ||||
Foreign currencies, at value (Cost $606) | 651 | |||
| ||||
Receivable for: | ||||
Investments sold | 8,222,902 | |||
| ||||
Dividends | 453,059 | |||
| ||||
Fund shares sold | 155,082 | |||
| ||||
Investment for trustee deferred compensation and retirement plans | 497,367 | |||
| ||||
Other assets | 44,642 | |||
| ||||
Total assets | 693,711,718 | |||
| ||||
Liabilities: | ||||
Payable for: | ||||
Fund shares reacquired | 791,351 | |||
| ||||
Accrued fees to affiliates | 895,432 | |||
| ||||
Accrued trustees’ and officers’ fees and benefits | 1,459 | |||
| ||||
Accrued other operating expenses | 63,984 | |||
| ||||
Trustee deferred compensation and retirement plans | 538,535 | |||
| ||||
Total liabilities | 2,290,761 | |||
| ||||
Net assets applicable to shares outstanding | $ | 691,420,957 | ||
| ||||
Net assets consist of: | ||||
Shares of beneficial interest | $ | 658,147,519 | ||
| ||||
Distributable earnings | 33,273,438 | |||
| ||||
$ | 691,420,957 | |||
| ||||
Net Assets: | ||||
Class A | $ | 601,507,167 | ||
| ||||
Class C | $ | 14,375,493 | ||
| ||||
Class R | $ | 9,267,348 | ||
| ||||
Class Y | $ | 34,179,156 | ||
| ||||
Class R5 | $ | 723,006 | ||
| ||||
Class R6 | $ | 31,368,787 | ||
|
Shares outstanding, no par value, with an unlimited number of shares authorized: |
| |||
Class A | 48,472,994 | |||
| ||||
Class C | 1,240,809 | |||
| ||||
Class R | 756,614 | |||
| ||||
Class Y | 2,745,543 | |||
| ||||
Class R5 | 57,617 | |||
| ||||
Class R6 | 2,496,060 | |||
| ||||
Class A: | ||||
Net asset value per share | $ | 12.41 | ||
| ||||
Maximum offering price per share | $ | 13.13 | ||
| ||||
Class C: | ||||
Net asset value and offering price per share | $ | 11.59 | ||
| ||||
Class R: | ||||
Net asset value and offering price per share | $ | 12.25 | ||
| ||||
Class Y: | ||||
Net asset value and offering price per share | $ | 12.45 | ||
| ||||
Class R5: | ||||
Net asset value and offering price per share | $ | 12.55 | ||
| ||||
Class R6: | ||||
Net asset value and offering price per share | $ | 12.57 | ||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
7 Invesco Value Opportunities Fund
Statement of Operations
For the six months ended October 31, 2019
(Unaudited)
Investment income: | ||||
Dividends | $ | 4,184,445 | ||
| ||||
Dividends from affiliated money market funds | 285,585 | |||
| ||||
Total investment income | 4,470,030 | |||
| ||||
Expenses: | ||||
Advisory fees | 2,331,605 | |||
| ||||
Administrative services fees | 50,178 | |||
| ||||
Custodian fees | 1,053 | |||
| ||||
Distribution fees: | ||||
Class A | 752,873 | |||
| ||||
Class C | 62,183 | |||
| ||||
Class R | 24,402 | |||
| ||||
Transfer agent fees– A, C, R and Y | 830,240 | |||
| ||||
Transfer agent fees – R5 | 703 | |||
| ||||
Transfer agent fees – R6 | 3,301 | |||
| ||||
Trustees’ and officers’ fees and benefits | 11,657 | |||
| ||||
Registration and filing fees | 48,720 | |||
| ||||
Reports to shareholders | 10,604 | |||
| ||||
Professional services fees | 17,379 | |||
| ||||
Other | 13,162 | |||
| ||||
Total expenses | 4,158,060 | |||
| ||||
Less: Fees waived, expenses reimbursed and/or expense offset arrangement(s) | (23,337 | ) | ||
| ||||
Net expenses | 4,134,723 | |||
| ||||
Net investment income | 335,307 | |||
| ||||
Realized and unrealized gain (loss) from: | ||||
Net realized gain (loss) from: | ||||
Investment securities | (1,417,098 | ) | ||
| ||||
Foreign currencies | (3,149 | ) | ||
| ||||
(1,420,247 | ) | |||
| ||||
Change in net unrealized appreciation (depreciation) of: | ||||
Investment securities | (25,802,318 | ) | ||
| ||||
Foreign currencies | 12,878 | |||
| ||||
(25,789,440 | ) | |||
| ||||
Net realized and unrealized gain (loss) | (27,209,687 | ) | ||
| ||||
Net increase (decrease) in net assets resulting from operations | $ | (26,874,380 | ) | |
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
8 Invesco Value Opportunities Fund
Statement of Changes in Net Assets
For the six months ended October 31, 2019 and the year ended April 30, 2019
(Unaudited)
October 31, 2019 | April 30, 2019 | |||||||
| ||||||||
Operations: | ||||||||
Net investment income (loss) | $ | 335,307 | $ | (9,990 | ) | |||
| ||||||||
Net realized gain (loss) | (1,420,247 | ) | 53,175,770 | |||||
| ||||||||
Change in net unrealized appreciation (depreciation) | (25,789,440 | ) | (28,833,478 | ) | ||||
| ||||||||
Net increase (decrease) in net assets resulting from operations | (26,874,380 | ) | 24,332,302 | |||||
| ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | – | (68,727,018 | ) | |||||
| ||||||||
Class C | – | (7,256,248 | ) | |||||
| ||||||||
Class R | – | (1,393,943 | ) | |||||
| ||||||||
Class Y | – | (4,210,458 | ) | |||||
| ||||||||
Class R5 | – | (267,250 | ) | |||||
| ||||||||
Class R6 | – | (3,356,878 | ) | |||||
| ||||||||
Total distributions from distributable earnings | – | (85,211,795 | ) | |||||
| ||||||||
Share transactions-net: | ||||||||
Class A | (33,929,492 | ) | 41,564,681 | |||||
| ||||||||
Class C | (1,979,676 | ) | (41,578,892 | ) | ||||
| ||||||||
Class R | (1,172,787 | ) | (905,036 | ) | ||||
| ||||||||
Class Y | (1,927,135 | ) | 1,018,691 | |||||
| ||||||||
Class R5 | (1,364,096 | ) | (43,992 | ) | ||||
| ||||||||
Class R6 | (289,445 | ) | 6,374,257 | |||||
| ||||||||
Net increase (decrease) in net assets resulting from share transactions | (40,662,631 | ) | 6,429,709 | |||||
| ||||||||
Net increase (decrease) in net assets | (67,537,011 | ) | (54,449,784 | ) | ||||
| ||||||||
Net assets: | ||||||||
Beginning of period | 758,957,968 | 813,407,752 | ||||||
| ||||||||
End of period | $ | 691,420,957 | $ | 758,957,968 | ||||
|
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
9 Invesco Value Opportunities Fund
(Unaudited)
The following schedule presents financial highlights for a share of the Fund outstanding throughout the periods indicated.
Net asset value, beginning of period | Net investment income (loss)(a) | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends from net investment income | Distributions from net realized gains | Total distributions | Net asset value, end of period | Total return (b) | Net assets, end of period (000’s omitted) | Ratio of expenses to average net assets with fee waivers and/or expenses absorbed | Ratio of expenses to average net assets without fee waivers and/or expenses absorbed | Ratio of net investment income (loss) to average net assets | Portfolio turnover (c) | |||||||||||||||||||||||||||||||||||||||||||
Class A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | $12.84 | $ 0.00 | $(0.43 | )(d) | $(0.43 | ) | $ – | $ – | $ – | $12.41 | (3.35 | )%(d) | $601,507 | 1.22 | %(e) | 1.22 | %(e) | 0.07 | %(e) | 12 | % | |||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 14.24 | 0.00 | 0.18 | 0.18 | – | (1.58 | ) | (1.58 | ) | 12.84 | 3.58 | 658,685 | 1.21 | 1.21 | 0.02 | 51 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 13.50 | 0.01 | 1.48 | 1.49 | – | (0.75 | ) | (0.75 | ) | 14.24 | 10.87 | 662,211 | 1.21 | 1.21 | 0.04 | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 11.60 | 0.01 | 2.05 | 2.06 | (0.02 | ) | (0.14 | ) | (0.16 | ) | 13.50 | 17.81 | 645,216 | 1.26 | 1.27 | 0.07 | 33 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 14.45 | 0.02 | (1.08 | ) | (1.06 | ) | (0.13 | ) | (1.66 | ) | (1.79 | ) | 11.60 | (6.93 | ) | 622,026 | 1.25 | 1.25 | 0.17 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 14.24 | 0.13 | 0.33 | 0.46 | (0.25 | ) | – | (0.25 | ) | 14.45 | 3.29 | 754,084 | 1.22 | 1.23 | 0.88 | 64 | ||||||||||||||||||||||||||||||||||||||||
Class C | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 12.02 | (0.03 | ) | (0.40 | )(d) | (0.43 | ) | – | – | – | 11.59 | (3.58 | )(d) | 14,375 | 1.80 | (e)(f) | 1.80 | (e)(f) | (0.51 | )(e) | 12 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 13.54 | (0.09 | ) | 0.15 | 0.06 | – | (1.58 | ) | (1.58 | ) | 12.02 | 2.83 | (f) | 17,027 | 1.92 | (f) | 1.92 | (f) | (0.69 | )(f) | 51 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 12.96 | (0.09 | ) | 1.42 | 1.33 | – | (0.75 | ) | (0.75 | ) | 13.54 | 10.07 | (f) | 68,174 | 1.91 | (f) | 1.91 | (f) | (0.66 | )(f) | 30 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 11.20 | (0.08 | ) | 1.98 | 1.90 | – | (0.14 | ) | (0.14 | ) | 12.96 | 17.00 | (f) | 82,590 | 1.97 | (f) | 1.98 | (f) | (0.64 | )(f) | 33 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 14.07 | (0.07 | ) | (1.05 | ) | (1.12 | ) | (0.09 | ) | (1.66 | ) | (1.75 | ) | 11.20 | (7.57 | )(f) | 79,538 | 1.97 | (f) | 1.97 | (f) | (0.55 | )(f) | 38 | ||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 13.87 | 0.02 | 0.33 | 0.35 | (0.15 | ) | – | (0.15 | ) | 14.07 | 2.53 | (f) | 99,994 | 1.95 | (f) | 1.96 | (f) | 0.15 | (f) | 64 | ||||||||||||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 12.69 | (0.01 | ) | (0.43 | )(d) | (0.44 | ) | – | – | – | 12.25 | (3.47 | )(d) | 9,267 | 1.47 | (e) | 1.47 | (e) | (0.18 | )(e) | 12 | |||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 14.13 | (0.03 | ) | 0.17 | 0.14 | – | (1.58 | ) | (1.58 | ) | 12.69 | 3.32 | 10,898 | 1.46 | 1.46 | (0.23 | ) | 51 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 13.43 | (0.03 | ) | 1.48 | 1.45 | – | (0.75 | ) | (0.75 | ) | 14.13 | 10.63 | 12,955 | 1.46 | 1.46 | (0.21 | ) | 30 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 11.55 | (0.02 | ) | 2.04 | 2.02 | – | (0.14 | ) | (0.14 | ) | 13.43 | 17.53 | 14,135 | 1.51 | 1.52 | (0.18 | ) | 33 | ||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 14.41 | (0.01 | ) | (1.07 | ) | (1.08 | ) | (0.12 | ) | (1.66 | ) | (1.78 | ) | 11.55 | (7.12 | ) | 16,119 | 1.50 | 1.50 | (0.08 | ) | 38 | ||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 14.20 | 0.09 | 0.33 | 0.42 | (0.21 | ) | – | (0.21 | ) | 14.41 | 3.03 | 20,696 | 1.47 | 1.48 | 0.63 | 64 | ||||||||||||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 12.86 | 0.02 | (0.43 | )(d) | (0.41 | ) | – | – | – | 12.45 | (3.19 | )(d) | 34,179 | 0.97 | (e) | 0.97 | (e) | 0.32 | (e) | 12 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 14.23 | 0.04 | 0.17 | 0.21 | – | (1.58 | ) | (1.58 | ) | 12.86 | 3.80 | 37,469 | 0.96 | 0.96 | 0.27 | 51 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 13.46 | 0.04 | 1.48 | 1.52 | – | (0.75 | ) | (0.75 | ) | 14.23 | 11.13 | 39,323 | 0.96 | 0.96 | 0.29 | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 11.56 | 0.04 | 2.06 | 2.10 | (0.06 | ) | (0.14 | ) | (0.20 | ) | 13.46 | 18.17 | 46,105 | 1.01 | 1.02 | 0.32 | 33 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 14.39 | 0.05 | (1.08 | ) | (1.03 | ) | (0.14 | ) | (1.66 | ) | (1.80 | ) | 11.56 | (6.71 | ) | 21,016 | 1.00 | 1.00 | 0.42 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 14.21 | 0.16 | 0.33 | 0.49 | (0.31 | ) | – | (0.31 | ) | 14.39 | 3.55 | 22,295 | 0.97 | 0.98 | 1.13 | 64 | ||||||||||||||||||||||||||||||||||||||||
Class R5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 12.95 | 0.03 | (0.43 | )(d) | (0.40 | ) | – | – | – | 12.55 | (3.09 | )(d) | 723 | 0.82 | (e) | 0.82 | (e) | 0.47 | (e) | 12 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 14.29 | 0.05 | 0.19 | 0.24 | – | (1.58 | ) | (1.58 | ) | 12.95 | 4.01 | 2,212 | 0.84 | 0.84 | 0.39 | 51 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 13.50 | 0.06 | 1.48 | 1.54 | – | (0.75 | ) | (0.75 | ) | 14.29 | 11.25 | 2,439 | 0.84 | 0.84 | 0.41 | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17 | 11.60 | 0.06 | 2.06 | 2.12 | (0.08 | ) | (0.14 | ) | (0.22 | ) | 13.50 | 18.30 | 2,456 | 0.85 | 0.86 | 0.48 | 33 | |||||||||||||||||||||||||||||||||||||||
Year ended 04/30/16 | 14.42 | 0.08 | (1.09 | ) | (1.01 | ) | (0.15 | ) | (1.66 | ) | (1.81 | ) | 11.60 | (6.56 | ) | 2,850 | 0.84 | 0.84 | 0.58 | 38 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/15 | 14.25 | 0.19 | 0.33 | 0.52 | (0.35 | ) | – | (0.35 | ) | 14.42 | 3.76 | 2,952 | 0.82 | 0.83 | 1.28 | 64 | ||||||||||||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Six months ended 10/31/19 | 12.97 | 0.03 | (0.43 | )(d) | (0.40 | ) | – | – | – | 12.57 | (3.08 | )(d) | 31,369 | 0.74 | (e) | 0.74 | (e) | 0.55 | (e) | 12 | ||||||||||||||||||||||||||||||||||||
Year ended 04/30/19 | 14.31 | 0.06 | 0.18 | 0.24 | – | (1.58 | ) | (1.58 | ) | 12.97 | 4.00 | 32,666 | 0.79 | 0.79 | 0.44 | 51 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/18 | 13.50 | 0.08 | 1.48 | 1.56 | – | (0.75 | ) | (0.75 | ) | 14.31 | 11.40 | 28,305 | 0.77 | 0.77 | 0.48 | 30 | ||||||||||||||||||||||||||||||||||||||||
Year ended 04/30/17(g) | 13.60 | 0.01 | (0.11 | ) | (0.10 | ) | – | – | – | 13.50 | (0.74 | ) | 10 | 0.76 | (h) | 0.76 | (h) | 0.57 | (h) | 33 |
(a) | Calculated using average shares outstanding. |
(b) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. Does not include sales charges and is not annualized for periods less than one year, if applicable. |
(c) | Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable. |
(d) | Includes litigation proceeds received during the period. Had these litigation proceeds not been received, Net gains (losses) on securities (both realized and unrealized) per share would have been $(0.51), $(0.48), $(0.51), $(0.51), $(0.51) and $(0.51) for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. Total returns would have been lower. |
(e) | Ratios are annualized and based on average daily net assets (000’s omitted) of $599,224, $14,823, $9,710, $34,158, $1,398 and $30,667 for Class A, Class C, Class R, Class Y, Class R5 and Class R6 shares, respectively. |
(f) | The total return, ratio of expenses to average net assets and ratio of net investment income (loss) to average net assets reflect actual12b-1 fees of 0.83%, 0.96%, 0.95%, 0.97%, 0.97% and 0.98% for the six months ended October 31, 2019 and the years ended April 30, 2019, 2018, 2017, 2016 and 2015, respectively. |
(g) | Commencement date of April 04, 2017. |
(h) | Annualized. |
See accompanying Notes to Financial Statements which are an integral part of the financial statements.
10 Invesco Value Opportunities Fund
October 31, 2019
(Unaudited)
NOTE 1–Significant Accounting Policies
Invesco Value Opportunities Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 total return through growth of capital and current income.
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 afront-end sales charge unless certain waiver criteria are met. 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. Class C shares held for ten years after purchase are eligible for automatic conversion into Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
11 Invesco Value Opportunities Fund
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 theex-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 theex-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 Rule12b-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 theperiod-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 the 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, |
12 Invesco Value Opportunities Fund
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 dailymark-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 | 0.695% | |||||
| ||||||
Next $250 million | 0.670% | |||||
| ||||||
Next $500 million | 0.645% | |||||
| ||||||
Next $1.5 billion | 0.620% | |||||
| ||||||
Next $2.5 billion | 0.595% | |||||
| ||||||
Next $2.5 billion | 0.570% | |||||
| ||||||
Next $2.5 billion | 0.545% | |||||
| ||||||
Over $10 billion | 0.520% | |||||
|
For the six months ended October 31, 2019, the effective advisory fee rate incurred by the Fund was 0.67%.
Under the terms of a mastersub-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 “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s).
The Adviser has contractually agreed, through at least June 30, 2020, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed above) of Class A, Class 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”). 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 ornon-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, 2020. 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, 2021, to waive the advisory fee payable by the Fund in an amount equal to 100% of the net advisory fees the Adviser receives from the affiliated money market funds on investments by the Fund of uninvested cash (excluding investments of cash collateral from securities lending) in such affiliated money market funds.
For the six months ended October 31, 2019, the Adviser waived advisory fees of $15,290.
The Trust has entered into a master administrative services agreement with Invesco pursuant to which the Fund has agreed to pay Invesco for certain administrative costs incurred in providing accounting services to the Fund. For the six months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asAdministrative services fees. Invesco has entered into asub-administration agreement whereby State Street Bank and Trust Company (“SSB”) serves as fund accountant and provides certain administrative services to the Fund. Pursuant to a custody agreement with the Trust on behalf of the Fund, SSB also serves as the Fund’s custodian.
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
13 Invesco Value Opportunities Fund
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 orsub-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 October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations asTransfer agent fees.
Shares of the Fund are distributed by Invesco Distributors, Inc. (“IDI”). The Fund has adopted a distribution plan pursuant to Rule12b-1 under the 1940 Act, and a service plan (collectively, the “Plans”) for Class A, Class C and Class R shares to compensate IDI for the sale, distribution, shareholder servicing and maintenance of shareholder accounts for these shares. Under the Plans, the Fund will incur annual fees of up to 0.25% of Class A average daily net assets, up to 1.00% of Class C average daily net assets and up to 0.50% of Class R average daily net assets. The fees are accrued daily and paid monthly.
With respect to Class C shares, the Fund is authorized to reimburse in future years any distribution related expenses that exceed the maximum annual reimbursement rate for such class, so long as such reimbursement does not cause the Fund to exceed the Class C maximum annual reimbursement rate, respectively. With respect to Class A shares, distribution related expenses that exceed the maximum annual reimbursement rate for such class are not carried forward to future years and the Fund will not reimburse IDI for any such expenses.
For the six months ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations asDistribution fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded as expenses of the Fund.Front-end sales commissions are deducted from proceeds from the sales of Fund shares prior to investment in Class A shares of the Fund. CDSC are deducted from redemption proceeds prior to remittance to the shareholder. During the six months ended October 31, 2019, IDI advised the Fund that IDI retained $24,371 infront-end sales commissions from the sale of Class A shares and $212 and $305 from Class A and Class C shares, respectively, for CDSC imposed upon redemptions by shareholders.
For the six months ended October 31, 2019, the Fund incurred $2,968 in brokerage commissions with Invesco Capital Markets, Inc., an affiliate of the Adviser and IDI, for portfolio transactions executed on behalf of the Fund.
Certain officers and trustees of the Trust are officers and directors of the Adviser, IIS and/or IDI.
NOTE 3–Additional Valuation Information
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, under current market conditions. GAAP establishes a hierarchy that prioritizes the inputs to valuation methods, giving the highest priority to readily available unadjusted quoted prices in an active market for identical assets (Level 1) and the lowest priority to significant unobservable inputs (Level 3), generally when market prices are not readily available or are unreliable. Based on the valuation inputs, the securities or other investments are tiered into one of three levels. Changes in valuation methods may result in transfers in or out of an investment’s assigned level:
Level 1 – | Prices are determined using quoted prices in an active market for identical assets. | |
Level 2 – | Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants may use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, yield curves, loss severities, default rates, discount rates, volatilities and others. | |
Level 3 – | Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in determining fair value of the securities or instruments and would be based on the best available information. |
As of October 31, 2019, 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.
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| ||||||||||||||||
Investments in Securities | ||||||||||||||||
| ||||||||||||||||
Common Stocks & Other Equity Interests | $ | 656,114,307 | $ | 6,368,373 | $– | $ | 662,482,680 | |||||||||
| ||||||||||||||||
Money Market Funds | 21,855,335 | – | – | 21,855,335 | ||||||||||||
| ||||||||||||||||
Total Investments | $ | 677,969,642 | $ | 6,368,373 | $– | $ | 684,338,015 | |||||||||
|
NOTE 4–Security Transactions with Affiliated Funds
The Fund is permitted to purchase or sell securities from or to certain other Invesco Funds under specified conditions outlined in procedures adopted by the Board of Trustees of the Trust. The procedures have been designed to ensure that any purchase or sale of securities by the Fund from or to another fund or portfolio that is or could be considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule17a-7 of the 1940 Act. Further, as defined under the procedures, each transaction is effected at the current market price. Pursuant to these procedures, for thesix-month period ended October 31, 2019, the Fund engaged in securities purchases of $0 and securities sales of $2,027,302, which resulted in net realized gains of $873,263.
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 October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $8,047.
14 Invesco Value Opportunities Fund
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, andTrustees’ 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 SSB, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable captionAmount 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 fiscalyear-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 April 30, 2019.
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 October 31, 2019 was $77,237,769 and $112,831,279, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis |
| |||
| ||||
Aggregate unrealized appreciation of investments | $ | 106,472,074 | ||
| ||||
Aggregate unrealized (depreciation) of investments | (85,588,170 | ) | ||
| ||||
Net unrealized appreciation of investments | $ | 20,883,904 | ||
| ||||
Cost of investments for tax purposes is $663,454,111. |
NOTE 10–Share Information
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Sold: | ||||||||||||||||
Class A | 1,126,279 | $ 13,465,451 | 2,997,323 | $ 38,539,069 | ||||||||||||
| ||||||||||||||||
Class C | 78,390 | 876,001 | 261,349 | 3,284,811 | ||||||||||||
| ||||||||||||||||
Class R | 40,797 | 487,138 | 84,122 | 1,110,544 | ||||||||||||
| ||||||||||||||||
Class Y | 305,464 | 3,720,771 | 1,098,977 | 13,944,039 | ||||||||||||
| ||||||||||||||||
Class R5 | 2,587 | 31,825 | 20,827 | 293,122 | ||||||||||||
| ||||||||||||||||
Class R6 | 404,398 | 4,889,582 | 811,481 | 10,686,666 | ||||||||||||
|
15 Invesco Value Opportunities Fund
Summary of Share Activity | ||||||||||||||||
| ||||||||||||||||
Six months ended October 31, 2019(a) | Year ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
| ||||||||||||||||
Issued as reinvestment of dividends: | ||||||||||||||||
Class A | - | $ | - | 6,168,261 | $ | 65,568,617 | ||||||||||
| ||||||||||||||||
Class C | - | - | 682,635 | 6,812,768 | ||||||||||||
| ||||||||||||||||
Class R | - | - | 132,621 | 1,393,851 | ||||||||||||
| ||||||||||||||||
Class Y | - | - | 363,569 | 3,868,374 | ||||||||||||
| ||||||||||||||||
Class R5 | - | - | 24,915 | 266,591 | ||||||||||||
| ||||||||||||||||
Class R6 | - | - | 308,054 | 3,302,335 | ||||||||||||
| ||||||||||||||||
Automatic conversion of Class C shares to Class A shares: |
| |||||||||||||||
Class A | 78,490 | 939,850 | 3,463,765 | 40,606,720 | ||||||||||||
| ||||||||||||||||
Class C | (83,951 | ) | (939,850 | ) | (3,690,780 | ) | (40,606,720 | ) | ||||||||
| ||||||||||||||||
Reacquired: | ||||||||||||||||
Class A | (4,036,162 | ) | (48,334,793 | ) | (7,830,091 | ) | (103,149,725 | ) | ||||||||
| ||||||||||||||||
Class C | (169,668 | ) | (1,915,827 | ) | (871,075 | ) | (11,069,751 | ) | ||||||||
| ||||||||||||||||
Class R | (143,129 | ) | (1,659,925 | ) | (274,956 | ) | (3,409,431 | ) | ||||||||
| ||||||||||||||||
Class Y | (472,667 | ) | (5,647,906 | ) | (1,313,108 | ) | (16,793,722 | ) | ||||||||
| ||||||||||||||||
Class R5 | (115,799 | ) | (1,395,921 | ) | (45,550 | ) | (603,705 | ) | ||||||||
| ||||||||||||||||
Class R6 | (426,698 | ) | (5,179,027 | ) | (579,271 | ) | (7,614,744 | ) | ||||||||
| ||||||||||||||||
Net increase (decrease) in share activity | (3,411,669 | ) | $ | (40,662,631 | ) | 1,813,068 | $ | 6,429,709 | ||||||||
|
(a) | There are entities that are record owners of more than 5% of the outstanding shares of the Fund and in the aggregate own 30% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially. |
16 Invesco Value Opportunities Fund
Calculating your ongoing Fund expenses
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments or contingent deferred sales charges on redemptions, if any; and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period May 1, 2019 through October 31, 2019.
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, expenses shown in the table do not include the expenses of the underlying funds, which are borne indirectly by the Fund. If transaction costs and indirect expenses were included, your costs would have been higher.
Beginning | ACTUAL |
HYPOTHETICAL (5% annual return before | Annualized | |||||||||||||||||||||||||||
Ending Account Value (10/31/19)1 | Expenses Paid During Period2 | Ending Account Value (10/31/19) | Expenses Paid During Period2 | |||||||||||||||||||||||||||
Class A | $ | 1,000.00 | $ | 966.50 | $ | 6.03 | $ | 1,019.00 | $ | 6.19 | 1.22 | % | ||||||||||||||||||
Class C | 1,000.00 | 964.20 | 8.89 | 1,016.09 | 9.12 | 1.80 | ||||||||||||||||||||||||
Class R | 1,000.00 | 965.30 | 7.26 | 1,017.75 | 7.46 | 1.47 | ||||||||||||||||||||||||
Class Y | 1,000.00 | 968.10 | 4.80 | 1,020.26 | 4.93 | 0.97 | ||||||||||||||||||||||||
Class R5 | 1,000.00 | 969.10 | 4.06 | 1,021.01 | 4.17 | 0.82 | ||||||||||||||||||||||||
Class R6 | 1,000.00 | 969.20 | 3.66 | 1,021.42 | 3.76 | 0.74 |
1 | The actual ending account value is based on the actual total return of the Fund for the period May 1, 2019 through October 31, 2019, after actual expenses and will differ from the hypothetical ending account value which is based on the Fund’s expense ratio and a hypothetical annual return of 5% before expenses. |
2 | Expenses are equal to the Fund’s annualized expense ratio as indicated above multiplied by the average account value over the period, multiplied by 184/366 to reflect the most recent fiscal half year. |
17 Invesco Value Opportunities Fund
Approval of Investment Advisory andSub-Advisory Agreements
At meetings held on June 10, 2019, the Board of Trustees (the Board or the Trustees) of Invesco Value Opportunities Fund (the Fund) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved the continuance of the Fund’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) and the Master IntergroupSub-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 AffiliatedSub-Advisers and thesub-advisory contracts) for another year, effective July 1, 2019. After evaluating the factors discussed below, among others, the Board approved the renewal of the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board’s Investments Committee has established threeSub-Committees which meet throughout the year to review the performance of funds advised by Invesco Advisers (the Invesco Funds). As part of a regularly scheduled basis ofin-person Board meetings, theSub-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 andSub-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 andsub-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 andsub-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 andsub-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 10, 2019.
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 advisory services provided to the Fund by Invesco Advisers under the Fund’s investment advisory agreement, the performance of Invesco Advisers in providing these services, and the credentials and experience of the officers and employees of Invesco Advisers who provide these services, including the Fund’s portfolio manager or managers. The Board’s review included consideration of Invesco Advisers’ investment process oversight, credit analysis and investment risk management. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds such as various back office support functions, trading operations, internal audit, valuation and legal and compliance.
In determining whether to continue the Fund’s investment advisory agreement, the Board considered the benefits of reapproving an existing relationship as contrasted with the greater uncertainty that may be associated with entering into a new relationship. 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 AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world. As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-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 performance as a relevant factor in considering whether to approve thesub-advisory contracts for the Fund, as no AffiliatedSub-Adviser currently manages assets of the Fund.
The Board compared the Fund’s investment performance over multiple time periods ending December 31, 2016 to the performance of funds in the Broadridge performance universe and against the Lipper Emerging Market Funds Index. The Board noted that performance of Class A shares of the Fund was in the first quintile of its performance universe for the one year period, the second quintile for the three year period and the third 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 above 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 Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. Advisory and Sub–Advisory Fees
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 at a common asset level. 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
18 Invesco Value Opportunities Fund
group. The Board noted that the term “contractual management fee” for funds in the expense group may include both advisory and certain administrative services fees, but that Broadridge does not provide information on a fund by fund basis as to what is included. The Board noted that Invesco Advisers does not separately charge the Invesco Funds for the administrative services included in the term as defined by Broadridge. 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 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 mutual funds advised by Invesco Advisers and its affiliates with investment strategies comparable to those of the Fund, based on asset balances as of December 31, 2016. The Board noted that the Fund’s rate was below the rate of two such mutual funds.
The Board noted that Invesco Advisers and the AffiliatedSub-Advisers do not manage other client accounts with investment strategies comparable to those of the Fund.
The Board also considered the services that may be provided by the AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-advisory contracts. The Board also noted that thesub-advisory fees are not paid directly by the Fund, but rather, are payable by Invesco Advisers to the AffiliatedSub-Advisers.
D. Economies of Scale and Breakpoints
The Board considered the extent to which there are 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. 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 advised by Invesco Advisers.
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 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, quality and extent of the services provided. The Board received and accepted information from Invesco Advisers demonstrating that Invesco Advisers and each AffiliatedSub-Adviser are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-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 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 AffiliatedSub-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 AffiliatedSub-Advisers with other clients and may reduce Invesco Adviser’s or the AffiliatedSub-Adviser’s expenses. The Board also considered that it receives periodic reports from the Chief Compliance Officer of the Invesco Funds demonstrating 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 the Fund may use an affiliated broker to execute certain trades for the Fund to, among other things, control information leakage, and was advised that such trades would be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
19 Invesco Value Opportunities Fund
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 list appears 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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormN-PORT filings on the SEC website, 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 recent12-month period ended June 30 is available at invesco.com/proxysearch. This information is also available on the SEC website, sec.gov. Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the US distributor for Invesco Ltd.’s retail mutual funds, exchange-traded funds and institutional money market funds. Both are wholly owned, indirect subsidiaries of Invesco Ltd. |
SEC file numbers: 811-03826 and 002-85905 | Invesco Distributors, Inc. | VK-VOPP-SAR-1 |
Shareholder Report for the
Four Months Ended 10/31/2019
| ||
Invesco Oppenheimer Gold & Special Minerals Fund*
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco.com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800 959 4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
*Prior to the close of business on May 24, 2019, the Fund’s name was Oppenheimer Gold & Special Minerals Fund. See Important Update on the following page for more information. |
Important Update
On October 18, 2018, Massachusetts Mutual Life Insurance Company, an indirect corporate parent of OppenheimerFunds, Inc. and its subsidiaries OFI Global Asset Management, Inc., OFI SteelPath, Inc. and OFI Advisors, LLC, announced that it had entered into an agreement whereby Invesco Ltd., a global investment management company would acquire OppenheimerFunds and its subsidiaries (together, “OppenheimerFunds”). After the close of business on May 24, 2019 Invesco Ltd. completed the acquisition of OppenheimerFunds. This Fund was included in that acquisition and as of that date, became part of the Invesco family of funds. Please visit invesco.com for more information or call Invesco’s Client Services team at800-959-4246.
Class A Shares
AVERAGE ANNUAL TOTAL RETURNS AT 10/31/19
Class A Shares of the Fund | |||||||||||||||
Without Sales Charge | With Sales Charge | MSCI World Index | |||||||||||||
6-Month | 30.81 | % | 23.61 | % | 3.55 | % | |||||||||
1-Year | 43.32 | 35.48 | 12.69 | ||||||||||||
5-Year | 11.33 | 10.08 | 7.58 | ||||||||||||
10-Year | -1.68 | -2.23 | 9.48 |
Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Visit invesco.com for the most recentmonth-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Fund returns include changes in share price, reinvested distributions and a 5.50% maximum applicable sales charge except where “without sales charge” is indicated. As the result of a reorganization after the close of business on May 24, 2019, the returns of the Fund for periods on or prior to May 24, 2019 reflect performance of the Oppenheimer predecessor fund. Share class returns will differ from those of the predecessor fund because they have different expenses. Returns for periods of less than one year are not annualized. Returns do not consider capital gains or income taxes on an individual’s investment. See Fund prospectus and
3 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
summary prospectus for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
4 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
TOP TEN HOLDINGS
Northern Star Resources Ltd. | 5.3% | |||
Barrick Gold Corp. | 5.2 | |||
Newmont Goldcorp Corp. | 5.1 | |||
Evolution Mining Ltd. | 4.5 | |||
Kirkland Lake Gold Ltd. | 4.5 | |||
Ivanhoe Mines Ltd., Cl. A | 3.7 | |||
Agnico Eagle Mines Ltd. | 3.6 | |||
B2Gold Corp. | 3.0 | |||
AngloGold Ashanti Ltd., Sponsored ADR | 3.0 | |||
Gold Fields Ltd., Sponsored ADR | 2.8 |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of October 31, 2019, and are based on net assets.
REGIONAL ALLOCATION
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of October 31, 2019 and are based on total market value of investments.
For more current Fund holdings, please visit invesco.com.
5 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Share Class Performance
AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 10/31/19
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | ||||||
Class A (OPGSX) | 7/19/83 | 30.81% | 43.32% | 11.33% | -1.68% | |||||
Class C (OGMCX) | 11/1/95 | 30.35 | 42.23 | 10.50 | -2.41 | |||||
Class R (OGMNX) | 3/1/01 | 30.70 | 42.91 | 11.05 | -1.95 | |||||
Class Y (OGMYX) | 9/7/10 | 31.01 | 43.65 | 11.62 | -5.731 | |||||
Class R5 (IOGYX)2 | 5/24/19 | 31.01 | 43.55 | 11.36 | -1.661 | |||||
Class R6 (OGMIX)3 | 10/26/12 | 31.09 | 43.85 | 11.80 | -6.181 |
AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 10/31/19
Inception Date | 6-Month | 1-Year | 5-Year | 10-Year | ||||||
Class A (OPGSX) | 7/19/83 | 23.61% | 35.48% | 10.08% | -2.23% | |||||
Class C (OGMCX) | 11/1/95 | 29.35 | 41.23 | 10.50 | -2.41 | |||||
Class R (OGMNX) | 3/1/01 | 30.70 | 42.91 | 11.05 | -1.95 | |||||
Class Y (OGMYX) | 9/7/10 | 31.01 | 43.65 | 11.62 | -5.731 | |||||
Class R5 (IOGYX)2 | 5/24/19 | 31.01 | 43.55 | 11.36 | -1.661 | |||||
Class R6 (OGMIX)3 | 10/26/12 | 31.09 | 43.85 | 11.80 | -6.181 |
1. Shows performance since inception.
2. Class R5 shares’ performance shown prior to the inception date (after the close of business on May 24, 2019) is that of the predecessor fund’s Class A shares at net asset value (NAV) and includes the12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements.
3. Class R6 shares’ returns shown for periods ending on or prior to May 24, 2019 are those of the Class I shares of the predecessor fund.
Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Visit invesco.com for the most recentmonth-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Performance shown at NAV does not include the applicablefront-end sales charge, which would have reduced the performance. The current maximum initial sales charge for Class A shares is 5.50% and the contingent deferred sales charge for Class C shares is 1% for the1-year period. Class R, Class Y, Class R5 and Class R6 shares have no sales charge; therefore, performance is at NAV. Effective after the close of business on May 24, 2019, Class A, Class C, Class R, Class Y, and Class I shares of the predecessor fund were reorganized into Class A, Class C, Class R, Class Y, and Class R6 shares, respectively, of the Fund. Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at NAV and includes the12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. Returns shown for Class A, Class C, Class R, Class Y, Class R5, and Class R6 shares are blended returns of the predecessor fund and the Fund. Share class returns will differ from those of the predecessor fund because of different
6 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
expenses. See Fund prospectuses and summary prospectuses for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
The MSCI World Index is an index of issuers listed on the stock exchanges of foreign countries and the United States. It is widely recognized as a measure of global stock market performance. The Index isunmanaged and cannot be purchased directly by investors. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments comprising theIndex. Index performance includes reinvestment of income, but does not reflect transaction costs, fees, expenses or taxes. Index performance is shown for illustrative purposes only as a benchmark for the Fund’s performance, and does not predict or depict performance of the Fund. The Fund’s performance reflects the effects of the Fund’s business and operating expenses.
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco. com/fundprospectus.
Shares of Invesco funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
7 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Fund Expenses. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and/or contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire6-month period ended October 31, 2019.
Actual Expenses. The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During 6 Months Ended October 31, 2019” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes.The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class 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 for the class of shares you hold 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 transactional costs, such asfront-end or contingent deferred sales charges (loads). Therefore, the “hypothetical” section of the table 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 transactional costs were included, your costs would have been higher.
8 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Actual | Beginning Account Value May 1, 2019 | Ending Account Value October 31, 2019 | Expenses Paid During 6 Months Ended October 31, 20191,2 | |||||||||
Class A | $ | 1,000.00 | $ | 1,308.10 | $ | 6.81 | ||||||
Class C | 1,000.00 | 1,303.50 | 11.16 | |||||||||
Class R | 1,000.00 | 1,307.00 | 8.26 | |||||||||
Class Y | 1,000.00 | 1,310.10 | 5.35 | |||||||||
Class R5 | 1,000.00 | 1,310.10 | 4.05 | |||||||||
Class R6 | 1,000.00 | 1,310.90 | 4.36 | |||||||||
Hypothetical | ||||||||||||
(5% return before expenses) | ||||||||||||
Class A | 1,000.00 | 1,019.25 | 5.96 | |||||||||
Class C | 1,000.00 | 1,015.48 | 9.77 | |||||||||
Class R | 1,000.00 | 1,018.00 | 7.23 | |||||||||
Class Y | 1,000.00 | 1,020.51 | 4.68 | |||||||||
Class R5 | 1,000.00 | 1,021.11 | 4.07 | |||||||||
Class R6 | 1,000.00 | 1,021.37 | 3.82 |
1. Actual expenses paid for Class A, C, R, Y, and R6 are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect theone-half year period). Actual expenses paid for Class R5 are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 160/366 to reflect the period from after the close of business on May 24, 2019 (inception of offering) to October 31, 2019.
2.Hypothetical expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366(to reflect theone-half year period).
Those annualized expense ratios, excluding indirect expenses from affiliated funds, based on the6-month period ended October 31, 2019 for Classes A, C, R, Y and R6and for the period from after the close of business on May 24, 2019 (inception of offering) to October 31, 2019 for Class R5 are as follows:
Class | Expense Ratios | |||
Class A | 1.17 | % | ||
Class C | 1.92 | |||
Class R | 1.42 | |||
Class Y | 0.92 | |||
Class R5 | 0.80 | |||
Class R6 | 0.75 |
The expense ratios reflect voluntary and/or contractual waivers and/or reimbursements of expenses by the Fund’s Manager. Some of these undertakings may be modified or terminated at any time, as indicated in the Fund’s prospectus. The “Consolidated Financial Highlights”
9 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
tables in the Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements and reduction to custodian expenses, if applicable.
10 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
SCHEDULE OF INVESTMENTSOctober 31, 2019 Unaudited
Shares | Value | |||||||
Common Stocks—99.1% | ||||||||
Consumer Discretionary—0.0% | ||||||||
Internet & Catalog Retail—0.0% | ||||||||
Artemis Gold, Inc.1
|
| 394,000
|
| $
| 349,996
|
| ||
Industrials—1.6% | ||||||||
Commercial Services & Supplies—0.0% |
| |||||||
Tomra Systems ASA
|
| 20,000
|
|
| 538,486
|
| ||
Electrical Equipment—0.9% | ||||||||
GrafTech International Ltd.
|
| 900,000
|
|
| 10,872,000
|
| ||
Machinery—0.7% | ||||||||
Sandvik AB
|
| 515,000
|
|
| 9,090,984
|
| ||
Materials—97.5% | ||||||||
Metals & Mining—97.5% | ||||||||
Adventus Mining Corp.1 | 2,000,000 | 1,579,227 | ||||||
Agnico Eagle Mines Ltd. | 739,000 | 45,426,330 | ||||||
Alacer Gold Corp.1 | 6,720,000 | 33,265,811 | ||||||
Alamos Gold, Inc., Cl. A | 2,195,000 | 11,940,800 | ||||||
AMG Advanced Metallurgical Group NV | 367,000 | 9,062,007 | ||||||
AngloGold Ashanti Ltd., Sponsored ADR | 1,723,000 | 38,043,840 | ||||||
Argonaut Gold, Inc.1 | 900,000 | 1,469,137 | ||||||
Auryn Resources, Inc.1 | 300,000 | 444,000 | ||||||
B2Gold Corp.1 | 10,870,000 | 38,153,700 | ||||||
Barrick Gold Corp. | 3,831,470 | 66,514,321 | ||||||
Bellevue Gold Ltd.1 | 11,708,772 | 4,445,839 | ||||||
Bushveld Minerals Ltd.1 | 7,400,000 | 2,108,092 | ||||||
Centerra Gold, Inc.1 | 2,236,000 | 19,064,824 | ||||||
Continental Gold, Inc.1 | 5,570,000 | 17,761,749 | ||||||
Dacian Gold Ltd.1,2 | 11,540,000 | 11,876,445 | ||||||
Dundee Precious Metals, Inc.1 | 2,100,000 | 7,318,351 | ||||||
Eldorado Gold Corp.1 | 2,780,702 | 23,413,511 | ||||||
Endeavour Mining Corp.1 | 1,099,000 | 19,900,653 | ||||||
ERO Copper Corp.1 | 1,168,000 | 14,596,675 | ||||||
Evolution Mining Ltd. | 20,033,732 | 57,878,824 | ||||||
Ferroglobe plc1 | 1,320,000 | 816,024 |
Shares | Value | |||||||
Metals & Mining (Continued) | ||||||||
First Quantum Minerals Ltd. | 2,716,200 | $ | 22,952,931 | |||||
Franco-Nevada Corp. | 204,000 | 19,781,880 | ||||||
Fresnillo plc | 590,000 | 5,435,017 | ||||||
Ganfeng Lithium Co. Ltd., Cl. H3 | 4,400,000 | 7,992,048 | ||||||
Gold Fields Ltd., Sponsored ADR | 5,790,000 | 35,782,200 | ||||||
Gold Road Resources Ltd.1 | 18,162,220 | 14,365,980 | ||||||
Golden Star Resources Ltd.1 | 5,115,532 | 17,392,809 | ||||||
Gran Colombia Gold Corp.1 | 140,000 | 536,785 | ||||||
Great Bear Resources Ltd.1 | 10,000 | 53,071 | ||||||
Harmony Gold Mining Co. Ltd., ADR1 | 4,120,000 | 14,337,600 | ||||||
Highland Gold Mining Ltd. | 3,285,000 | 8,702,560 | ||||||
Independence Group NL | 1,890,000 | 8,281,705 | ||||||
Ivanhoe Mines Ltd., Cl. A1 | 18,930,000 | 46,998,026 | ||||||
K92 Mining, Inc.1 | 8,220,000 | 14,042,214 | ||||||
Kirkland Lake Gold Ltd. | 1,216,367 | 57,119,656 | ||||||
Koza Altin Isletmeleri AS1 | 1,582,028 | 19,463,702 | ||||||
Largo Resources Ltd.1 | 1,590,000 | 1,593,501 | ||||||
Liberty Gold Corp.1 | 867,000 | 599,021 | ||||||
Lion One Metals Ltd.1 | 781,500 | 551,815 | ||||||
Lundin Gold, Inc.1 | 2,279,600 | 13,673,100 | ||||||
Maverix Metals, Inc.1 | 555,000 | 2,127,971 | ||||||
Metals X Ltd.1 | 3,190,000 | 372,111 | ||||||
New Century Resources Ltd.1 | 7,110,000 | 1,829,613 | ||||||
Newcrest Mining Ltd. | 90,147 | 1,968,861 | ||||||
Newmont Goldcorp Corp. | 1,651,923 | 65,630,901 | ||||||
Nickel Mines Ltd.1 | 14,300,000 | 6,295,110 | ||||||
Northern Star Resources Ltd. | 9,940,562 | 68,157,397 |
11 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED
SCHEDULE OF INVESTMENTSUnaudited / Continued
Shares | Value | |||||||
Metals & Mining (Continued) | ||||||||
Novo Resources Corp.1 | 900,000 | $ | 1,797,130 | |||||
Oceangold Corp.4 | 90,000 | 216,276 | ||||||
Oceangold Corp.4 | 4,320,000 | 10,364,589 | ||||||
Osino Resources Corp.1 | 1,440,000 | 819,983 | ||||||
Osisko Gold Royalties Ltd. | 1,108,000 | 10,902,720 | ||||||
Pan American Silver Corp. | 611,000 | 10,417,550 | ||||||
Pantoro Ltd.1 | 15,100,000 | 1,721,783 | ||||||
Perenti Global Ltd. | 65,634 | 102,831 | ||||||
Pilbara Minerals Ltd.1 | 6,210,000 | 1,375,544 | ||||||
Polymetal International plc | 1,246,000 | 20,452,254 | ||||||
Polyus PJSC, GDR4 | 339,000 | 19,956,833 | ||||||
Polyus PJSC, GDR4 | 2,000 | 116,573 | ||||||
Pretium Resources, Inc.1 | 777,000 | 7,828,403 | ||||||
Ramelius Resources Ltd. | 8,170,000 | 7,185,038 | ||||||
Real Gold Mining Ltd.1 | 10,400,000 | 0 | ||||||
Red 5 Ltd.1 | 7,100,000 | 1,364,755 | ||||||
Resolute Mining Ltd.1 | 11,650,000 | 9,939,750 | ||||||
Roxgold, Inc.1 | 6,010,000 | 4,426,164 | ||||||
Royal Gold, Inc. | 124,000 | 14,314,560 | ||||||
Royal Nickel Corp.1 | 18,850,000 | 5,510,022 | ||||||
Saracen Mineral Holdings Ltd.1 | 7,750,000 | 20,344,502 | ||||||
SEMAFO, Inc.1 | 4,730,000 | 15,262,698 | ||||||
Shandong Gold Mining Co. Ltd., Cl. H3 | 6,800,000 | 16,292,711 | ||||||
Sibanye Gold Ltd., Sponsored ADR1 | 2,790,000 | 21,343,500 | ||||||
Silver Lake Resources Ltd.1 | 14,980,000 | 12,106,879 | ||||||
SilverCrest Metals, Inc.1 | 2,370,000 | 13,585,529 | ||||||
SolGold plc1 | 19,400,000 | 5,290,901 | ||||||
SSR Mining, Inc.1 | 1,086,000 | 16,061,940 | ||||||
Teranga Gold Corp.1 | 1,510,000 | 6,110,622 |
Shares | Value | |||||||
Metals & Mining (Continued) | ||||||||
TMAC Resources, Inc.1 | 1,360,000 | $ | 4,202,566 | |||||
Torex Gold Resources, Inc.1 | 1,311,800 | 19,192,458 | ||||||
Trevali Mining Corp.1 | 23,149,500 | 3,603,103 | ||||||
Turquoise Hill Resources Ltd.1 | 1,100,000 | 459,360 | ||||||
Wallbridge Mining Co. Ltd.1 | 100,000 | 45,934 | ||||||
Wesdome Gold Mines Ltd.1 | 5,145,100 | 31,446,401 | ||||||
Westgold Resources Ltd.1 | 11,688,294 | 19,203,700 | ||||||
Wheaton Precious Metals Corp. | 659,000 | 18,498,130 | ||||||
Zhaojin Mining Industry Co. Ltd., Cl. H | 10,150,000 | 11,434,635 | ||||||
1,244,416,072 | ||||||||
Total Common Stocks | ||||||||
(Cost $902,151,383) |
| 1,265,267,538
|
| |||||
Units | ||||||||
Rights, Warrants and Certificates—0.0% |
| |||||||
Pan American Silver Corp., Exp. 2/22/291 | 2,300,100 | 0 | ||||||
Royal Nickel Corp., Exp. 9/21/211 | 2,500,000 | 265,735 | ||||||
Total Rights, Warrants and Certificates |
| |||||||
(Cost $0) |
| 265,735
|
| |||||
Shares | ||||||||
Investment Company—1.1% | ||||||||
Invesco Government & Agency Portfolio, Institutional Class, | 13,749,804 | 13,749,804 | ||||||
Total Investments, at Value | 100.2 | % | 1,279,283,077 | |||||
Net Other Assets (Liabilities) | (0.2 | ) | (3,132,013 | ) | ||||
|
| |||||||
Net Assets | 100.0 | % | $ | 1,276,151,064 | ||||
|
|
12 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Footnotes to Consolidated Schedule of Investments
1.Non-income producing security.
2. Is or was an affiliate, as defined in the Investment Company Act of 1940, as amended, at or during the reporting period, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the reporting period in which the issuer was an affiliate are as follows:
Shares June 30, 2019 | Gross Additions | Gross Reductions | Shares October 31, 2019 | |||||||||||||
Common Stock | ||||||||||||||||
Metals & Mining | ||||||||||||||||
Dacian Gold Ltd. | 10,990,000 | 550,000 | — | 11,540,000 | ||||||||||||
Wesdome Gold Mines Ltd.a | 7,285,100 | 40,000 | 2,180,000 | 5,145,100 | ||||||||||||
Value | Income | Realized Gain (Loss) | Change in Unrealized Gain (Loss) | |||||||||||||
Common Stock | ||||||||||||||||
Metals & Mining | ||||||||||||||||
Dacian Gold Ltd. | $ | 11,876,445 | $ | — | $ | — | $ | 7,406,487 | ||||||||
Wesdome Gold Mines Ltd.a | —a | — | 8,152,303 | 5,296,811 | ||||||||||||
|
|
| ||||||||||||||
Total | $ | 11,876,445 | $ | — | $ | 8,152,303 | $ | 12,703,298 | ||||||||
|
|
|
a.This security is no longer an affiliate. Therefore, the value has been excluded from this table.
3.Security purchased or received in a transaction exempt from registration under the Securities Act of 1933, as amended (the “1933 Act”). The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers. The aggregate value of these securities at October 31, 2019 was $24,284,759, which represented 1.90% of the Fund’s Net Assets.
4.The Fund holds securities which have been issued by the same entity and that trade on separate exchanges.
5.The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019.
Distribution of investments representing geographic holdings, as a percentage of total investments at value, is as follows:
Geographic Holdings | Value | Percent | ||||||||
Canada | $ | 573,617,613 | 44.8 | % | ||||||
Australia | 264,688,433 | 20.7 | ||||||||
United States | 157,511,045 | 12.3 | ||||||||
South Africa | 109,507,140 | 8.6 | ||||||||
Russia | 49,228,220 | 3.9 | ||||||||
China | 35,719,394 | 2.8 | ||||||||
Zambia | 22,952,931 | 1.8 | ||||||||
Ivory Coast | 19,900,653 | 1.6 | ||||||||
Turkey | 19,463,702 | 1.5 | ||||||||
Sweden | 9,090,984 | 0.7 | ||||||||
Netherlands | 9,062,007 | 0.7 | ||||||||
Mexico | 5,435,017 | 0.4 | ||||||||
United Kingdom | 2,108,092 | 0.2 | ||||||||
Norway | 538,486 | 0.0 | ||||||||
Mongolia | 459,360 | 0.0 | ||||||||
|
|
| ||||||||
Total | $ | 1,279,283,077 | 100.0 | % | ||||||
|
|
|
13 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED
SCHEDULE OF INVESTMENTSUnaudited / Continued
Exchange-Traded Options Written at October 31, 2019 |
| |||||||||||||||||||||||
Description | Exercise Price | Expiration Date | Number of Contracts (000’s) | Notional Amount (000’s) | Premiums Received | Value | ||||||||||||||||||
Agnico Eagle Mines Ltd. Call | USD 65.000 | 2/21/20 | USD (1 | ) | USD 6,500 | $ | 178,961 | $ | (291,500 | ) | ||||||||||||||
AngloGold Ashanti Ltd. Call | USD 24.000 | 1/17/20 | USD (1 | ) | USD 2,400 | 118,961 | (115,000 | ) | ||||||||||||||||
Endeavour Mining Corp. Put | CAD 17.000 | 1/17/20 | CAD (1 | ) | CAD 1,700 | 86,197 | (20,879 | ) | ||||||||||||||||
Endeavour Mining Corp. Put | CAD 21.000 | 4/17/20 | CAD (1 | ) | CAD 2,100 | 140,501 | (121,479 | ) | ||||||||||||||||
First Quantum Minerals Ltd. Put | CAD 9.000 | 4/17/20 | CAD (1 | ) | CAD 900 | 84,822 | (50,110 | ) | ||||||||||||||||
Franco-Nevada Corp. Put | USD 85.000 | 4/17/20 | USD (1 | ) | USD 8,500 | 279,000 | (230,000 | ) | ||||||||||||||||
Royal Gold, Inc. Put | USD 110.000 | 1/17/20 | USD (1 | ) | USD 11,000 | 270,181 | (390,000 | ) | ||||||||||||||||
Sibanye Stillwater Put | USD 7.500 | 4/17/20 | USD (1 | ) | USD 750 | 128,161 | (107,500 | ) | ||||||||||||||||
Torex Gold Resources, Inc. Call | CAD 19.000 | 1/17/20 | CAD (1 | ) | CAD 1,900 | 96,467 | (130,970 | ) | ||||||||||||||||
Torex Gold Resources, Inc. Put | CAD 15.000 | 4/17/20 | CAD (1 | ) | CAD 1,500 | 109,255 | (58,841 | ) | ||||||||||||||||
|
|
| ||||||||||||||||||||||
Total Exchange-Traded Options Written |
| $ | 1,492,506 | $ | (1,516,279 | ) | ||||||||||||||||||
|
|
|
Glossary: | ||||||
Currency abbreviations indicate amounts reporting in currencies | ||||||
CAD | Canadian Dollar | |||||
Definition | ||||||
ADR | American Depositary Receipt | |||||
GDR | Global Depositary Receipt |
See accompanying Notes to Consolidated Financial Statements.
14 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
ASSETS AND LIABILITIESOctober 31, 2019 Unaudited
Assets | ||||
Investments, at value—see accompanying consolidated schedule of investments: | ||||
Unaffiliated companies (cost $884,973,389) | $ | 1,253,656,828 | ||
Affiliated companies (cost $30,927,798) | 25,626,249 | |||
|
|
| ||
1,279,283,077 | ||||
Cash | 503,665 | |||
Cash—foreign currencies (cost $3,773,846) | 3,750,672 | |||
Receivables and other assets: | ||||
Investments sold | 2,688,920 | |||
Shares of beneficial interest sold | 2,357,591 | |||
Dividends | 1,058,966 | |||
Other | 356,976 | |||
|
|
| ||
Total assets
|
| 1,289,999,867
|
| |
Liabilities | ||||
Options written, at value (premiums received $1,492,506) | 1,516,279 | |||
Payables and other liabilities: | ||||
Investments purchased | 8,091,294 | |||
Shares of beneficial interest redeemed | 2,753,074 | |||
Transfer and shareholder servicing agent fees | 796,328 | |||
Distribution and service plan fees | 242,476 | |||
Trustees’ compensation | 140,877 | |||
Shareholder communications | 98,796 | |||
Advisory fees | 22,312 | |||
Administration fees | 485 | |||
Other | 186,882 | |||
|
|
| ||
Total liabilities
|
| 13,848,803
|
| |
Net Assets | $ | 1,276,151,064 | ||
|
|
| ||
Composition of Net Assets | ||||
Shares of beneficial interest | $ | 2,434,193,350 | ||
Total accumulated loss | (1,158,042,286 | ) | ||
|
|
| ||
Net Assets | $ | 1,276,151,064 | ||
|
|
|
15 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED STATEMENT OF
ASSETS AND LIABILITIESUnaudited / Continued
Net Asset Value Per Share | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (based on net assets of $603,561,536 and 31,233,172 shares of beneficial interest outstanding) | $ | 19.32 | ||
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price) | $ | 20.44 | ||
Class C Shares: | ||||
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $92,047,754 and 5,267,294 shares of beneficial interest outstanding) | $ | 17.48 | ||
Class R Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $123,819,841 and 6,748,432 shares of beneficial interest outstanding) | $ | 18.35 | ||
Class Y Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of | ||||
$295,280,104 and 15,260,474 shares of beneficial interest outstanding) | $ | 19.35 | ||
Class R5 Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $13,120 and 678 shares of beneficial interest outstanding) | $ | 19.35 | ||
Class R6 Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $161,428,709 and 8,268,143 shares of beneficial interest outstanding) | $ | 19.52 |
See accompanying Notes to Consolidated Financial Statements.
16 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
OPERATIONS
Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | |||||||
Investment Income | ||||||||
Dividends: | ||||||||
Unaffiliated companies (net of foreign withholding taxes of $187,625 and $317,592, respectively) | $ | 4,036,411 | $ | 10,186,954 | ||||
Affiliated companies | 178,198 | 434,939 | ||||||
Interest | — | 2,438 | ||||||
|
|
| ||||||
Total investment income | 4,214,609 | 10,624,331 | ||||||
Expenses | ||||||||
Advisory fees | 2,702,094 | 6,293,628 | ||||||
Administration fees | 58,728 | 11,908 | ||||||
Distribution and service plan fees: | ||||||||
Class A | 474,068 | 1,044,821 | ||||||
Class C | 313,144 | 1,055,246 | ||||||
Class R | 204,362 | 503,164 | ||||||
Transfer and shareholder servicing agent fees: | ||||||||
Class A | 545,704 | 886,327 | ||||||
Class C | 86,741 | 214,323 | ||||||
Class R | 113,216 | 204,556 | ||||||
Class Y | 255,944 | 337,157 | ||||||
Class R5 | 4 | 1 | ||||||
Class R6 | 16,467 | 31,096 | ||||||
Shareholder communications: | ||||||||
Class A | 28,510 | 34,058 | ||||||
Class C | 4,518 | 8,726 | ||||||
Class R | 5,902 | 5,101 | ||||||
Class Y | 13,410 | 13,274 | ||||||
Class R5 | 1 | 0 | ||||||
Class R6 | 7,455 | 5,233 | ||||||
Custodian fees and expenses | 30,862 | 85,916 | ||||||
Trustees’ compensation | 11,065 | 26,363 | ||||||
Borrowing fees | — | 23,851 | ||||||
Other | 55,753 | 147,116 | ||||||
|
|
| ||||||
Total expenses | 4,927,948 | 10,931,865 | ||||||
Less waivers and reimbursements of expenses | (215,507 | ) | (101,241 | ) | ||||
|
|
| ||||||
Net expenses
|
| 4,712,441
|
|
| 10,830,624
|
| ||
Net Investment Loss | (497,832 | ) | (206,293 | ) |
17 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED STATEMENT OF
OPERATIONSContinued
Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | |||||||
Realized and Unrealized Gain (Loss) | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions in: | ||||||||
Unaffiliated companies | $ | 25,059,096 | $ | (17,006,596 | ) | |||
Affiliated companies | 8,152,303 | (5,031,778 | ) | |||||
Option contracts written | 2,204,536 | 2,495,362 | ||||||
Foreign currency transactions | (23,851 | ) | (94,789 | ) | ||||
|
|
| ||||||
Net realized gain (loss) | 35,392,084 | (19,637,801 | ) | |||||
Net change in unrealized appreciation/(depreciation) on: | ||||||||
Investment transactions in: | ||||||||
Unaffiliated companies | 39,997,067 | 147,803,063 | ||||||
Affiliated companies | 12,703,298 | 14,326,680 | ||||||
Translation of assets and liabilities denominated in foreign currencies | (20,179 | ) | (374 | ) | ||||
Option contracts written | 419,892 | (651,009 | ) | |||||
|
|
| ||||||
Net change in unrealized appreciation/(depreciation)
|
| 53,100,078
|
|
| 161,478,360
|
| ||
Net Increase in Net Assets Resulting from Operations | $ | 87,994,330 | $ | 141,634,266 | ||||
|
|
|
See accompanying Notes to Consolidated Financial Statements.
18 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
STATEMENT OF CHANGES IN NET ASSETS
Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | Year Ended June 30, 2018 | ||||||||||
Operations | ||||||||||||
Net investment loss | $ | (497,832 | ) | $ | (206,293 | ) | $ | (4,698,053 | ) | |||
Net realized gain (loss) | 35,392,084 | (19,637,801 | ) | 17,357,410 | ||||||||
Net change in unrealized appreciation/(depreciation) | 53,100,078 | 161,478,360 | (31,991,535 | ) | ||||||||
|
|
| ||||||||||
Net increase (decrease) in net assets resulting from operations
|
| 87,994,330
|
|
| 141,634,266
|
|
| (19,332,178
| )
| |||
Dividends and/or Distributions to Shareholders | ||||||||||||
Distributions to shareholders from distributable earnings: | ||||||||||||
Class A | — | — | (15,015,096 | ) | ||||||||
Class B | — | — | (12,596 | ) | ||||||||
Class C | — | — | (3,055,344 | ) | ||||||||
Class R | — | — | (3,538,235 | ) | ||||||||
Class Y | — | — | (4,678,986 | ) | ||||||||
Class R5 | — | — | — | |||||||||
Class R6 | — | — | (2,554,953 | ) | ||||||||
|
|
| ||||||||||
Total distributions from distributable earnings
|
| —
|
|
| —
|
|
| (28,855,210
| )
| |||
Beneficial Interest Transactions | ||||||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions: | ||||||||||||
Class A | 28,541,256 | (21,157,820 | ) | (56,120,555 | ) | |||||||
Class B | — | — | (2,841,055 | ) | ||||||||
Class C | (3,766,428 | ) | (45,910,870 | ) | (10,261,568 | ) | ||||||
Class R | 1,118,211 | (15,199,193 | ) | (16,322,727 | ) | |||||||
Class Y | 47,132,253 | 50,764,653 | 2,019,862 | |||||||||
Class R5 | — | 10,000 | — | |||||||||
Class R6 | 16,280,325 | 10,483,870 | 31,655,578 | |||||||||
Total beneficial interest transactions
|
| 89,305,617
|
|
| (21,009,360
| )
|
| (51,870,465
| )
| |||
Net Assets | ||||||||||||
Total increase (decrease) | 177,299,947 | 120,624,906 | (100,057,853 | ) | ||||||||
Beginning of period | 1,098,851,117 | 978,226,211 | 1,078,284,064 | |||||||||
|
|
| ||||||||||
End of period | $ | 1,276,151,064 | $ | 1,098,851,117 | $ | 978,226,211 | ||||||
|
|
|
See accompanying Notes to Consolidated Financial Statements.
19 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED FINANCIAL HIGHLIGHTS
Class A | Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2017 | Year Ended June 30, 2016 | Year Ended June 30, 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net asset value, beginning of period | $17.87 | $15.51 | $16.28 | $19.82 | $12.63 | $19.89 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss1 | (0.01) | 0.002 | (0.06) | (0.09) | (0.06) | (0.04) | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.46 | 2.36 | (0.25) | (2.40) | 7.25 | (6.91) | ||||||||||||||||||
Total from investment operations | 1.45 | 2.36 | (0.31) | (2.49) | 7.19 | (6.95) | ||||||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||||||
Dividends from net investment income | 0.00 | 0.00 | (0.46) | (1.05) | 0.00 | (0.29) | ||||||||||||||||||
Tax return of capital distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.02) | ||||||||||||||||||
Total dividends and/or distributions to shareholders | 0.00 | 0.00 | (0.46) | (1.05) | 0.00 | (0.31) | ||||||||||||||||||
Net asset value, end of period | $19.32 | $17.87 | $15.51 | $16.28 | $19.82 | $12.63 | ||||||||||||||||||
Total Return, at Net Asset Value3 | 8.11% | 15.22% | (1.88)% | (12.12)% | 56.93% | (34.91)% | ||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $603,562 | $532,925 | $490,065 | $570,847 | $793,452 | $499,903 | ||||||||||||||||||
Average net assets (in thousands) | $586,615 | $436,791 | $534,962 | $671,123 | $501,940 | $630,815 | ||||||||||||||||||
Ratios to average net assets:4 | ||||||||||||||||||||||||
Net investment loss | (0.15)% | 0.00%5 | (0.39)% | (0.48)% | (0.44)% | (0.29)% | ||||||||||||||||||
Expenses excluding specific expenses listed below | 1.22% | 1.18% | 1.17% | 1.16% | 1.18% | 1.22% | ||||||||||||||||||
Interest and fees from borrowings | 0.00% | 0.00%5 | 0.00%5 | 0.00%5 | 0.00%5 | 0.00% | ||||||||||||||||||
Total expenses6 | 1.22% | 1.18% | 1.17% | 1.16% | 1.18% | 1.22% | ||||||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 1.17% | 1.17% | 1.16% | 1.15% | 1.17% | 1.16% | ||||||||||||||||||
Portfolio turnover rate7 | 19% | 35% | 44% | 65% | 69% | 79% |
20 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods less than one full year.
5. Less than 0.005%.
6. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Four Months Ended October 31, 2019 | 1.22 | % | ||||
Year Ended June 30, 2019 | 1.18 | % | ||||
Year Ended June 30, 2018 | 1.17 | % | ||||
Year Ended June 30, 2017 | 1.16 | % | ||||
Year Ended June 30, 2016 | 1.18 | % | ||||
Year Ended June 30, 2015 | 1.22 | % |
7. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Consolidated Financial Statements.
21 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED FINANCIAL HIGHLIGHTSContinued
Class C | Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2017 | Year Ended June 30, 2016 | Year Ended June 30, 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net asset value, beginning of period | $16.20 | $14.17 | $14.91 | $18.26 | $11.73 | $18.44 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss1 | (0.05) | (0.10) | (0.17) | (0.20) | (0.14) | (0.15) | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.33 | 2.13 | (0.22) | (2.21) | 6.67 | (6.37) | ||||||||||||||||||
Total from investment operations | 1.28 | 2.03 | (0.39) | (2.41) | 6.53 | (6.52) | ||||||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||||||
Dividends from net investment income | 0.00 | 0.00 | (0.35) | (0.94) | 0.00 | (0.18) | ||||||||||||||||||
Tax return of capital distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.01) | ||||||||||||||||||
Total dividends and/or distributions to shareholders | 0.00 | 0.00 | (0.35) | (0.94) | 0.00 | (0.19) | ||||||||||||||||||
Net asset value, end of period | $17.48 | $16.20 | $14.17 | $14.91 | $18.26 | $11.73 | ||||||||||||||||||
Total Return, at Net Asset Value2 | 7.90% | 14.33% | (2.62)% | (12.80)% | 55.67% | (35.35)% | ||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $92,048 | $88,904 | $121,350 | $138,114 | $179,529 | $122,325 | ||||||||||||||||||
Average net assets (in thousands) | $93,122 | $105,744 | $131,364 | $156,883 | $115,882 | $157,102 | ||||||||||||||||||
Ratios to average net assets:3 | ||||||||||||||||||||||||
Net investment loss | (0.90)% | (0.76)% | (1.15)% | (1.22)% | (1.19)% | (1.05)% | ||||||||||||||||||
Expenses excluding specific expenses listed below | 1.98% | 1.93% | 1.93% | 1.92% | 1.94% | 1.98% | ||||||||||||||||||
Interest and fees from borrowings | 0.00% | 0.00%4 | 0.00%4 | 0.00%4 | 0.00%4 | 0.00% | ||||||||||||||||||
Total expenses5 | 1.98% | 1.93% | 1.93% | 1.92% | 1.94% | 1.98% | ||||||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 1.92% | 1.92% | 1.92% | 1.91% | 1.93% | 1.92% | ||||||||||||||||||
Portfolio turnover rate6 | 19% | 35% | 44% | 65% | 69% | 79% |
22 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
1. Per share amounts calculated based on the average shares outstanding during the period.
2. 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.
3. Annualized for periods less than one full year.
4. Less than 0.005%.
5. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Four Months Ended October 31, 2019 | 1.98 | % | ||||
Year Ended June 30, 2019 | 1.93 | % | ||||
Year Ended June 30, 2018 | 1.93 | % | ||||
Year Ended June 30, 2017 | 1.92 | % | ||||
Year Ended June 30, 2016 | 1.94 | % | ||||
Year Ended June 30, 2015 | 1.98 | % |
6. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Consolidated Financial Statements.
23 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED FINANCIAL HIGHLIGHTSContinued
Class R | Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2017 | Year Ended June 30, 2016 | Year Ended June 30, 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net asset value, beginning of period | $16.98 | $14.77 | $15.54 | $18.98 | $12.12 | $19.11 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment loss1 | (0.02) | (0.04) | (0.10) | (0.12) | (0.09) | (0.08) | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.39 | 2.25 | (0.25) | (2.31) | 6.95 | (6.63) | ||||||||||||||||||
Total from investment operations | 1.37 | 2.21 | (0.35) | (2.43) | 6.86 | (6.71) | ||||||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||||||
Dividends from net investment income | 0.00 | 0.00 | (0.42) | (1.01) | 0.00 | (0.27) | ||||||||||||||||||
Tax return of capital distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.01) | ||||||||||||||||||
Total dividends and/or distributions to shareholders | 0.00 | 0.00 | (0.42) | (1.01) | 0.00 | (0.28) | ||||||||||||||||||
Net asset value, end of period | $18.35 | $16.98 | $14.77 | $15.54 | $18.98 | $12.12 | ||||||||||||||||||
Total Return, at Net Asset Value2 | 8.07% | 14.96% | (2.23)% | (12.34)% | 56.60% | (35.07)% | ||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $123,820 | $113,589 | $114,608 | $136,979 | $176,396 | $102,624 | ||||||||||||||||||
Average net assets (in thousands) | $121,651 | $100,857 | $128,644 | $158,070 | $108,402 | $123,329 | ||||||||||||||||||
Ratios to average net assets:3 | ||||||||||||||||||||||||
Net investment loss | (0.40)% | (0.25)% | (0.65)% | (0.73)% | (0.70)% | (0.54)% | ||||||||||||||||||
Expenses excluding specific expenses listed below | 1.48% | 1.43% | 1.43% | 1.42% | 1.43% | 1.48% | ||||||||||||||||||
Interest and fees from borrowings | 0.00% | 0.00%4 | 0.00%4 | 0.00%4 | 0.00%4 | 0.00% | ||||||||||||||||||
Total expenses5 | 1.48% | 1.43% | 1.43% | 1.42% | 1.43% | 1.48% | ||||||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 1.42% | 1.42% | 1.42% | 1.41% | 1.42% | 1.42% | ||||||||||||||||||
Portfolio turnover rate6 | 19% | 35% | 44% | 65% | 69% | 79% |
24 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
1. Per share amounts calculated based on the average shares outstanding during the period.
2. 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.
3. Annualized for periods less than one full year.
4. Less than 0.005%.
5. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Four Months Ended October 31, 2019 | 1.48 | % | ||||
Year Ended June 30, 2019 | 1.43 | % | ||||
Year Ended June 30, 2018 | 1.43 | % | ||||
Year Ended June 30, 2017 | 1.42 | % | ||||
Year Ended June 30, 2016 | 1.43 | % | ||||
Year Ended June 30, 2015 | 1.48 | % |
6. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Consolidated Financial Statements.
25 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED FINANCIAL HIGHLIGHTSContinued
Class Y | Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2017 | Year Ended June 30, 2016 | Year Ended June 30, 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net asset value, beginning of period | $17.88 | $15.48 | $16.26 | $19.81 | $12.59 | $19.85 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)1 | 0.01 | 0.04 | (0.02) | (0.05) | (0.02) | (0.01) | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.46 | 2.36 | (0.25) | (2.41) | 7.24 | (6.90) | ||||||||||||||||||
Total from investment operations | 1.47 | 2.40 | (0.27) | (2.46) | 7.22 | (6.91) | ||||||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||||||
Dividends from net investment income | 0.00 | 0.00 | (0.51) | (1.09) | 0.00 | (0.34) | ||||||||||||||||||
Tax return of capital distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.01) | ||||||||||||||||||
Total dividends and/or distributions to shareholders | 0.00 | 0.00 | (0.51) | (1.09) | 0.00 | (0.35) | ||||||||||||||||||
Net asset value, end of period | $19.35 | $17.88 | $15.48 | $16.26 | $19.81 | $12.59 | ||||||||||||||||||
Total Return, at Net Asset Value2 | 8.22% | 15.50% | (1.65)% | (11.91)% | 57.35% | (34.74)% | ||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $295,280 | $229,569 | $147,282 | $152,334 | $146,710 | $102,438 | ||||||||||||||||||
Average net assets (in thousands) | $275,508 | $165,432 | $154,822 | $140,430 | $101,745 | $128,207 | ||||||||||||||||||
Ratios to average net assets:3 | ||||||||||||||||||||||||
Net investment income (loss) | 0.10% | 0.24% | (0.15)% | (0.28)% | (0.19)% | (0.04)% | ||||||||||||||||||
Expenses excluding specific expenses listed below | 0.98% | 0.93% | 0.93% | 0.92% | 0.94% | 0.98% | ||||||||||||||||||
Interest and fees from borrowings | 0.00% | 0.00%4 | 0.00%4 | 0.00%4 | 0.00%4 | 0.00% | ||||||||||||||||||
Total expenses5 | 0.98% | 0.93% | 0.93% | 0.92% | 0.94% | 0.98% | ||||||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 0.92% | 0.92% | 0.92% | 0.91% | 0.93% | 0.92% | ||||||||||||||||||
Portfolio turnover rate6 | 19% | 35% | 44% | 65% | 69% | 79% |
26 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
1. Per share amounts calculated based on the average shares outstanding during the period.
2. 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.
3. Annualized for periods less than one full year.
4. Less than 0.005%.
5. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Four Months Ended October 31, 2019 | 0.98 | % | ||||
Year Ended June 30, 2019 | 0.93 | % | ||||
Year Ended June 30, 2018 | 0.93 | % | ||||
Year Ended June 30, 2017 | 0.92 | % | ||||
Year Ended June 30, 2016 | 0.94 | % | ||||
Year Ended June 30, 2015 | 0.98 | % |
6. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Consolidated Financial Statements.
27 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED FINANCIAL HIGHLIGHTSContinued
Class R5 | Four Months Ended October 31, 2019 (Unaudited) | Period Ended June 30, 20191 | ||||||
Per Share Operating Data | ||||||||
Net asset value, beginning of period | $17.87 | $14.75 | ||||||
Income (loss) from investment operations: | ||||||||
Net investment income2 | 0.01 | 0.01 | ||||||
Net realized and unrealized gain | 1.47 | 3.11 | ||||||
Total from investment operations | 1.48 | 3.12 | ||||||
Dividends and/or distributions to shareholders: | ||||||||
Dividends from net investment income | 0.00 | 0.00 | ||||||
Tax return of capital distribution | 0.00 | 0.00 | ||||||
Total dividends and/or distributions to shareholders | 0.00 | 0.00 | ||||||
Net asset value, end of period | $19.35 | $17.87 | ||||||
Total Return, at Net Asset Value3 | 8.28% | 21.15% | ||||||
Ratios/Supplemental Data | ||||||||
Net assets, end of period (in thousands) | $13 | $12 | ||||||
Average net assets (in thousands) | $13 | $11 | ||||||
Ratios to average net assets:4 | ||||||||
Net investment income | 0.21% | 0.35% | ||||||
Expenses excluding specific expenses listed below | 0.81% | 0.80% | ||||||
Interest and fees from borrowings | 0.00% | 0.00% | ||||||
Total expenses5 | 0.81% | 0.80% | ||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 0.80% | 0.80% | ||||||
Portfolio turnover rate6 | 19% | 35% |
1.For the period from after the close of business on May 24, 2019 (inception of offering) to June 30, 2019.
2.Per share amounts calculated based on the average shares outstanding during the period.
3.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.
4.Annualized for periods less than one full year.
5.Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Four Months Ended October 31, 2019 | 0.81 | % | ||
Period Ended June 30, 2019 | 0.80 | % |
6.Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Consolidated Financial Statements.
28 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Class R6 | Four Months Ended October 31, 2019 (Unaudited) | Year Ended June 30, 2019 | Year Ended June 30, 2018 | Year Ended June 30, 2017 | Year Ended June 30, 2016 | Year Ended June 30, 2015 | ||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||||||
Net asset value, beginning of period | $18.03 | $15.58 | $16.37 | $19.94 | $12.65 | $19.96 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)1 | 0.02 | 0.06 | 0.002 | (0.02) | (0.00)2 | 0.02 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 1.47 | 2.39 | (0.26) | (2.42) | 7.29 | (6.94) | ||||||||||||||||||
Total from investment operations | 1.49 | 2.45 | (0.26) | (2.44) | 7.29 | (6.92) | ||||||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||||||
Dividends from net investment income | 0.00 | 0.00 | (0.53) | (1.13) | 0.00 | (0.38) | ||||||||||||||||||
Tax return of capital distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (0.01) | ||||||||||||||||||
Total dividends and/or distributions to shareholders | 0.00 | 0.00 | (0.53) | (1.13) | 0.00 | (0.39) | ||||||||||||||||||
Net asset value, end of period | $19.52 | $18.03 | $15.58 | $16.37 | $19.94 | $12.65 | ||||||||||||||||||
Total Return, at Net Asset Value3 | 8.26% | 15.73% | (1.53)% | (11.75)% | 57.63% | (34.62)% | ||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Net assets, end of period (in thousands) | $161,429 | $133,853 | $104,921 | $77,158 | $69,889 | $39,359 | ||||||||||||||||||
Average net assets (in thousands) | $153,327 | $103,114 | $89,461 | $69,428 | $40,868 | $44,106 | ||||||||||||||||||
Ratios to average net assets:4 | ||||||||||||||||||||||||
Net investment income (loss) | 0.28% | 0.41% | 0.02% | (0.09)% | (0.02)% | 0.16% | ||||||||||||||||||
Expenses excluding specific expenses listed below | 0.75% | 0.76% | 0.75% | 0.73% | 0.75% | 0.78% | ||||||||||||||||||
Interest and fees from borrowings | 0.00% | 0.00%5 | 0.00%5 | 0.00%5 | 0.00%5 | 0.00% | ||||||||||||||||||
Total expenses6 | 0.75% | 0.76% | 0.75% | 0.73% | 0.75% | 0.78% | ||||||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 0.75%7 | 0.75% | 0.75%7 | | 0.73%7 | | 0.74% | 0.72% | ||||||||||||||||
Portfolio turnover rate8 | 19% | 35% | 44% | 65% | 69% | 79% |
29 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
CONSOLIDATED FINANCIAL HIGHLIGHTSContinued
1. Per share amounts calculated based on the average shares outstanding during the period.
2. Less than $0.005 per share.
3. 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.
4. Annualized for periods less than one full year.
5. Less than 0.005%.
6. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Four Months Ended October 31, 2019 | 0.75 | % | ||||
Year Ended June 30, 2019 | 0.76 | % | ||||
Year Ended June 30, 2018 | 0.75 | % | ||||
Year Ended June 30, 2017 | 0.73 | % | ||||
Year Ended June 30, 2016 | 0.75 | % | ||||
Year Ended June 30, 2015 | 0.78 | % |
7. Waiver was less than 0.005%.
8. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Consolidated Financial Statements.
30 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
FINANCIAL STATEMENTSOctober 31, 2019 Unaudited
Note 1 – Significant Accounting Policies
Invesco Oppenheimer Gold & Special Minerals Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-end series management investment company authorized to issue an unlimited number of shares of beneficial interest. Information presented in these consolidated financial statements pertains only to the Fund. Matters affecting the Fund or each class will be voted on exclusively by the shareholders of such Fund or each class.
Prior to the close of business on May 24, 2019, the Fund operated as Oppenheimer Gold & Special Minerals Fund (the “Acquired Fund” or “Predecessor Fund”). The Acquired Fund was reorganized after the close of business on May 24, 2019 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”).
Upon closing of the Reorganization, holders of the Acquired Fund’s Class A, Class C, Class R, and Class Y shares received the corresponding class of shares of the Fund and holders of the Acquired Fund’s Class I shares received Class R6 shares of the Fund. Information for the Acquired Fund’s Class I shares prior to the Reorganization is included with Class R6 shares throughout this report. Class R5 shares commenced operations on the Reorganization Date.
Effective July 31, 2019, the Fund’s fiscal year end changed from June 30 to April 30.
The Fund will seek to gain exposure to the commodity market through investments in the Invesco Oppenheimer Gold & Special Minerals Fund (Cayman) Ltd. (the “Subsidiary”), a wholly-owned and controlled subsidiary by the Fund organized under the laws of the Cayman Islands. The Subsidiary was organized by the Fund to invest in gold bullion and other precious metals, Gold ETFs, commodity-linked derivatives related to gold or other special mineral (including commodity futures, financial futures, options and swap contracts). The Fund may invest up to 25% of its total assets in the Subsidiary.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with afront-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. Class C shares held for ten years after purchase are eligible for automatic conversion into class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares
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 consolidated financial statements.
A. Security Valuations– Securities, including restricted securities, are valued according to the following policy.
31 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
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 theover-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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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,
32 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
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 theex-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
33 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
a sale of securities. Such transaction costs are included in the determination of net realized and unrealized gain (loss) from investment transactions reported in the Consolidated Statement of Operations and the Consolidated Statement of Changes in Net Assets and the net realized and unrealized gains (losses) on securities per share in the Consolidated 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 Consolidated Statement of Operations and the Consolidated 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 Consolidated 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 Consolidated 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. |
D. | Distributions -Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from accounting principles generally accepted in the United States of America (“GAAP”), are recorded on theex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as determined necessary by the Adviser. |
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
34 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
years after the filing of the return for the tax period.
F. | Expenses -Fees provided for under the Rule12b-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 financial statements are prepared on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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 theperiod-end date and before the date the consolidated 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 the 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 |
35 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
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. | Put Options Purchased and Written - The Fund may purchase and write 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. |
Additionally, the Fund may enter into an option on a swap agreement, also called a “swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
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 underlying portfolio securities. The Fund may write put options to earn additional income in the form of option premiums if it expects the price of the underlying instrument to remain stable or rise during the option period so that the option will not be exercised. The risk in this strategy is that the price of the underlying securities may decline by an amount greater than the premium received. Put options written are reported as a liability in the Statement of Assets and Liabilities. Realized and unrealized gains and losses on put options purchased and put options written are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Investment securities and Option contracts written, respectively. 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.
K. | Call Options Purchased and Written - The Fund may write call options and/or buy call options. A covered call option gives the purchaser of such option the right to buy, and the writer the obligation to sell, the underlying security or foreign currency at the stated exercise price during the option period. An uncovered call option exists without the ownership of the underlying security. Options written by the Fund normally will have expiration dates between three and nine months from the date written. The exercise price of a call option may be below, equal to, or above the current market value of the underlying security at the time the option is written. |
Additionally, the Fund may enter into an option on a swap agreement, also called a
36 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
“swaption”. A swaption is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market-based premium. A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the Counterparties.
When the Fund writes a covered call option, an amount equal to the premium received by the Fund is recorded as an asset and an equivalent liability in the Statement of Assets and Liabilities. The amount of the liability is subsequently“marked-to-market” to reflect the current market value of the option written. If a written covered call option expires on the stipulated expiration date, or if the Fund enters into a closing purchase transaction, the Fund realizes a gain (or a loss if the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a written covered call option is exercised, the Fund realizes a gain or a loss from the sale of the underlying security and the proceeds of the sale are increased by the premium originally received. Realized and unrealized gains and losses on call options written are included in the Statement of Operations as Net realized gain (loss) from and Change in net unrealized appreciation (depreciation) of Option contracts written. A risk in writing a covered call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing an uncovered call option is that the Fund may incur significant losses if the value of the written security exceeds the exercise price of the option.
When the Fund buys a call option, an amount equal to the premium paid by the Fund is recorded as an investment on the Statement of Assets and Liabilities. The amount of the investment is subsequently“marked-to-market” to reflect the current value of the option purchased. Realized and unrealized gains and losses on call 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.
L. | Leverage Risk- Leverage exists when the Fund can lose more than it originally invests because it purchases or sells an instrument or enters into a transaction without investing an amount equal to the full economic exposure of the instrument or transaction. |
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:
37 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
Fee Schedule* | ||||
Up to $200 million | 0.75 | % | ||
Next $200 million | 0.72 | |||
Next $200 million | 0.69 | |||
Next $200 million | 0.66 | |||
Next $2.2 billion | 0.60 | |||
Next $1.0 billion | 0.59 | |||
Next $2.0 billion | 0.58 | |||
Next $4.0 billion | 0.57 | |||
Over $10 billion | 0.56 |
* The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser.
For the four monthsended October 31, 2019, the effective advisory fee incurred by the Fund was 0.65% annualized.
Under the terms of a mastersub-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 separatesub-advisory agreements with Invesco Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s). Invesco has also entered into aSub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
Effective on the Reorganization Date, the Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit the total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) ofClass A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.17%, 1.92%, 1.42%, 0.92%, 0.80% and 0.75%, respectively, of the Fund’s average daily net assets (the “expense limits”). 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 total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expenses on short sales; (4) extraordinary ornon-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 May 31, 2021. 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.
Further, the Adviser has contractually agreed, through at least June 30, 2021, 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.
38 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
For the four monthsended October 31, 2019, the Adviser waived advisory fees of $8,774 and reimbursed fund expenses of $104,003, $19,180, $25,268, and $58,282 for Class A, Class C, Class R, and Class Y, 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 four months ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations as Administration fees. Additionally, Invesco has entered into service agreements whereby JPMorgan Chase Bankserves as custodian to the Fund. Prior to the Reorganization, the Acquired Fund paid administrative fees to OFI Global Asset Management, Inc.
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 orsub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. Prior to the Reorganization, the Acquired Fund paid transfer agent fees to OFI Global Asset Management, Inc. and Shareholder Services, Inc. For the four months ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations as Transfer and shareholder servicing 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 Rule12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares(collectively the “Plan”). The Fund, pursuant to the Class A Plan, reimburses IDI in an amount up to an annual rate of 0.25% of the average daily net assets of Class A shares. The Fund pursuant to the Class C and Class R Plan, pays IDI compensation at the annual rate of 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. 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 Plan 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 plans. Prior to the Reorganization, the Acquired Fund paid distribution fees to OppenheimerFunds Distributor, Inc. For the four months ended October 31, 2019, expenses incurred under the plans are shown in the Statement of Operations as Distribution and service plan 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 thefour months ended October 31, 2019, IDI advised the Fund that IDI retained $40,180 infront-end sales
39 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
commissions from the sale of Class A shares and $21,847 and $1,167 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 October 31, 2019. The level assigned to the securities valuations may not be an indication of the risk or liquidity associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected in the financial statements may materially differ from the value received upon actual sale of those investments.
Level 1— Unadjusted Quoted Prices | Level 2— Other Significant Observable Inputs | Level 3— Significant Unobservable Inputs | Value | |||||||||||||
Assets Table | ||||||||||||||||
Investments, at Value: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Consumer Discretionary | $ | 349,996 | $ | — | $ | — | $ | 349,996 | ||||||||
Industrials | 10,872,000 | 9,629,470 | — | 20,501,470 |
40 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Level 1— Quoted Prices | Level 2— Other Significant | Level 3— Significant Unobservable Inputs | Value | |||||||||||||
Common Stocks (Continued) | ||||||||||||||||
Materials | $ | 869,192,369 | $ | 375,223,703 | $ | — | $ | 1,244,416,072 | ||||||||
Rights, Warrants and Certificates | 265,735 | — | — | 265,735 | ||||||||||||
Investment Company | 13,749,804 | — | — | 13,749,804 | ||||||||||||
|
|
| ||||||||||||||
Total Assets | $ | 894,429,904 | $ | 384,853,173 | $ | — | $ | 1,279,283,077 | ||||||||
|
|
| ||||||||||||||
Liabilities Table | ||||||||||||||||
Other Financial Instruments: | ||||||||||||||||
Options written, at value | $ | — | $ | (1,516,279 | ) | $ | — | $ | (1,516,279 | ) | ||||||
|
|
| ||||||||||||||
Total Liabilities | $ | — | $ | (1,516,279 | ) | $ | — | $ | (1,516,279 | ) | ||||||
|
|
|
Forward currency exchange contracts and futures contracts, if any, are reported at their unrealized appreciation/depreciation at measurement date, which represents the change in the contract’s value from trade date. All additional assets and liabilities included in the above table are reported at their market value at measurement date.
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 andclose-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 Consolidated Statement of Assets and Liabilities.
Value of Derivative Instruments atPeriod-End
The table below reflects the Fund’s exposure to Counterparties subject to either an ISDA Master Agreement or other agreement for OTC derivative liability transactions as of October 31, 2019:
Liability Derivatives | ||||||
Derivatives Not Accounted for as Hedging Instruments | Consolidated Statement of Assets and Liabilities Location | Value | ||||
Equity contracts | Options written, at value | $ | 1,516,279 |
41 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
Effect of Derivative Investments for the Four Months Ended October 31, 2019
The tables below summarize the gains (losses) on derivative investments, detailed by primary risk exposure, recognized in earnings during the period:
Amount of Realized Gain or (Loss) Recognized on Derivatives | ||||||||
Derivatives Not Accounted for as Hedging Instruments | Option contracts written | |||||||
Equity contracts | $ | 2,204,536 | ||||||
Amount of Change in Unrealized Gain or (Loss) Recognized on Derivatives |
| |||||||
Derivatives Not Accounted for as Hedging Instruments | Option contracts written | |||||||
Equity contracts | $ | 419,892 |
The table below summarizes thefour months ended average notional value ofoptions written during the period.
Equity Options Written | ||||
Average notional amount | $ | 45,336,289 | ||
Average contracts | 14,750 |
Note 6 - Trustee and Officer Fees and Benefits
The Fund has adopted an unfunded retirement plan (the “Plan”) for the Fund’s Independent Trustees. Benefits are based on years of service and fees paid to each Trustee during their period of service. The Plan was frozen with respect to adding new participants effective December 31, 2006 (the “Freeze Date”) and existing Plan Participants as of the Freeze Date will continue to receive accrued benefits under the Plan. Active Independent Trustees as of the Freeze Date have each elected a distribution method with respect to their benefits under the Plan.
During the reporting period, the Fund’s projected benefit obligations, payments to retired Trustees and accumulated liability were as follows:
Projected Benefit Obligations Increased | $ | 2,932 | ||
Payments Made to Retired Trustees | — | |||
Accumulated Liability as of October 31, 2019 | 53,880 |
Certain trustees have executed a Deferred Compensation Agreement pursuant to which they have the option to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had
42 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
been invested in shares of the Fund or in other Invesco and/or Invesco Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Consolidated Statement of Assets and Liabilities. Deferral of Trustees’ fees under the plan will not affect the net assets of the Fund and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the compensation deferral plan.
Note 7 – Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with JPMorgan Chase Bank, the custodian bank. Such balances, if any atperiod-end, are shown in the Consolidated Statement of Assets and Liabilities under the payable caption Amount due to 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 – 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 thefourmonthsended October 31, 2019 was $288,907,294 and $182,354,691, 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 reportingperiod-end.
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis |
| |||
Aggregate unrealized appreciation of investments | $ | 450,215,872 | ||
Aggregate unrealized (depreciation) of investments | (86,879,426 | ) | ||
|
|
| ||
Net unrealized appreciation of investments | $ | 363,336,446 | ||
|
|
|
Cost of investments for tax purposes is$915,901,187.
43 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
Note 9 – Share Information
Transactions in shares of beneficial interest were as follows:
Four Months Ended October 31, 20191 | Year Ended June 30, 20192 | Year Ended June 30, 2018 | ||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||
Class A | ||||||||||||||||||||||||
Sold | 5,375,135 | $ | 103,738,911 | 9,458,270 | $ | 144,671,146 | 8,124,876 | $ | 131,219,591 | |||||||||||||||
Automatic conversion | ||||||||||||||||||||||||
Class C to Class A shares | 182,543 | 3,479,844 | — | — | — | — | ||||||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | 923,828 | 14,171,529 | ||||||||||||||||||
Redeemed | (4,151,021 | ) | (78,677,499 | ) | (11,237,201 | ) | (165,828,966 | ) | (12,501,998 | ) | (201,511,675 | ) | ||||||||||||
|
|
| ||||||||||||||||||||||
Net increase (decrease) | 1,406,657 | $ | 28,541,256 | (1,778,931 | ) | $ | (21,157,820 | ) | (3,453,294 | ) | $ | (56,120,555 | ) | |||||||||||
|
|
| ||||||||||||||||||||||
Class B | ||||||||||||||||||||||||
Sold | — | $ | — | — | $ | — | 1,933 | $ | 30,143 | |||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | 806 | 11,726 | ||||||||||||||||||
Redeemed3 | — | — | — | — | (190,342 | ) | (2,882,924 | ) | ||||||||||||||||
|
|
| ||||||||||||||||||||||
Net increase (decrease) | — | $ | — | — | $ | — | (187,603 | ) | $ | (2,841,055 | ) | |||||||||||||
|
|
| ||||||||||||||||||||||
Class C | ||||||||||||||||||||||||
Sold | 637,576 | $ | 11,053,702 | 1,216,119 | $ | 16,312,847 | 1,588,420 | $ | 23,408,868 | |||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | 202,287 | 2,846,178 | ||||||||||||||||||
Automatic conversion Class C to Class A shares | (201,707 | ) | (3,479,844 | ) | — | — | — | — | ||||||||||||||||
Redeemed | (656,937 | ) | (11,340,286 | ) | (4,294,484 | ) | (62,223,717 | ) | (2,486,030 | ) | (36,516,614 | ) | ||||||||||||
|
|
| ||||||||||||||||||||||
Net increase (decrease) | (221,068 | ) | $ | (3,766,428 | ) | (3,078,365 | ) | $ | (45,910,870 | ) | (695,323 | ) | $ | (10,261,568 | ) | |||||||||
|
|
|
44 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
Four Months Ended October 31, 20191 | Year Ended June 30, 20192 | Year Ended June 30, 2018 | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||
Class R | ||||||||||||||||||||||||||||||||
Sold | 1,291,943 | $ | 23,361,814 | 2,255,361 | $ | 31,565,148 | 2,961,901 | $ | 45,632,841 | |||||||||||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | 222,740 | 3,260,909 | ||||||||||||||||||||||||||
Redeemed | (1,233,558 | ) | (22,243,603 | ) | (3,323,388 | ) | (46,764,341 | ) | (4,243,717 | ) | (65,216,477 | ) | ||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Net increase (decrease) | 58,385 | $ | 1,118,211 | (1,068,027 | ) | $ | (15,199,193 | ) | (1,059,076 | ) | $ | (16,322,727 | ) | |||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Class Y | ||||||||||||||||||||||||||||||||
Sold | 4,927,339 | $ | 94,662,841 | 10,082,276 | $ | 149,305,227 | 5,766,922 | $ | 92,733,982 | |||||||||||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | 260,683 | 3,985,837 | ||||||||||||||||||||||||||
Redeemed | (2,509,823 | ) | (47,530,588 | ) | (6,756,704 | ) | (98,540,574 | ) | (5,878,169 | ) | (94,699,957 | ) | ||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Net increase (decrease) | 2,417,516 | $ | 47,132,253 | 3,325,572 | $ | 50,764,653 | 149,436 | $ | 2,019,862 | |||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Class R54 | ||||||||||||||||||||||||||||||||
Sold | — | $ | — | 678 | $ | 10,000 | — | $ | — | |||||||||||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | — | — | ||||||||||||||||||||||||||
Redeemed | — | — | — | — | — | — | ||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Net increase (decrease) | — | $ | — | 678 | $ | 10,000 | — | $ | — | |||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Class R6 | ||||||||||||||||||||||||||||||||
Sold | 2,071,255 | $ | 39,872,782 | 5,773,319 | $ | 85,525,000 | 3,847,471 | $ | 61,147,391 | |||||||||||||||||||||||
Dividends and/or distributions reinvested | — | — | — | — | 166,122 | 2,554,953 | ||||||||||||||||||||||||||
Redeemed | (1,228,736 | ) | (23,592,457 | ) | (5,082,586 | ) | (75,041,130 | ) | (1,992,793 | ) | (32,046,766 | ) | ||||||||||||||||||||
|
|
| ||||||||||||||||||||||||||||||
Net increase (decrease) | 842,519 | $ | 16,280,325 | 690,733 | $ | 10,483,870 | 2,020,800 | $ | 31,655,578 | |||||||||||||||||||||||
|
|
|
1.There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own 23% 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.
2.There are entities that are record owners of more than 5% of the outstanding shares of the Fund and own 17% of the outstanding shares of the Fund. IDI has an agreement with these entities to sell Fund shares. The Fund, Invesco and/or Invesco affiliates may make payments to these entities, which are considered to be related to the Fund, for providing services to the Fund, Invesco and/or Invesco affiliates, including but not limited to services such as securities brokerage, distribution, third party record keeping and account servicing. The Fund has no knowledge as to whether all or any portion of the shares owned of record by these entities are also owned beneficially.
3. All outstanding Class B shares converted to Class A shares on June 1, 2018.
45 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTSUnaudited / Continued
4. Commencement date after the close of business on May 24, 2019.
Note 10 – Subsequent Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which Invesco Oppenheimer Gold & Special Minerals Fund (the “Fund”) would acquire all of the assets and liabilities of Invesco Gold & Precious Metals Fund (the “Target Fund”) in exchange for shares of the Fund.
The Agreement requires approval of the Target Fund’s shareholders and will be submitted to the shareholders for their consideration at a meeting to be held in or around April 2020. Upon closing of the reorganization, shareholders of the Target Fund will receive a corresponding class of shares of the Fund in exchange for their shares of the Target Fund and the Target Fund will liquidate and cease operations.
46 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
PORTFOLIO PROXY VOTING POLICIES AND GUIDELINES;
UPDATES TO SCHEDULE OF INVESTMENTS
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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormsN-PORT on the SEC website at sec.gov.
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 recent12-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.
47 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
INVESCO’S PRIVACY POLICY | ||||
|
Invesco recognizes the importance of protecting your personal and financial information when you visit our website located atwww.invesco.com (the “Website”). The following information is designed to help you understand the information collection practices at this Website. We will not sell, share or rent your personally identifiable information to others in contravention of this Privacy Policy. When we refer to ourselves as “we” or “Invesco” in this Privacy Policy, we mean our entire company including our affiliates, such as subsidiaries.
By visiting this Website, you are accepting the practices described in this Privacy Policy. If you do not agree to this policy, you may not use this Website. This Privacy Policy is subject to change without notice, from time to time in our sole discretion. You acknowledge that by accessing the Website after we have posted changes to this Privacy Policy, you are agreeing to this Privacy Policy as modified. Please review the Terms of Use1 to learn of other terms and conditions applicable to your use of the Website.
Please note that this Privacy Policy is not an exclusive statement of our privacy principles across all products and services. Other privacy principles or policies may apply depending on the products or services you obtain from Invesco, or the jurisdiction in which you transact with Invesco.
This Privacy Policy was last updated on May 6, 2018.
Information We Collect and Use
We collect personal information you choose to submit to the Website in order to process transactions requested by you and meet our contractual obligations. For example, you can choose to provide your name, contact information, social security number, or tax identification number in connection with accessing your account, or you can choose to provide your personal information when you fill out a secure account question form. Any information collected about you from the Website can, from time to time, be associated with other identifying information we have about you.
In addition, we may gather information about you automatically through your use of the Website, e.g. your IP address, how you navigate the Website, the organization from which you are accessing the Website, and the websites that you access before and after you visit the Website.
When you access the Website, we may also collect information such as unique device identifiers, your screen resolution and other device settings, information about your location, and analytical information about how you use the device from which you are viewing the Website. Where applicable, we may ask your permission before collecting certain information, such as precise geolocation information.
From time to time, we use or augment the personal information we have about you with information obtained from third parties. For example, we use third party information to confirm contact or financial information or to better understand your interests by associating demographic information from third parties with the information you have provided.
How We Use Personal Information
We use your personal information to respond to your inquiries and provide the products and services you request. We also use your information from time to time to deliver the content and services we believe
1NTD
48 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
you will find the most relevant and to provide customer service and support.
We also use the information you provide to further develop and improve our products and services. We aggregate and/orde-identify data about visitors to the Website for various business purposes including product and service development and improvement activities.
How We Share Personal Information
We collaborate with other companies and individuals to perform services for us and on our behalf and we collaborate with our affiliates, other companies and individuals with respect to particular products or services (“Providers”). Examples of Providers include data analysis firms, customer service and support providers, email and SMS vendors, andweb-hosting and development companies. Some Providers collect information for us or on our behalf on our Website. These Providers can be provided with access to personal information needed to perform their functions.
We reserve the right to disclose your personal information as required by law, when we believe disclosure is necessary to comply with a regulatory requirement, judicial proceeding, court order or legal process served on us, to protect the safety, rights or property of our customers, the public or Invesco or to enforce the Terms of Use.
If we sell or transfer a business unit (such as a subsidiary) or an asset (such as a website) to another company, we will share your personal information with such company. You will receive notice of such an event and the new entity will inform you of any changes to the practices in this Privacy Policy. If the new entity wishes to make additional use of your information, you have the right to decline such use at that time.
We occasionally disclose aggregate orde-identified data that is not personally identifiable with third parties.
Cookies and Other Tools
Invesco and its Providers collect information about you by using cookies, tracking pixels and other technologies. We use this information to better understand, customize and improve user experience with our websites, services and offerings as well as to manage our advertising. For example, we use web analytics services that use these technologies to gather information to help us understand how visitors engage with and navigate our Website, e.g., how and when pages in a site are visited and by how many visitors. We are also able to offer our visitors a more customized, relevant experience on our sites using these technologies by delivering content and functionality based on your preferences and interests.
Depending on their purpose, some cookies will only operate for the length of a single browsing session, while others have a longer life span to ensure that they fulfill their longer-term purposes. Your web browser can be set to allow you to control whether you will accept cookies or reject cookies, to notify you each time a cookie is sent to your browser, or to delete cookies that have already been set. If your browser is set to reject cookies, certain aspects of the Website that are cookie-enabled will not recognize you when you return to the website, and some Website functionality may be lost. The “Help” section of your browser may tell you how to prevent your browser from accepting cookies. To find out more about cookies, visitwww.aboutcookies.org.
49 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
INVESCO’S PRIVACY POLICY Continued | ||||
|
Security
No data transmission over the internet can be 100% secure, so Invesco cannot ensure or warrant the security of any information you submit to us on this Website. However, Invesco seeks to protect your personal information from unauthorized access or use when you transact business on our Website using technical, administrative and procedural measures. Invesco makes no representation as to the reasonableness, efficacy, or appropriateness of the measures we use to safeguard such information.
Users are responsible for maintaining the secrecy of their own passwords. If you have reason to believe that your interaction with us is no longer secure (for example, if you feel that the security of any account you might have with us has been compromised), please immediately notify us by contacting us as specified below.
Transfer of Data to Other Countries
Any information you provide to Invesco through use of the Website may be stored and processed, transferred between and accessed from the United States, Canada and other countries which do not guarantee the same level of protection of personal information as the one in which you reside. However, Invesco will handle your personal information in accordance with this Privacy Policy regardless of where your personal information is stored/accessed.
Children’s Privacy
We are committed to protecting the privacy of children. We do not knowingly collect personal information from children under the age of 18. If you are under the age of 18, do not provide us with any personal information.
Contact Us
Please contact us if you have any questions or concerns about your personal information or require assistance in managing your choices.
Invesco Ltd.
1555 Peachtree St. NE
Atlanta, GA 30309
By phone:
(404)439-3236
By fax:
(404)962-8288
By email:
Anne.Gerry@invesco.com
Please update your account information by logging in or contact us by email or telephone as specified above to update your account information whenever such information ceases to be complete or accurate.
You may also contact us to:
50 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
● Request that we amend, rectify, delete or update the personal data we hold about you;
● Where possible (e.g. in relation to marketing) amend or update your choices around processing;
● Request a copy of personal data held by us.
Disclaimer
Where the Website contains links to third-party websites/content/services that are not owned or controlled by Invesco, Invesco is not responsible for how these properties operate or treat your personal information so we recommend that you read the privacy policies and terms associated with these third party properties carefully.
51 INVESCO OPPENHEIMER GOLD & SPECIAL MINERALS FUND
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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.
| ||||
| Invesco Distributors, Inc. | O-GSM-SAR-1 122719 |
Semiannual Report 10/31/2019
| ||||
Invesco Oppenheimer Small Cap Value Fund*
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on the Fund’s website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by enrolling at invesco. com/edelivery.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800 959 4246 to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held with your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
*Prior to the close of business on May 24, 2019, the Fund’s name was Oppenheimer Small Cap Value Fund. See Important Update on the following page for more information. |
Important Update
On October 18, 2018, Massachusetts Mutual Life Insurance Company, an indirect corporate parent of OppenheimerFunds, Inc. and its subsidiaries OFI Global Asset Management, Inc., OFI SteelPath, Inc. and OFI Advisors, LLC, announced that it had entered into an agreement whereby Invesco Ltd., a global investment management company would acquire OppenheimerFunds and its subsidiaries (together, “OppenheimerFunds”). After the close of business on May 24, 2019 Invesco Ltd. completed the acquisition of OppenheimerFunds. This Fund was included in that acquisition and as of that date, became part of the Invesco family of funds. Please visit invesco.com for more information or call Invesco’s Client Services team at800-959-4246.
Class A Shares
AVERAGE ANNUAL TOTAL RETURNS AT 10/31/19
Class A Shares of the Fund | ||||||||||||
Without Sales Charge | With Sales Charge | Russell 2000 Value Index | ||||||||||
6-Month | -5.71% | -10.90% | -0.53% | |||||||||
1-Year | -2.98 | -8.35 | 3.22 | |||||||||
Since Inception (12/7/15) | 3.47 | 1.99 | 9.00 |
Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Visit invesco.com for the most recentmonth-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Fund returns include changes in share price, reinvested distributions and a 5.50% maximum applicable sales charge except where “without sales charge” is indicated. Returns for periods of less than one year are cumulative and not annualized. As the result of a reorganization after the close of business on May 24, 2019, the returns of the Fund for periods on or prior to May 24, 2019 reflect performance of the Oppenheimer predecessor fund. Share class returns will differ from those of the predecessor fund because they have different expenses. Returns do not consider capital gains or income taxes on an individual’s investment. See Fund prospectus and summary prospectus for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
3 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
TOP TEN COMMON STOCK HOLDINGS
AECOM | 3.7 | % | ||||||
Energizer Holdings, Inc. | 3.6 | |||||||
Flex Ltd. | 3.3 | |||||||
Crown Holdings, Inc. | 3.2 | |||||||
Carpenter Technology Corp. | 3.1 | |||||||
MGIC Investment Corp. | 3.0 | |||||||
Owens Corning | 3.0 | |||||||
LKQ Corp. | 2.9 | |||||||
Sealed Air Corp. | 2.9 | |||||||
CNO Financial Group, Inc. | 2.8 |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of October 31, 2019, and are based on net assets.
TOP TEN COMMON STOCK INDUSTRIES
Thrifts & Mortgage Finance | 7.7 | % | ||||||
Machinery | 7.4 | |||||||
Building Products | 6.9 | |||||||
Construction & Engineering | 6.3 | |||||||
Auto Components | 6.2 | |||||||
Containers & Packaging | 6.0 | |||||||
Household Products | 6.0 | |||||||
Chemicals | 5.4 | |||||||
Metals & Mining | 5.2 | |||||||
Trading Companies & Distributors | 4.8 |
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of October 31, 2019, and are based on net assets.
SECTOR ALLOCATION
Holdings and allocations are subject to change and are not buy/sell recommendations. Percentages are as of October 31, 2019, and are based on the total market value of common stocks.
For more current Fund holdings, please visit invesco.com.
4 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Share Class Performance
AVERAGE ANNUAL TOTAL RETURNS WITHOUT SALES CHARGE AS OF 10/31/19
Inception Date | 6-Month | 1-Year | Since Inception | |||||||||||||
Class A (OVSAX) | 12/7/15 | -5.71 | % | -2.98 | % | 3.47 | % | |||||||||
Class C (OVSCX) | 12/7/15 | -5.95 | -3.66 | 2.71 | ||||||||||||
Class R (OVSRX) | 12/7/15 | -5.83 | -3.23 | 3.22 | ||||||||||||
Class Y (OVSYX) | 12/7/15 | -5.58 | -2.72 | 3.72 | ||||||||||||
Class R5 (IOSDX)1 | 5/24/19 | -5.61 | -2.88 | 3.50 | ||||||||||||
Class R6 (OVSIX)2 | 12/7/15 | -5.49 | -2.67 | 3.81 | ||||||||||||
AVERAGE ANNUAL TOTAL RETURNS WITH SALES CHARGE AS OF 10/31/19
|
| |||||||||||||||
Inception Date | 6-Month | 1-Year | Since Inception | |||||||||||||
Class A (OVSAX) | 12/7/15 | -10.90 | % | -8.35 | % | 1.99 | % | |||||||||
Class C (OVSCX) | 12/7/15 | -6.89 | -4.59 | 2.71 | ||||||||||||
Class R (OVSRX) | 12/7/15 | -5.83 | -3.23 | 3.22 | ||||||||||||
Class Y (OVSYX) | 12/7/15 | -5.58 | -2.72 | 3.72 | ||||||||||||
Class R5 (IOSDX)1 | 5/24/19 | -5.61 | -2.88 | 3.50 | ||||||||||||
Class R6 (OVSIX)2 | 12/7/15 | -5.49 | -2.67 | 3.81 |
1. Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at net asset value (NAV) and includes the12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements.
2. Pursuant to the closing of the transaction described in the Notes to Consolidated Financial Statements, after the close of business on May 24, 2019, Class I shares were reorganized as Class R6 shares.
Performance quoted is past performance and cannot guarantee comparable future results; current performance may be lower or higher. Visit invesco.com for the most recentmonth-end performance. Performance figures reflect reinvested distributions and changes in net asset value (NAV). Investment return and principal value will vary so that you may have a gain or a loss when you sell shares. Performance shown at NAV does not include the applicablefront-end sales charge, which would have reduced the performance. The current maximum initial sales charge for Class A shares is 5.50%, and the contingent deferred sales charge for Class C shares is 1% for the1-year period. Class R, Class Y, Class R5 and Class R6 shares have no sales charge; therefore, performance is at NAV. Effective after the close of business on May 24, 2019, Class A, Class C, Class R, Class Y, and Class I shares of the predecessor fund were reorganized into Class A, Class C, Class R, Class Y, and Class R6 shares, respectively, of the Fund. Class R5 shares’ performance shown prior to the inception date is that of the predecessor fund’s Class A shares at NAV and includes the12b-1 fees applicable to Class A shares. Class A shares’ performance reflects any applicable fee waivers and/or expense reimbursements. Returns shown for Class A, Class C, Class R, Class Y, Class R5, and Class R6 shares are blended returns of the predecessor fund and the Fund. Share class returns will differ from those of the predecessor fund because of different expenses. See Fund prospectuses and summary prospectuses for more information on share classes, sales charges and new fee agreements, if any. Fund literature is available at invesco.com.
5 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
The Russell 2000 Value Index measures the performance ofsmall-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lowerprice-to-book ratios and lower forecasted growth values. The Index is unmanaged and cannot be purchased directly by investors. While index comparisons may be useful to provide a benchmark for the Fund’s performance, it must be noted that the Fund’s investments are not limited to the investments comprising the Index. Index performance includes reinvestment of income, but does not reflect transaction costs, fees, expenses or taxes. Index performance is shown for illustrative purposes only as a benchmark for the Fund’s performance, and does not predict or depict performance of the Fund. The Fund’s performance reflects the effects of the Fund’s business and operating expenses.
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco. com/fundprospectus.
Shares of Invesco funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested.
6 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Fund Expenses. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments and/or contingent deferred sales charges on redemptions; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire6-month period ended October 31, 2019.
Actual Expenses. The first section of the table provides information about actual account values and actual expenses. You may use the information in this section for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the first section under the heading entitled “Expenses Paid During 6 Months Ended October 31, 2019” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes.The second section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio for each class of shares, and an assumed rate of return of 5% per year for each class 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 for the class of shares you hold 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 transactional costs, such asfront-end or contingent deferred sales charges (loads). Therefore, the “hypothetical” section of the table 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 transactional costs were included, your costs would have been higher.
7 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Actual | Beginning Account Value May 1, 2019 | Ending Account Value October 31, 2019 | Expenses Paid During 6 Months Ended October 31, 20191,2 | |||||||||
Class A | $ 1,000.00 | $ 942.90 | $ 6.12 | |||||||||
Class C | 1,000.00 | 940.50 | 9.81 | |||||||||
Class R | 1,000.00 | 941.70 | 7.35 | |||||||||
Class Y | 1,000.00 | 944.20 | 4.90 | |||||||||
Class R5 | 1,000.00 | 943.90 | 4.17 | |||||||||
Class R6 | 1,000.00 | 945.10 | 4.56 | |||||||||
Hypothetical | ||||||||||||
(5% return before expenses) | ||||||||||||
Class A | 1,000.00 | 1,018.85 | 6.36 | |||||||||
Class C | 1,000.00 | 1,015.08 | 10.18 | |||||||||
Class R | 1,000.00 | 1,017.60 | 7.64 | |||||||||
Class Y | 1,000.00 | 1,020.11 | 5.09 | |||||||||
Class R5 | 1,000.00 | 1,020.21 | 4.99 | |||||||||
Class R6 | 1,000.00 | 1,020.46 | 4.73 |
1. Actual expenses paid for Class A, C, R, Y, and R6are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366(to reflect theone-half year period). Actual expenses paid for Class R5 are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 160/366to reflect the period from after the close of business on May 24, 2019 (inception of offering) to October 31, 2019.
2.Hypothetical expenses paid for all classes are equal to the Fund’s annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect theone-half year period).
Those annualized expense ratios, excluding indirect expenses from affiliated funds, based on the6-month period ended October 31, 2019 for Classes A, C, R, Y and R6and for the period from after the close of business on May 24, 2019 (inception of offering) to October 31, 2019 for Class R5 are as follows:
Class | Expense Ratios | |||
Class A | 1.25 | % | ||
Class C | 2.00 | |||
Class R | 1.50 | |||
Class Y | 1.00 | |||
Class R5 | 0.98 | |||
Class R6 | 0.93 |
The expense ratios reflect voluntary and/or contractual waivers and/or reimbursements of expenses by the Fund’s Manager. Some of these undertakings may be modified or terminated at any time, as indicated in the Fund’s prospectus. The “Financial Highlights” tables in the
8 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Fund’s financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements and reduction to custodian expenses, if applicable.
9 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS October 31, 2019 Unaudited
Shares | Value | |||||||
Common Stocks—97.2% | ||||||||
Consumer Discretionary—10.8% | ||||||||
Auto Components—6.2% | ||||||||
Dana, Inc. | 50,456 | $ | 818,901 | |||||
Delphi Technologies plc | 58,889 | 719,035 | ||||||
Motorcar Parts of America, Inc.1 | 19,322 | 368,277 | ||||||
Visteon Corp.1 | 220 | 20,464 | ||||||
1,926,677 | ||||||||
Distributors—2.9% | ||||||||
LKQ Corp.1
|
| 26,383
|
|
| 896,758
|
| ||
Household Durables—1.7% | ||||||||
Ethan Allen Interiors, Inc. | 9,653 | 190,261 | ||||||
TopBuild Corp.1 | 3,260 | 338,812 | ||||||
529,073 | ||||||||
Consumer Staples—6.0% | ||||||||
Household Products—6.0% | ||||||||
Energizer Holdings, Inc. | 26,217 | 1,113,960 | ||||||
Spectrum Brands Holdings, Inc. | 14,951 | 750,690 | ||||||
1,864,650 | ||||||||
Energy—5.9% | ||||||||
Energy Equipment & Services—1.8% | ||||||||
Forum Energy Technologies, Inc.1 | 9,662 | 11,208 | ||||||
Helix Energy Solutions Group, Inc.1 | 48,881 | 419,888 | ||||||
NexTier Oilfield Solutions, Inc.1 | 27,735 | 119,815 | ||||||
550,911 | ||||||||
Oil, Gas & Consumable Fuels—4.1% | ||||||||
Noble Energy, Inc. | 16,153 | 311,107 | ||||||
Northern Oil & Gas, Inc.1 | 120,510 | 236,200 | ||||||
Parsley Energy, Inc., Cl. A | 40,103 | 634,028 | ||||||
QEP Resources, Inc. | 33,726 | 112,307 | ||||||
1,293,642 | ||||||||
Financials—14.9% | ||||||||
Capital Markets—0.9% | ||||||||
Greenhill & Co., Inc. | 710 | 11,502 | ||||||
Stifel Financial Corp. | 4,770 | 267,025 | ||||||
278,527 |
Shares | Value | |||||||
Commercial Banks—2.6% | ||||||||
First Horizon National Corp.
|
| 51,243
|
| $
| 818,351
|
| ||
Consumer Finance—0.9% | ||||||||
SLM Corp.
|
| 31,853
|
|
| 268,839
|
| ||
Insurance—2.8% | ||||||||
CNO Financial Group, Inc.
|
| 54,897
|
|
| 859,138
|
| ||
Thrifts & Mortgage Finance—7.7% | ||||||||
Axos Financial, Inc.1 | 22,153 | 643,544 | ||||||
MGIC Investment Corp. | 68,387 | 937,586 | ||||||
Radian Group, Inc. | 31,887 | 800,364 | ||||||
2,381,494 | ||||||||
Health Care—6.4% | ||||||||
Health Care Providers & Services—4.2% | ||||||||
Brookdale Senior Living, Inc.1 | 108,137 | 794,807 | ||||||
Capital Senior Living Corp.1 | 23,912 | 98,278 | ||||||
McKesson Corp. | 3,025 | 402,325 | ||||||
1,295,410 | ||||||||
Pharmaceuticals—2.2% | ||||||||
Mylan NV1 | 35,160 | 673,314 | ||||||
Industrials—30.8% | ||||||||
Building Products—6.9% | ||||||||
Builders FirstSource, Inc.1 | 24,766 | 559,959 | ||||||
JELD-WEN Holding, Inc.1 | 26,743 | 457,038 | ||||||
Masco Corp. | 493 | 22,801 | ||||||
Masonite International Corp.1 | 1,291 | 79,280 | ||||||
Owens Corning | 15,242 | 934,030 | ||||||
PGT Innovations, Inc.1 | 4,610 | 81,413 | ||||||
2,134,521 | ||||||||
Commercial Services & Supplies—2.4% | ||||||||
Stericycle, Inc.1 | 5,945 | 342,432 | ||||||
Team, Inc.1 | 21,756 | 395,089 | ||||||
737,521 | ||||||||
Construction & Engineering—6.3% | ||||||||
AECOM1 | 28,333 | 1,133,603 | ||||||
Fluor Corp. | 19,516 | 314,403 | ||||||
Valmont Industries, Inc. | 3,753 | 514,874 | ||||||
1,962,880 |
10 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Shares | Value | |||||||
Industrial Conglomerates—2.3% | ||||||||
Carlisle Cos., Inc. | 4,721 | $ | 718,867 | |||||
Machinery—7.4% | ||||||||
AGCO Corp. | 9,663 | 741,055 | ||||||
Astec Industries, Inc. | 1,524 | 53,477 | ||||||
Hillenbrand, Inc. | 15,000 | 461,850 | ||||||
REV Group, Inc. | 34,665 | 431,233 | ||||||
Timken Co. (The) | 12,410 | 608,090 | ||||||
2,295,705 | ||||||||
Professional Services—0.7% | ||||||||
ManpowerGroup, Inc. | 168 | 15,275 | ||||||
Resources Connection, Inc. | 12,618 | 184,854 | ||||||
TrueBlue, Inc.1 | 748 | 17,129 | ||||||
217,258 | ||||||||
Trading Companies & Distributors—4.8% | ||||||||
Beacon Roofing Supply, Inc.1 | 16,229 | 503,748 | ||||||
BMC Stock Holdings, Inc.1 | 2,963 | 79,971 | ||||||
DXP Enterprises, Inc.1 | 3,891 | 134,317 | ||||||
WESCO International, Inc.1 | 15,516 | 778,128 | ||||||
1,496,164 | ||||||||
Information Technology—5.8% | ||||||||
Electronic Equipment, Instruments, & Components—3.4% | ||||||||
Flex Ltd.1 | 86,984 | 1,022,062 | ||||||
Sanmina Corp.1 | 1,189 | 36,538 | ||||||
1,058,600 | ||||||||
Semiconductors & Semiconductor Equipment—2.4% | ||||||||
Kulicke & Soffa Industries, Inc. | 30,871 | 733,032 |
Shares | Value | |||||||
Materials—16.6% | ||||||||
Chemicals—5.4% | ||||||||
Chemours Co. (The) | 26,333 | $ | 432,125 | |||||
Flotek Industries, Inc.1 | 44,052 | 84,139 | ||||||
Huntsman Corp. | 35,884 | 794,113 | ||||||
Kraton Corp.1 | 15,715 | 352,330 | ||||||
1,662,707 | ||||||||
Containers & Packaging—6.0% | ||||||||
Crown Holdings, Inc.1 | 13,421 | 977,586 | ||||||
Sealed Air Corp. | 21,368 | 892,541 | ||||||
1,870,127 | ||||||||
Metals & Mining—5.2% | ||||||||
Allegheny Technologies, Inc.1 | 32,082 | 674,043 | ||||||
Carpenter Technology Corp. | 19,426 | 952,263 | ||||||
1,626,306 | ||||||||
Total Common Stocks (Cost $29,391,757) | 30,150,472 | |||||||
Investment Company—2.9% | ||||||||
Invesco Government & Agency Portfolio, Institutional Class, 1.71%2(Cost $910,055) | 910,055 | 910,055 | ||||||
Total Investments, at Value (Cost $30,301,812) | 100.1% | 31,060,527 | ||||||
Net Other Assets (Liabilities) | (0.1) | (32,007 | ) | |||||
|
| |||||||
Net Assets | 100.0% | $ | 31,028,520 | |||||
|
|
Footnotes to Schedule of Investments
1.Non-income producing security.
2. The money market fund and the Fund are affiliated by having the same investment adviser. The rate shown is the7-day SEC standardized yield as of October 31, 2019.
See accompanying Notes to Financial Statements.
11 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIESOctober 31, 2019 Unaudited
Assets | ||||
Investments, at value—see accompanying schedule of investments: | ||||
Unaffiliated companies (cost $29,391,757) | $ | 30,150,472 | ||
Affiliated companies (cost $910,055) | 910,055 | |||
|
| |||
31,060,527 | ||||
Cash | 10,000 | |||
Receivables and other assets: | ||||
Investments sold | 194,119 | |||
Shares of beneficial interest sold | 15,543 | |||
Dividends | 10,658 | |||
Other | 12,470 | |||
|
| |||
Total assets | 31,303,317 | |||
Liabilities | ||||
Payables and other liabilities: | ||||
Shares of beneficial interest redeemed | 108,429 | |||
Investments purchased | 101,152 | |||
Transfer and shareholder servicing agent fees | 19,525 | |||
Distribution and service plan fees | 9,481 | |||
Shareholder communications | 8,959 | |||
Trustees’ compensation | 1,233 | |||
Advisory fees | 677 | |||
Administration fees | 10 | |||
Other | 25,331 | |||
|
| |||
Total liabilities | 274,797 | |||
Net Assets | $ | 31,028,520 | ||
|
| |||
Composition of Net Assets | ||||
Shares of beneficial interest | $ | 33,439,837 | ||
Total accumulated loss | (2,411,317 | ) | ||
|
| |||
Net Assets | $ | 31,028,520 | ||
|
|
12 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Net Asset Value Per Share | ||||
Class A Shares: | ||||
Net asset value and redemption price per share (based on net assets of $19,896,231 and 1,871,708 shares of beneficial interest outstanding) | $10.63 | |||
Maximum offering price per share (net asset value plus sales charge of 5.50% of offering price)
|
| $11.25
|
| |
Class C Shares: | ||||
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $4,348,729 and 412,240 shares of beneficial interest outstanding)
|
| $10.55
|
| |
Class R Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $5,013,590 and 471,506 shares of beneficial interest outstanding)
|
| $10.63
|
| |
Class Y Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $1,727,827 and 162,363 shares of beneficial interest outstanding)
|
| $10.64
|
| |
Class R5 Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $10,280 and 967 shares of beneficial interest outstanding)
|
| $10.63
|
| |
Class R6 Shares: | ||||
Net asset value, redemption price and offering price per share (based on net assets of $31,863 and 2,995 shares of beneficial interest outstanding) | $10.64 |
See accompanying Notes to Financial Statements.
13 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
STATEMENT OF OPERATIONSFor the Six Months Ended October 31, 2019 Unaudited
Investment Income
| ||||
Dividends: | ||||
Unaffiliated companies (net of foreign withholding taxes of $344) | $ | 317,382 | ||
Affiliated companies | 9,374 | |||
Interest | 561 | |||
|
| |||
Total investment income
|
| 327,317
|
| |
Expenses
| ||||
Advisory fees | 125,553 | |||
Administration fees | 1,912 | |||
Distribution and service plan fees: | ||||
Class A | 24,567 | |||
Class C | 24,066 | |||
Class R | 12,036 | |||
Transfer and shareholder servicing agent fees: | ||||
Class A | 39,719 | |||
Class C | 9,327 | |||
Class R | 9,470 | |||
Class Y | 3,829 | |||
Class R5 | 3 | |||
Class R6 | 2 | |||
Shareholder communications: | ||||
Class A | 6,147 | |||
Class C | 1,473 | |||
Class R | 1,552 | |||
Class Y | 636 | |||
Class R5 | 3 | |||
Class R6 | 10 | |||
Registration fees | 44,735 | |||
Legal, auditing and other professional fees | 19,280 | |||
Trustees’ compensation | 6,142 | |||
Custodian fees and expenses | 1,990 | |||
Borrowing fees | 118 | |||
Other | 667 | |||
|
| |||
Total expenses | 333,237 | |||
Less waivers, reimbursement of expenses and offset arrangement(s) | (112,830 | ) | ||
|
| |||
Net expenses
|
| 220,407
|
| |
Net Investment Income
| 106,910 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions in unaffiliated companies | (1,117,981 | ) | ||
Net change in unrealized appreciation/(depreciation) on investment transactions | (1,004,160 | ) | ||
Net Decrease in Net Assets Resulting from Operations |
$ |
(2,015,231 |
) | |
|
|
See accompanying Notes to Financial Statements.
14 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended October 31, 2019 (Unaudited) | Year Ended April 30, 2019 | |||||||
Operations | ||||||||
Net investment income | $ | 106,910 | $ | 241,855 | ||||
Net realized gain (loss) | (1,117,981 | ) | (1,791,220 | ) | ||||
Net change in unrealized appreciation/(depreciation) | (1,004,160 | ) | (353,329 | ) | ||||
|
| |||||||
Net decrease in net assets resulting from operations
|
| (2,015,231
| )
|
| (1,902,694
| )
| ||
Dividends and/or Distributions to Shareholders | ||||||||
Distributions to shareholders from distributable earnings: | ||||||||
Class A | (100,946 | ) | (771,702 | ) | ||||
Class C | (6,086 | ) | (186,018 | ) | ||||
Class R | (17,849 | ) | (163,630 | ) | ||||
Class Y | (12,746 | ) | (104,689 | ) | ||||
Class R5 | (62 | ) | — | |||||
Class R6 | (208 | ) | (1,454 | ) | ||||
|
| |||||||
Total distributions from distributable earnings
|
| (137,897
| )
|
| (1,227,493
| )
| ||
Beneficial Interest Transactions | ||||||||
Net increase (decrease) in net assets resulting from beneficial interest transactions: | ||||||||
Class A | (202,917 | ) | 6,114,252 | |||||
Class C | (1,104,264 | ) | 1,571,322 | |||||
Class R | 295,108 | 1,617,544 | ||||||
Class Y | (322,140 | ) | 883,055 | |||||
Class R5 | 10,000 | — | ||||||
Class R6 | 171 | (775 | ) | |||||
|
| |||||||
Total beneficial interest transactions
|
| (1,324,042
| )
|
| 10,185,398
|
| ||
Net Assets | ||||||||
Total increase (decrease) | (3,477,170 | ) | 7,055,211 | |||||
Beginning of period | 34,505,690 | 27,450,479 | ||||||
|
| |||||||
End of period | $ | 31,028,520 | $ | 34,505,690 | ||||
|
|
See accompanying Notes to Financial Statements.
15 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Class A | Six Months Ended October 31, 2019 (Unaudited) | Year Ended April 30, 2019 | Year Ended April 30, 2018 | Year Ended April 30, 2017 | Period Ended April 29, 20161,2 | |||||||||||||||
Per Share Operating Data | ||||||||||||||||||||
Net asset value, beginning of period | $11.33 | $12.38 | $12.13 | $10.10 | $10.00 | |||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income3 | 0.04 | 0.10 | 0.07 | 0.06 | 0.04 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.69) | (0.69) | 0.36 | 2.04 | 0.10 | |||||||||||||||
Total from investment operations | (0.65) | (0.59) | 0.43 | 2.10 | 0.14 | |||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||
Dividends from net investment income | (0.05) | (0.11) | (0.04) | (0.07) | (0.04) | |||||||||||||||
Distributions from net realized gain | 0.00 | (0.35) | (0.14) | 0.00 | 0.00 | |||||||||||||||
Total dividends and/or distributions to shareholders | (0.05) | (0.46) | (0.18) | (0.07) | (0.04) | |||||||||||||||
Net asset value, end of period | $10.63 | $11.33 | $12.38 | $12.13 | $10.10 | |||||||||||||||
Total Return, at Net Asset Value4 | (5.71)% | (4.54)% | 3.56% | 20.87% | 1.40% | |||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $19,896 | $21,433 | $17,238 | $27,101 | $5,922 | |||||||||||||||
Average net assets (in thousands) | $20,129 | $21,982 | $22,295 | $16,833 | $5,052 | |||||||||||||||
Ratios to average net assets:5 | ||||||||||||||||||||
Net investment income | 0.81% | 0.80% | 0.54% | 0.50% | 0.98% | |||||||||||||||
Expenses excluding specific expenses listed below | 1.95% | 1.67% | 1.66% | 1.69% | 2.86% | |||||||||||||||
Interest and fees from borrowings | 0.00%6 | 0.00%6 | 0.00%6 | 0.00% | 0.00% | |||||||||||||||
Total expenses7 | 1.95% | 1.67% | 1.66% | 1.69% | 2.86% | |||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 1.25% | 1.25% | 1.25% | 1.25% | 1.25% | |||||||||||||||
Portfolio turnover rate8 | 116% | 107% | 73% | 52% | 22% |
1. For the period from December 7, 2015 (commencement of operations) to April 29, 2016.
2. Represents the last business day of the Fund’s reporting period.
3. Per share amounts calculated based on the average shares outstanding during the period.
4. 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.
5. Annualized for periods less than one full year.
6. Less than 0.005%.
7. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Six Months Ended October 31, 2019 | 1.95 | % | ||||
Year Ended April 30, 2019 | 1.67 | % | ||||
Year Ended April 30, 2018 | 1.66 | % | ||||
Year Ended April 30, 2017 | 1.69 | % | ||||
Period Ended April 29, 2016 | 2.87 | % |
8. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Financial Statements.
16 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Class C | Six Months Ended October 31, 2019 (Unaudited) | Year Ended April 30, 2019 | Year Ended April 30, 2018 | Year Ended April 30, 2017 | Period Ended April 29, 20161,2 | |||||||||||||||
Per Share Operating Data | ||||||||||||||||||||
Net asset value, beginning of period | $11.23 | $12.30 | $12.10 | $10.09 | $10.00 | |||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss)3 | 0.004 | 0.01 | (0.03) | (0.04) | (0.02) | |||||||||||||||
Net realized and unrealized gain (loss) | (0.67) | (0.70) | 0.37 | 2.06 | 0.13 | |||||||||||||||
Total from investment operations | (0.67) | (0.69) | 0.34 | 2.02 | 0.11 | |||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||
Dividends from net investment income | (0.01) | (0.03) | 0.00 | (0.01) | (0.02) | |||||||||||||||
Distributions from net realized gain | 0.00 | (0.35) | (0.14) | 0.00 | 0.00 | |||||||||||||||
Total dividends and/or distributions to shareholders | (0.01) | (0.38) | (0.14) | (0.01) | (0.02) | |||||||||||||||
Net asset value, end of period | $10.55 | $11.23 | $12.30 | $12.10 | $10.09 | |||||||||||||||
Total Return, at Net Asset Value5 | (5.95)% | (5.34)% | 2.81% | 20.01% | 1.07% | |||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $4,349 | $5,822 | $4,771 | $4,885 | $289 | |||||||||||||||
Average net assets (in thousands) | $4,779 | $5,607 | $4,476 | $2,387 | $123 | |||||||||||||||
Ratios to average net assets:6 | ||||||||||||||||||||
Net investment income (loss) | 0.05% | 0.05% | (0.23)% | (0.31)% | (0.46)% | |||||||||||||||
Expenses excluding specific expenses listed below | 2.71% | 2.45% | 2.52% | 2.52% | 3.97% | |||||||||||||||
Interest and fees from borrowings | 0.00%7 | 0.00%7 | 0.00%7 | 0.00% | 0.00% | |||||||||||||||
Total expenses8 | 2.71% | 2.45% | 2.52% | 2.52% | 3.97% | |||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 2.00% | 2.00% | 2.00% | 2.00% | 1.96% | |||||||||||||||
Portfolio turnover rate9 | 116% | 107% | 73% | 52% | 22% |
1. For the period from December 7, 2015 (commencement of operations) to April 29, 2016.
2. Represents the last business day of the Fund’s reporting period.
3. Per share amounts calculated based on the average shares outstanding during the period.
4. Less than $0.005 per share.
5. 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.
6. Annualized for periods less than one full year.
7. Less than 0.005%.
8. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Six Months Ended October 31, 2019 | 2.71 | % | ||||
Year Ended April 30, 2019 | 2.45 | % | ||||
Year Ended April 30, 2018 | 2.52 | % | ||||
Year Ended April 30, 2017 | 2.52 | % | ||||
Period Ended April 29, 2016 | 3.98 | % |
9. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Financial Statements.
17 �� INVESCO OPPENHEIMER SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTSContinued
Class R | Six Months Ended October 31, 2019 (Unaudited) | Year Ended April 30, 2019 | Year Ended April 30, 2018 | Year Ended April 30, 2017 | Period Ended April 29, 20161,2 | |||||||||||||||
Per Share Operating Data | ||||||||||||||||||||
Net asset value, beginning of period | $11.33 | $12.38 | $12.15 | $10.10 | $10.00 | |||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income3 | 0.03 | 0.07 | 0.03 | 0.02 | (0.00)4 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.69) | (0.69) | 0.36 | 2.07 | 0.13 | |||||||||||||||
Total from investment operations | (0.66) | (0.62) | 0.39 | 2.09 | 0.13 | |||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||
Dividends from net investment income | (0.04) | (0.08) | (0.02) | (0.04) | (0.03) | |||||||||||||||
Distributions from net realized gain | 0.00 | (0.35) | (0.14) | 0.00 | 0.00 | |||||||||||||||
Total dividends and/or distributions to shareholders | (0.04) | (0.43) | (0.16) | (0.04) | (0.03) | |||||||||||||||
Net asset value, end of period | $10.63 | $11.33 | $12.38 | $12.15 | $10.10 | |||||||||||||||
Total Return, at Net Asset Value5 | (5.83)% | (4.77)% | 3.21% | 20.72% | 1.27% | |||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $5,014 | $5,024 | $3,804 | $2,468 | $205 | |||||||||||||||
Average net assets (in thousands) | $4,793 | $4,478 | $3,124 | $1,124 | $57 | |||||||||||||||
Ratios to average net assets:6 | ||||||||||||||||||||
Net investment income (loss) | 0.56% | 0.55% | 0.25% | 0.21% | (0.03)% | |||||||||||||||
Expenses excluding specific expenses listed below | 2.21% | 1.97% | 2.04% | 2.12% | 3.71% | |||||||||||||||
Interest and fees from borrowings | 0.00%7 | 0.00%7 | 0.00%7 | 0.00% | 0.00% | |||||||||||||||
Total expenses8 | 2.21% | 1.97% | 2.04% | 2.12% | 3.71% | |||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 1.50% | 1.50% | 1.50% | 1.50% | 1.45% | |||||||||||||||
Portfolio turnover rate9 | 116% | 107% | 73% | 52% | 22% |
1. For the period from December 7, 2015 (commencement of operations) to April 29, 2016.
2. Represents the last business day of the Fund’s reporting period.
3. Per share amounts calculated based on the average shares outstanding during the period.
4. Less than $0.005 per share.
5. 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.
6. Annualized for periods less than one full year.
7. Less than 0.005%.
8. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Six Months Ended October 31, 2019 | 2.21 | % | ||||
Year Ended April 30, 2019 | 1.97 | % | ||||
Year Ended April 30, 2018 | 2.04 | % | ||||
Year Ended April 30, 2017 | 2.12 | % | ||||
Period Ended April 29, 2016 | 3.72 | % |
9. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Financial Statements.
18 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Six Months Ended October 31, 2019 (Unaudited) | Year Ended April 30, 2019 | Year Ended April 30, 2018 | Year Ended April 30, 2017 | Period Ended April 29, 20161,2 | ||||||||||||||||
Class Y | ||||||||||||||||||||
Per Share Operating Data | ||||||||||||||||||||
Net asset value, beginning of period | $11.34 | $12.40 | $12.15 | $10.10 | $10.00 | |||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income3 | 0.06 | 0.13 | 0.10 | 0.08 | 0.05 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.69) | (0.70) | 0.36 | 2.06 | 0.09 | |||||||||||||||
Total from investment operations | (0.63) | (0.57) | 0.46 | 2.14 | 0.14 | |||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||
Dividends from net investment income | (0.07) | (0.14) | (0.07) | (0.09) | (0.04) | |||||||||||||||
Distributions from net realized gain | 0.00 | (0.35) | (0.14) | 0.00 | 0.00 | |||||||||||||||
Total dividends and/or distributions to shareholders | (0.07) | (0.49) | (0.21) | (0.09) | (0.04) | |||||||||||||||
Net asset value, end of period | $10.64 | $11.34 | $12.40 | $12.15 | $10.10 | |||||||||||||||
Total Return, at Net Asset Value4 | (5.58)% | (4.38)% | 3.80% | 21.31% | 1.44% | |||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $1,728 | $2,193 | $1,600 | $2,454 | $154 | |||||||||||||||
Average net assets (in thousands) | $1,949 | $3,740 | $1,706 | $1,285 | $137 | |||||||||||||||
Ratios to average net assets:5 | ||||||||||||||||||||
Net investment income | 1.05% | 1.05% | 0.80% | 0.65% | 1.14% | |||||||||||||||
Expenses excluding specific expenses listed below | 1.71% | 1.40% | 1.51% | 1.45% | 2.67% | |||||||||||||||
Interest and fees from borrowings | 0.00%6 | 0.00%6 | 0.00%6 | 0.00% | 0.00% | |||||||||||||||
Total expenses7 | 1.71% | 1.40% | 1.51% | 1.45% | 2.67% | |||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 1.00% | 1.00% | 1.00% | 1.00% | 1.00% | |||||||||||||||
Portfolio turnover rate8 | 116% | 107% | 73% | 52% | 22% |
1. For the period from December 7, 2015 (commencement of operations) to April 29, 2016.
2. Represents the last business day of the Fund’s reporting period.
3. Per share amounts calculated based on the average shares outstanding during the period.
4. 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.
5. Annualized for periods less than one full year.
6. Less than 0.005%.
7. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Six Months Ended October 31, 2019 | 1.71 | % | ||||
Year Ended April 30, 2019 | 1.40 | % | ||||
Year Ended April 30, 2018 | 1.51 | % | ||||
Year Ended April 30, 2017 | 1.45 | % | ||||
Period Ended April 29, 2016 | 2.68 | % |
8. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Financial Statements.
19 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTSContinued
Class R5 | Period Ended October 31, 2019 (Unaudited) 1 | ||||
Per Share Operating Data | |||||
Net asset value, beginning of period | $10.34 | ||||
Income (loss) from investment operations: | |||||
Net investment income2 | 0.05 | ||||
Net realized and unrealized gain | 0.30 | ||||
Total from investment operations | 0.35 | ||||
Dividends and/or distributions to shareholders: | |||||
Dividends from net investment income | (0.06) | ||||
Distributions from net realized gain | 0.00 | ||||
Total dividends and/or distributions to shareholders | (0.06) | ||||
Net asset value, end of period | $10.63 | ||||
Total Return, at Net Asset Value3 | 3.43% | ||||
Ratios/Supplemental Data | |||||
Net assets, end of period (in thousands) | $10 | ||||
Average net assets (in thousands) | $10 | ||||
Ratios to average net assets:4 | |||||
Net investment income | 1.05% | ||||
Expenses excluding specific expenses listed below | 1.39% | ||||
Interest and fees from borrowings | 0.00% | ||||
Total expenses5 | 1.39% | ||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 0.98% | ||||
Portfolio turnover rate6 | 116% |
1. For the period from after the close of business on May 24, 2019 (inception of offering) to October 31, 2019.
2. Per share amounts calculated based on the average shares outstanding during the period.
3. 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.
4. Annualized for periods less than one full year.
5. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Period Ended October 31, 2019 | 1.39 | % |
6. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Financial Statements.
20 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Class R6 | Six Months Ended October 31, 2019 (Unaudited) | Year Ended April 30, 2019 | Year Ended April 30, 2018 | Year Ended April 30, 2017 | Period Ended April 29, 20161,2 | |||||||||||||||
Per Share Operating Data | ||||||||||||||||||||
Net asset value, beginning of period | $11.33 | $12.39 | $12.13 | $10.10 | $10.00 | |||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income3 | 0.06 | 0.13 | 0.11 | 0.11 | 0.04 | |||||||||||||||
Net realized and unrealized gain (loss) | (0.68) | (0.69) | 0.36 | 2.03 | 0.11 | |||||||||||||||
Total from investment operations | (0.62) | (0.56) | 0.47 | 2.14 | 0.15 | |||||||||||||||
Dividends and/or distributions to shareholders: | ||||||||||||||||||||
Dividends from net investment income | (0.07) | (0.15) | (0.07) | (0.11) | (0.05) | |||||||||||||||
Distributions from net realized gain | 0.00 | (0.35) | (0.14) | 0.00 | 0.00 | |||||||||||||||
Total dividends and/or distributions to shareholders | (0.07) | (0.50) | (0.21) | (0.11) | (0.05) | |||||||||||||||
Net asset value, end of period | $10.64 | $11.33 | $12.39 | $12.13 | $10.10 | |||||||||||||||
Total Return, at Net Asset Value4 | (5.49)% | (4.31)% | 3.89% | 21.30% | 1.50% | |||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Net assets, end of period (in thousands) | $32 | $34 | $37 | $12 | $10 | |||||||||||||||
Average net assets (in thousands) | $32 | $36 | $18 | $11 | $9 | |||||||||||||||
Ratios to average net assets:5 | ||||||||||||||||||||
Net investment income | 1.12% | 1.12% | 0.88% | 0.96% | 0.98% | |||||||||||||||
Expenses excluding specific expenses listed below | 1.33% | 1.27% | 1.29% | 1.38% | 2.47% | |||||||||||||||
Interest and fees from borrowings | 0.00%6 | 0.00%6 | 0.00%6 | 0.00% | 0.00% | |||||||||||||||
Total expenses7 | 1.33% | 1.27% | 1.29% | 1.38% | 2.47% | |||||||||||||||
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses | 0.93% | 0.93% | 0.93% | 0.93% | 0.93% | |||||||||||||||
Portfolio turnover rate8 | 116% | 107% | 73% | 52% | 22% |
1. For the period from December 7, 2015 (commencement of operations) to April 29, 2016.
2. Represents the last business day of the Fund’s reporting period.
3. Per share amounts calculated based on the average shares outstanding during the period.
4. 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.
5. Annualized for periods less than one full year.
6. Less than 0.005%.
7. Total expenses including indirect expenses from affiliated fund fees and expenses were as follows:
Six Months Ended October 31, 2019 | 1.33 | % | ||||||||||
Year Ended April 30, 2019 | 1.27 | % | ||||||||||
Year Ended April 30, 2018 | 1.29 | % | ||||||||||
Year Ended April 30, 2017 | 1.38 | % | ||||||||||
Period Ended April 29, 2016 | 2.48 | % |
8. Portfolio turnover is calculated at the fund level and is not annualized for periods less than one year, if applicable.
See accompanying Notes to Financial Statements.
21 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTSOctober 31, 2019 Unaudited
Note 1 – Significant Accounting Policies
Invesco Oppenheimer Small Cap Value Fund (the “Fund”) is a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the “Trust”). The Trust is a Delaware statutory trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as anopen-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 such Fund or each class.
Prior to the close of business on May 24, 2019, the Fund operated a Oppenheimer Small Cap Value Fund (the “Acquired Fund” or “Predecessor Fund”). The Acquired Fund was reorganized after the close of business on May 24, 2019 (the “Reorganization Date”) through the transfer of all of its assets and liabilities to the Fund (the “Reorganization”).
Upon closing of the Reorganization, holders of the Acquired Fund’s Class A, Class C, Class R, and Class Y shares received the corresponding class of shares of the Fund and holders of the Acquired Fund’s Class I shares received Class R6 shares of the Fund. Information for the Acquired Fund’s Class I shares prior to the Reorganization is included with Class R6 shares throughout this report. Class R5 shares commenced operations on the Reorganization Date.
The Fund’s investment objective is to seek capital appreciation.
The Fund currently consists of six different classes of shares: Class A, Class C, Class R, Class Y, Class R5 and Class R6. Class Y shares are available only to certain investors. Class A shares are sold with afront-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. Class C shares held for ten years after purchase are eligible for automatic conversion in to Class A shares of the same Fund (the “Conversion Feature”). The automatic conversion pursuant to the Conversion Feature will generally occur at the end of the month following the tenth anniversary after a purchase of Class C shares.
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 theover-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
22 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
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 inopen-end andclosed-end registered investment companies that do not trade on an exchange are valued at theend-of-day net asset value per share. Investments inopen-end andclosed-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 asinstitution-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
23 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTSUnaudited / Continued
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 theex-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 transactions 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
24 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
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.
The Fund recharacterizes distributions received from REIT investments based on information provided by the REIT into the following categories: ordinary income, long-term and short-term capital gains, and return of capital. If information is not available on a timely basis from the REIT, the recharacterization will be based on available information which may include the previous year’s allocation. If new or additional information becomes available from the REIT at a later date, a recharacterization will be made in the following year. The Fund records as dividend income the amount recharacterized as ordinary income and as realized gain the amount recharacterized as capital gain in the Statement of Operations, and the amount recharacterized as return of capital as a reduction of the cost of the related investment. These recharacterizations are reflected in the accompanying financial statements.
C. | Country Determination- For the purposes of making investment selection decisions and presentation in the Schedule of Investments, the investment adviser may determine the country in which an issuer is located and/or credit risk exposure based on various factors. These factors include the laws of the country under which the issuer is organized, where the issuer maintains a principal office, the country in which the issuer derives 50% or more of its total revenues and the country that has the primary market for the 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. |
D. | Distributions - Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from accounting principles generally accepted in the United States of America (“GAAP”), are recorded on theex-dividend date. Income distributions are declared and paid quarterly, if any. Capital gain distributions, if any, are declared and paid annually or at other times as determined necessary by the Adviser. |
The tax character of distributions is determined as of the Fund’s fiscal year end. Therefore, a portion of the Fund’s distributions made to shareholders prior to the Fund’s fiscal year end may ultimately be categorized as a tax return of capital.
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
25 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTSUnaudited / Continued
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 Rule12b-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 allocated to each share class based on relative net assets. 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 financial statements are prepared on a basis in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which 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 theperiod-end date and before the date the financial statements are released to print. |
H. | Indemnifications - Under the Trust’s organizational documents, each Trustee, officer, employee or other agent of the Trust is indemnified against certain liabilities that may arise out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts, including the Fund’s servicing agreements, that contain a variety of indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. The risk of material loss as a result of such indemnification claims is considered remote. |
Note 2 – Advisory Fees and Other Fees Paid to Affiliates
The Trust has entered into a master investment advisory agreement with Invesco Advisers, Inc. (the “Adviser” or “Invesco”). Under the terms of the investment advisory agreement, the Fund 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:
26 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Fee Schedule* | ||||
Up to $500 million | 0.80 | % | ||
Next $500 million | 0.75 | |||
Next $4 billion | 0.70 | |||
Over $5 billion | 0.65 |
* The advisory fee paid by the Fund shall be reduced by any amounts paid by the Fund under the administrative services agreement with the Adviser.
During the six months ended October 31, 2019, the effective advisory fee incurred by the Fund was 0.79% annualized.
From the beginning of the fiscal period until the date of the Reorganization, the Acquired Fund paid $17,656 in advisory fees to OFI Global Asset Management, Inc. based on the annual rates above of the Acquired Fund’s average daily net assets.
Under the terms of a mastersub-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 separatesub-advisory agreements with Invesco Capital Management LLC, and Invesco Asset Management (India) Private Limited (collectively, the “AffiliatedSub-Advisers”) the Adviser, not the Fund, will pay 40% of the fees paid to the Adviser to any such AffiliatedSub-Adviser(s) that provide(s) discretionary investment management services to the Fund based on the percentage of assets allocated to such AffiliatedSub-Adviser(s). Invesco has also entered into aSub-Advisory Agreement with OppenheimerFunds, Inc. to provide discretionary management services to the Funds.
Effective on the Reorganization Date, the Adviser has contractually agreed, through at least May 31, 2021, to waive advisory fees and/or reimburse expenses of all shares to the extent necessary to limit the total annual fund operating expenses after fee waiver and/or expense reimbursement (excluding certain items discussed below) ofClass A, Class C, Class R, Class Y, Class R5 and Class R6 shares to 1.25%, 2.00%, 1.50%, 1.00%, 0.98% and 0.93%, respectively, of the Fund’s average daily net assets (the “expense limits”). 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 total annual fund operating expenses after fee waivers and/or expense reimbursement to exceed the numbers reflected above: (1) interest; (2) taxes; (3) dividend expenses on short sales; (4) extraordinary ornon-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 May 31, 2021. 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.
Further, the Adviser has contractually agreed, through at least June 30, 2021, 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.
During the six months ended October 31, 2019, the Adviser waived advisory fees of $446
27 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTSUnaudited / Continued
and reimbursed fund expenses of $71,151, $16,885, $17,217, $6,962, $17 and $63 for Class A, Class C, Class R, Class Y, Class R5 and Class R6, respectively.
Prior to the Reorganization, the OFI Global Asset Management, Inc. had contractually agreed to waive fees and/or reimburse expenses of Class A, Class C, Class R, Class Y and Class R6 shares to 1.25%, 2.00%, 1.50% 1.00% and 0.93%,respectively, of the Acquired Fund’s average daily net assets.
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 period ended October 31, 2019, expenses incurred under the agreement are shown in the Statement of Operations as Administration fees. Additionally, Invesco has entered into service agreements whereby Citibank, N.A.serves as custodian to the Fund. Prior to the Reorganization, the Acquired Fund paid administrative fees to OFI Global Asset Management, Inc.
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 orsub-accounting services are charged back to the Fund, subject to certain limitations approved by the Trust’s Board of Trustees. Prior to the Reorganization, the Acquired Fund paid transfer agent fees to OFI Global Asset Management, Inc. and Shareholder Services, Inc. During the six months ended October 31, 2019, expenses incurred under these agreements are shown in the Statement of Operations as Transfer and shareholder servicing agent fees.
The Trust has entered into master distribution agreements with Invesco Distributors, Inc. (“IDI”) to serve as the distributor for theClass A, Class C, Class R, Class Y, Class R5 and Class R6 shares of the Fund. The Trust has adopted plans pursuant to Rule12b-1 under the 1940 Act with respect to the Fund’s Class A, Class C and Class R shares(collectively the “Plan”). The Fund, pursuant to the Class A Plan, reimburses IDI in an amount up to an annual rate of 0.25% of the average daily net assets of Class A shares. The Fund pursuant to the Class C and Class R Plan, pays IDI compensation at the annual rate of 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. 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 Plan 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 plans. Prior to the Reorganization, the Acquired Fund paid distribution fees to OppenheimerFunds Distributor, Inc. During the six months ended October 31, 2019, expenses incurred under the plans are shown in the Statement of Operations as Distribution and service plan fees.
Front-end sales commissions and CDSC (collectively, the “sales charges”) are not recorded
28 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
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 thesix months ended October 31, 2019, IDI advised the Fund that IDI retained $5,142 infront-end sales commissions from the sale of Class A shares and $116 from Class C shares, for CDSC imposed on redemptions by shareholders. From the beginning of the fiscal year to the date of the Reorganization, OppenheimerFunds Distributor, Inc. retained $1,857 in front–end sales commissions from the sale of Class A shares and $7 from Class C shares for CDSC imposed on redemption 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.
As of October 31, 2019, 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.
29 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTSUnaudited / Continued
Note 4 – Expense Offset Arrangement
The expense offset arrangement is comprised of custodian credits which result from periodic overnight cash balances at the custodian. For the periodended October 31, 2019, the Fund received credits from this arrangement, which resulted in the reduction of the Fund’s total expenses of $89.
Note 5 – Trustee and Officer Fees and Benefits
Certain Trustees have executed a Deferred Compensation Agreement pursuant to which they have the option to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustees under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Invesco and/or Invesco Oppenheimer funds selected by the Trustees. The Fund purchases shares of the funds selected for deferral by the Trustees in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other” within the asset section of the Statement of Assets and Liabilities. Deferral of Trustees’ fees under the plan will not affect the net assets of the Fund and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the compensation deferral plan.
Note 6 – Cash Balances
The Fund is permitted to temporarily carry a negative or overdrawn balance in its account with JPMorgan Chase Bank, the custodian bank. Such balances, if any atperiod-end, are shown in the Statement of Assets and Liabilities under the payable caption Amount due to 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 – 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 monthsended October 31, 2019 was $35,959,435 and $38,088,250, 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 reportingperiod-end.
30 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Unrealized Appreciation (Depreciation) of Investments on a Tax Basis | ||||
| ||||
Aggregate unrealized appreciation of investments | $ | 2,481,950 | ||
Aggregate unrealized (depreciation) of investments | (1,723,235) | |||
|
| |||
Net unrealized appreciation of investments | $ | 758,715 | ||
|
|
Cost of investments for tax purposes is$30,301,812.
Note 8 – Share Information
Transactions in shares of beneficial interest were as follows:
Six Months Ended October 31, 2019 | Year Ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class A | ||||||||||||||||
Sold | 204,252 | $ | 2,146,447 | 1,624,701 | $ | 19,742,029 | ||||||||||
Automatic Conversion | 101,438 | 1,065,582 | — | — | ||||||||||||
Class C to Class A Shares | ||||||||||||||||
Dividends and/or distributions reinvested | 9,466 | 100,853 | 71,907 | 769,370 | ||||||||||||
Redeemed | (335,791 | ) | (3,515,799 | ) | (1,196,688 | ) | (14,397,147 | ) | ||||||||
Net increase (decrease) | (20,635 | ) | $ | (202,917 | ) | 499,920 | $ | 6,114,252 | ||||||||
Class C | ||||||||||||||||
Sold | 61,486 | $ | 639,965 | 234,139 | $ | 2,800,274 | ||||||||||
Dividends and/or distributions reinvested | 577 | 6,081 | 17,913 | 186,010 | ||||||||||||
Automatic Conversion | ||||||||||||||||
Class C to Class A Shares | (102,218 | ) | (1,065,582 | ) | — | ��� | ||||||||||
Redeemed | (65,893 | ) | (684,728 | ) | (121,745 | ) | (1,414,962 | ) | ||||||||
Net increase (decrease) | (106,048 | ) | $ | (1,104,264 | ) | 130,307 | $ | 1,571,322 | ||||||||
Class R | ||||||||||||||||
Sold | 76,515 | $ | 799,399 | 180,314 | $ | 2,164,385 | ||||||||||
Dividends and/or distributions reinvested | 1,664 | 17,742 | 15,417 | 163,363 | ||||||||||||
Redeemed | (50,247 | ) | (522,033 | ) | (59,395 | ) | (710,204 | ) | ||||||||
Net increase (decrease) | 27,932 | $ | 295,108 | 136,336 | $ | 1,617,544 | ||||||||||
Class Y | ||||||||||||||||
Sold | 22,398 | $ | 237,544 | 482,873 | $ | 6,217,022 | ||||||||||
Dividends and/or distributions reinvested | 1,195 | 12,746 | 9,447 | 104,655 | ||||||||||||
Redeemed | (54,578 | ) | (572,430 | ) | (428,076 | ) | (5,438,622 | ) | ||||||||
Net increase (decrease) | (30,985 | ) | $ | (322,140 | ) | 64,244 | $ | 883,055 | ||||||||
Class R51 | ||||||||||||||||
Sold | 967 | $ | 10,000 | — | $ | — | ||||||||||
Dividends and/or distributions reinvested | — | — | — | — | ||||||||||||
Redeemed | — | — | — | — | ||||||||||||
Net increase (decrease) | 967 | $ | 10,000 | — | $ | — | ||||||||||
31 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTSUnaudited / Continued
Six Months Ended October 31, 2019 | Year Ended April 30, 2019 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Class R6 | ||||||||||||||||
Sold | 93 | $ | 964 | 405 | $ | 5,000 | ||||||||||
Dividends and/or distributions reinvested | 13 | 140 | 89 | 956 | ||||||||||||
Redeemed | (94 | ) | (933 | ) | (527 | ) | (6,731 | ) | ||||||||
Net increase (decrease) | 12 | $ | 171 | (33 | ) | $ | (775 | ) | ||||||||
1. Commencement date after the close of business on May 24, 2019.
Note 9 – Borrowings
Joint Credit Facility.A number of mutual funds managed by the Adviser participate in a $1.95 billion revolving credit facility (the “Facility”) intended to provide short-term financing, if necessary, subject to certain restrictions in connection with atypical redemption activity. Expenses and fees related to the Facility are paid by the participating funds and are disclosed separately or as other expenses on the Statement of Operations. The Fund did not utilize the Facility during the reporting period.The Facility terminated May 24, 2019.
Note 10 - Independent Registered Public Accounting Firm
The Audit Committee of the Board of Trustees appointed, and the Board of Trustees ratified and approved, PricewaterhouseCoopers LLP (“PwC”) as the independent registered public accounting firm of the Fund for the fiscal periods ending after May 24, 2019. Prior to the close of business on May 24, 2019, the Predecessor Fund was a separate series of an unaffiliated investment company and its financial statements were audited by a different independent registered public accounting firm (the “Prior Auditor”).
Effective after the close of business on May 24, 2019, the Prior Auditor resigned as the independent registered public accounting firm of the Fund. The Prior Auditor’s report on the financial statements of the Predecessor Fund for the past two fiscal years did not contain an adverse or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the Predecessor Fund’s two most recent fiscal years and through the close of business on May 24, 2019, there were no (1) disagreements with the Prior Auditor on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the Prior Auditor’s satisfaction, would have caused it to make reference to that matter in connection with its report; or (2) “reportable events,” as that term is defined in Item 304(a)(1)(v) of RegulationS-K under the Securities Exchange Act of 1934.
Note 11 – Subsequent Event
The Board of Trustees unanimously approved an Agreement and Plan of Reorganization (the “Agreement”) pursuant to which Invesco Oppenheimer Small Cap Value Fund (the “Fund”) would transfer all of its assets and liabilities to Invesco Small Cap Value Fund (the “Acquiring
32 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
Fund”).
Upon closing of the reorganization, shareholders of the Fund will receive a corresponding class of shares of the Acquiring Fund in exchange for their shares of the Fund and the Fund will liquidate and cease operations.
33 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY CONTRACTS
At meetings held on December 14, 2018, the Board of Trustees (the Board or the Trustees) of AIM Sector Funds (Invesco Sector Funds) (the Trust) as a whole, and the independent Trustees, who comprise over 75% of the Board, voting separately, approved (i) an amendment to the Trust’s Master Investment Advisory Agreement with Invesco Advisers, Inc. (Invesco Advisers and the investment advisory agreement) to add Invesco Oppenheimer Small Cap Value Fund (the Fund), (ii) an amendment to the Master IntergroupSub-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. to add the Fund, (iii) an amendment to the separatesub-advisory contract with Invesco Capital Management LLC to add the Fund, (iv) an amendment to the separatesub-advisory contract with Invesco Asset Management (India) Private Limited to add the Fund, and (v) an initialsub-advisory contract with OppenheimerFunds, Inc. (collectively, the Affiliated Sub-Advisers and thesub-advisory contracts). Additionally, on March 26, 2019, the Boardre-approved an initialsub-advisory contract with OppenheimerFunds, Inc. following its change of control as a result of the acquisition of OppenheimerFunds, Inc. and its subsidiaries, including the Oppenheimer mutual funds (each, an Oppenheimer Fund), by Invesco Ltd. (the OFI Transaction). After evaluating the factors discussed below, among others, the Board approved the Fund’s investment advisory agreement and thesub-advisory contracts and determined that the compensation payable by the Fund to Invesco Advisers and by Invesco Advisers to the AffiliatedSub-Advisers is fair and reasonable.
The Board’s Evaluation Process
The Board noted that it had previously approved establishing the Fund at the Board meeting held on October 23, 2018 and that the Fund was formed to acquire the assets and liabilities of an Oppenheimer Fund (the Acquired Fund) with the same investment objective and substantially similar principal investment strategies and risks. At the time of approval, the Fund had no assets and no performance history and the portfolio managers were not employed by Invesco Advisers or any of the AffiliatedSub-Advisers except OppenheimerFunds, Inc., which was not affiliated with Invesco at that time.
In approving the investment advisory agreement andsub-advisory contracts, the Board followed a process similar to the process that it follows in annually reviewing and approving investment advisory agreements andsub-advisory contracts for the series portfolios of funds advised by Invesco Advisers and considered the information provided in the most recent annual review process for those funds as well as the information provided with respect to the Fund. As part of the approval process, the Board reviewed and considered 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 reviewed comparative investment performance and fee data prepared by Invesco Advisers and an independent mutual fund data provider. The Board was assisted in its
34 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
review by the Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees, and by independent legal counsel.
The discussion below serves as a summary of the material factors and related conclusions that formed the basis for the Board’s approval of the Fund’s investment advisory agreement andsub-advisory contracts. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them 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 December 14, 2018 and March 26, 2019 for thesub-advisory contract with OppenheimerFunds, Inc.
Factors and Conclusions and Summary of Independent Written Fee Evaluation
A. Nature, Extent and Quality of Services Provided by Invesco Advisers and the AffiliatedSub-Advisers
The Board reviewed the nature, extent and quality of the advisory services to be 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 will provide these services. The Board’s review included consideration of the investment process oversight and structure, credit analysis and investment risk management to be employed in providing advisory services to the Fund. The Board also considerednon-advisory services that Invesco Advisers and its affiliates provide to the Invesco Funds and will provide to the Fund, such as various back office support functions, third party oversight, internal audit, valuation, portfolio trading and legal and compliance. The Board also received and reviewed information about Invesco Advisers’ role as administrator of the Invesco Funds’ liquidity risk management program. 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 reviewed and considered information about the resources that Invesco Advisers intends to continue to commit to managing the Invesco family of funds, including the Fund, following the OFI Transaction. The Board concluded that the nature, extent and quality of the services to be provided to the Fund by Invesco Advisers are appropriate and satisfactory.
The Board reviewed the services that may be provided by the AffiliatedSub-Advisers under thesub-advisory contracts and the credentials and experience of the officers and employees of the AffiliatedSub-Advisers who provide these services. The Board noted the AffiliatedSub-Advisers’ expertise with respect to certain asset classes and that the AffiliatedSub-Advisers have offices and personnel that are located in financial centers around the world.
35 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY CONTRACTSContinued
As a result, the Board noted that the AffiliatedSub-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 thesub-advisory contracts may benefit the Fund and its shareholders by permitting Invesco Advisers to use the resources and talents of the AffiliatedSub-Advisers in managing the Fund. The Board concluded that the nature, extent and quality of the services that may be provided by the AffiliatedSub-Advisers are appropriate and satisfactory.
B. Fund Investment Performance
The Board noted that the Fund would continue the historical performance information of the Acquired Fund following the consummation of the OFI Transaction. The Board considered the performance of the Acquired Fund and the fact that, at the closing of the OFI Transaction, management anticipates that the Fund will be managed pursuant to substantially similar investment strategies and by substantially the same portfolio management team as managed the Acquired Fund. The Board did not view Fund performance as a relevant factor in considering whether to approve thesub-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 theone-year period ending December 31, 2017 to the performance of funds in the Morningstar performance universe and against the Fund’s benchmark index. The Trustees also reviewed more recent Fund performance and this review did not change their conclusions.
C. Advisory andSub-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 Morningstar 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 for at least two years from the closing date of the OFI Transaction 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 AffiliatedSub-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,
36 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
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 AffiliatedSub-Advisers pursuant to thesub-advisory contracts, as well as the fees payable by Invesco Advisers to the AffiliatedSub-Advisers pursuant to thesub-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 considered Invesco’s reinvestment in its business, including investments in business infrastructure and cybersecurity. The Board also considered that the Fund may benefit 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 will share 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 the 2018 contract renewal process provided by Invesco Advisers concerning the costs of the advisory and other services that Invesco Advisers and its affiliates provide to 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 will continue to operate at a net profit from services Invesco Advisers and its affiliates provide to the Invesco Funds. The Board did not deem the level of profits realized by Invesco Advisers and its affiliates from providing services to the Invesco Funds, and the profits estimated to be realized by 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 AffiliatedSub-Advisers are financially sound and have the resources necessary to perform their obligations under the investment advisory agreement andsub-advisory contracts.
F. Collateral Benefits to Invesco Advisers and its Affiliates
The Board considered various other benefits to be received by Invesco Advisers and its affiliates from the relationship with the Fund, including the fees to be received for providing administrative, transfer agency and distribution services to the Fund. The Board considered
37 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY CONTRACTSContinued
the performance of Invesco Advisers and its affiliates in providing these services to other Invesco Funds and the organizational structure employed to provide these services. The Board also considered that these services will be 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 AffiliatedSub-Advisers with other clients and may reduce Invesco Advisers’ or the AffiliatedSub-Advisers’ expenses. The Board also considered that it will receive 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 considered that Invesco Advisers will receive 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 will receive 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 to be 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 AffiliatedSub-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 will be executed in compliance with rules under the federal securities laws and consistent with best execution obligations.
38 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
PORTFOLIO PROXY VOTING POLICIES AND GUIDELINES;
UPDATES TO SCHEDULE OF INVESTMENTS
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) as an exhibit to its reports on FormN-PORT. The most recent list of portfolio holdings is available at invesco.com/completeqtrholdings. Shareholders can also look up the Fund’s FormsN-PORT on the SEC website at sec.gov.
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 recent12-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.
39 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
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Invesco recognizes the importance of protecting your personal and financial information when you visit our website located atwww.invesco.com (the “Website”). The following information is designed to help you understand the information collection practices at this Website. We will not sell, share or rent your personally identifiable information to others in contravention of this Privacy Policy. When we refer to ourselves as “we” or “Invesco” in this Privacy Policy, we mean our entire company including our affiliates, such as subsidiaries.
By visiting this Website, you are accepting the practices described in this Privacy Policy. If you do not agree to this policy, you may not use this Website. This Privacy Policy is subject to change without notice, from time to time in our sole discretion. You acknowledge that by accessing the Website after we have posted changes to this Privacy Policy, you are agreeing to this Privacy Policy as modified. Please review the Terms of Use1 to learn of other terms and conditions applicable to your use of the Website.
Please note that this Privacy Policy is not an exclusive statement of our privacy principles across all products and services. Other privacy principles or policies may apply depending on the products or services you obtain from Invesco, or the jurisdiction in which you transact with Invesco.
This Privacy Policy was last updated on May 6, 2018.
Information We Collect and Use
We collect personal information you choose to submit to the Website in order to process transactions requested by you and meet our contractual obligations. For example, you can choose to provide your name, contact information, social security number, or tax identification number in connection with accessing your account, or you can choose to provide your personal information when you fill out a secure account question form. Any information collected about you from the Website can, from time to time, be associated with other identifying information we have about you.
In addition, we may gather information about you automatically through your use of the Website, e.g. your IP address, how you navigate the Website, the organization from which you are accessing the Website, and the websites that you access before and after you visit the Website.
When you access the Website, we may also collect information such as unique device identifiers, your screen resolution and other device settings, information about your location, and analytical information about how you use the device from which you are viewing the Website. Where applicable, we may ask your permission before collecting certain information, such as precise geolocation information.
From time to time, we use or augment the personal information we have about you with information obtained from third parties. For example, we use third party information to confirm contact or financial information or to better understand your interests by associating demographic information from third parties with the information you have provided.
How We Use Personal Information
We use your personal information to respond to your inquiries and provide the products and services you request. We also use your information from time to time to deliver the content and services we believe
1NTD
40 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
you will find the most relevant and to provide customer service and support.
We also use the information you provide to further develop and improve our products and services. We aggregate and/orde-identify data about visitors to the Website for various business purposes including product and service development and improvement activities.
How We Share Personal Information
We collaborate with other companies and individuals to perform services for us and on our behalf and we collaborate with our affiliates, other companies and individuals with respect to particular products or services (“Providers”). Examples of Providers include data analysis firms, customer service and support providers, email and SMS vendors, andweb-hosting and development companies. Some Providers collect information for us or on our behalf on our Website. These Providers can be provided with access to personal information needed to perform their functions.
We reserve the right to disclose your personal information as required by law, when we believe disclosure is necessary to comply with a regulatory requirement, judicial proceeding, court order or legal process served on us, to protect the safety, rights or property of our customers, the public or Invesco or to enforce the Terms of Use.
If we sell or transfer a business unit (such as a subsidiary) or an asset (such as a website) to another company, we will share your personal information with such company. You will receive notice of such an event and the new entity will inform you of any changes to the practices in this Privacy Policy. If the new entity wishes to make additional use of your information, you have the right to decline such use at that time.
We occasionally disclose aggregate orde-identified data that is not personally identifiable with third parties.
Cookies and Other Tools
Invesco and its Providers collect information about you by using cookies, tracking pixels and other technologies. We use this information to better understand, customize and improve user experience with our websites, services and offerings as well as to manage our advertising. For example, we use web analytics services that use these technologies to gather information to help us understand how visitors engage with and navigate our Website, e.g., how and when pages in a site are visited and by how many visitors. We are also able to offer our visitors a more customized, relevant experience on our sites using these technologies by delivering content and functionality based on your preferences and interests.
Depending on their purpose, some cookies will only operate for the length of a single browsing session, while others have a longer life span to ensure that they fulfill their longer-term purposes. Your web browser can be set to allow you to control whether you will accept cookies or reject cookies, to notify you each time a cookie is sent to your browser, or to delete cookies that have already been set. If your browser is set to reject cookies, certain aspects of the Website that are cookie-enabled will not recognize you when you return to the website, and some Website functionality may be lost. The “Help” section of your browser may tell you how to prevent your browser from accepting cookies. To find out more about cookies, visitwww.aboutcookies.org.
41 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
INVESCO’S PRIVACY NOTICEContinued
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Security
No data transmission over the internet can be 100% secure, so Invesco cannot ensure or warrant the security of any information you submit to us on this Website. However, Invesco seeks to protect your personal information from unauthorized access or use when you transact business on our Website using technical, administrative and procedural measures. Invesco makes no representation as to the reasonableness, efficacy, or appropriateness of the measures we use to safeguard such information.
Users are responsible for maintaining the secrecy of their own passwords. If you have reason to believe that your interaction with us is no longer secure (for example, if you feel that the security of any account you might have with us has been compromised), please immediately notify us by contacting us as specified below.
Transfer of Data to Other Countries
Any information you provide to Invesco through use of the Website may be stored and processed, transferred between and accessed from the United States, Canada and other countries which do not guarantee the same level of protection of personal information as the one in which you reside. However, Invesco will handle your personal information in accordance with this Privacy Policy regardless of where your personal information is stored/accessed.
Children’s Privacy
We are committed to protecting the privacy of children. We do not knowingly collect personal information from children under the age of 18. If you are under the age of 18, do not provide us with any personal information.
Contact Us
Please contact us if you have any questions or concerns about your personal information or require assistance in managing your choices.
Invesco Ltd.
1555 Peachtree St. NE
Atlanta, GA 30309
By phone:
(404)439-3236
By fax:
(404)962-8288
By email:
Anne.Gerry@invesco.com
Please update your account information by logging in or contact us by email or telephone as specified above to update your account information whenever such information ceases to be complete or accurate.
You may also contact us to:
42 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
● Request that we amend, rectify, delete or update the personal data we hold about you;
● Where possible (e.g. in relation to marketing) amend or update your choices around processing;
● Request a copy of personal data held by us.
Disclaimer
Where the Website contains links to third-party websites/content/services that are not owned or controlled by Invesco, Invesco is not responsible for how these properties operate or treat your personal information so we recommend that you read the privacy policies and terms associated with these third party properties carefully.
43 INVESCO OPPENHEIMER SMALL CAP VALUE FUND
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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.
Invesco Distributors, Inc. | O-SCV-SAR-1 | 12272019 |
ITEM 2. CODE OF ETHICS.
Not applicable for a semi-annual report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
During the reporting period, PricewaterhouseCoopers LLC (“PwC”) advised the Audit Committee of the following matters for consideration under the SEC’s auditor independence rules. PwC advised the Audit Committee that a PwC Director, a PwC Manager and a PwC Senior Associate each held financial interests in investment companies within the Invesco Fund Complex that were inconsistent with the requirements of Rule2-01(c)(1) of RegulationS-X. PwC noted, among other things, that during the time of its audit, the engagement team was not aware of the investments, (or with respect to the PwC Senior Associate was not aware until after the investments were confirmed as SEC exceptions), the individuals were not in the chain of command of the audit or the audit partners of Invesco or the affiliate of the Registrant, the services each individual provided were not relied upon by the audit engagement team with respect to the audit of the Registrant or its affiliates (or with respect to the PwC Senior Associate, the services were performed by an individual who did not have decision-making responsibility for matters that materially affected the audit and were reviewed by team members at least two levels higher than the PwC Senior Associate), and the investments were not material to the net worth of each individual or their respective immediate family members which PwC considered in reaching its conclusion. PwC advised the Audit Committee that it believes its objectivity and impartiality had not been adversely affected by these matters as they related to the audit of the Registrant.
On May 24, 2019, certain investment advisor subsidiaries of Invesco Ltd. assumed management responsibility from Oppenheimer Funds, Inc. (“OFI”) for 83open-end mutual funds and 20 exchange-traded funds (collectively, the “Oppenheimer Funds”). Assumption of management responsibility for the Oppenheimer Funds was accomplished through the reorganization of each Oppenheimer Fund into a new Invesco shell fund (collectively, the “New Invesco Funds”) that did not havepre-existing assets (together, the “Reorganizations”). The Reorganizations were part of the acquisition by Invesco Ltd. (together with its subsidiaries, “Invesco”) of the asset management business of OFI (including the Oppenheimer Funds) from Massachusetts Mutual Life Insurance Company (“MassMutual”), which was also consummated on May 24, 2019 (the “Acquisition”). Subsequent to the Acquisition, MassMutual became a significant shareholder of Invesco, and the Invesco Ltd. board of directors expanded by one director with the addition of a director selected by MassMutual.
Prior to the consummation of the Acquisition and the Reorganizations on May 24, 2019, PwC completed an independence assessment to evaluate the services and relationships with OFI and its affiliates, which became affiliates of Invesco upon the closing of the Acquisition. The assessment identified the following relationship and services that are inconsistent with the auditor independence rules under Rule2-01 of RegulationS-X (“Rule2-01”) if provided to an affiliate of an audit client. A retired PwC partner who receives a benefit from PwC that is not fully funded, served as a member of Audit Committee of the Boards of Trustees of certain Oppenheimer Funds prior to the Acquisition (the“Pre-Reorganization Relationship”). Additionally, PwC provided certainnon-audit services including, expert legal services to one Oppenheimer Fund, custody of client assets in connection with payroll services, anon-audit service performed pursuant to a success-based fee,non-audit services in which PwC acted as an advocate on behalf of a MassMutual foreign affiliate and certain employee activities undertaken in connection with the provision ofnon-audit
services for MassMutual and certain MassMutual foreign affiliates (collectively, the“Pre-Reorganization Services”).
PwC and the Audit Committees of the New Invesco Funds each considered the impact that thePre-Reorganization Relationship and Services have on PwC’s independence with respect to the New Invesco Funds. On the basis of the nature of the relationship and services performed, and in particular the mitigating factors described below, PwC concluded that a reasonable investor, possessing knowledge of all the relevant facts and circumstances regarding thePre-Reorganization Relationship and Services, would conclude that thePre-Reorganization Relationship and Services do not impair PwC’s ability to exhibit the requisite objectivity and impartiality to report on the financial statements of the New Invesco Funds for the years ending May 31, 2019 – April 30, 2020 (“PwC’s Conclusion”).
The Audit Committees of the Boards of Trustees of the New Invesco Funds, based upon PwC’s Conclusion and the concurrence of Invesco, considered the relevant facts and circumstances including the mitigating factors described below and, after careful consideration, concluded that PwC is capable of exercising objective and impartial judgment in connection with its audits of the financial statements of the New Invesco Funds that the respective Boards of Trustees oversee.
Mitigating factors that PwC and the Audit Committees considered in reaching their respective conclusions included, among others, the following factors:
· | none of thePre-Reorganization Relationship or Services created a mutuality of interest between PwC and the New Invesco Funds; |
· | PwC will not act in a management or employee capacity for the New Invesco Funds or their affiliates during any portion of PwC’s professional engagement period; |
· | other than the expert legal services,Pre-Reorganization Services that have been provided to OFI, MassMutual and their affiliates do not have any impact on the financial statements of the New Invesco Funds; |
· | as it relates to the expert legal services, while the service provided by PwC related to litigation involving one Oppenheimer Fund, the impact of the litigation on the Oppenheimer Fund’s financial statements was based upon OFI’s decision, and OFI management represented that the PwC service was not considered a significant component of its decision; |
· | while certain employees of OFI who were involved in the financial reporting process of the Oppenheimer Funds will be employed by Invesco subsequent to the Reorganizations, existing officers of other Invesco Funds will serve as Principal Executive Officer and Principal Financial Officer or equivalent roles for the New Invesco Funds, and are ultimately responsible for the accuracy of all financial statement assertions for the entirety of the financial reporting periods for the New Invesco Funds; |
· | thePre-Reorganization Services giving rise to the lack of independence were provided to, or entered into with, OFI, MassMutual and their affiliates at a time when PwC had no independence restriction with respect to these entities; |
· | with the exception of the expert legal service provided to one Oppenheimer Fund, none of thePre-Reorganization Services affected the operations or financial reporting of the New Invesco Funds; |
· | thePre-Reorganization Services provided by PwC to OFI, MassMutual and their affiliates were performed by persons who were not, and will not be, part of the audit engagement team for the New Invesco Funds; and |
· | the fees associated with thePre-Reorganization Services were not material to MassMutual, Invesco or PwC. |
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 FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 8. | PORTFOLIO MANAGERS OFCLOSED-END MANAGEMENT COMPANIES. |
Not applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BYCLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. |
Not applicable.
ITEM 10. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. |
None
ITEM 11. | CONTROLS AND PROCEDURES. |
(a) | As of December 18, 2019, 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 Rule30a-3(c) under the Investment Company Act of 1940 (“Act”), as amended. Based on that evaluation, the Registrant’s officers, including the PEO and PFO, concluded that, as of December 18, 2019, the Registrant’s disclosure controls and procedures were reasonably designed so as to ensure: (1) that information required to be disclosed by the Registrant on FormN-Q 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 Rule30a-3(d) under the Act) that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12. | DISCLOSURE OF SECURITIES LENDING ACTIVITIES FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 13. | EXHIBITS. |
13(a) (1) | 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(a) (3) | Not applicable. |
13(a) (4) | Registrant’s Independent Public Accountant, attached as Exhibit 99.ACCT |
13(b) | Certifications of principal executive officer and principal financial officer as required by Rule30a-2(b) under the Investment Company Act of 1940. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AIM Sector Funds (Invesco Sector Funds)
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | January 3, 2020 |
Pursuant to the requirements of the Securities and Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Sheri Morris | |
Sheri Morris | ||
Principal Executive Officer | ||
Date: | January 3, 2020 | |
By: | /s/ Kelli Gallegos | |
Kelli Gallegos | ||
Principal Financial Officer | ||
Date: | January 3, 2020 |